Orszag Backs Bush Tax Cuts Extension

Former Director of the Office of Management and Budget Peter Orzag said Tuesday that Congress should work towards extending the Bush tax cuts for two years, at which point he said they end, permanently.

In his first New York Times column, Orszag said he believes the best way to handle the country’s short term jobs problem and a growing deficit for the long term is to temporarily extend the tax cuts set to expire this year.

“In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether,” Orzag wrote.

The former OMB Director also said he believes that higher taxes would reduce consumer spending, severely affecting the demand for products across the boards. While permanently extending these tax cuts would increase the deficit by nearly $3 trillion over the next ten years, Orszag argued that the tax cuts are simply not affordable and, by letting them expire, an already stalled jobs market will be dealt a heavy blow, worsening its status.

Orszag said this is not a time for partisan politics, but rather a time where Congress and the administration need to work together to solve the “One Nation, Two Deficits” problem facing the country.

“Both approaches lock us into a budget scenario out of which there are few politically plausible routes of escape,” Orszag said. “Senate Democrats and Republicans almost never come together anymore, [and] this month, they should fight the dual deficits rather than each other. Let’s continue the tax cuts for two years but end them for good in 2013.”

Senate Democrats Blame Stagnant Economy On Stalled Congress

Robert Hune-Kalter - Talk Radio News Service

A duo of Senate Democrats pointed their fingers the Republican party Thursday and accused Senate Republicans of stalling an agenda aimed at boosting the economy.

Sen. Robert Menendez (D-N.J.) posed a simple question to voters heading into the summer recess.

“Whose side are you on?” he asked.

Menendez asserted that more could have been accomplished this year had Republicans not repeatedly stalled legislation and denied the economy of countless beneficial provisions.

“As [Democrats] try to give those small businesses the tax breaks and incentives to be able to grow this economy and hire more Americans, Republicans, every step of the way, are impeding our ability to create those jobs,” he said.

Sen. Sheldon Whitehouse (D-R.I.) said that it is frustrating to move legislation in the Senate because negotiations get delayed and are not made in good faith.

Menendez agreed, and said Senate Democrats will try to pass energy legislation, repeal tax breaks and help small businesses when the Senate reconvenes in September.

“What we want at the end of the day is to help middle-class families in this country get over this difficult time and realize their hopes and dreams and aspirations,” he said.

However, the lawmakers’ ambitious remarks were met immediately with skepticism.

“Senators Menendez and Whitehouse have imposed an immeasurable burden on small businesses with mountains of new spending and debt and countless new tax hikes under the failed Pelosi-Reid economic agenda,” said Parish Braden, a spokesman for the Republican National Committee (RNC).

In fact, 83,000 total jobs have dissapeared in Rhode Island and New Jersey since one of the Democrats’ biggest legislative achievements - the American Recovery and Reinvestment Act - was passed in early 2009. Both states have also seen their unemployment rates rise considerably in that time.

“Democrat leaders pledge to support small businesses while at the same time are planning yet another job killing tax hike on the same businesses,” Braden added.

Super Tuesday in a drowning nation

By Ellen Ratner

Twenty-four hour campaigning, 7,000 person rallies, political ads filling every TV and radio spot, political pundits spewing their latest guesstimates … overall, there is a lot of noise and promises, but no one is dealing with two of the biggest issues facing America – debt and health care crises.

In fairness, Ron Paul has attempted to elevate the debt crisis to the national scene, but he has been sidelined. And yes, the Democrats are talking about health care for all, and even Mitt Romney is touting his Massachusetts health care plan, but neither party is taking a hard look at the facts with debt or health care.

According to Demos and the Center for Responsible Lending, credit card debt has almost tripled since 1989 and risen 31 percent in the last three years. Many people are using credit cards as safety nets instead of relying on savings. Low and middle-income households have an average $8,650 in credit-card debt. Most people with this amount of debt have carried it for more than one year. Almost half of all card debtors have used their credit cards to pay for automobile repair. Not just paying the minimums, most people in this study paid $700 last month and are making a median payment of $300 per month. This kind of debt for so many Americans is clearly unsustainable.

On the health care front, the issue has been focused on the ability of people to purchase health insurance policies. Mitt Romney worked with the Democrats in his state to fine people who did not buy health insurance policies and to underwrite part of the costs for people who could not afford it. Hillary Clinton and Barack Obama each have plans to get the majority of Americans to be able to purchase health insurance. None of the candidates are discussing the real problem – the cost of health care, whether it is paid by insurance or the government, is going to rise astronomically. Insurance is not going to pay these rising costs because they will go broke doing so. Health care is now almost 17 percent of our GDP, up from 13 percent in 2000, and it is rising about a percentage point a year.

You do not have to be a Nobel laureate in economics to know that these numbers are unsustainable – health care will not be affordable to individuals or taxpayers as it takes a larger and larger chunk out of our overall economy.
Even though the candidates don't want to address these problems, there are solutions. First, on the credit crisis, we can provide real incentives for people to save by providing some kind of matching program in the same way that we are giving out treasury checks in the stimulus program. Congress can support legislation that would provide a tax break to those who save. Second, start making some deals with the credit card companies in the form of tax savings if they stop handing out easy credit and start reducing the monthly interest rates for people with high debt.

In addition, Demos and the Center for Responsible Lending recommend that credit card companies be required to disclose the overall cost of minimum payments and require meaningful underwriting standards so that credit card limits are not pushed beyond what they know can be paid for by the consumer.
With health care taking such a bite out of our GDP, the only solution is to turn the rising health technology costs into a plus on our national balance sheet. Other countries recognize our expertise. Johns Hopkins and the Cleveland Clinic are going to be managing hospitals in the United Arab Emirates. With our advances in equipment and other technology, there is no reason why we can't pay for our increasing health care bill by supporting research and exporting it. We have given tax breaks to tobacco companies to export their products, why not the same for health care innovators and providers?

The above are just a few solutions to major economic problems but nary a word from the major presidential hopefuls. You have to dig deep on their websites to find any in-depth thinking and forget about policy specifics. They are convinced that the American people don't want to hear anything but sound bites. If you don't believe that, watch one of the debates. They simply respond to one generality with another unless it's about "who" said or did "what" "when," and then the exchange becomes so sophomoric, as it did with Sen. McCain attacking Romney last week, that the other candidates have to redirect the focus to real issues when moderator Anderson Cooper lost control.

President Bush is no different than the candidates. He prefers to fly in the stratosphere on issues versus rolling up his sleeves and addressing root causes. He signed an executive order to put together a panel on increasing financial literacy for the greater population; that is great, but it hardly helps people caught in the vise now. Americans aren't dumb; they want real talk about real solutions. Too bad Super Tuesday won't move the candidates to enter into the discussion.