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... the White House on Sunday released estimates of how it says the so-called sequester — scheduled to take effect March 1 — could affect programs in every state. The GOP has questioned the administration's methodology. Read more coverage.

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Last week, the United Kingdom received its first ever credit downgrade, as continued austerity has dragged down the country’s economic growth. Britain’s conservative government, however, is forging ahead. Finance Minister George Osborne yesterday called for the UK to “stick to its course.”

The UK, though, is a prime example for why austerity should be avoided in a weak economy. As this chart from Reuters’ shows, the U.S., which embraced stimulus after the 2008 financial crisis, is in much better shape than the European countries that went for austerity:





As this chart shows, the UK has not at all lived up to the projections for economic growth that were made in 2010:




Austerity has actually had the opposite of its intended effect in the UK, killing growth while not bringing down debt. And that’s held true across Europe, as this chart from economists Paul De Grauwe and Yuemei Ji shows:

http://www.voxeu.org/article/panic-driven-austerity-eurozone-and-its-implications

How well did this panic-induced austerity work? We provide some answers in Figures 4 and 5. [font size="3"]Figure 4 shows the relation between the austerity measures introduced in 2011 and the growth of GDP over 2011-12. We find a strong negative correlation. [/font]Countries that imposed the strongest austerity measures also experienced the strongest declines in their GDP. This result is in line with the IMF’s recent analysis (IMF 2012).

Figure 4. Austerity and GDP growth 2011-2012

My short version of apportioning blame for the current mess is this: The Obama administration is guilty of bad negotiating in pursuit of sensible policy. Congressional Republicans are guilty of exploiting the president’s bad negotiating in pursuit of terrible policy.

Let’s quickly dispense with the sideshow of the sequester’s parentage. It makes no difference, no matter how many times Republicans decry “the president’s sequester.”

First, the Obama administration came up with the mechanism precisely because Republicans deemed unacceptable a sequester that included automatic increases in tax revenue.

The underlying concept, from Democrats’ view, was never to implement the $1.2 trillion through spending cuts alone. Rather, the threat of sequester was to be leverage for a blend of spending cuts and tax increases. Sequester is happening because Republicans in the supercommittee balked at raising adequate revenue.
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If the 2012 election was fought over any one issue, it was tax revenues. Mitt Romney thought tax rates were fine where they were. President Obama thought they needed to go considerably higher.

Obama won that election and with it, many thought, the argument over taxes. But a few short months later, the “center” on taxes appears to have shifted to the right — even as compared with the months after Republicans won the 2010 midterm elections. And the blame for that may lie as much with Democrats as Republicans.

The initial budget plan released in December 2010 by former Republican senator Alan Simpson and former Democratic White House chief of staff Erskine Bowles, if passed today, would raise taxes by more than $2.6 trillion over the next 10 years. The new Simpson-Bowles proposal, released earlier this week, would raise taxes by barely half that.

Simpson-Bowles isn’t alone in sharply reducing its tax ask. The bipartisan debt commission chaired by former OMB director Alice Rivlin and former Republican senator Pete Domenici released its first report in November 2010. It called for more than $3.5 trillion in revenues over the next decade — some of which would’ve been raised through a value-added tax. But the post-election update of their report called for only $1.5 trillion in revenues, and it scrapped the value-added tax.

Obama ran for reelection with a budget calling for $1.7 trillion in tax increases and a promise that he’d oppose anything that didn’t raise tax rates on families making more than $250,000. In the end, the fiscal-cliff deal raised a bit more than $600 billion in revenues and raised tax rates only on families making $450,000 or more. Today, White House officials say they’d be willing to settle for $1.2 trillion in total revenues.



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Enter the Gang of Six

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Word quickly traveled down Pennsylvania Avenue to the White House, where Nabors, who was still honing a response to Boehner’s offer from Sunday night, called Barry Jackson in the speaker’s office and asked what was going on. Jackson wasn’t sure. Within a few hours, though, the White House had the sense that something important had shifted. More than 20 Republican senators, by some counts, had stood up in favor of a plan (the one agreed to by the 'gang of six'_Bill USA) that would raise more revenue, and Obama thought he now had an opportunity to exert more pressure on House Republicans by highlighting the widening split inside their own party. Shortly after noon, Obama took the unusual step of marching out to the briefing room to declare his support for the Gang of Six, instantly elevating what was supposed to have been an informal, sparsely attended briefing into the day’s national news. It was, in retrospect, a costly miscalculation.

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If it was never going to be easy for the White House to sell the grand bargain to Democrats on the Hill, then the plan put forward by the Gang of Six was likely to make it impossible. [font color="red"]On the surface, the gang had proposed an overall revenue increase of $1.2 trillion, 50 percent more than the $800 billion Obama and Boehner were talking about[/font]. Democrats were bound to ask why the president had settled for less in taxes than the Gang of Six did.

But once Obama’s aides looked more closely at the numbers, they understood that the political problem posed by the gang’s plan was actually far worse. ]  This is where the whole distinction between base lines — “current law” and “current policy” — comes in again. ] The gang had settled on a base line that was somewhere between “current law” and “current policy”; it had assumed the Bush tax cuts for the most affluent were expiring, while the other tax cuts would persist. ]  The White House, meanwhile, had been calculating their figures based on “current policy,” under which all the tax cuts would remain in place. This meant that when you actually compared the two plans in an apples-to-apples way, [font color="red"]the Gang of Six was proposing to raise revenue by about $2 trillion — $1.2 trillion more than the president and the speaker had tentatively agreed to[/font].

How could Obama possibly ask Democratic leaders to pass a deal with $800 billion in new revenue, when a bunch of Republican senators — not to mention the president himself, on national TV — had just stood up to applaud a plan with $2 trillion attached?   Never mind that the Gang of Six plan was little more than a memo, with no chance of becoming an actual bill — let alone passing the House or Senate. ]  Liberals would laugh the president out of the room. The numbers would confirm the suspicion, already voiced by some lawmakers privately, that Obama wanted a bipartisan victory too badly and would accept a deal on any terms, even if it sold out his party’s principles.
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Overall, 49% would mostly blame GOP leaders if no deficit reduction agreement is reached by the March 1 deadline. Just 31% would mostly blame Obama, while 11% volunteer that both would be equally to blame.





"while Obama’s 51% job approval rating is down slightly from a post-election high of 55%, it remains well above the 25% approval rating for GOP congressional leaders. The job rating for Democratic leaders is higher (37%), though more disapprove (55%) than approve of their performance (uh, 67% dissapproved of Republican leaders_Bill USA)."



Climate Change: Public Favors Stricter Emission Standards

[font size="3"]By a 54% to 34% margin, more Americans say the priority for addressing the nation’s energy supply should be developing alternative energy sources, such as wind, solar and hydrogen, over increased production of oil, coal and natural gas. [/font]

In a progressive system, upper-income households pay a larger share of taxes than their share of income, while the opposite is true for lower-income households. Over the last three decades, taxation in the United States became less progressive.

Households earning more than $350,000 paid 20 percent of the nation’s taxes in 2010, 1.37 times their share of total income, while in 1980, those households paid taxes equaling 1.56 times their share of income. The change was larger before the recession, which reduced investment income, as in past recessions.

A sharply divided Congress isn't likely to jump at President Barack Obama's challenge for quick passage of a mortgage refinancing bill that supporters say could help millions of homeowners save big each year and boost the economy.

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"That's holding our entire economy back, and we need to fix it," the president said. "Right now, there's a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today's rates. Democrats and Republicans have supported it before."
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Nearly 12 million homeowners have Fannie Mae and Freddie Mac loans and stand to benefit refinancing, the two senators said. Many can't refinance at a lower rate because of red tape and high fees. The red tape has reduced competition among banks, so borrowers pay higher interest rates than they would if they were able to shop around more, according to the senators.

The bill also would reduce up-front fees that borrowers pay on refinances and eliminate appraisal costs for all borrowers. The measure seeks to expand the Obama administration's Home Affordable Refinancing Program, which saves an average homeowner about $2,500 per year, they said.

"Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum," Boxer said.