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Economic News, Data and Analysis

Obama Casts Wide Blame for Financial Crisis and Proposes Homeowner Aid

For the press clips file…

Obama Casts Wide Blame for Financial Crisis and Proposes Homeowner Aid – New York Times

Both warned of a national credit crisis and advanced proposals to amend bankruptcy laws to aid those facing housing foreclosure. Each endorsed Democratic legislation — sponsored by Senator Christopher J. Dodd of Connecticut and Representative Barney Frank of Massachusetts — to create a housing security program in the Federal Housing Administration that would provide incentives to refinance mortgages carrying onerously high interest rates.
“They are very close; they are pointing to very similar proposals,” said John Irons, research and policy director for the Economic Policy Institute, a labor-oriented research center. “There are minor differences, but when you compare their proposals with McCain, that’s night and day. The Democrats are more like noon and 12:30.”

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Live at Democracy Journal

Cap and Lease Carbon

by John Irons
Global warming is fast becoming a reality. Unless significant action is taken to reduce greenhouse gas emissions, we can expect irreversible environmental and economic damage. While there is little serious debate on the need to reduce emissions-especially of carbon dioxide-there is a substantial debate on how to reduce these emissions. In theory, either a direct quantity restriction (cap-and-trade) or a price mechanism (tax) could be used to reduce production of carbon dioxide. But there is a policy stalemate on which is better.

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Obama and McCain on taxes

In a preview of what will likely be a hot issue in the general election, the 3 remaining presidential candidates took a stance on Bush’s tax changes during the budget debate yesterday.
Both Democrats and McCain supported extending reductions for low-income taxpayers, families with kids, and married couples. Only McCain supported extending the other tax cuts that primarily benefit high-income individuals.
From Reuters:

All three senators, including McCain, voted for a Democratic proposal to permanently extend a 10 percent tax rate, mostly for low-income earners, along with a child tax credit and marriage penalty relief. All were all set to expire in 2010.
A Republican amendment that would have extended the remaining Bush tax cuts was defeated. McCain voted for it, while Obama and Clinton opposed it.

Afterwards, the Obama and McCain camps crossed swords – with Obama pointing to McCain’s flip-flop on the issue…

“He made a decision to reverse himself on that, that was how I guess you got your ticket punched to be the Republican nominee,” Obama told reporters. “But he was right then and he’s wrong now.”
McCain responded he looked forward to a potential debate on taxes with Obama during a general election campaign.
“Senator Obama has stated very clearly his desire to increase Americans’ taxes. That’ll be one of the great debates we have if he is the nominee of his party,” McCain told reporters.

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Budget Resolution Passes House, Senate

Yesterday the House and Senate passed nearly identical versions of a budget blueprint for next year. The congressional budgets are largely status quo–spending and revenues are similar to this year’s levels, and include slight increases to domestic spending relative to Bush’s proposal.
Over time, however, the budgets assume a declining level of discretionary spending (which is the spending that Congress allocates on an annual basis for things like national defense, infrastructure, community development, and many other programs.) They also assume that some of the Bush tax changes would be reversed, while leaving some room for extending tax cuts for low and moderate income taxpayers.

Discretionary spending as a Share of GDP: 2000-2013

Update: To put this into context, here is the historical data with 5 year outlook under Bush’s proposed budget. Note that the defense portion is too low, since Bush does not include spending on Iraq in the out years.

Discretionary spending as a Share of GDP: 1962-2013


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