An America that works at home: Jobs and economic growth

Over the past week, House Republicans have been busy meeting with folks back in their districts. With a stagnant economy and a crippling health care law, jobs and economic growth continue to be the top concerns for Americans across the country. Below are some examples of what House Republicans are doing back home to build an American that works:

House Majority Whip Kevin McCarthy (R-CA) and Rep. Gregg Harper (R-MS) visited the Puckett Machinery, a manufacturing hub in Meridian, Mississippi. Too many business owners are struggling because of the burdensome regulations and excessive red tape coming out of Washington, DC. House Republicans are working every day to change that.

Rep. Adam Kinzinger (R-IL) visited the Woods Equipment Company in Oregon, Illinois, which employs more than 300 employees. “With the right business climate, success stories like Woods can be repeated all across the Sixteenth District and Illinois,” said Kinzinger.

Rep. Tom Graves (R-GA) toured the Propex Global facility in Ringgold, Georgia. House Republicans believe expanding markets for American-made goods will help lower prices for consumers; create better, higher-paying jobs for workers; and attract new investments in the United States. Learn more here.

Rep. Mike Rogers (R-AL) visited the Hyundai and Kia supplier DAS North America in Montgomery, Alabama. The company recently opened a 360,000 square-foot facility that is expected to employ at least 440 people.

Click here to learn more about what House Republicans are doing to build an America that works.

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Cutting the Deficit, Compassionately - Economic View

Thanks to former President George W. Bush — remember the compassionate conservative? — I have a good name for the fundamental principle that should guide the Democratic alternative: compassionate deficit reduction. The essence is to cut the deficit in a way that does as little harm as possible to people, jobs and economic opportunity. This principle was implicit in much of what President Obama proposed in his 2013 budget, and in what he said about the deficit at the Democratic convention on Thursday. But embracing it more explicitly would improve the substance of the president’s plan, and make it easier to explain to voters.

The first tenet is to go slowly. Investors are willing to lend to the United States at the lowest interest rates in our history. That gives us the ability to cut the deficit on our own timetable. We should pass a comprehensive, aggressive deficit reduction plan as soon as possible, but the actual spending cuts and tax increases should be phased in as the economy recovers.

Why is this the compassionate approach? Because immediate, extreme austerity would plunge us back into recession. The Congressional Budget Office set off alarm bells a few weeks ago when it said that going over the fiscal cliff — a reference to the nearly $500 billion of automatic fiscal contraction scheduled for the start of 2013 — would cause a rapid rise in unemployment. Well, duh.

A crude rule of thumb is that every $100 billion of deficit reduction will cost close to a million jobs in the near term. If that isn’t a reason to move gradually, what is? But if you need another, just look at Europe.

A concrete way to adjust gradually is to pair serious long-run deficit reduction measures with equally serious, near-term jobs measures — like a sizable short-run infrastructure program and a one-year continuation of the payroll tax cut for working families first passed in 2010. President Obama advocated both in his proposed American Jobs Act last September.

Even better would be to give businesses increasing employment a tax credit so large they couldn’t help but notice it, and state and local governments a round of aid generous enough to finally stop the hemorrhaging of teacher jobs and essential government services.

A second feature of compassionate deficit reduction is well-designed tax reform that raises at least some additional revenue. Our budget problems are so large that solving them entirely through spending cuts would devastate the social safety net and slash investments essential for long-run growth and economic opportunity. So revenue increases must be part of the package.

President Obama has repeatedly urged Congress to let the Bush tax cuts expire for those earning more than $250,000 a year. Increasing rates on top earners is an obvious way to raise revenue from those who can afford it most.

Many experts also recommend raising revenue by lowering tax expenditures — the roughly $1 trillion of deductions, credits and loopholes in the income tax code. Cutting tax expenditures would probably have fewer undesirable incentive effects than raising marginal tax rates. But it’s important to move carefully. Many tax expenditures, like the mortgage interest deduction and the tuition credit, go to middle-class families. Cutting only those expenditures wouldn’t be compassionate: it would shift tax burdens toward ordinary families already struggling to make ends meet.

One big tax expenditure benefiting the wealthy is the low tax rate on capital gains and dividends. The tax cuts of 2003 lowered the top rate on this income to 15 percent, far below the 35 percent top rate on other income. Compassionate deficit reduction requires a willingness to raise this preferential rate.

Government health care spending is a major cause of our terrifying long-run budget outlook. Any effective deficit plan has to slow that spending growth. But a compassionate plan would minimize risk to people, especially the most vulnerable.

The central question is whether Medicare and Medicaid should remain entitlement programs guaranteeing a certain amount of care, as Democrats believe, or become defined contribution programs in which federal spending is capped, as Republicans suggest.

Democrats have been forceful in explaining that if the federal contribution is limited and competition doesn’t magically slow costs commensurately, individuals and states will have to pay more. With Medicare, if individuals couldn’t pay the extra cost, they’d have to settle for less complete coverage and fewer benefits. With Medicaid, if states weren’t willing to pay the extra cost, they’d have to throw people off the rolls.

But Democrats need to explain their own plans for slowing government health care spending. To start with, they shouldn’t be defensive about having found $716 billion of Medicare savings as part of the health care reform legislation. They should explain, as former President Bill Clinton did in his speech on Wednesday, that these were reasonable changes that reduced overpayments to providers. They should ask Mitt Romney, who has vowed to roll back these reforms, why he wants to waste taxpayers’ money.

Moreover, Democrats should explain that compassionate deficit reduction will involve more such reforms. Fortunately, there is much inefficiency in the current system, so it should be possible to cut costs without lowering benefits. But if we can’t save enough money by reducing waste and finding better ways to provide care, we might have to consider more painful choices.

Making the wealthy pay a larger share of their Medicare costs, through further means-testing of benefits, would be one way to go. Gradually raising the Medicare eligibility age would be another. That may not sound like a winning message until you contrast it with the Republican plan, which trusts private insurers to decide how to cut costs.

Dealing with the deficit will require more than increasing revenue and reforming health care programs. We’ll also have to cut other spending. Compassionate deficit reduction requires that we choose carefully what to trim.

Spending that protects children, such as money for school lunches and vaccinations, must be maintained. So should assistance for workers displaced by international trade and for veterans struggling to recover from combat wounds.

Democrats shouldn’t be ashamed to advocate actually increasing spending that encourages opportunity and long-run growth. Aid for effective public education and Pell grants that help low-income students go to college aren’t luxuries — they are the building blocks of tomorrow’s labor force and the foundation of the American dream. And spending on infrastructure and basic scientific research is essential for the growth of productivity and standards of living.

BUT to make support for good spending credible, compassionate deficit reducers should be specific about what they would cut. Personally, I’d start with agricultural price supports and subsidized crop insurance programs that mainly benefit large commercial farmers. High-speed rail might be next. (Sorry, Mr. Vice President.) And if the defense secretary says that there is $487 billion that can be safely cut from the Pentagon’s budget over the next 10 years, we should listen to him.

Honest talk about the deficit is risky. Voters are more enthusiastic about the abstract notion of deficit reduction than about the painful details of accomplishing it. But deficit reduction is coming, and this election will most likely determine how it’s done. Democrats owe it to the American people to detail their more compassionate approach so that voters can make an informed choice.

Christina D. Romer is an economics professor at the University of California, Berkeley, and was the chairwoman of President Obama’s Council of Economic Advisers.

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#DNCEconomy: Romney's wrong economic answers

Given Mitt Romney's business record as an outsourcer and tax avoider, and his desire to continue the failed economic policies of George W. Bush, President Obama should be 20 points ahead in the polls right now, not struggling to stay even.

By Chip Somodevilla, Getty Images

Sen. Bernie Sanders, I-Vt.

By Chip Somodevilla, Getty Images

Sen. Bernie Sanders, I-Vt.

At a time when the wealthiest people are doing phenomenally well, Romney's plan to provide more tax breaks for millionaires and billionaires is dead wrong.

At a time when we have lost more than 56,000 factories and 5.3 million decent-paying manufacturing jobs since 2000, Romney is wrong in pushing for more unfettered free trade, which will make it easier for large corporations to throw American workers out on the street and ship American jobs to China and other low-wage countries.

At a time when millions of Americans continue to struggle through the horrendous recession caused by the greed, recklessness and illegal behavior on Wall Street, Romney is wrong to believe we need more deregulation of too-big-to fail financial institutions.

In order to win support from the American middle class, it is absolutely imperative that the president provide a strong agenda that speaks to their needs, and that makes clear he will fight to win those proposals against the right-wing extremists who now control the Republican Party. Here is some of what the president should advocate:

1) The president must make it clear to the American people that he will not cut Social Security. Social Security has not added one penny to the deficit because it is funded by the payroll tax. Social Security has a $2.7 trillion surplus and can pay out every benefit owed to every eligible American for the next 21 years.

2) Obama must tell the American people that he is not going to balance the budget on the backs of the elderly, the children, the sick and the poor. The deficit was largely caused by Bush's two unpaid-for wars, tax breaks for the rich and the Wall Street-caused recession. The president must reduce the deficit by asking the wealthiest people in this country to start paying their fair share of taxes, by ending enormous corporate tax loopholes and by taking a hard look at wasteful military spending.

3) Given that real unemployment is 15%, the president must propose a major jobs program to rebuild our crumbling infrastructure (roads, bridges, water systems, waste water plants, airports and railroads) and, in the process, create millions of good paying jobs.

4) The president must accelerate his efforts to transform our energy system away from fossil fuel and into energy efficiency and such sustainable energy sources as wind, solar, geothermal and biomass. This would not only address the planetary crisis of global warming but also create jobs.

5) The president must call for real Wall Street reform that ends the largest unregulated gambling casino in the history of the world, and that demands Wall Street invest in the productive economy.

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6) The president must support a constitutional amendment to overturn Citizens United, the disastrous U.S. Supreme Court decision that allows corporations and billionaires to buy politicians.

Bernie Sanders is the independent senator from Vermont.

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Romney criticizes Obama economic policies in Utah (AP)

SALT LAKE CITY – Republican presidential hopeful Mitt Romney criticized President Barack Obama's economic policies Friday at campaign stops in his one-time home state of Utah.

"Gasoline is too expensive, food's too expensive, there's too many people out of work, and there's nothing to be proud of in Barack Obama's economic policies," Romney said from the back of a bright red pickup outside a popular Salt Lake City drive-in restaurant. "My policies will get Americans back to work and let America lead the world as it has in the past."

Romney's stop at the locally owned Hires Big H was his first public appearance in heavily Republican Utah since he announced his bid for the nomination. The event drew about 200 supporters and was bookended by a pair of private fundraisers, including a $1,000-a-plate luncheon at a private home in Orem and a $2,500 per-person reception at a downtown Salt Lake City.

It wasn't clear Friday how much money Romney had raised during his swing through the state.

This is Romney's second bid for the GOP nomination. He's considered the front-runner in a primary field that includes former Minnesota Gov. Tim Pawlenty, former House Speaker Newt Gingrich, Minnesota Rep. Michele Bachman and former Utah Gov. Jon Huntsman.

Romney said that by the end of his first term, Obama will have racked up more debt than all previous U.S. presidents combined — a remark that drew loud booing from the crowd.

"He has spent too much money, he has borrowed too much money ... he's put in place the greatest takeover of states' rights with his Obamacare, which we're gonna repeal and reverse," Romney said with his wife of 42 years, Ann, by his side.

Merle and Robert Fullmer, republicans from Midvale, waited about an hour in the hot sun to see the candidate. They said they think Romney, who like the couple is a member of the Utah-based Church of Jesus Christ of Latter-day Saints, can tackle the nation's economic and foreign policy problems.

"He seems to have integrity and he seems to have the right experience at this particular time in politics," said Robert Fullmer, 78.

A registered Democrat, Anne Ryan, of Portland, Ore., interrupted her Utah visit to bring her husband and two teenage sons to the rally.

"I am a Mitt fan. I've followed his campaign for a long time ... and also this is just such an experience for my son to come see a campaign event," said the 43-year-old, who is also a Mormon.

Ryan, a former computer systems engineer, said it was Romney's performances as Massachusetts' governor and head of the 2002 Olympic Winter Games in Salt Lake City that drew her interest and support.

After the rally, Romney munched on a cheeseburger and talked with local small-business owners and state government leaders about their concerns, including taxes, health insurance costs, entitlement programs and energy policy.

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