Expert Blasts GOP's Economic Freedom Act

By Rob Sanna - Talk Radio News

Economic expert at Citizens for Tax Justice Steven Wamoff said Tuesday that the Republicans’ Economic Freedom Act, informally know as their jobs plan, would be extraordinarily expensive and only provide temprary relief to middle-class Americans. 

The plan permanently eliminates income taxes on capital gains, which provides a huge windfall to wealthy people who rely on return on their investment for income. It also erases the federal tax on property transferred after a person dies via a will.

Speaking at the Center for American Progress, Wamoff said the plan is “regressive” and that it cuts payroll taxes in half for one year, the only portion of the bill which would benefit the middle class and it is a short-lived provision.

Wamoff offered harsh criticism of the right-leaning legislation and said America would be “spinning its wheels if a bill like this were passed.”

He argued that the plan cuts 75% of corporate income taxes by allowing businesses to immediately write off purchases and reduces the regular corporate tax rate from 35% to 12.5%.

All of these changes in the tax code would cost about $7 trillion over 10 years, and Wamoff said if the Bush tax cuts are made permanent, the total cost would be closer to $10 trillion.

House Majority Leader Steny Hoyer (D-Md.) described the plan as “more of the Bush policies warmed over.”

“Americans don’t want to go back [and] they don’t want to return to the failed policies of the Bush administration,” Hoyer said. “They want to go forward, and very frankly we think the progess we have been making, and which we need to build on, are what the American public are going to vote on in November.”

OMB Director Remains Cautious Of Fragile Economy

By Rob Sanna- Talk Radio News

Peter Orszag made his last public address as Director of the Office of Management and Budget Wednesday and lauded policies that have helped the economy begin to recover. However, he believes that the economy is far from fixed.

“We are back from the brink, but not out of the woods,” Orszag said. “The most pressing danger we now face is unacceptably weak growth and persistent unemployment, rather than outright economic collapse, more needs to be done.”

According to Orszag, the deficit is predicted to drop from of 9.2% of GDP to 5% GDP by 2015, which is the fastest deficit reduction since the end of World War II.

Orszag touted the Health Care Act and said it will drive down health care costs which will help the status of a the country’s struggling economy. In addition to lowering health care costs, the OMB Director says government spending is being reduced through cutting outdated or inefficient programs.

Orszag said that critiques against a rising defit are ill informed. Orszag argued that radically reducing the deficit would hinder the progress of an already weakened economy and job market.

“It would be foolish to dramatically reduce the deficit immediately because that would choke off the economic recovery before it had a chance to develop adequately, but it would be equally foolish not to reduce the deficit significantly by 2015, because it would seriously imperil economic growth at that point”

Bernanke Says Economy Is Stabilizing, But Unemployment Rate Still Rising

By Mariko Lamb - Talk Radio News Service

The pace of economic decline has shown signs of gradual stabilization since April, but the labor market continues to weaken, said Federal Reserve Board Chairman Ben Bernanke during testimony before the House Committee on Financial Services Tuesday.

“Many of the improvements in financial conditions can be traced, in part, to policy actions taken by the Federal Reserve to encourage the flow of credit,” he said. Federal Reserve recovery programs such as the Term Asset-Backed Securities Loan Facility (TALF) and the Supervisory Capital Assessment Program (SCAP), both implemented this year, have restarted classes of small business and consumer securitization markets, increased investor confidence in the U.S. banking system, and raised equity in public markets.

Despite better conditions in financial markets and optimistic economic prospects, the unemployment rate continues to rise. “Although the unemployment rate is projected to peak at the end of this year, the projected declines in 2010 and 2011 would still leave unemployment well above FOMC participants’ views of the longer-run sustainable rate,” Bernanke said.

Further Federal Reserve and Reserve Bank projections indicate “subdued” inflation over the next two years, a slight increase in output at the end of this year, and a gradual recovery starting in 2010 with some acceleration in 2011.

To quell GOP committee members’ concerns about the Federal Reserve’s extensive intervention in monetary policy, Bernanke said, “The extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed.”

Bernanke emphasized that the Federal Reserve is a non-partisan, independent organization and does not get involved in details of specific policy programs such as healthcare; however, he urged Congress to “think about the implications of the federal budget and make sure that we have a trajectory that will be sustainable for the medium term.”

A Futuristic Grid and Fossil Gas are Energy’s New Pillars

Coffee Brown University of New Mexico, for Talk Radio News Service

During two energy conferences in Washington, DC, Secretary of Energy Dr. Steven Chu said that a new, expanded, robust, and smart electric grid is the big ticket item for his department in the just-signed stimulus bill (American Recovery and Reinvestment Act).

We are moving away, he said from locally produced power in pursuit of alternative energies, such as wind and solar, which are favored by geography in sparsely populated areas. As energy is produced in a fluctuating pattern due to local weather, and then sent farther away, a computerized grid which can direct, even out, monitor and store power will be needed. This coordination will extend even to homes, where fluctuations in use or peak draws can be managed to limit brown- and black-outs. he described circadian pricing, rewarding users who shift usage away from peak hours, and buy-back credits for homes which actually produce power as examples of smart distribution at the home level.

Chu noted that the new grid could be a target, so robust design was a security priority.
While wind power is as high as 20 percent in some areas, it is only three percent of overall production, and will need to mature and expand over a decade or more to compete on a cost-per-kilowatt basis.

Chu has made a priority of streamlining funding of shovel-ready projects, which were facing delays of up to two years for approval.

At the second conference, chaired by Senate Majority Leader Harry Reid, and attended by entrepreneur and hedge fund manager T.Boone Pickens, the question of new regulatory agencies came up, as power distribution became less regional and more interconnected. Reid said that he thought it could be handled administratively.

Pickens said that there are vast reserves of natural gas at several fields in the U.S., far more than would be needed to bridge the gap to non-carbon pumping energy production. Trucks, he said, can never run on batteries but can easily be converted from gasoline to natural gas, which is 30 percent cleaner and would create many American jobs and businesses.

Chu concluded by saying that carbon capture and climate change are important topics that will be addressed in later stages of the program.

Pelosi pushes for economic recovery package

Speaker of the House Nancy Pelosi (D-Calif.) touched upon the plan for an economic recovery package and explained how it will be different from Roosevelt's New Deal.

"This is not a 1930s public works project: this is a broad band modernization of the grid initiative for the future. The only thing it has in common with the thirties is the bold and persistent experimentation of that era, the entrepreneurial spirit," said Pelosi during her final press conference for the 110th Congress.

While the Speaker did not say for certain the cost of the package, she did allude to a recent meeting between the Democratic Caucus and a series of economists, including McCain economic advisor Mark Zandi, who all agreed that the intensifying economic crisis called for a robust stimulus package.

"Mark talked about 600 billion dollars … 400 billion for investments in infrastructure [and aid to the States] and 200 billion in tax cuts."

Pelosi said that Democratic leadership in Congress has been communicating with the President elect, and is confident that they will arrive upon a consensus.

The Speaker also discussed the auto bailout and reaffirmed her view that Troubled Assets Relief Program (TARP) funds should be used to help the big 3 auto manufacturers. While the White House has been reluctant to use these funds, Pelosi believes the administration will not allow the companies to go bankrupt following Congress' failure to pass legislation supporting the big 3.

As for the rest of TARP funds, Pelosi said that she has been working with Rep. Barney Frank (D-Mass.) to create legislation that would only give the Treasury Department the second half of TARP funds when the provisions of the initial legislation, namely the requirement to provide aid to those suffering from the housing crisis, are met.

"It was very clearly spelled out in the initial legislation that funds would be used for mortgage foreclosure forbearance. As you recall, there were no votes to pass this legislation … and it was only until we intensified the provisions that related to keeping people in their homes that this legislation even passed the House of Representatives," said Pelosi.

"It has been totally ignored by the administration. Absolutely nothing has been done to respect that part of the legislation, which is the only part of the legislation that had support in the Congress and enabled it to pass."