Between 1984 and 2007, “The gap between the wealth possessed by white and black families grew more than four times larger,” in part because of tax cuts and policies that favored high-income groups. Researchers from the Institute on Assets and Social Policy at Brandeis University also found in a new report that the average middle-income white family was able to accumulate more wealth (assets minus debts) than the average high-income African-American family: “Consumers of color face a gauntlet of barriers – in credit, housing and taxes – that dramatically reduce the chances of economic mobility.”

The growing wealth gap between the races in the U.S. is the focus of the new report, which you can download here. Other researchers have found equally damning evidence of the widening gap between the very rich and everyone else. This graph shows how “the top 10 per cent of income earners in the US took home an ever more outsized share of the total national income starting at the end of the 1970s.” From the World War II era to the early 1980s, the “top 10 percent took 30-35 per cent of total national income,” but by 2007 that figure had grown to about 50 percent–a level not seen since just before the Great Depression.

Ronald Reagan’s fiscal policies started this trend, but George W. Bush accelerated it with his enormous tax cuts for the highest earners. During Bush’s presidency, “The share of the nation’s income flowing to the top 1 percent of households increased sharply, from 16.9 percent in 2002 to 23.5 percent in 2007 – a larger share than at any point since 1928.” In addition, approximately “Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households […].”  

This enormous wealth gap is invisible to the Reagan-worshippers who now dominate the Republican Party. For them, any attempt to increase working-class wages is a “job-killer,” and tax cuts that disproportionately benefit the well-off are the solution to every problem. Look at how the Republican candidates for Iowa governor balk at spending $42 million to send more than 12,000 kids to pre-school but brag about plans to cut corporate taxes by $80 million to $160 million. Their priorities would be laughable if the real-world consequences were not so tragic.

Share any relevant thoughts in this thread.

Terry Branstad’s campaign launched its third television ad today, about a month after his first commercials started running statewide in Iowa. The new commercial depicts Branstad as “the real conservative change we needed then… and now.”

Here’s the ad script:

The farm crisis … Budget deficits… Skyrocketing unemployment…

That’s what Terry Branstad faced when he was elected governor.

But this Winnebago County farm kid put his rural values right to work, recruiting thousands of jobs, cutting out half the state agencies and taxes $124 million – leaving us record employment, and a $900 million surplus.

Terry Branstad is the real conservative change we needed then… and NOW.

Time for a reality check.

Branstad was first elected governor near the bottom of one economic cycle (at that time the most severe recession since World War II) and was fortunate to retire near the peak of the Clinton boom years. However, job gains during Branstad’s tenure as governor did not fulfill promises he made during his campaigns.

Iowa reorganized state government in 1985, eliminating some agencies and merging others into larger departments. On the other hand, total state government employment increased from 53,342 in 1983 to 61,400 in 1999. Total receipts in the state’s general fund increased from $1.899 billion in 1983 to $4.881 billion in 1999. That 166 percent increase was more than the rate of inflation during the same period, and Iowa’s population was no larger when Branstad retired than it was when he was first elected.

The huge growth in the general fund budget would not have been possible without various tax increases Branstad signed into law. Increased revenue from two sales tax hikes dwarfed the $124 million in tax cuts highlighted in Branstad’s new commercial. Those cuts came primarily from reducing income and estate taxes, delivering most of the benefits to wealthier Iowa families. Unfortunately, Branstad’s sales tax increases disproportionately hit lower-income families, who spend a greater share of their money on essentials.

Branstad was far from reluctant to raise taxes. He asked the state legislature to increase the sales tax in his very first budget address, within days of being inaugurated in 1983.

I expect Branstad to win the Republican primary on June 8 despite his accountability problem. Bob Vander Plaats is a strong speaker but doesn’t have the financial resources to publicize his case against the former governor. Rod Roberts isn’t trying to make a case against Branstad, as far as I can tell. His function in the campaign seems to be to prevent Vander Plaats from consolidating the conservative vote in the primary.

However, during the general election campaign, Branstad will face an opponent with the resources to compare his record with his rhetoric. I wonder how many conservative Republicans will either stay home in November or check the Libertarian box in the governor’s race.

UPDATE: Kathie Obradovich says the $124 million figure “is the campaign’s calculation of the net result of all the tax changes enacted under Branstad – an overall reduction of $124 million, in 2008 inflation-adjusted dollars.” I would like to see a calculation of all the Branstad-era sales and gas tax increases in 2008 dollars. Hint: it would work out to a lot more than $124 million.

SECOND UPDATE: Branstad “had an elective heart procedure” today to put a stent in a partially blocked artery. I hope he feels better soon. His campaign released a statement from his doctor saying, “Governor Branstad should be able to resume his normal campaign schedule within the next few days and should quickly return to his normal lifestyle without limitations. He should be fully capable of performing the activities of a candidate and a Governor.”  

I was disappointed by some compromises made to pass the stimulus (the American Recovery and Reinvestment Act) in February 2009. I felt President Obama made too many concessions in the fruitless pursuit of Republican votes, and that too much of the cost went toward tax cuts that would be slower-acting and less stimulative than certain forms of government spending.

That said, the tax cuts in the stimulus will help tens of millions of American families, particularly those with working-class or middle-class incomes. Citizens for Tax Justice has calculated that “the major tax cuts enacted in the 2009 economic stimulus bill actually reduced federal income taxes for tax year 2009 for 98 percent of all working families and individuals. ”

In terms of the number of Americans who benefited, the stimulus bill was the biggest tax cut in history. That is, “the estimated $282 billion in tax cuts [from the stimulus] over two years is more than either of the 2001-2002 or the 2004-2005 Bush tax cuts or the Kennedy or Reagan tax cuts.” George W. Bush’s tax cuts were more costly to the U.S. Treasury over a 10-year period, but as Anonymous Liberal noted last year,

The Bush tax cuts were skewed dramatically toward the wealthy. In 2004, 60% of the tax cuts went to the top 20 percent of income earners with over 25% going to the top 1% of income earners. Those numbers have increased since then as the cuts to the estate tax have taken effect.

Tomorrow is the deadline for most Americans to file their tax returns, and Republicans will try to harness the tea party movement’s anger at what they view as excessive taxes and spending. However, many ordinary people may be shocked to learn how large their refunds are this year. According to the White House, “the average tax refund is up nearly 10 percent this year.”

Democrats should not be afraid to vigorously defend the stimulus bill during this year’s Congressional campaigns. I wish the recovery act had been larger and better targeted, but the bottom line is that Republicans voted against the largest ever middle-class tax cut.

The White House website has this Recovery Act Tax Savings Tool to help people find benefits to which they are entitled. After the jump I’ve posted a fact sheet on this subject, which the White House press office released on April 12. Note: if you have already filed your taxes, you can amend them after April 15 to collect on any credits from the stimulus bill that you missed.

Following up on the diary I posted this morning, this post compiles links to Bleeding Heartland’s coverage of national politics from July through December 2009. Health care reform was again the number one topic. I wish there had been a happy ending.

It took me a week longer than I anticipated, but I finally finished compiling links to Bleeding Heartland’s coverage from last year. This post and part 2, coming later today, include stories on national politics, mostly relating to Congress and Barack Obama’s administration. Diaries reviewing Iowa politics in 2009 will come soon.

One thing struck me while compiling this post: on all of the House bills I covered here during 2009, Democrats Leonard Boswell, Bruce Braley and Dave Loebsack voted the same way. That was a big change from 2007 and 2008, when Blue Dog Boswell voted with Republicans and against the majority of the Democratic caucus on many key bills.

No federal policy issue inspired more posts last year than health care reform. Rereading my earlier, guardedly hopeful pieces was depressing in light of the mess the health care reform bill has become. I was never optimistic about getting a strong public health insurance option through Congress, but I thought we had a chance to pass a very good bill. If I had anticipated the magnitude of the Democratic sellout on so many aspects of reform in addition to the public option, I wouldn’t have spent so many hours writing about this issue. I can’t say I wasn’t warned (and warned), though.

Links to stories from January through June 2009 are after the jump. Any thoughts about last year’s political events are welcome in this thread.

When Congress was debating the stimulus bill earlier this year, Mark Zandi, the chief economist for Moody’s, compared various forms of government spending and tax cuts in terms of economic stimulus “bang for the buck.” He concluded (pdf file) that various forms of government spending did more to stimulate the economy than various kinds of tax cuts.

The best kinds of spending in terms of stimulative effect were food stamps and extending unemployment benefits. Every extra dollar the federal government spends on food stamps generates approximately $1.73 in economic activity, and every dollar the federal government spends to extend unemployment benefits generates approximately $1.63 in economic activity. People who need these services are likely to spend additional money quickly, helping preserve jobs in the retail sector.

With this in mind, you might imagine that the states would take full advantage of money allocated to unemployment benefits in the American Reinvestment and Recovery Act. But you would be wrong, according to this article by Olga Pierce from ProPublica:

So far, only about half of the $7 billion included in the stimulus package [for expanding unemployment insurance] has been claimed by states. […]

Four states have explicitly rejected the funding, but many others have so far failed to pass legislation qualifying them for incentive payments. […]

Under the stimulus bill [2], states can qualify for the extra funding by extending unemployment insurance to new categories of workers. To receive a third of the funding, they must begin using something called an alternative base period, which would allow more low-wage workers to receive unemployment benefits. […]

To get the other two-thirds of the cash, they must adopt at least two other changes from a list that includes covering part-time workers and offering $15 extra per week for each dependent.

If states meet the requirements, they qualify for a federal lump sum payment that will cover the cost of expansion for at least three years, or longer in many cases. It was on those grounds – that after the federal funding runs out states will have to find another way to cover the cost – that Louisiana Gov. Bobby Jindal [3], Mississippi Gov. Haley Barbour [4] and others [5] that said they would reject the funding.

Bleeding-heart liberal that I am, I believe basic fairness justifies extending unemployment benefits to more part-time and low-wage workers. But even if you don’t care about fairness, Zandi’s analysis shows that extending unemployment benefits will get money circulating in the economy.

Click here for a map and a chart showing how much federal unemployment money each state has claimed.  

As of mid-June, 17 states had claimed none of the stimulus funding for unemployment benefits, and another 12 states and the District of Columbia had claimed only part of that money. In some of those states, Democrats are in charge. Progressives who have ridiculed Republican governors for rejecting stimulus money for unemployment benefits should also hold Democrats accountable on this score.

Fortunately, Iowa is among 21 states that have fully used these stimulus funds as Congress intended. Thousands of Iowans struggling to get by will benefit from the $70.8 million the stimulus bill appropriated to our state for unemployment benefits. Democrats in the state legislature and Governor Chet Culver deserve credit for enacting the necessary legislative changes to collect this funding.

Many of the states that have left stimulus money on the table have significantly higher unemployment rates than Iowa, by the way.

Speaking of boosting the economy, Zandi’s report showed that infrastructure projects were the third-most stimulative form of government spending. Every extra dollar spent on infrastructure generates an estimated $1.59 in economic activity. Remember that next time Iowa Republicans bring out their misleading talking points about the the I-JOBS program. Also remember that Iowa has used the stimulus bill’s transportation funding wisely compared to many other states, according to a recent review by Smart Growth America.

In contrast, most kinds of tax cuts Republicans advocate generate less than one dollar of economic activity for every dollar they cost the government. As a gesture to Republicans, Democrats replaced some spending in the stimulus bill with $70 billion allocated to fixing the alternative minimum tax, even though Zandi’s analysis found that a dollar spent on fixing the alternative minimum tax generates only about 49 cents in economic activity.

It’s too bad the Obama administration made a number of concessions to Republicans on the stimulus bill. Like Bob Herbert wrote a few months ago, when the GOP talks about the economy, nobody should listen.

I was expecting a showdown in the Iowa House this week over the tax reform package that Governor Chet Culver worked out with key Democratic legislators. Republican State Representative Chris Rants announced his intention to amend the tax bill so that marriage would be defined as between a man and a woman.

However, the tax bill never came up for a vote before legislators went home for the weekend. House Speaker Pat Murphy said on April 15 that he had only 50 votes in favor of the proposal:

According to Murphy, he had lined up 52 Democrats to vote for the bill, but two Democrats changed their minds after adjustments sought by the governor broadened the number of Iowans who would get a tax cut — and amounted to a roughly $50 million reduction in the amount of income taxes collected.

“All we need is one person to change their mind,” Murphy says. “…We’re still optimistic we’ll get it done before we adjourn.”

Murphy is counting on Governor Chet Culver, a fellow Democrat, to help find the extra vote that will get the bill passed.

“We still believe that it is a middle class tax cut,” Murphy says. “We still believe it simplifies the tax code and we are optimistic that we will pass it yet this year.”

Murphy may be optimistic, but I’m feeling a sense of deja vu. Two months ago House Democrats were stuck at 50 votes for the “prevailing wage” bill heading into a weekend. The governor and legislative leaders failed to find the 51st vote to pass that measure.

If Murphy’s assessment is correct, two Iowa House Democrats supported the original tax reform bill but not the deal worked out with the governor. Does anyone know who they are, and why they are refusing to get behind the revised tax bill? Do they disagree with changes to the bill, or are they spooked by pressure they are getting from anti-tax conservative activists? It would be a big mistake for the legislature to let this bill die now. Overhauling the tax system won’t become politically easier during an election year.

In other economic policy news, Jason Hancock reports today that prospects look good for three bills which, combined, would approve $700 billion in bonding for infrastructure projects in Iowa. Click here for more details about the bills and what they would pay for. The main difference between this package of bills and Culver’s bonding proposal is that the governor wanted $200 million from bonding to pay for roads and bridges. Legislators have specified that the bonds must be used to fund other kinds of infrastructure projects.

Many Iowa legislators wanted to pass a small gas tax increase this year and next to fund more road projects, but a veto threat from Culver killed that proposal. The federal stimulus package approved this year did include about $358 million in highway funds for Iowa (click that link for more details). I’m with legislators on this one. I’d rather see money raised through bonding used for other kinds of projects.

I am glad to see Democrats move ahead on the bonding bills despite a recent Des Moines Register poll. The poll indicated that just 24 percent supported “Governor Chet Culver’s plan to borrow money to speed up public works projects,” while 71 percent said the state should “pay for the projects as it has the money over time.” That’s a badly-worded poll question if I ever heard one. I’ll bet that people who say we should only take on what we have cash for right now will change their mind once bonding money starts funding projects in their own cities and counties.

The package of tax reform proposals that Iowa Democratic leaders worked out will come up for a vote this week. The Republican Party of Iowa and various right-wing interest groups are generating phone calls and e-mails to the capitol in opposition to this plan, and are planning several protest actions as well.

This package isn’t everything I’d like to see on tax reform, but it would be a huge improvement on the status quo. As State Senator Joe Bolkcom wrote in this op-ed for the Iowa City Press-Citizen,

There is no doubt that lightening the tax burden on Iowa’s middle-class families would be a significant change in direction for Iowa tax policy. It would reverse the trend of tax changes that mostly benefit the wealthiest Iowans. Increases in sales taxes, the reliance on gambling, and the changes in income tax policies have made Iowa’s overall tax system very regressive and unfair. Those who have less pay more. Those with more pay less to support state and local services.

Our proposed reform would reward work and provide tax cuts to middle-class Iowa workers who are bearing the brunt of the national recession.

Iowa Democratic Party chairman Michael Kiernan sent out an action alert on Monday urging Democrats to contact legislators in support of the tax changes. After the jump I’ve posted an excerpt with some details about the plan and other talking points.  

The U.S. House of Representatives approved President Barack Obama’s proposed $3.55 trillion 2010 budget on Thursday by a vote of 233 to 196. As you can see from the roll call, all three Democrats representing Iowa voted for the budget: Bruce Braley (IA-01), Dave Loebsack (IA-02), and Leonard Boswell (IA-03). Every House Republican voted against Obama’s budget, including Tom Latham (IA-04) and Steve King (IA-05).

Twenty House Democrats joined Republicans in voting against the budget (Dennis Kucinich plus a minority of the Blue Dog caucus). But it’s notable that most Blue Dogs, like Boswell, supported this budget. Obama has met twice with the Blue Dog caucus this year, most recently on March 30.

House Republicans offered an alternative budget proposal with all kinds of crazy ideas in it, like privatizing Medicare, giving the wealthy more tax cuts, and freezing most non-defense discretionary federal spending. As you can see from the roll call, Tom Latham was among the 28 Republicans who joined House Democrats in voting down the GOP budget alternative. Steve King was among the 137 Republicans who voted yes.

White House officials were right to mock the GOP’s budget alternative as a “joke.” Freezing federal spending is a good way to turn a severe economic recession into a depression.

Soon after the House budget vote, I received press releases from the Democratic Congressional Campaign Committee slamming Latham and King for voting against a wide range of tax cuts contained in the budget resolution. I’ve posted those after the jump.

I suspect that the the DCCC is not putting out statements attacking the House Democrats who voted against the budget, and I’m seeking a comment from their communications staff about whether my hunch is correct. DCCC chair Chris Van Hollen warned on Thursday that liberal groups supporting primary challengers against unreliable House Democrats could cost the party seats in 2010. I wonder why we are supposed to look the other way when members of our own party take positions that the DCCC finds atrocious in House Republicans.

Meanwhile, the U.S. Senate approved a 2010 budget resolution late on Thursday after a nearly 12-hour marathon of votes on various amendments. David Waldman (formerly known as Kagro X) gives you the play-by-play from yesterday’s Senate action at Congress Matters. The final vote in the Senate was 55-43 (roll call here). Iowa’s Tom Harkin voted yes, along with all Senate Democrats except for Evan Bayh of Indiana and Ben Nelson of Nebraska, who voted with Republicans, and Robert Byrd of West Virginia, who did not vote. The 41 Senate Republicans, including Iowa’s Chuck Grassley, voted no.

CNN went over the key similarities and differences between the House and Senate budget resolutions. Most important difference, in my opinion:

[House Democrats] also included language that allows for the controversial procedure called “budget reconciliation” for health care, a tool that would limit debate on major policy legislation.

Senate Democrats did not include reconciliation in their version of the budget. The matter is guaranteed to be a major partisan sticking point when the two chambers meet to hammer out a final version of next year’s spending plan. If it passes, it would allow the Senate to pass Obama’s proposed health care reform without the threat of a Republican-led Senate filibuster.

Notably, both the House and Senate budget bills “do away with Obama’s request for an additional $250 billion, if needed, in financial-sector bailout money.” Thank goodness for that.

Any comments or speculation regarding federal tax or spending policies are welcome in this thread.

President Barack Obama will present his first budget request to Congress today.

Early leaks indicate that he will propose some tax increases on the wealthiest Americans as well as some spending cuts to help pay for health care reform.

Ezra Klein, an excellent blogger on health care, is excited about what’s in the budget regarding health care reform. Although there is no detailed plan, Obama is submitting eight principles that should define health care reform efforts. Klein believes the principle of “universality” is likely to lead Congress to propose an individual mandate to hold health insurance.

I support mandated coverate only if there is a public plan that any American, regardless of age and income, can purchase as an alternative to private health insurance. The public plan would work like Medicare, in that individuals would be able to choose their own providers. Unfortunately, the Massachusetts model of mandatory private insurance without a meaningful public option has left a lot of problems unsolved.

It is not clear how much Obama will do to roll back George W. Bush’s tax cuts for the wealthiest Americans. I am with House Speaker Nancy Pelosi and others who would prefer to start rolling back tax cuts for the top 1 percent immediately. Last month the president seemed to be leaning toward letting those tax cuts expire over the next two years rather than fighting to repeal them this year.

According to Bloomberg,

President Barack Obama’s first budget request would provide as much as $750 billion in new aid to the financial industry […]

No wonder Obama went out of his way to make the case for helping banks during his address to Congress on Tuesday night. I firmly oppose shelling out another $750 billion toward this end, especially since the bailout money we’ve already spent hasn’t accomplished the stated goals of the program.

According to AFP, today’s budget proposal will include a plan

to raise money through a mandatory cap on greenhouse emissions.

Obama’s budget director Peter Orszag earlier estimated that a cap-and-trade scheme could generate 112 billion dollars by 2012, and up to 300 billion dollars a year by 2020.

Cap-and-trade may be more politically palatable, but a carbon tax may be a better approach for reducing greenhouse-gas emissions.

In cabinet-related news, have calculated that expanding the food-stamp program

Interior Secretary Ken Salazar wasn’t the top choice of environmentalists, but I was pleased to read this post:

Interior Secretary Ken Salazar canceled oil shale development leases on Federal lands in Colorado, Utah and Wyoming and announced that the Interior Department would first study the water, power and land-use issues surrounding the development oil shale.

Meanwhile, Homeland Security Secretary wants to review US Immigration and Customs Enforcement raids and told Congress that employers should be the focus of raids seeking to enforce immigration laws at workplaces. Obviously, swooping in and arresting a bunch of undocumented workers does nothing to address the root of the problem if employers are not forced to change their hiring practice.

Yesterday Obama named former Washington Governor Gary Locke as his latest choice to run the Commerce Department. Locke seems like a business-friendly Democrat, which is a big improvement over conservative Republican Judd Gregg, who thankfully withdrew his nomination for this post.

Republicans have been freaking out because of alleged plans by the Obama administration to “take control of the census.” Of course the GOP wants to continue the practices that have caused millions of white Americans to be double-counted in past censuses while millions more Americans in urban centers (largely non-whites) were not counted at all. Click here for more on the political battle over the census.

This thread is for any thoughts or comments about Obama’s cabinet or budget.

President Barack Obama will have a very large bill to sign on Monday. Yesterday the U.S. House of Representatives passed the $787 billion economic stimulus bill by 246 to 183. As expected, no Republicans voted for the bill. Iowa’s three Democrats in the House voted for it. Looking at the roll call, I was surprised to see that only seven House Democrats voted against this bill (one voted “present” and one did not vote). I did not expect that much support from the 50-odd Blue Dog Democrats. Good for them!

In the Senate, supporters of the stimulus managed exactly 60 votes after Senator Sherrod Brown flew back from Ohio, where he was attending his mother’s wake. All Democrats, two independents, and three Republicans (Olympia Snowe, Susan Collins and Arlen Specter) voted for it. According to Specter, at least a few other Senate Republicans supported the bill but were afraid to vote for it (fearing a challenge from the right in the next GOP primary). I’m no fan of Specter, but I give him credit for casting a tough vote today. As brownsox explains, conservative Republicans in Pennsylvania are eager to take Specter out in the 2010 primary, having apparently forgotten how badly right-wing Senator Rick Santorum got beaten in 2006.

Daily Kos diarist thereisnospoon, a self-described “hack” who conducts focus groups for a living, is giddy about the potential to make Republicans pay in 2010 for voting against “the biggest middle-class tax cut in history.”

On the whole, this bill is more good than bad, but I agree 100 percent with Tom Harkin’s comments to the New York Times:

Even before the last touches were put to the bill, some angry Democrats said that Mr. Obama and Congressional leaders had been too quick to give up on Democratic priorities. “I am not happy with it,” said Senator Tom Harkin, Democrat of Iowa. “You are not looking at a happy camper. I mean they took a lot of stuff out of education. They took it out of health, school construction and they put it more into tax issues.”

Mr. Harkin said he was particularly frustrated by the money being spent on fixing the alternative minimum tax. “It’s about 9 percent of the whole bill,” he said, “Why is it in there? It has nothing to do with stimulus. It has nothing to do with recovery.”

The $70 billion spent on fixing the alternative minimum tax will produce little “stimulus bang for the buck” compared to most forms of spending. The upper middle class and upper class earners who will benefit are likely to save rather than spend the money they get back.

As exciting as it is to see increased funding for high-speed rail, I fear that the bulk of the much larger sum appropriated for roads will go toward new highway construction rather than maintaining our existing infrastructure.

But I’ve buried the lede: what will the stimulus bill do for Iowa?

Iowa Politics linked to two White House documents about the impact in terms of spending and jobs created. This pdf file estimates the number of jobs created in each state and in each Congressional district within that state. It estimates 37,000 jobs created in Iowa: 6,600 in the first district, 7,000 in each of the second and third districts, 6,700 in the fourth district and 6,200 in the fifth district.

Prediction: Tom Latham and Steve King will take credit for infrastructure projects in their districts during the next election campaign, even though both voted against the stimulus bill.

This pdf file shows how much money Iowa will receive under different line items in the stimulus bill. Even more helpful, it also shows the figures for the original House and Senate bills, so you can get a sense of which cuts were made. The bill that first passed the House would have directed $2.27 billion to Iowa. The first Senate version reduced that number to $1.8 billion. The final bill that came out of conference directs about $1.9 billion to Iowa.

If you delve into the details of this document you’ll understand why Harkin isn’t thrilled with the bill he voted for. They took out school construction funds and extra money for the Low Income Home Energy Assistance Program (LIHEAP), for crying out loud.

“Bizarro Stimulus” indeed.

Iowa Independent reports that Harkin and Chuck Grassley “agree that the newly conceived formula used to distribute the $87 billion Medicaid portion of the bill shortchanges Iowa.”

After the jump I’ve posted statements from Representatives Dave Loebsack and Bruce Braley on the stimulus bill. Both talk about the jobs that will be created in Iowa. Loebsack emphasizes the tax cuts that 95 percent of American families will receive as a result of this bill. However, he also expresses his concern about what he views as inadequate funding for modernizing schools in the final bill.

Braley’s statement highlights an amendment he wrote providing low-interest loans for biofuels producers.

I would have been happy to post a statement from Leonard Boswell too, but his office has repeatedly refused my requests to be added to its distribution list for press releases. Hillary Clinton may have a prestigious job in Barack Obama’s cabinet and Joe Lieberman may be welcome in the Democratic Senate caucus, but Boswell’s press secretary seems ready to hold a grudge forever against the blogger who supported Ed Fallon.  

I learned at Iowa Independent that Senator Chuck Grassley told reporters on Wednesday that he would vote for the economic stimulus “regardless of what else is in the bill” if the Senate approved an amendment providing for 30-year fixed-rate mortgages at 4 percent interest.

He remained critical of the spending in the bill:

“People at the grassroots see it as a lot of spending and not very much stimulus,” Grassley said. “Somebody thinks they’re fooling the people of this country with this package, but they aren’t.”

Senator Tom Harkin’s office put out a statement on Tuesday listing some of the proposed spending that would benefit Iowans:

February 3, 2009

HARKIN: $1.5 BILLION INCLUDED FOR IOWA IN SENATE STIMULUS PACKAGE

Washington,  D.C. – U.S. Senator Tom Harkin (D-IA) today announced that there are more than $1.5 billion in critical investments for  Iowa included in the Senate version of The American Recovery and Reinvestment Act. These investments will create and save jobs; help with budget shortfalls to prevent deep cuts in basic services such as health, education, and law enforcement; cut taxes for working families and invest in the long-term health of our economy.

“The economy is now shedding an average of 17,000 jobs a day, and new foreclosures average 9,000 a day.  We are facing what could be the deepest, longest recession since the Great Depression.  We must act quickly and boldly,”  said Harkin.  “This bill will create jobs now while also laying the foundation for a stronger economy that works for all Americans in the future.”

The American Recovery and Reinvestment Act provides $888 billion in investments and tax cuts.  Of this total, $694 billion will enter the economy by the end of Fiscal year 2010, meaning that 78 percent of the monies allocated will reach the American people by September 30, 2010, providing an immediate boost to the overall economy and creating an estimated four million jobs nationwide.

Below are the approximate investments Iowa could see if the Senate bill is passed and signed into law by the president.  These amounts only include major accounts that are allocated by formula, and do not include the considerable funds that will be allocated competitively by the executive branch.

Nutrition Programs

·         $2.3 million for School Lunch Programs

·         $109 million for the Supplemental Nutrition Assistance Program

·         $776,000 for the Emergency Food Assistance Program

Homeland Security Programs

·         $639,000 for the Emergency Food and Shelter Program

Clean Water Programs

·         $24 million for the Drinking Water Fund

·         $54 million for the Clean Water Fund

Transportation Funding

·         $389 million for  Iowa ‘s Highway fund

·         $46 million for Transit Funding

Housing Programs

·         $7.6 million for public housing capital

·         $14.8 million for HOME funding

·         $16.8 million for homelessness prevention

Law Enforcement / Crime funding

·         $14 million for Byrne/JAG funding

·         $978,000 for crime victim programs

·         $1 million to protect children against internet crimes

·         $3.2 million to assist women who are victims of violence

Energy Programs

·         $6.6 million for  Iowa ‘s energy program

·         $48.6 million for weatherization programs

Labor, Health and Human Service and Education Programs

·         $18.1 million for Child Care and Development Block Grants

·         $5.2 million for Head Start

·         $625.6 million for the state stabilization fund

·         $65.4 million for Title 1 programs

·         $140.1 million for Special Education Part B Grants

·         $46.1 million for Higher Education Facilities

·         $1.6 million for Adult Employment and Training

·         $78.7 million for School modernization

·         $5 million for education technology

·         $2.2 million for Community Service Block Grants

·         $441,000 for Senior Meals

·         $3.9 million for Employment Service Grants

·         $5 million for Dislocated Worker Grants

·         $5.4 million for vocational rehabilitation programs

·         $7.2 million for immunization programs

 

Some of these programs yield more “bang for the buck” than others, and there’s an argument to be made that the stimulus bill has too much of a grab-bag quality. Yesterday Daily Kos user TocqueDeville lamented the fact that Democrats put together a spending bill instead of “a big, unifying vision for the future – a Rebuilding America Act.” I agree with much of the critique and would have liked to see some different spending priorities.

That said, even an imperfect spending bill will do more to stimulate the economy than the tax cuts favored by Republicans.

I don’t know the specifics of the amendment Grassley supports, but in general making low-rate mortgages more accessible would be good. It was stupid as well as unethical for Federal Reserve Chairman Alan Greenspan and other wise men of Wall Street to encourage so many Americans to buy adjustable-rate mortgages.

I was surprised to see Grassley say that the low-rate mortgage provision would be enough to win his vote for the stimulus. Senator Judd Gregg got a post in Barack Obama’s cabinet and still won’t vote for the bill.

If Grassley ends up voting yes on the stimulus, the wingnuts will go ballistic, but what can they do other than add a line to Grassley’s entry on the Iowa Defense Alliance “Wall of Shame”?

In other stimulus-related news, Obama published an op-ed in the Washington Post making the case for this package. Excerpt:

This plan is more than a prescription for short-term spending — it’s a strategy for America’s long-term growth and opportunity in areas such as renewable energy, health care and education. And it’s a strategy that will be implemented with unprecedented transparency and accountability, so Americans know where their tax dollars are going and how they are being spent.

In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis — the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive.

I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. They know that we have tried it those ways for too long. And because we have, our health-care costs still rise faster than inflation. Our dependence on foreign oil still threatens our economy and our security. Our children still study in schools that put them at a disadvantage. We’ve seen the tragic consequences when our bridges crumble and our levees fail.

It’s a start, but I agree with early Obama supporter Theda Skocpol. Obama mishandled this effort by making bipartisanship (instead of saving the economy) his measure of success. He can undo some of the damage by going directly to the people to make the case for the stimulus. But unfortunately, the Republicans still have the upper hand if they vote against the bill and blame the president for not giving them enough input.

Paul Rosenberg has an outstanding post up at Open Left on a report by Mark Zandi, the chief economist and co-founder of Moody’s Economy.com. Zandi analyzed different types of tax cuts and government spending in terms of “fiscal stimulus bang for the buck.”

Click here to view the chart showing his conclusions. Various types of government spending all delivered much more stimulus to the economy than even the most effective tax cuts.

Temporary increases in food stamps carried the most “bang for the buck,” $1.73 for every federal dollar spent. That’s because food stamp money goes into the hands of people who will spend it right away. Not far behind was extending unemployment benefits (which also helps people likely to spend money quickly) and government spending on infrastructure (which creates jobs).

Zandi found that even the government spending that delivered the least bang for the buck, general aid to state governments, still generated $1.38 for every federal dollar spent.

On the other hand, most tax cuts generated far below $1 for the economy for every dollar they cost the federal government. That’s particularly true for the tax cuts Republicans tend to favor, which mainly benefit high-income Americans or businesses. These generate between 25 and 50 cents for the economy for every dollar they cost the federal government.

By far the best tax cut for stimulating the  economy, according to Zandi, was a payroll tax holiday, which generates $1.28 for every dollar it costs. However, a payroll tax holiday still ranked significantly below various types of spending in terms of “bang for the buck.”

Rosenberg created a second chart combining Zandi’s figures with job creation numbers from the Center for Economic Policy and Research. It shows that millions more jobs would be created by $850 billion in spending compared to $850 billion in tax cuts.

Not only does government spending create more jobs and stimulate more consumer spending, it can also accomplish tasks that benefit the community as a whole. For instance, everyone who uses a bridge benefits from maintenance that prevents that bridge from collapsing. Thousands of travelers could take advantage of improved passenger rail service, which would also reduce greenhouse-gas emissions compared to driving or flying. For those reasons, I agree with the Iowa legislators who have advocated more rail funding in the stimulus bill.

Yesterday the Iowa Environmental Council provided another excellent example of how stimulus spending could produce both jobs and cleaner water in many Iowa communities:

IOWA ENVIRONMENTAL COUNCIL

For Immediate Release

February 2, 2009

More money needed in stimulus for clean water infrastructure

The Iowa Environmental Council is encouraging U.S. lawmakers to increase clean water infrastructure funding in the economic stimulus plan, now under consideration in Congress. The House version of the stimulus package currently includes $8 billion and the Senate bill $4 billion for clean water infrastructure. The EPA estimated the cost of meeting our clean water infrastructure needs at $580 billion during the last assessment in 2004, according to a GAO report.

In Iowa alone, the Department of Natural Resources estimates water infrastructure needs to be over $618 million over the next two to three years.

According to Susan Heathcote, water program director for the Iowa Environmental Council, 87 of these projects, with a total cost of $306 million, could be underway in three to four months if the necessary funding were made available.

Sixty-six communities in Iowa do not have a public sewer system and 21 communities need help to upgrade their drinking water systems says Heathcote.

“These needs combined with the fact that we could have shovels in the ground as soon as funding becomes available make them perfect candidates for funding under the nation’s economic stimulus package,” said Heathcote.

In letters to Iowa Representative Boswell and Senators Harkin and Grassley, Heathcote outlined Iowa projects that could proceed immediately with available funding:

·         25 communities with sewage treatment plant projects, with estimated needed loan amounts of $165 million.

·         41 small unsewered communities, with estimated total cost of $72 million.

·         21 communities with need for upgrades to their drinking water systems, with an estimated total cost of $69 million.

Heathcote says, in addition to the new water projects outlined above, Iowa communities also need help to address ongoing efforts to separate outdated combined sewer systems and to repair or replace aging sanitary sewer system pipes. Until this work is completed, Iowa communities must continue to deal with the public health threat from frequent failure of sanitary sewer systems that result in discharges of untreated sewage into Iowa rivers.

“While we are addressing our ailing economy, why not make a real investment in clean water?” said Heathcote.

### End ###

Maybe Senator Chuck Grassley, who derides the stimulus spending as “porkulus,” needs to hear from Iowans living in communities with substandard sewage systems and drinking water that could be a lot cleaner. You can reach his office by calling (202) 224-3121.

President Barack Obama and Democratic leaders in Congress need to do a better job explaining to the public that the spending in the stimulus bill would directly boost the economy much more than tax cuts.  

Senator Tom Harkin was right to warn in a conference call with reporters today that the economic stimulus bill may be too small.

He is also right to be concerned about the tax-cut provisions. Tax cuts that put more money into the hands of people in high income brackets (such as fixing the alternative minimum tax) will not necessarily boost consumer spending.

He is right about this too:

Harkin said the bill must be seen as more than an immediate jump-start for the ailing economy, and therefore lawmakers should not be timid about its potential.

“This is not just a stimulus bill to put someone to work right now,” Harkin said. “That’s important and we will do that. But we are also going to do things that lay the groundwork for a solid recovery in the future.”

Harkin wants the bill to put more money into renewable fuels and less money into so-called “clean coal”:

“We’re putting money into clean coal technology,” he said. “There’s no such thing.”

You said it, senator.

Speaking of how there’s no such thing as clean coal, if you click here you’ll find another clever ad from the Reality Coalition.

Speaking of senators who are right about things, Here’s John Kerry on the stimulus:

Reacting to Wednesday night’s vote in the House – where not a single GOP member supported the stimulus package – Kerry told Politico that “if Republicans aren’t prepared to vote for it, I don’t think we should be giving up things, where I think the money can be spent more effectively.”

“If they’re not going to vote for it, let’s go with a plan that we think is going to work.”

The Massachusetts Democrat and 2004 presidential candidate suggested tossing some of the tax provisions in the stimulus that the GOP requested. “Those aren’t job creators immediately, and even in the longer term they’re not necessarily. We’ve seen that policy for the last eight years,” he said.

What was that thing Americans voted for in November? Oh yeah, change.

I know, that sounds like hyperbole, but it would be hard to top the argument Grover Norquist made yesterday on CNBC. David Sirota, who was also on the program, fills us in:

Grover Norquist is regularly billed as one of the leading intellectual lights of the conservative movement – and I think you will agree that the arguments he made in a debate with me over taxes this morning on CNBC highlight not merely the shocking intellectual bankruptcy of the movement he leads, but just how out of touch Republicans in Washington really are.

The debate revolved around President-elect Obama’s potential plans to put off raising taxes on the very wealthy. Norquist begins the debate with the claim – I kid you not – that “the economy is in the present state because when the Democrats took the House and Senate in 2006 you knew those tax increases were going to come in 2010.” He insisted that, “The stock market began to collapse as soon as you recognize that those old tax rates were coming back.” Yes, because under “those old tax rates” – ie. Clinton-era tax rates – the economy was so much worse than it is today.

As you’ll see, the CNBC reporters start laughing at Norquist, having trouble taking him seriously. And I must say, I really wasn’t sure he was being serious – but, of course, he was. I went on to make the point that I’ve often made in the past – the point that conservatives simply want everyone to forget: Namely, that President Clinton faced down a recession in 1993 by raising taxes on the wealthy in order to finance an economic stimulus package, and the economy subsequently boomed.

Click here to watch the You Tube. Yes, Norquist would have us believe that the U.S. economy is tanking in late 2008 because when the Democrats took over Congress two years ago, people began to expect that taxes on the wealthy would go up in 2010.

If you’ve heard a more illogical assertion from a Republican talking head lately, I want to hear about it in the comments.

While we’re talking about taxes, who thinks Obama should keep his promise to ask Congress to roll back George W. Bush’s tax cuts for the wealthiest 2 percent?

Who thinks Obama should just let those tax cuts expire on schedule in 2010, rather than spend political capital to get Congress to rescind them one year early?