GDP Worst in 3 Years. Blip or Trend?

The U.S. economy limped into 2006, growing at a less-than-expected 1.1 percent rate in the fourth quarter as consumers spent at the slowest pace since 2001 and corporations limited equipment purchases.

The rise in gross domestic product, the value of all goods and services produced in the U.S., followed a 4.1 percent annual rate of increase in the previous three months, the Commerce Department reported today in Washington. A measure of inflation rose more than expected.

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Extending the Rich's Tax Cuts = $500 Billion Deficit

The Congressional Budget Office released its budget outlook for the years 2007-2014.  The full report is available on their website here. Its full of some very interest facts and snippets which I will detail below.

The Congressional Budget Office projects that if current laws and polices remained the same, the federal government would sun a deficit of $337 in 2006.  The baseline deficit for this year would be somewhat larger than the deficit of $318 billion in 2005, but it would be roughly the same relative to the size of the nation's economy.

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Bush's Jobless Recovery

One of the answers to the poll on the pages indicates people don't think good-paying jobs are easy to find.  This is an explanation of why

Full credit to Stephen Roach of Morgan Stanley for the phrase  "jobless, wageless recovery." For those of you unfamiliar with his work, Roach is a top-notch economist who has been concerned with this expansion's quality for several years. While many on the right may disagree with his conclusions, I have yet to see anyone on the right take apart the depth of his analysis or reasoning. I agree completely with Roach's reasons for bearishness: low job growth leads to weak wages growth.

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Polling Project: First Numbers

The poll is finished. The methodology can be found here. We will release the results in eight separate bursts, starting today and finishing up on Tuesday morning. The releases will follow the chronological ordering of the questions. There are twenty-two questions in the poll, plus a number of demographic questions. The release will cover questions 1-5.

The reason we are not releasing all of our information at once is because we want to give proper attention to all of the questions in the poll. Of course, in the interests of full disclosure, absolutely everything in the poll, including the raw data, the methodology, the entire questionnaire, and all of the results, will be available to the public on Tuesday morning. This will be the most public, open-source poll of all-time--Chris

If you will forgive me for being a tease, our first release will focus on perhaps the most boring questions in the entire poll:

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GOP Unwilling to Give Up Tax Cuts for Wealthy to Fix AMT

If there's ever been a more clear cut example of serving the wealthy being the driving ideology of the modern Republican Party, I've yet to see it. The Alternative Minimum Tax is a screwed up bit of tax policy. That's something that just about everyone agrees on. The idea behind it is good -- making sure that the high-income earners pay their fair share of taxes, even with all of the deductions they may be eligible for. However, since it is not adjusted to inflation, its definition of "high-income" is highly suspect and thus the tax threatens more middle class families -- especially in blue states -- every year. Lately, Congress has been stepping in to tweak the AMT every year. This year, it seems that's not going to happen.

The House and Senate passed separate bills applying a temporary fix on the problem next year, reducing taxes for those affected by roughly $30 billion. Those bills have gotten stuck in a broader debate over tax policy, specifically a GOP effort to prevent tax cuts for capital gains and dividends from expiring at the end of 2008.

The investors' tax cuts have been the priority of Republican leaders, who hold out hope that Congress could still pass an extension before lawmakers break for the holidays.

Democrats say Republicans have their priorities wrong. "We should fix the AMT for 2006 and work to address it permanently before even thinking about cap gains," said Sen. Max Baucus, D-Mont.

The expiration of the temporary patch means nearly 19 million individuals and families can expect to pay the alternative minimum tax next year. More than 15 million taxpayers would face the alternative minimum tax for the first time, most of then married couples. The extra taxes would come due in 2007 when returns must be filed to the Internal Revenue Service.

This is incredibly stupid politics for the Republicans. Holding up an AMT fix to fight for tax cuts for the wealthy perfectly highlights the soak the middle class Republican tax policy. While the Republicans are framing this as an issue of compromise, it's ridiculous that the two should even be linked.

Democrats would be well advised to fight for separate votes on the two issues. And moving into the 2006 midterms, they would be even smarter to push for a comprehensive, long-term overhaul of the AMT. This will provide quite a contrast between the economic policies of the Republicans and Democrats. One party is indeed engaged in "class warfare," and it certainly isn't the Democrats.


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