Senate Passes Stimulus, conference debate begins.

[SirNitram]

61-37. Almost entirely party-line. Sen. Gregg recused himself.

Why 60? Not a filibuster. Under the rules adopted by the Dems, all deficit spending requires a supermajority to waive budgetary rules.

Obama, stumping for the bill in Florida, quipped thus:

Because they knew I was coming down to Ft. Myers. They didn’t want to mess with people in Ft. Myers. They said, we don’t want folks in Ft. Myers mad at us!

Onto more serious questions, the Conference members will soon be selected. Obama has stated he wants to add back education dollars slashed by the Senate. The House Blue Dog caucus is sulking and insisting more tax cuts. And no one invites the Progressive Caucus anywhere so we have NO idea where they are on this. Possibly passing around medical marijuana in the back of the Progressmobile.

[Derek Thunder]

Speaking of evil things other than valentine's day, how about the DeMint amendment (quoted from LF):

During the stimulus debate, Sen. Jim DeMint (R-S.C.) proposed that we get rid of all of the government spending and replace it with the following


How it works:
1) Defuse the 2011 tax bomb: Stop tax increases set to hit the economy in 2011.
o Permanently repeal the alternative minimum tax once and for all;
o Permanently keep the capital gains and dividends taxes at 15 percent;
o Permanently kill the Death Tax for estates under $5 million, and cut the tax rate to 15 percent for those above;
o Permanently extend the $1,000-per-child tax credit;
o Permanently repeal the marriage tax penalty;
o Permanently simplify itemized deductions to include only home mortgage interest and charitable contributions.
2) Long term, broad based tax cuts for American families and businesses.
o Lower top marginal income rates – the one paid by most of the small businesses that create new jobs – from 35 percent to 25 percent.
o Simplify the tax code to include only two other brackets, 15 and 10 percent.
o Lower corporate tax rate as well, from 35 percent to 25 percent. The U.S. corporate tax rate is second highest among all industrialized nations, driving investment and jobs overseas. Lowering this key rate will unlock trillions of dollars to be invested in America instead of abroad.
o This is not only good economic policy, but a matter of fairness. No American family should be forced to pay the federal government more than 25 percent of the fruits of their hard labor.

36 of 41 republican senators supported this


That looks to be the biggest tax giveaway to the rich, ever. Krugman estimated this would cost 3.1 trillion.

if this does not end up in a political ad in 2010 i will be amazed

[SirNitram]

The stupid ignites in the House. During the debate, to file a motion, to begin selecting members of the conference for markup.

Rep. Ted Poe (R-TX-02):

We are being told by the Administration that unless America plays the stimulus package game, the country may never recover. Once again, the politics of fear and intimidation are on Capitol Hill.

I detect some irony.

Rep. Tom Latham (R-IA-04):

It's not only what this bill does, as far as spending over a trillion dollars, it is some provisions in here which make dramatic changes in the way our government operates. When we look at reversing welfare reform, the one great thing back from the Clinton administration. This is going to turn that on its head and allow people to stay on welfare for as long as they like. It also -- I think, is very, very serious -- when we talk about a major change in health care reform. That this is going to put the government in charge of rationing health care, standing between you and your doctor.

...

We had a proposal brought forward that was totally ignored. The idea of creating over 6 million new jobs at half the cost of what this bill costs. And it's been totally thrown aside. This would have put money immediately into people's pockets, and have them spend, have them get the economy going and rolling again. And that's exactly what we need to do, but those provisions -- we've never had an opportunity to put those into this bill.

[...]

This is something that at least there should be some debate about. Someone should have a chance to offer amendments to change these bills.

Of course, any amendments added now, mean you have to start all over again, because the two conference markups won't match.

And what amendment was he proposing?

The Republican replacement one, that was all tax cuts!

[SirNitram]

Speaking of evil things other than valentine's day, how about the DeMint amendment (quoted from LF):

Brought it up, but yes, the DeMint amendment is so full of fail it deserves a re-mocking.

[Derek Thunder]

Hahah, tell us what you really think...

This morning the Heritage Foundation, in conjunction with the Club for Growth, held a conference on the supposed stimulus bill. Here's what one of the speakers, CATO Economist Arnold Kling, had to say about the Democrat's economic plans:

"I think about the stimulus as an economist but I feel it as a father. Barack Obama is destroying my daughters future. It is like sitting there watching my house ransacked by a gang of thugs. That's how I feel, now back to how I think."

[SirNitram]

This IS the institute which trumpeted the 1.3 Trillion Bush tax cuts, and decreed all Republicans must stop Obama's healthcare plan because succeeding at insuring the majority will... GASP.. Be bad for Republicans.

[Derek Thunder]

True, but there's an additional racial element that, while not surprising, is incredibly troubling.

[rhoenix]

True, but there's an additional racial element that, while not surprising, is incredibly troubling.

Personally, I like how the GOP is showing off all its worst qualities to the American public right now. I hope they get more brazen about it, personally.

[Derek Thunder]

I don't want to fall into the hubris of Karl Rove's 'permanant majority' but it seems the the GOP almost wants to follow the Whig party into historical irrelevancy.

[rhoenix]

I don't want to fall into the hubris of Karl Rove's 'permanant majority' but it seems the the GOP almost wants to follow the Whig party into historical irrelevancy.

My problem is not with Republicans (of which I count the good, thinking Republicans I've met), but with neo-Conservatives, who almost appear to be the Confederate faction now, given their actions.

What I'm ultimately hoping for is that the Republicans will go back to their core values, back when the party had a heart, and a mind. I hear individual Republican voices here and there that sound sane, but most of the punditry boils down to "The government creates work, not jobs!" and other assorted inane indignantry.

[Derek Thunder]

"The government creates work, not jobs!" seems to have been the party line from 1980 to the present, one would have to reach back far indeed to find a sane republican party.

[SirNitram]

I don't want to fall into the hubris of Karl Rove's 'permanant majority' but it seems the the GOP almost wants to follow the Whig party into historical irrelevancy.

If the Republican party implodes, they will most likely ressurect at a later date. Even if they were scoured from the political map, flayed to dust under the gales of public opinion, the Dem party would simply split; they've practically already packaged an opposition party into their own numbers.

[frigidmagi]

I hope this isn't to much of a derailment here but...

Permanently repeal the marriage tax penalty;

Most of the stuff I was against but the above seemed like a good idea. I'm also okay with saying that under a million dollars you don't pay an estate tax, but I concede there's enough room for disagreement there to park a death star in. What's bad about not having a marriage tax?

I would back the all tax cut bit if I thought it would succeed, but it won't. If you gave me 2,000 dollars right now, I wouldn't run out and buy a bunch of new stuff. I would pay off debts and sit on the rest. That's not stimulating shit and I know that. I'm also pretty sure most people would do the same thus dooming an all tax cut spree.

one would have to reach back far indeed to find a sane republican party.

Theodore Roosevelt, we miss you.

[General Havoc]

I'd settle for Dwight Eisenhower.

[SirNitram]

I hope this isn't to much of a derailment here but...

Permanently repeal the marriage tax penalty;

Most of the stuff I was against but the above seemed like a good idea. I'm also okay with saying that under a million dollars you don't pay an estate tax, but I concede there's enough room for disagreement there to park a death star in. What's bad about not having a marriage tax?

I would back the all tax cut bit if I thought it would succeed, but it won't. If you gave me 2,000 dollars right now, I wouldn't run out and buy a bunch of new stuff. I would pay off debts and sit on the rest. That's not stimulating shit and I know that. I'm also pretty sure most people would do the same thus dooming an all tax cut spree.

The Marriage Tax Penalty is sufficiently rare and easily dealt with on the user-end that it's mostly a talking point. It only kicks in if a married couple both works, both makes approximately the same amount, and are high enough to start feeling income tax. The typical example is two people earning 50k a year. Now, the penalty will ONLY occour if they file jointly, not if they're 'married filing seperately'. Furthermore, the NATURE of the issue is that you'd have to either make some boondoggle of legal snafu to fix it, or you'd penalize all married couples with disparate incomes(The problem comes from the averaging method).

And that is the nature of the marriage tax penalty.

As for all-tax-cuts, I oppose them on mathematical grounds. They drain huge amounts of income(Often disguised in initial estimates, because of duration) from the government(Less for roads, fire departments, defense, research..), with very little return on investment(See the Moody's table). Those few tax changes with multipliers above .99 are, in my mind, quite welcome(They also seem to trend progressive, helped by the fact the poorer you are, the more likely you are to spend the extra cash, as opposed to wire it to the Cayman's.).

[General Havoc]

I disagree with Nitram, in that I support tax cuts on philosophical grounds. Even if we accept that our mathematical models are accurate (which I question), and that a given dollar will result in more "effective" use when spent by the government than by a private individual, it is, to me, not a question of "who will more efficiently spend that dollar", which is, even with the most accurate math, a completely subjective decision. Taxes (in my mind) exist to pay for things that are absolutely necessary to the maintenance of social order, national integrity, and the social safety net. A government can waste money just as easily as a banker can transfer his personal wealth to the Cayman Islands, indeed it can waste it easier, for a government generally, no matter the safeguards you build in, does not have the same personal stake in ensuring money spent is not wasted.

Now... being a rational human being, I accept that at this moment, tax cuts are not the answer. They are not a gilded cross one waves in the general direction of every economic disturbance, as the present-day Republicans would have us believe. Today, the answer is (probably) stimulus spending of the proper sort, and the return of taxes to their 1996 levels. That does not mean that tax cuts are always the answer, nor that they are usually the answer, nor of course are all tax cuts created equal. Tax cuts for the middle class (a feature of this program) are a different thing entirely than repealing the Capital Gains tax (which would be of no use right now).

However I generally believe that taxes should be maintained as low as they can be, for the largest segment of the population possible. Where that boundary lies exactly fluctuates and changes based on who is talking and what the situation is, but just because your math says raising taxes yields better rewards, does not mean we should do it.

[SirNitram]

Stimulus Compromise is being talked about. AP via Talking Points Memo.

Link

Highlights of a nearly $789 billion compromise version of President Barack Obama's economic recovery plan agreed to by Democrats and moderate Senate Republicans. Additional debt costs would add about $330 billion over 10 years. Many provisions expire in two years.

___

Spending

AID TO POOR AND UNEMPLOYED

_ $40 billion to provide extended unemployment benefits through Dec. 31, and increase them by $25 a week; $20 billion to increase food stamp benefits by 14 percent; $3 billion in temporary welfare payments.

DIRECT CASH PAYMENTS

_ $14 billion to give one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions.

INFRASTRUCTURE

_ $46 billion for transportation projects, including $27 billion for highway and bridge construction and repair; $8.4 billion for mass transit; $8 billion for construction of high-speed railways and $1.3 billion for Amtrak; $4.6 billion for the Army Corps of Engineers; $4 billion for public housing improvements; $6.4 billion for clean and drinking water projects; $7 billion to bring broadband Internet service to underserved areas.

HEALTH CARE

_ $21 billion to provide a 60 percent subsidy of health care insurance premiums for the unemployed under the COBRA program; $87 billion to help states with Medicaid; $19 billion to modernize health information technology systems; $10 billion for health research and construction of National Institutes of Health facilities.

STATE BLOCK GRANTS

_ $8 billion in aid to states to defray budget cuts.

ENERGY

_ About $50 billion for energy programs, focused chiefly on efficiency and renewable energy, including $5 billion to weatherize modest-income homes; $6.4 billion to clean up nuclear weapons production sites; $11 billion toward a so-called "smart electricity grid" to reduce waste; $13.9 billion to subsidize loans for renewable energy projects; $6.3 billion in state energy efficiency and clean energy grants; and $4.5 billion make federal buildings more energy efficient.

EDUCATION

_ $47 billion in state fiscal relief to prevent cuts in state aid to school districts, with great flexibility to use the funds for school modernization and repair; $26 billion to school districts to fund special education and the No Child Left Behind law for students in K-12; $17 billion to boost the maximum Pell Grant by $500 to $5,350; $2 billion for Head Start.

HOMELAND SECURITY

_ $2.8 billion for homeland security programs, including $1 billion for airport screening equipment.

LAW ENFORCEMENT

_ $4 billion in grants to state and local law enforcement to hire officers and purchase equipment.

___

Taxes

NEW TAX CREDIT

_ Approximately $115 billion for a $400 per-worker, $800 per-couple tax credits in 2009 and 2010. For the last half of 2009, workers could expect to see perhaps $13 a week less withheld from their paychecks starting around June. Millions of Americans who don't make enough money to pay federal income taxes could file returns next year and receive checks. Individuals making more than $75,000 and couples making more than $150,000 would receive reduced amounts.

ALTERNATIVE MINIMUM TAX

_ About $70 billion to spare about 24 million taxpayers from being hit with the alternative minimum tax in 2009. The change would save a family of four an average of $2,300. The tax was designed to make sure wealthy taxpayers can't use credits and deductions to avoid paying any taxes. But it was never indexed to inflation, so families making as little as $45,000 could get significant increases without the change. Congress addresses it each year, usually in the fall.

EXPANDED COLLEGE CREDIT

_ About $13 billion to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010. The credit is phased out for couples making more than $160,000.

HOMEBUYER CREDIT

_ $3.7 billion to repeal a requirement that a $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to August 31, unless the home is sold within three years.

BONUS DEPRECIATION

_ $5 billion to extend a provision allowing businesses buying equipment such as computers to speed up its depreciation through 2009.

AUTO SALES

_ $2.5 billion to makes sales tax on paid on new car purchases tax deductible.

Working class credit got cut a little, though I'm starting to think AMT might be better handled out of this. It's just adding the cost onto the bill, giving the opposition ammo on their(Frankly, phony) fiscal responsibility angle.

I am wondering why we're using this to build nuclear weapons though.

[General Havoc]

"Cleaning up nuclear weapons production sites" is not "building nuclear weapons".

[SirNitram]

"Cleaning up nuclear weapons production sites" is not "building nuclear weapons".

They're not enviromental problems(The EPA, a flashlight, and the DoE's ass are involved in the metaphor), so I'm guesstimating.

[General Havoc]

Are we certain they are not environmental problems? Or for that matter organizational problems, security problems, or maintenance problems? I'd rate any of the above more likely than building new nuclear weapons.

[SirNitram]

Are we certain they are not environmental problems? Or for that matter organizational problems, security problems, or maintenance problems? I'd rate any of the above more likely than building new nuclear weapons.

I am not certain of any of it, to be honest. Admittably, the idealogical rot of the past 8 years might've allowed any of those to become serious issues.

[SirNitram]

However I generally believe that taxes should be maintained as low as they can be, for the largest segment of the population possible.

This may surprise you, but I agree. The Working Class(And, with luck, the Middle Class will replace it as the majority) are a very smart place to pour tax cuts into. The economically optimal group to give tax holidays/rebates/cuts is the lowest rung in the economy(Thus mostly cutting things like Payroll taxes... Which Obama is doing), because the economic activity is immediate; they Buy Shit because it's needed. Money flows into the bottom of the economy, and by virtue of how the economy works, it flows up. It's not economic theory; it's how it was built. You buy something, the cashier gets paid, the management gets paid, the executives get paid, and the whole thing happens with the manufacturer as well. I think that's a bit more settled than Trickle-Down Economics.

A double-check of Moody's reinforces this. Payroll taxes are the taxes the majority all pays. A holiday of it creates 1.29 bucks of economic effect for every buck. Positive!

The smallest group you can lift taxes on is Corporations, and the two ways to drop theirs.. Accelerated Depreciation, and Corporate Tax Cuts, are .27 and .30 cents for each dollar.

So I'm all for tax holidays(Which is effectively timed, temporary tax cuts) for the majority. Sadly, we have people preaching those people 'don't pay taxes'.

[General Havoc]

I don't put much faith in those coefficients of yours Nitram as I don't know the math underlying them or trust the person who put them together. Moreover, there are secondary benefits to cutting taxes on small businesses, or even on large corporations. Pumping money into the government is an inefficient method of using it, save that it can be employed with the government in ways that it cannot with the private sector. Low corporate taxes tends to keep capital and investments happening domestically, reduces outsourcing and off-shoring, and permits large-scale business expansion, and thereby increases domestic payroll. I'm not saying it's as good as low middle and working class taxes, it's not, but there's more to recommend it than your coefficients suggest. There are many government programs I would see drastically cut in favor of lower corporate taxes.

[SirNitram]

These benefits are clearly not to the economy at large. The three times we gave the biggest breaks to corporations were Hoover. The highest tax bracket went from 73% to 25%. Then there was 1929, and the economy exploded.

Then there was Reagan, changing a period of 70-92% on the highest bracket and then suddenly 50%. Then Black Monday and the Recession of 1987 following a brief boom.

Then the second Bush Presidency. 29% to 25%. Result? Economic crash.

The periods of best economic growth? WWII: Top bracket at 88-94%.

Truman/Eisenhower: 81-92%.

Roosevelt's first two terms: Leaping from 25% to 63%, then again to 79%.

Some put Clinton in, but too much was bubbly.

I'm sure one could dispute Roosevelt's, but 58% growth between first term and entering the war is nothing to sneeze at.

THAT is why I don't buy, for one single second, talk about how corporate and top bracket tax cuts are good. All of these are simply matters of history, of facts plain and sitting there.

[General Havoc]

That's specious reasoning, and you know it. The 1929 stock market crash did not occur because the highest tax bracket shifted downwards. Neither did the recession of 1987, neither did the most recent explosion. That's like claiming that every time the Cubs win the National League Pennant, nuclear bombs are dropped on Japan.

The highest sustained economic growth period in this country was the POST-WWII years, a boom which lasted until 1973, before being dragged down not by tax cuts but by the first Oil crisis (and other factors). Reagan cut the maximum tax bracket in 1981, not 1987, changing a situation where inflation and unemployment were both at double digits (from the Carter years).

Did lower corporate taxes result in the Housing bubble? In the Credit Default Swap scams? Was that why AIG failed? Was that why property speculators drove up the price of real estate in my city? Did independent house flippers exist somehow because corporate taxes were too low? Were 2-and-28 Mortgages invented by people who had so much free time to make up new schemes due to their having reaped such favorable tax rewards? Did China decided to finance our debt because of our tax policies? Was the Dot-com crash (to go back a few years) because of low taxes? I'll remind you that it happened under Clinton.

The answer to every one of the above questions, incidentally, is "no".

The notion that low corporate taxes were responsible for these economic dislocations is among the most absurd things I've heard in a long while.