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archived: 7 - 13 Jan, 2007 Back Next
UPDATED: JANUARY 11, 2007
PAYGO
House Democrats are continuing their 100 Hours of legislative packages. On Friday, Democrats passed rules establishing PAYGO.
PAYGO is a simple budget concept; but one that has profound implications. The rule simply provides that either tax cuts or increased appropriations for benefit programs cannot add to the already large federal deficit.
PAYGO will effect both Republican and Democratic policies. For Republicans, PAYGO will prohibit further major tax cuts. The non-partisan Congressional Budget Office recently issued a report on the effect of Bush’s tax cuts. Democrats had correctly predicted the consequences:
Families earning more than $1 million a year saw their federal tax rates drop more sharply than any group in the country as a result of President Bush’s tax cuts, according to a new Congressional study.
The study, by the nonpartisan Congressional Budget Office, also shows that tax rates for middle-income earners edged up in 2004, the most recent year for which data was available, while rates for people at the very top continued to decline.
Based on an exhaustive analysis of tax records and census data, the study reinforced the sense that while Mr. Bush’s tax cuts reduced rates for people at every income level, they offered the biggest benefits by far to people at the very top — especially the top 1 percent of income earners.
Those tax cuts account for nearly half of the increase in the federal deficit as this chart from the Center for Budget and Policy Priorities demonstrates:
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Bush’s tax cuts favoring the wealthy, which will start to expire in 2010, could not be made permanent in this session of Congress or renewed.
For Democrats, it means restraint in program development:
It [will] make it difficult for Democrats to pass increases in federal benefit programs such as Medicare or the Medicaid health care program for the poor or disabled.
The rule requires that tax cuts have corresponding cuts in government spending or increases in taxes elsewhere to pay for them. Likewise, any increase in entitlement programs such as Medicare would have to have corresponding tax increases, or equal cuts in other government programs.
In the near term, the rule, also known as PAYGO, means the Democrats' bill to cut student loan rates will be less generous than they'd like.
PAYGO will bring a large measure of fiscal sanity following years of a Republican policy of borrow and spend. It will be a painful experience.
An equally important point emerges. Every dollar spent on Bush’s war in Iraq is a dollar that cannot be spent at home.
DOWN; BUT OUT?
The second publicly released poll in January is out; USA Today/Gallup. Consistent with our warning earlier in the week, the USA Today/Gallup poll pegs Bush’s approval rating at 37%.
Even though the USA Today/Gallup poll is +7% higher than the CBS poll, the USA Today/Gallup poll is -1% from its previous poll in December. The -1% drop is consistent with the -1% drop in the CBS poll from December to January.
For the moment, TPJ’s monthly average of both polls is at 33.50%, a full -2% down from December. In TPJ’s estimation, Bush’s actual approval rating is most likely 34.5%, down about -1% from December.
Bush will appear on national television tomorrow night and outline the escalation of America’s involvement in the civil war raging in Iraq. His speech will certainly have some impact on his approval rating. Under normal circumstances, TPJ would surmise that he would get a bump up in approval rating as a result. However, every recent poll points to the fact that the vast majority of Americans do not support Bush’s escalation of the war by a greater proportion than his approval ratings below.
Can Bush convince a skeptical American public of the efficacy of his plan? In our view, much is at stake for Bush and America tomorrow night. How will the public respond?
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Approve |
Trail Mo |
Disapprove |
No Opinion |
Spread |
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USA Today/Gallup |
1/5-7/07 |
37 |
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59 |
4 |
-22 |
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CBS |
1/1-3/07 |
30 |
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63 |
7 |
-33 |
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33.50 |
-2.00 |
61.00 |
5.50 |
-27.50 |
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2006 |
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December Avg |
35.50 |
-0.93 |
59.25 |
5.42 |
-23.75 |
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November Avg |
36.43 |
-1.07 |
58.00 |
5.50 |
-21.57 |
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October Avg |
37.50 |
-3.42 |
57.11 |
5.36 |
-19.61 |
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September Avg |
40.92 |
2.64 |
54.23 |
4.77 |
-13.31 |
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August Avg |
38.29 |
0.59 |
57.14 |
4.64 |
-18.86 |
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July Avg |
37.70 |
0.49 |
56.40 |
5.90 |
-18.70 |
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June Avg |
37.21 |
3.05 |
56.79 |
5.93 |
-19.57 |
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May Avg |
34.17 |
-1.58 |
60.33 |
5.91 |
-26.17 |
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April Avg |
35.75 |
-1.35 |
57.75 |
6.82 |
-22.00 |
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March Avg |
37.10 |
-2.54 |
57.30 |
5.80 |
-20.20 |
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February Avg |
39.64 |
-2.42 |
55.21 |
5.23 |
-15.57 |
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January Avg |
42.07 |
1.32 |
53.27 |
5.07 |
-11.20 |
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2005 |
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December Avg |
40.75 |
2.83 |
54.25 |
6.33 |
-13.50 |
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November Avg |
37.92 |
-1.93 |
56.46 |
6.09 |
-18.54 |
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October Avg |
39.86 |
-1.46 |
55.07 |
5.58 |
-15.21 |
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September Avg |
41.31 |
-1.91 |
53.75 |
4.81 |
-12.44 |
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August Avg |
43.22 |
-2.38 |
52.33 |
4.33 |
-9.11 |
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July Avg |
45.60 |
0.60 |
49.00 |
5.30 |
-3.40 |
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June Avg |
45.00 |
-1.50 |
49.83 |
5.33 |
-4.83 |
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May Avg |
46.50 |
-1.10 |
48.33 |
5.17 |
-1.83 |
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April Avg |
47.60 |
-1.28 |
49.00 |
3.20 |
-1.40 |
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March Avg |
48.88 |
-1.13 |
46.00 |
5.13 |
2.88 |
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February Avg |
50.00 |
-1.00 |
46.29 |
3.71 |
3.71 |
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January Avg |
51.00 |
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44.71 |
4.00 |
6.29 |
_____________________________________________
100 HOURS
Democrats have assumed leadership of Congress and are starting to enact their promised agenda of reforms within the first 100 hours. Immediately after electing Rep. Pelosi as Speaker, Democrats enacted ethics reforms.
One of the key provisions passed addresses “earmarks” in spending and tax measures. Republicans in control of Congress had turned “earmarks” into an art form.
The cost of earmarks has tripled in the last 12 years, to more than $64 billion annually. Some lawmakers treated their share of that money as personal accounts to dole out to constituents or, in many cases, campaign contributors. . . .
[O]ver the last 12 years of Republican control the number of earmarks in the labor, health and education spending bill had risen to 3,000, from zero.
The new rules require lawmakers to:
attach their names to “earmarks” they include in spending or tax bills and they must certify that they have no financial interest in the provisions.
disclose narrowly focused tax or tariff reductions affecting fewer than 10 companies or people.
“pay as you go.” Earmarks cannot create a larger federal deficit.
The vote in the House was rather surprising. The bill passed with 48 Republicans joining all 232 Democrats.
A great start for Democrats, who have promised to deliver much needed reforms. The House bill is off to the Senate where the bill will be considered next week.
THE CHALLENGE
Congressional Democrats will successfully complete their 100 hour legislative reform package. It is a good foundation on which to build.
Yet, Benjamin Barber, a political theorist of note at the University of Maryland, is a former advisor to Clinton and Gov. Dean. He succinctly makes the point that the Democrats must have a broader vision if they are to successfully lead America in new directions:
The Democrats are about to start their hundred days blitzkrieg, using the very Republican methods they screamed about for twelve years to assure a completely partisan process — with good reason, to be sure (they want to actually do something) — but ending any hope that the new Congress will bring a new comity . . . But the real question is do Democrats have a larger vision to go with their obvious small bore agenda? Sure, minimum wage has to go up, health insurance must be put back on the table, and corporate corruption has to be attacked. Sure. But what about the global economy? unbalanced trade? ruanway markets? illegal immigration? the war on terrorism? the war in Iraq that can neither be won nor stopped? where escalation and deescalation are alike disastrous? Is there a global vision that confronts global markets without pretending that globalization will somehow go away? Is there a way out of the mess in the Middle East that doesn’t abandon all hope of avoiding a Sunni-Shia pan-arabic civic war? It’s great to have the Democrats back in the saddle, but at some point the horse has to be told where it’s going. The Democrats need to act forcefully, but to do that they have to start thinking acutely — not just about 2008 but about 2018, not just about the next election but about the next decade. Are they ready to do that? Are they able?
Junkie Editor Michael Carmichael begins to take on some of these questions in an excellent piece that is posted today in his section of TPJ, “WHAT AMERICA MUST NOT DO NOW.” It is a must read.
INTO THE ABYSS
CBS has the first poll out in 2007. The results:
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Approve |
Disapprove |
No Opinion |
Spread |
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