Debt Ceiling

Top Economist: Even Brief Default Will Cause New Recession And Blow Recovery 'Out Of The Water'

Brian Beutler | June 28, 2011, 11:39AM

Moody's Analytics chief economist Mark Zandi

How big are the stakes on Capitol Hill right now? According to one of the most influential economists in federal policy making, the next four weeks will make the difference between a slow glide toward economic recovery, and a severe tumble into a new recession.

[TPM SLIDESHOW: More Than Just Forms: Tax Day Tea Party-Style]

Moody's chief economist, and former McCain economic adviser Mark Zandi is forecasting GDP growth of 4 percent by the end of the year and into next. But in response to a question from TPM, he told reporters at a breakfast meeting hosted by the Christian Science Monitor that his forecast would be "blown out of the water," if Congress fails to "reasonably gracefully" raise the national borrowing limit.

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Jon Kyl

McConnell, Kyl: Obama Must Break Silence On Tax Increases

Brian Beutler | June 23, 2011, 12:45PM

Senate Minority Leader Mitch McConnell (R-KY)

In a joint statement, and in the midst of major turbulence in bipartisan debt negotiations, the top two Republicans in the Senate say President Obama needs to speak publicly about his insistence that new tax revenue and job promotion measures be included in any deal to increase the debt limit.

"The White House and Democrats are insisting on job-killing tax hikes and new spending," says a joint statement by Mitch McConnell (R-KY) and Jon Kyl (R-AZ). "That proposal won't address our fiscal crisis, our jobs crisis, or protect and reform entitlements. And a bill with new spending and higher taxes would fail with bipartisan opposition - as it should. President Obama needs to decide between his goal of higher taxes, or a bipartisan plan to address our deficit. He can't have both. But we need to hear from him."

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Democrats

Democrats Explicitly Call Out GOP For Sabotaging The Economic Recovery

Brian Beutler | June 22, 2011, 12:36PM

Sen. Chuck Schumer (D-NY) and Senate Majority Whip Dick Durbin (D-IL)

They've made it explicit. Democrats are accusing Republicans of trying to sabotage the recovery -- or at least stall it -- by blocking all short-term measures to boost the economy, even ones they previously supported.

In a Capitol press conference Wednesday, the Senate's top Democrats argued that Republicans don't want to pass measures like a temporary payroll tax holiday for employers because they'll improve President Obama's re-election chances.

"Our Republican colleagues in the House and Senate are driven by putting one man out of work: President Obama," said Senate Majority Whip Dick Durbin (D-IL).

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Harry Reid

With Economy Faltering, Dems Seize On GOP About-Face On Payroll Tax Cuts For Businesses

Brian Beutler | June 22, 2011, 5:45AM

Senate Majority Leader Harry Reid (D-NV) with Sens. Dick Durbin (D-IL) and Charles Schumer (D-NY)

Democrats are increasingly concerned that Republicans are setting them up to endorse large spending cuts in a deal to raise the national debt limit without giving ground on anything -- even GOP-friendly policy measures like tax cuts for business owners -- to stimulate the economy in the near-term.

The concern arises as numerous top Republicans react coldly to the prospect of temporarily reducing the payroll tax burden on employers and employees -- to juice the economy before federal spending draws down in the years ahead.

Traditionally, and particularly in tough economic times, this and a handful of other stimulative policies have enjoyed bipartisan support. But with the outcome of the 2012 election likely to hinge on the nation's economic trajectory, the GOP is mysteriously rethinking those positions. And Democrats are starting to note of the suspicious timing.

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Bill Gross

PIMCO Founder To Deficit-Obsessed Congress: Get Back To Reality

Brian Beutler | June 21, 2011, 11:00AM

One of the most influential investors in the world of finance has a message for lawmakers -- particularly conservative lawmakers -- on Capitol Hill: rejoin the real world.

In a prospectus for clients, Bill Gross, a co-founder of investment management giant PIMCO, says members' of Congress incessant focus on deficit -- and in particular, the manner in which they obsess about deficits -- is foolhardy, and a recipe for disaster. What the country needs, Gross said, is real stimulus now, and a measured return toward fiscal balance in the years ahead.

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Barack Obama

Top Republicans Pour Cold Water On Obama's Last-Ditch Stimulus Plan

Brian Beutler | June 15, 2011, 3:04PM

Sen. Lamar Alexander (R-TN)

Two leading Republicans say they do not support President Obama's plan to broaden, deepen, and extend a payroll tax cut to stimulate the economy in the short-term.

In a briefing with reporters in the Capitol Tuesday, the House and Senate GOP conference chairs said they're through with short-term stimulus measures, even if they take the form of tax cuts.

"Well they've tried this once, and it hasn't seemed to be working," said Rep. Jeb Hensarling (R-TX).

His Senate counterpart, Lamar Alexander (R-TN) echoed this view.

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Tax Breaks

Dems See Opening To Push GOP On Taxes After Ethanol Subsidies Vote

Benjy Sarlin | June 15, 2011, 3:01PM

Sens. Chuck Schumer (D-NY) and Tom Coburn (R-OK)

Looking to exploit a rare rift between Republicans and anti-tax groups, Sens. Chuck Schumer (D-NY) and Bob Menendez (D-NJ) renewed calls on Tuesday to include revenue increases in any deficit deal.

Some 34 Senate Republicans voted for an amendment ending ethanol subsidies on Tuesday, despite warnings from anti-tax crusader Grover Norquist that dropping tax credits counted as a tax hike. The divide over the issue is complicated and hinges on regional factors in both parties, but Democrats largely voted against the unsuccessful amendment due to stated objections to the procedure by which it was brought up.

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Barack Obama

MAYBE! Dems, Republicans Non-Committal On Stimulus In Debt Limit Deal

Brian Beutler | June 15, 2011, 10:00AM

President Barack Obama meets with Republican and Democratic leaders

President Obama's calling for it, so is his one-time top economic adviser. With unemployment stuck at around 9 percent, the administration is desperate for more economic stimulus, and the only way they think they can get it is by further cutting payroll taxes. They want to include those cuts in a bipartisan deal to raise the national debt limit.

But thus far, top Democrats and Republicans are making no promises.

"I think this is something we should take a look at," said Senate Majority Leader Harry Reid (D-NV) at a Capitol press conference Tuesday. "We've analyzed this, we've considered this -- we, the Democratic caucus has considered this -- we have not arrived at a conclusion so I'm glad that this is an issue they're talking about."

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Doug Elmendorf

CBO Director On The Economy: 'Great Deal Of Pain' Ahead

Brian Beutler | June 14, 2011, 11:56AM

CBO director Doug Elmendorf offered reporters a sneak preview of his agency's forthcoming economic forecast Tuesday, at a breakfast roundtable hosted by the Christian Science Monitor. It's bad news for most Americans -- and bad political news for President Obama.

"A great deal of the pain of this downturn lies in front of us still," Elmendorf said.

At the beginning of the year, CBO put the U.S. on a five-year path of modest growth, over which time they predicted the unemployment rate would crawl down toward five percent. Elmendorf sees nothing on the horizon to speed that up.

"At this point I don't expect large changes to that forecast," he said.

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