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Tag: double dip recession

Durbin Says American Jobs Act Can’t Pass Senate

Since his high profile September 8th address to Congress, President Obama has taken every available opportunity to implore legislators to pass the American Jobs Act. Economists from both sides of the aisle have argued that the bill would stave off a dreaded double-dip recession. The Congressional Budget Office gave a the bill a de facto endorsement. But despite all of this positive press, the bill appears to be far away from actually becoming law.

In an interview with Chicago radio station WLS-AM on Thursday, Illionis Senator Dick Durbin claimed that the Senate does not have the votes to pass the bill.

“The oil-producing state senators don’t like eliminating or reducing the subsidy for oil companies,” Durbin tells WLS Radio, “There are some senators who are up for election who say I’m never gonna vote for a tax increase while I’m up for election, even on the wealthiest people. So, we’re not gonna have 100% Democratic senators. That’s why it needs to be bi-partisan and I hope we can find some Republicans who will join us to make it happen.”

But so far, Durbin concedes Democrats don’t have the votes in the senate to pass it, “Not at the moment, I don’t think we do but, uh, we can work on it.”

If the American Jobs Act needs significant Republican support to pass, then it is in serious trouble. Congressional Republicans have spent the past three years doing everything possible to impede President Obama’s legislative agenda, and it’s hard to imagine the politically contentious American Jobs Act stopping that trend.

Ironically, failing to pass the American Jobs Act may actually benefit President Obama politically. It would give him the clearest example yet that Republicans are more interested in partisan squabbling than they are in economic recovery, which is sure to be a recurring theme of his re-election campaign. But it would be disastrous economically. If Congress once again fails to do anything to stimulate the economy, then it seems certain that unemployment will continue to rise; if they’re not careful, many Congressmen might soon join those looking for jobs.

Economists: Obama Plan Would Save At Least 250,000 Jobs

Bloomberg News surveyed a wide range of economists — many of whom work at Wall Street investment banks where the executives have flocked to donate to Mitt Romney’s presidential campaign — and they generally seem to agree that the Obama jobs plan (don’t call it a stimulus!) would help stave off a “double-dip” recession:

President Barack Obama’s $447 billion jobs plan would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year, according to economists surveyed by Bloomberg News.

The legislation, submitted to Congress this month, would increase gross domestic product by 0.6 percent next year and add or keep 275,000 workers on payrolls, the median estimates in the survey of 34 economists showed. The program would also lower the jobless rate by 0.2 percentage point in 2012, economists said.

Economists in the survey are less optimistic than Treasury Secretary Timothy F. Geithner, who has cited estimates for a 1.5 percent boost to gross domestic product. Even so, the program may bolster Obama’s re-election prospects by lowering a jobless rate that has stayed near 9 percent or more since April 2009.

That’s not to say the economic climate forecast looks sunny for Obama. Even if the bill miraculously passes a Republican Congress that has come out against to the tax cut portions of the plan (specifically, a payroll tax cut that would mostly spur lower-income people to buy), businesses might still be scared to hire. And while the right may blame regulations or taxes, there’s an even simpler explanation: What kind of company wants to expand when the federal government is constantly on the brink of shutdown because the House can’t pass regular spending bills, and the European banking system is still teetering on the verge of collapse?

The Balanced Budget Amendment: Good Politics, Bad Policy

Congressional Republicans are once again pushing for the enactment of a Balanced Budget Amendment. The Amendment, which was introduced by conservative Utah Senator Mike Lee, would require that revenues equal expenditures every year, and that they never exceed 18 percent of the gross domestic product. A two-thirds majority of Congress would be required to exceed those limits or to “levy a new tax or increase the rate of any tax.”

In a political environment where almost all spending has been demonized, it’s easy to understand how the idea of a Balanced Budget Amendment has become popular. While it may be good politics, however, the Balanced Budget Amendment would be terrible policy. As Slate’sDoug Kendall and Dahlia Lithwick put it:

“A balanced budget amendment sounds like a great idea—until you read a little U.S. history and count all the times America spent more in a fiscal year than it raised in taxes and why that was necessary for our very survival….[d]ebt helped fund the War for Independence, complete the Louisiana Purchase, and preserve the Union during the Civil War. Debt not only helped us weather the Great Depression; it also gave us the tools we needed to emerge victorious from two world wars.”

There’s a reason the Constitution specifically grants Congress the authority “to borrow money on the credit of the United States.” In times of crisis, the Balanced Budget Amendment could be a fiscal disaster.

The provision that would require a supermajority to raise taxes also ignores the intent of the Constitution, which empowers Congress “to lay and collect Taxes … to pay the Debts and provide for the common Defense and general Welfare of the United States.” As Kendall and Lithwick point out, the provision “would remove huge swaths of lawmaking power from majority rule and arbitrarily limit the size of government to a level not seen since the 1960s. Under the guise of promoting fiscal responsibility, we would be creating a government that could not govern.”

The Balanced Budget Amendment has little chance of becoming law; even if all 47 Republicans in the Senate vote in favor of it, 20 Democrats would have to support it as well. That seems highly unlikely, if not impossible.

Congress is currently looking to find $1.5 trillion in cuts to the deficit through the “supercommittee,” toying with efforts to solve the painful unemployment crisis, and trying to avoid a devastating double-dip recession. It should not waste time debating the Balanced Budget Amendment, which is a political ploy that would be disastrous policy, and will only serve to distract Congress from the important issues that it has yet to tackle.