Tag Archives: US House

GOP Rule Change in Congress Signals New Dawn for ‘Voodoo Economics’

‘Few economic theories have been as thoroughly tested in the real world as supply-side economics, and so notoriously failed.’

By Jon Queally
January 7, 2015
Common Dreams

 

Republican Speaker of the House John Boehner wields the gavel for the first time after being re-elected as the Speaker of the House of Representatives at the start of the 114th Congress on Jan. 6, 2015. Among the GOP's first act was imposing a new rule on non-partisan agencies to institute new prediction models that will be more favorable to trickle-down economic policies. (Photo: Jim Bourg /Reuters)

Republican Speaker of the House John Boehner wields the gavel for the first time after being re-elected as the Speaker of the House of Representatives at the start of the 114th Congress on Jan. 6, 2015. Among the GOP’s first act was imposing a new rule on non-partisan agencies to institute new prediction models that will be more favorable to trickle-down economic policies. (Photo: Jim Bourg /Reuters)

 

A seemingly arcane rule change passed by the House of Representatives on Tuesday night signals that a new wave of tax cuts for the wealthy and what has long been criticized as “voodoo economics” will again be in vogue as the new Republican-controlled Congress sets the agenda in the new session.

Along with a host of other rules changes that will govern procedural issues in the House over the next two years, at issue here is a rule that will force both the Congressional Budget Office (CBO) and the Congressional Joint Committe on Taxation (JCT), the two nonpartisan groups tasked with scoring the economic impacts of proposed legislation, to use projection models that include what is called “dynamic scoring.”

According to current lawmakers opposed to the change, the impact could be devastating. That view is also shared by outside economists and progressives who say that demanding the CBO to make expansive and unsupported predictions about the possible macroeconomic implications of new laws is akin to “cooking the books” and a proven failure when it comes to obtaining accurate, unbiased analysis on behalf of the American people.

Voicing objection ahead of the rule change on Tuesday, Rep. Chris Van Hollen (D-Maryland) and Rep. Louise Slaughter (D-NY) wrote an op-ed in Politico in which they argued that recent decades have clearly shown that the GOP’s “trickle down” economic policies have failed. “But instead of changing their approach to budgeting,” the pair wrote, “Republicans want to change the evidence.” They continued:

It may be tempting to dismiss this change as just an accounting issue. But they are rigging the rules in favor of windfall tax breaks to the very wealthy and big corporations who can hire high-priced, well-funded lobbyists—once again choosing to leave behind working families. Their plan would further distort the nation’s fiscal outlook by applying this scoring model only to tax cuts—not the economic impact of investments in education, healthcare, infrastructure, and other areas. That means that the value of tax cuts to the economy would be exaggerated, and the value of investments in the middle class would be undercut.

Though the Senate has yet to vote on new rules for its new session, expectations are that it will impose matching rules on the CBO and the tax committee. In a statement released just ahead of the rule change in the House, Sen. Bernie Sanders (I-Vt.) called the move a dangerous “gimmick” and vowed to fight the effort in the Senate.

“They call it ‘dynamic scoring.’ In fact, it’s a gimmick to help justify more tax cuts for the wealthy and profitable corporations. It’s what the first President Bush called voodoo economics—and he was right,” Sanders said. “The purpose of dynamic scoring is to conceal—not reveal—how Republican policies will affect the economy.”

As former Secretary of Labor and professor of public policy at UC Berkeley Robert Reich explained recently:

Dynamic scoring is the magical-mystery math Republicans have been pushing since they came up with supply-side “trickle-down” economics.

It’s based on the belief that cutting taxes unleashes economic growth and thereby produces additional government revenue. Supposedly the added revenue more than makes up for what’s lost when Congress hands out the tax cuts.

Dynamic scoring would make it easier to enact tax cuts for the wealthy and corporations, because the tax cuts wouldn’t look as if they increased the budget deficit. […]

Few economic theories have been as thoroughly tested in the real world as supply-side economics, and so notoriously failed.

In a recent op-ed for the New York Times voicing his opposition to dynamic scoring, Edward D. Kleinbard, a law professor at the University of Southern California and a former chief of staff of the JCT, said the Republican Party’s interest in the controversial model “is not the result of a million-economist march on Washington,” but rather, “comes from political factions convinced that tax cuts are the panacea for all economic ills.” The GOP, he continued, will “use dynamic scoring to justify a tax cut that, under conventional score-keeping, loses revenue.”

Sen. Sanders, however, says you don’t need a new measuring stick to show what happens when you cut taxes for the wealthy and powerful. “What history shows,” Sanders said, “is that when you give tax breaks to the rich and large corporations, the rich get richer, corporate profits climb and the federal deficit soars. In these difficult times, we need realistic economic projections, not discredited theories, not voodoo economics.”

Funding Bill Passes; Wall Street Wins; “Kind of Compromise” Obama Loves

‘This bill allows too-big-to-fail banks to make the same risky bets on derivatives that led to the largest taxpayer bailout in history and nearly destroyed the economy,’ argued Bernie Sanders

By Deirdre Fulton
December 12, 2014
Common Dreams, December 11, 2014

 

Speaker of the House John Boehner (R-Ohio) speaking to reporters on Thursday December 11, 2014. (Image: C-SPAN)

 

Update (9:53 PM EST):

The Republican-controlled U.S. House of Representatives passed a controversial spending bill late on Thursday night with a final vote of 219 to 206.

139 Democrats opposed the bill because, as the Huffington Post reports, they “were bitterly opposed to two attached riders that would whittle away at campaign finance rules and roll back provisions in the Dodd Frank Wall Street reform act designed to curb the risky trading at the heart of the 2008 financial crisis.”

The additional ‘Nay’ votes came from 67 Republicans whose opposition centered around their objection to funding contained in the bill that would go towards immigration reform measures recently put forth by the Obama administration.

In a statement opposing the bill ahead of the final vote, Minority Leader Nancy Pelosi, condemned the contents of the rider that will lift the regulations on derivatives trading, saying “This is ransom, this is blackmail. We don’t get a bill unless Wall Street gets its taxpayer-funded coverage.”

Pelosi said the amendment in question, which was literally written by lobbyists with Citigroup (see below), brings back financial services regulation “back to the same old Republican formula: privatize the gain, nationalize the risk.  You succeed, it’s in your pocket.  You fail, the taxpayer pays the bill.  It’s just not right.”

As the Washington Post reported just ahead of the final vote, “The provision was so important to the profits at [the nation’s biggest banks] that J.P.Morgan’s chief executive Jamie Dimon himself telephoned individual lawmakers to urge them to vote for it, according to a person familiar with the effort.”

Though progressive lawmakers, including Sens. Elizabeth Warren and Bernie Sanders, put forth spirited arguments against the nefarious provisions in the bill which they described as “giveaways” to Wall Street financiers and the wealthiest Americans, White House spokesperson John Earnest appeared on MSNBC and championed passage of the bill, saying the funding legislation was “the kind of compromise that [President Obama has] been seeking from Republicans for years now.”

According to Agence France-Presse, the bill’s passage came after a “bruising day of arm-twisting by the White House” directed at Democrats who opposed the bill.

Negative reactions from progressives on Twitter ensued:

Find the complete roll call here.

Earlier:

Despite enthusiastic backing from the White House, the $1.1 trillion government spending bill that opponents have described as “a Wall Street giveaway” is on thin ice on Thursday, facing strong opposition from progressive lawmakers and watchdog groups.

According to The Hill, the bill’s prospects “appeared to be teetering Thursday after House Democratic Leader Nancy Pelosi (Calif.) announced her opposition and the package narrowly survived a procedural vote.”

The House went into recess shortly after 2 p.m. after the debate on the bill had concluded, “something that could signal GOP leaders aren’t sure they have the votes necessary to pass the bill,” The Hill reported. “During a debate on a border measure last summer, Republicans also went into recess and then pulled the bill from consideration. But GOP aides insisted on Thursday the spending bill would go forward.”

At the center of the dispute is a provision, inserted at the last minute by Congressional Republicans, that would relax the regulation of investments known as derivatives. Democrats have demanded that the provision be removed, arguing that would weaken protections that keep the U.S. economy safe, allow big banks gamble with depositors’ federally insured money, and increase the likelihood that floundering banks would get another taxpayer bailout.

While White House press secretary Josh Earnest called the bill “a compromise” that “does fulfill some of the many of the top line priorities that the president himself has long identified,” opponents claim the bill was “literally written by Citigroup lobbyists,” as Senator Elizabeth Warren (D-Mass.) wrote on her website.

On the Senate floor on Wednesday, Warren chided her fellow lawmakers: “Who do you work for, Wall Street or the American people?” she asked. “Nobody sent us here to stand up for Citigroup. It is time for all of us to stand up and fight.”

In remarks he shared with The Hill, Senator Bernie Sanders (I-Vt.) echoed Warren’s rallying cry.

“Instead of cracking down on Wall Street CEOs who plunged the country into a terrible recession, this bill allows too-big-to-fail banks to make the same risky bets on derivatives that led to the largest taxpayer bailout in history and nearly destroyed the economy,” he said.

It’s no wonder Warren referred to the bill as a giveaway “for the rich and powerful,” declared Mary Bottari, director of the Center for Media and Democracy.

Bottari wrote:

The measure is backed not just by Citi, but by all the too-big-to-fail banks who want to continue business as usual, including JP Morgan Chase, which lost a whopping $7 billion recently in risky derivatives trades. FDIC’s Vice Chair Thomas Heonig, a Republican, explains the real reason the banks want the deal: “Most of these firms have broker-dealer affiliates where they can place these activities, but these affiliates are not as richly subsidized.” In other words, the banks could make a lot more money if they can use taxpayer-backed funds to make risky bets in the derivatives markets.

Marcus Stanley, policy director for nonprofit consumer watchdog group Americans for Financial Reform, puts it more simply: “The bill restores the public subsidy to exotic Wall Street activities.”

This progressive roadblock—the Washington Post described it a “liberal Democrats’ rebellion”—could prove problematic for the GOP, which needs a handful of Democratic votes to make up for members of its own party who oppose the spending package because it does not do more to curtail President Obama’s executive actions on immigration.

The Senate is waiting for the House to take action on a funding measure before determining its own next steps, though it is expected to take up the bill on Friday.

A procedural vote earlier Thursday to advance debate on the spending package was narrowly approved in a 214-212 vote—another sign the bill is on shaky ground.

Buried Within Omnibus Bill, a ‘Long-Term Blank Check for War Spending’

Analysts warn that “emergency” war spending fund, which was supposed to be temporary, has become permanent fixture that inflates Pentagon’s budget

by Sarah Lazare
December 12, 21014
Common Dreams

 

army_1.jpg

A U.S. Army helicopter taking off from Forward Operating Base Shindand, Afghanistan, Oct. 3, 2012. (Photo: DoD/public domain)

 

The government funding bill that narrowly passed the House of Representatives on Thursday has been widely criticized, including from within Congress, as a give-away to Wall Street. However, its 1,600 pages raise numerous other red flags for activists and analysts, including a bloated military budget and what journalist Julia Harte calls “a long-term blank check for ‘war’ spending.”

The bill approves $554 billion overall in Pentagon spending—in keeping with the trajectory of a country that spends more on the military than the next 11 countries combined. As Dave Gilson points out in Mother Jones, this sum means that total Pentagon funding during 2015 is “close to what it got during the height of the Iraq War” and “close to its highest level since World War II.”

When this sum is broken down, its sources raise further concerns, say analysts.

Buried within the budget is $64 billion in military funding from what is called the Overseas Contingency Operations. Established in 2001 under a different title, the OCO was supposed to be for “temporary” emergencies relating to the U.S. wars in Iraq and Afghanistan. However, it has become a permanent, and seemingly bottomless, source of funding for war. Even President Obama noticed this in 2008, when he issued the campaign promise to reign in abuse of emergency war spending.

As Harte writes for the Center for Public Integrity, “The OCO budget isn’t subject to spending limits that cap the rest of the defense budget for the next seven years; it’s often omitted altogether from tallies of how much the military spends each year; and as an ’emergency’ fund, it’s subject to much less scrutiny than other military spending requests.”

Furthermore, Lindsay Koshgarian points out for National Priorities Project, included within the bill is a “spending spree for defense contractors,” which includes $479 million for F-35s and war ships. In addition, the bill green-lights $5 billion for the expanding U.S.-led war in Iraq and Syria, despite the fact that that military operation still has not been approved—or even subject to real debate—in Congress.