Economy & Budget

Friday's job numbers, and what they won't tell us about America's growing anxious class

Last year was a fabulous one for entrepreneurs, at least according to the Kauffman Index of Entrepreneurial Activity released last month by the Ewing Marion Kauffman Foundation. "Rather than making history for its deep recession and record unemployment," the foundation reported, "2009 might instead be remembered as the year business startups reached their highest level in 14 years -- even exceeding the number of startups during the peak 1999-2000 technology boom."


Getting it right on consumer protection (Rep. Rush Holt)

Now that the Senate has passed its version of financial regulatory reform and we head to Conference, it’s vital that House leaders insist on the strongest possible consumer protections and reject a watered down version.

The 2008 economic meltdown had some roots in consumer finance. Financial lenders steered families into mortgages they could not afford to repay, steered them into subprime loans, then packaged those loans and sold them to investors in the securities market. Credit card companies used unfair and deceptive practices to exacerbate nearly $1 trillion in nationwide credit card debt.

The financial meltdown has much of its origin in lax consumer regulation and consumer abuse.  Financial lenders steered families into mortgages they could not afford to repay, offering only subprime loans to some who qualified for prime loans and then packaging those loans and selling them to investors on the securities market. Additionally, credit card companies used unfair and deceptive practices to exacerbate nearly $1 trillion in nationwide credit card debt.


They don’t speak for all minorities on Net Neutrality

In the net neutrality debate, several leading civil rights organizations have come down heavily against net neutrality, as have some members of the Congressional Black Caucus. Do not assume that they speak for all people of color or for all low-income individuals in urban or rural areas.
I do not belittle or demonize those champions of many noble battles past and yet to come. However, I vigorously disagree with their position on this particular issue, and adamantly reject the assumption that it’s in minority constituents’ best interests for Congress to oppose net neutrality. As a minority business owner who also specializes in broadband strategy, and has spent years assessing the efforts of people working directly with those abandoned across the digital divide, I have a valid perspective.

Organizations that view open Internet requirements as a threat to poor people do not speak for A. Mustafa Al-Aziz, CEO of a WiMAX service provider who grew up in a low-income community. He believes net neutrality is a battle for equality. “If my mom who lives in Battleboro, NC couldn’t get to Skype to make calls that are free or cheap [because Skype competes with telcos’ other services], she wouldn’t be able to afford to make long distance calls.”
These organizations do not speak for Davis Park, former Director of Community Technology Programs for the Little Tokyo Service Center. “If I’m going to pay for 756k speed, that’s what I’ll pay. But I want the same access to whatever content is on the Internet. Suppose local government gives people free online access to healthcare information and services, but only subscribers who pay an extra price to network operators can access it. This is a matter of social injustice. The same is true for access to job opportunities and educational information that’s supposed to be available for everyone.”
Likewise, they do not speak for Genaro Rendon, Director of Southwest Workers Union, which works for community empowerment. He believes net neutrality’s emphasis on equal access to information directly impacts low-income people’s ability to build up their communities. “People not informed are people not participating. The Internet is how you reach decision makers who influence whether Spanish-speaking people are allocated proper resources and representation in government.”
Nor do they speak for the St. Anthony Foundation in San Francisco, CA, a nonprofit running technology training programs to help low-income individuals enter, re-enter and/or advance in the workplace. Karl Robillard, Manager of Employment Programs and the Tech Lab, sees a threat down the road if net neutrality principles are not codified. “Right now the Internet is an open exchange of communication. But if it becomes so profit driven by providers that you need money to get to specific content, then you cut out people trying to get a leg up in the world.”

Are poor communities damned if you do, damned if you don’t?

Organizations pressuring Congress with the dubious threat that incumbents won’t invest in minority communities if net neutrality passes do not speak for the urban and rural poor who’ve suffered shabby treatment in a regulation-free environment.
Philadelphia moved to build its own broadband network because of the digital divide. Research in 2004 revealed those with physical access to broadband, meaning if you requested someone would deliver service, correlated directly to income: those in the rich parts of town easily got DSL service, those in low-income communities didn’t. Following Katrina, many poor New Orleans residents lost all communication. The city’s WiFi network was the only system working reliably for weeks. But, in that time of great need, Bell South threatened to sue to keep the city from opening this lifeline to residents even on a temporary basis.
Many rural communities that are repeatedly denied broadband services today will tell you. Low-income communities likely will not be any more desirable for telco investment if net neutrality is defeated, and it’s hard to believe under-served communities can be any less served if net neutrality passes. However, low-income communities that create ways to acquire Internet access, as those around St. Anthony’s did, have a much better chance of closing the digital divide under net neutrality principles.
A telco industry advocate argued in Ebony magazine that the FCC shouldn’t bother with net neutrality because there are more important issues for them to pursue. Nothing is further from the truth! The Internet is about the access to, and use of, resources that are the lifeblood in a global digital economy. Information denied is equal opportunity denied, advancement denied, political participation denied.
Organizations that have lined up against net neutrality are entitled to their opinions. But as with most other communities in America, there are those of us within minority communities who stand firmly on the side of rules that ensure everyone has equal access and equal voice on the Information highway.

Craig Settles is a broadband industry analyst, Co-Director of Communities United for Broadband [] and author of Fighting the Next Good Fight: Bringing True Broadband to Your Community []



A dishonest debate on VAT

The debate over a national sales tax, or value-added tax (VAT), to tackle the country’s deficit and debt problems is becoming fiercer as we approach the fall election. Unfortunately, the facts are becoming more obscure, and the narrow scope within which a VAT makes sense is being lost. This should be clarified or the nation will miss an opportunity for reform or impose a tax that makes things worse.

The current debate centers on the European experience. Opponents decry the VAT since it has not solved European deficit problems, rates have steadily increased, and revenues from the VAT have enabled Europe’s large welfare state. All of these arguments are correct but not the end of the story.

VATs are a major source of revenue in Europe. Nations of the European Union are required to impose a VAT as a condition of membership. The minimum rate allowed is 15 percent, which currently only Luxembourg uses. Most member countries have much higher rates, with Denmark, Hungary, and Sweden all imposing the maximum rate of 25 percent.

It is also true that European governments have consistently increased their VATs. However, the increases are a result of the design, which imbeds the tax in the final price of goods and services, where consumers do not see it. Such opacity provides convenient cover for politicians and bureaucrats to increase rates, but this design flaw can be corrected. Our northern neighbor’s experience shows that rate increases are not inevitable.

Canada introduced a VAT, the goods and services tax (GST), in 1991 at a rate of 7 percent, and it’s visible to consumers. That explains why Canadians loathe the GST and why it would be political suicide for any political party to suggest increasing it. Indeed, the rate was recently reduced to 5 percent.

In the United States, promoters argue that a VAT can solve the deficit problem with the least amount of economic damage. This argument is both right and wrong. The increased revenues generated by the VAT in Europe have not solved their deficit and debt problems. European governments simply spent the additional revenues rather than using them to balance their books.

Those arguing for a VAT based on lower economic costs also have a point because not all taxes are the same. Corporate and personal income taxes impose enormous costs on an economy by discouraging work effort, investment and entrepreneurship, which ultimately reduces economic growth. The incentive effects of consumption taxes like the VAT, on the other hand are minor, and thus one of the least costly ways to raise revenue.

Switching from costly taxes like corporate and personal income taxes to a VAT makes a great deal of sense. The key consideration is how resources from the VAT will be used. Here again the Canadian experience is informative.

Government spending in Canada as a share of the economy declined from 52 percent in 1991 when the GST was introduced to roughly 39 percent in 2007. (It has since increased owing to the Great Recession.) In other words, the revenues from the GST in Canada were not used to finance more government spending. In fact, Canadian governments switched from income to consumption taxes, which made the tax system less costly, while also decreasing the overall tax burden.

If the plan were to reduce spending in the United States and concurrently implement tax reform based on greater reliance on consumption taxes in place of corporate and personal income taxes, then a VAT makes sense. Unfortunately, that’s not the argument being made by proponents of the VAT.

They want more government spending and a new revenue source, on top of all the others, to finance it. Such an expansion of government, even if financed by a low-cost tax, will not fix deficits and debt, and will mean less economic prosperity in the future.

Jason Clemens is the director of research at the Pacific Research Institute ( Prior to joining PRI in 2008, he was a senior researcher at Canada’s Fraser Institute for 11 years.


YouCut: Eliminate federal employee raises (Rep. Michele Bachmann)

Over 87,000 votes have been cast for this week's winning YouCut proposal to Eliminate the Federal Employee Pay Raise scheduled to go into effect next year. Later today, I'll be bringing this legislation to the House Floor for a vote.

As part of his FY 2011 Budget submission President proposed raising federal civilian pay by 1.4% beginning in January of next year. This will be on top of the 2.0% raise federal civilian employees received this past January, the 3.9% raise they received the previous January, and the 3.5% raise they received the January before that. Freezing federal civilian pay at the current level for one year would save approximately $2 billion next year and $30 billion over ten years.

If the Democrats are really serious about cutting spending, this legislation is a great place to start.


Help provide justice for Native veterans (Rep. Ann Kirkpatrick)

On Monday, folks across America will come together to pay tribute to our greatest heroes – those who fought and died to keep this Nation safe and free. We owe them and all of our men and women in uniform an eternal debt of gratitude.

Sadly, Washington has not always done enough to pay that debt. Even now, many Native American Veterans are struggling to keep a roof over their heads because of their service – they are being denied housing assistance because they are receiving benefits they have earned with their sacrifices.

I introduced the Indian Veterans Housing Opportunity Act to right this wrong.  This common sense bill makes sure that Veterans disability and survivor benefits are not counted as income under a critical Native housing program.

This House approved the bill unanimously last month, and Native Veterans should not have to wait any longer for justice. I call on the Senate to observe this Memorial Day by passing this important measure.


Obama's spending proposals not genuine (Rep. Jerry Lewis)

The president and this Democrat Congress have demonstrated their apathy toward massive government spending at nearly every turn. They have approved a failed trillion-dollar ‘stimulus’ bill, punted decisions on spending reductions to a drawn-out fiscal commission, failed to pass even the barest budget blueprint, and this week are pushing for over $30 billion in additional ‘jobs’ spending on a must-pass emergency troop funding and disaster assistance bill.

Now the president is trying to appear fiscally responsible by saying he’s going to cut certain items out of spending bills – ostensibly from accounts that, in total, make up less than one-tenth of one percent of the
federal budget. This plan not only intrudes on the constitutional authority of Congress to determine federal spending, but also would have only a minuscule effect on real savings for the American taxpayer.

The president’s proposal today is merely a public relations maneuver to distract the American people from the fact that his policies and those of the Democrat Congress have led us to unprecedented and devastating levels of deficit and debt. Our economy and our people are in crisis, and we should be focusing on what our constituents really want and need: genuine budget reform, less government spending, more jobs, and a stable economic future for our country.


We are listening, America — speak out! (Rep. Jim Jordan)

Right now, there is a family sitting at their dining room table, looking over receipts and figuring out how they can cut a few extra dollars from their budget. They may be calculating the cost of a summer vacation or cutting coupons to make the most of their next grocery trip.

But that family is doing what Washington refuses to do: tighten their belt and make the tough decisions to live on what they have. Families don't answer their problems with more spending. But Washington does.

We have recently seen countless examples of the disconnect our Congress has with the people they represent. In the same year of record unemployment and economic decline, this Congress has exploded our deficits, loaded us with health care regulation and increased taxes. They've named post offices while continuing to ignore our near-ten percent unemployment rate. They've prioritized misguided legislation such as Cash for Caulkers instead of listening to the American people.

I hear your frustrations every day -- when I stop by your business, bump into you at the gas station or even on my Facebook page. You are tired of more spending and you have more unemployed friends and family members than ever before. Simply put, Congress' to-do list doesn't match up with yours.

It is time to change the priorities of Washington and introduce a new way of doing business -- a business where the American people drive the agenda in Congress.

House Republicans are on the brink of bringing such an agenda from America. We will listen to Americans and get to work for them right away.

Our new project -- America Speaking Out -- is unprecedented and is finally giving Americans the pen and paper. You will have a seat at the table when it comes to building the agenda.

In stark contrast to the Washington arrogance, House Republicans want to hear what you think should be a part of a new policy agenda. Whether it’s on the economy, spending, family values or national security -- your priorities will be reflected.

On the new online forum,, you can lend your voice to build a new agenda. Using the best of social media, will allow you to submit a policy solution, promote your priorities, debate the ideas posted by other Americans, and share the conversation with your friends and neighbors via Facebook and Twitter. It is our hope that will become the home to an unprecedented online conversation between Americans and their elected representatives.

Now is America’s time to rewrite our to-do list -- a groundbreaking way of changing Washington and giving you what you need.


Wall Street reform ends 'too big to fail' (Sen. Jon Tester)

You've probably already seen the ads on TV or heard them on the radio. Out-of-state groups are shelling out millions to sway your opinion on a very important bill I'm working on in the Senate Banking Committee -- a bill that finally ends the era of "too big to fail" on Wall Street.

I can see why some folks with a lot of money to burn don't want this bill to pass. They don't want it to pass because it finally puts referees on Wall Street. And without refs on Wall Street, business has been brisk for a handful of well-off Americans.

But our entire economy almost collapsed a year-and-a-half ago because there were no referees on Wall Street. And sadly, hardworking, honest taxpayers -- and our entire economy -- paid the price.

The bailouts President Bush asked for in 2008 weren't the answer. That's why I voted against both of them.

The best way to fix this problem -- and to prevent it from happening again -- is to rewrite the rules. To require big banks and huge financial institutions to play by those rules. And to take "too big to fail" out of the equation.

The Wall Street reform bill, which combines good ideas from Republicans and Democrats -- does just that.

It will create a bipartisan council of regulators to serve an "advance warning system" to snuff out problems well before they hurt the entire economy. It will streamline existing regulators, giving them the power to write rules and enforce them on America's biggest banks.

The bill will not, however, affect Montana's banks. Montana's Main Street banks and credit unions played by the rules during the financial crisis. I made sure this bill won't create more hassles or costs for banks that do honest business.

A few weeks ago, a secretive organization called the Committee for Truth in Politics saturated Montana's airwaves with TV and radio ads. The ads called Wall Street reform a "bailout."

Why? Good question. Calling the Wall Street reform a "bailout" -- even though it isn't -- is a poll-tested way get folks to be against it.

In response to those ads, thousands of callers were automatically patched into my office to tell me, "vote against the bailout." Many callers were relieved -- and confused -- to learn that Wall Street reform is not a bailout. No matter how you spin it. This bill is just the opposite.

The fact is, Wall Street reform will finally make some much needed changes to the way things work, to protect the good actors on Main Street -- and across rural America -- from the bad actors on Wall Street. And it ends "too big to fail."

I've posted the Wall Street reform bill online at You can also follow the progress of the bill at As this very important legislation moves through Congress, I'll make sure it's the best possible bill for Montanans.

And I'll make sure we have an honest debate based on the facts.

Cross posted from the Huffington Post