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Supercommittee Failure and Stimulus

November 22, 2011 - by Donny Shaw

While the failure of the supercommittee may be a good thing for long-term deficit reduction, it's not great for what Congress should really be working on -- supporting the economic recovery in the near term. There was some hope that if the supercommittee reached a deal, it would include an extension of some of the fiscal stimulus measures that are set to expire at the end of December. With no deal, the route to sustaining these measures is more difficult, and that threatens the small gains in employment we've seen in recent months.

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Supercommittee to Admit Failure

November 21, 2011 - by Donny Shaw

There was never any reason to think that giving and inordinate amount of power to a subset of Congress split between the two parties would somehow solve the partisan dispute over whether or not to raise taxes. So it's not surprising to read that with just a few days left before their deadline, discussions have turned to how to announce their failure:

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Here's an idea for how Congress and the supercommittee can overcome gridlock and reduce deficits: stop paying so much attention to pundits and corporate lobbyisyts, and, instead, start listening to the people they were elected to serve. Unlike the hardened and polarized Washington establishemnt, the public-at-large has broad agreement on several proposals for handling budget deficits.

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Checking in on the Supercommittee

October 20, 2011 - by Donny Shaw

When Congress created the deficit supercommittee they attached a trigger to it that would automatically enact large cuts in defense spending if they failed to vote out a proposal. The idea was that nobody in Congress wants to make major cuts to defense so the threat would compel the supercommittee to accomplish the kind of deficit-reduction compromise that the full House and Senate were unable to achieve. More than halfway through the supercommittee's tenure, however, the only progress being made involves finding a way out of the trigger.

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On jobs, Congress is probably not going to do anything. On deficits, however, expect Congress to act. It's an unfortunate situation. Without congressional action on jobs, the unemployment rate is expected to stay around 9% -- or even get worse -- until 2014 or so. But on deficits, if Congres doesn't act the problem will basically take care of itself. As the CBO explained recently, under current law, annual deficits are on track to shrink from where they are today (8% of GDP) to about 1% of GDP by 2015. That's because Congress' of the past created policies with expiration dates and controls that were designed to prevent them from being perpetual drains on the budget. For example, the 2003 Bush tax cuts were passed under special rules that make it easier for the majority party to overcome minority opposition for controversial legislation, but, in exchange, require the legislation to expire after 10 years. Other examples include the Alternative Minimum Tax and the formula the government uses to reimburse doctors under Medicare, both of which are "patched" by Congress year after year so that they don't end up raising taxes too much or reducing doctor pay.

The problem, however, is that doing nothing and letting these sunsets and budget controls do their job is that it would mean more of the burden would get shifted to people and interests groups with money and political influence. For that reason, Congress is not likely to keep their hands off.

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The deficit reduction supercommittee that was created by the debt ceiling bill is going to have an extraordinary amount of power. All areas of federal spending and revenues will be on the table when they meet, and whatever proposal they come up with will be guaranteed a vote in both chambers of Congress with no amendments and no filibusters allowed. Now that the 12 supercommittee members have been named, here's a look at some of their key votes on budget, spending and tax legislation over the past few years, as well as some information on their party loyalty.

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House Passes Debt Ceiling Bill

July 29, 2011 - by Donny Shaw

After failing Thursday night, Speaker John Boehner [R, OH-8] brought his debt ceiling bill back to the floor Friday afternoon with an amendment appealing to far-right Republicans, and passed it. The final vote was 218-210, with zero Democrats voting in favor and 22 Republicans voting "no." The bill now goes to the Senate where it is expected to be rejected later this evening. Click through and the read the full post for what happens next with the debt debate. 

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After five hours of twisting arms and trying to persuade conservatives into voting "yes" with offerings of pizza, at 10 p.m. Thursday evening House Speaker John Boehner [R, OH-8] pulled his debt ceiling bill from the House floor. The bill has been sent back to the Rules Committee for tweaks and will most likely be brought to the floor again on Friday for a second vote attempt. In its current form the bill does not have the 216 votes it needs to pass.

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The Boehner Plan

July 26, 2011 - by Donny Shaw

As usual, when Congress does something that's actually important, they do it the least transparent way possible. This time around it's the Boehner debt plan, which calls for trillions in cuts to social spending and a "super Congress" for reforming taxes and entitlements in exchange for allowing President Obama to raise the debt ceiling through the end of the year. It's a plan that was negotiated 100% behind closed doors, and it's not being introduced through the regular legislative order, thereby hindering the public's ability to read it and contact their elected officials with feedback.

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The "Gang of Six" Plan

July 20, 2011 - by Donny Shaw

It's still unclear just how viable the "Gang of Six" deficit and debt package is. On a logistical level, Senate Majority Leader Sen. Harry Reid [D, NV] said yesterday that the lack of actual legislative language and an official budget score from the CBO means there might not be enough time to get it through Congress before the August 2th deadline. On a political level, it's unlikely the House would bite. It looks to be basically similar to the Biden plan that House Republican leaders rejected several weeks ago because of the level of revenue raisers involved. Still, there are reaons to take it seriously. It is bipartisan to some extent, public pressure to strike a deal is increasing as the deadline approaches, and ratings agencies are now threatening to downgrade U.S. debt if Congress goes with the other potential compromise on the table, Reid-McConnell. Those factors make it absolutely worth taking a close look.

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The McConnell Debt Plan

July 14, 2011 - by Donny Shaw

At this point we're pretty much all aware that raising the debt ceiling is nothing new. Democrats do it and Republicans do it. It's been done 9 times in the past decade, and corralling the votes to pass the increases each time has been treated as a burden of the majority. The unique problem this time around is that Congress is split between the parties and it's not clear who the majority is. But regardless of the politics of the situation, it's something that pretty much everyone in Congress agrees must be done. And that's the reality that Senate Minority Leader Micth McConnell's [R, KY] plan, which seems to be the leading proposal right now, reflects.

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Coburn vs. Big Corn

June 14, 2011 - by Donny Shaw

Sen. Tom Coburn [R, OK] has stuck his neck out and is forcing a vote today on an amendment (identical to S.871) to repeal ethanol tax subsidies. Ethanol subsidies cost the government atlas $5 billion per year and they are opposed by groups like the Sierra Club and Clean Water Action on environmental grounds and by groups like Koch Industries on grounds that they distort energy market forces. On the other side, however, are Big Ag corporations like Monsanto, whose Roundup-resistant-corn-seed sales have skyrocketed under the subsidies, and they seem to be winning.

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Senate Moves to Bill Repealing Oil Subsidies

May 17, 2011 - by Donny Shaw

The Senate is set to begin debate this afternoon on the Close Big Oil Tax Loopholes Act. The bill repeal five tax breaks that Congress has enacted over the years to encourage oil companies to drill off of America's shorelines, and it would close a loophole that U.S. oil companies have been using to disguise foreign royalty payments as taxes and deduct them from their domestic tax bill. All savings would be used to balance the budget and pay down the debt. Despite expert analysis showing that the bill would not increase gas prices and may actually increase domestic oil production, Republicans are planning to vote against it. 

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Balance the Budget, But How?

April 28, 2011 - by Donny Shaw

Should taxes be on the table for balancing the budget, or should we look at spending cuts only? This is they key partisan debate right now in Congress, and it's going to come to a head in the next few weeks when the House and Senate vote on the debt limit and, likely, some kind of structural enforcement mechanism for bringing annual deficits down to zero.

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