In North Carolina, TANF Emergency Funds were used to place more than 1,000 individuals in jobs while also providing critical funding to support work for many more North Carolina families.

The TANF Emergency Fund provided North Carolina with critical funding to child care subsidies ($23.6 million), More at Four ($30.5 million), Work First family assistance ($9.7 million) and to the subsidized jobs program ($11.4 million). Taken together, these programs served to support working families and provide job opportunities for low-income adults.
 
"Studies show that wage subsidy programs can create jobs and connect workers to employment opportunities, creating wealth and spurring business," said Alexandra Forter Sirota, a policy analyst with the NC Budget & Tax Center. "North Carolina needs more of this, not less."
 
The Temporary Assistance to Needy Families Emergency Fund provided North Carolina with critical funding to child care subsidies ($23.6 million), More at Four ($30.5 million), Work First family assistance ($9.7 million) and to the subsidized jobs program ($11.4 million). Taken together, these programs served to support working families and provide job opportunities for low-income adults.
 
"Ending this program will cost North Carolina jobs, remove much-needed income from local economies, adversely affect local businesses, and make it impossible for many low-income parents to cover basic expenses," writes Sirota. "This is the opposite of what the nation needs at a time when the economic recovery remains precarious."

You can read the full NC Budget & Tax Center report online at: http://www.ncjustice.org/?q=node/589.

When Congress returns from its August recess in September, one of the most important issues facing members will be how to address the coming expiration of several major tax policy changes implemented over the course of the last decade. The choice of which tax policies to extend, change or eliminate will have far-reaching consequences here in North Carolina and across the country.

A new report from the North Carolina Budget & Tax Center shows that nearly 600,000 children in North Carolina would lose benefits if just one portion of the middle-class tax cuts is not extended. The results of the overall tax decisions would be far greater, affecting nearly all children in North Carolina.

The report recommends extending the middle-class tax cuts that support public structures while letting the deficit-exploding Bush tax cuts for the wealthiest Americans expire.

"The stability and growth of North Carolina's future economy requires strong public structures," said Edwin McLenaghan, the BTC policy analyst who authored the report. "The best way to strengthen those public structures is a tax system that helps North Carolina's middle class families provide for their children."

Major tax provisions from 2001 and 2003 and the 2009 American Recovery and Reinvestment Act are set to expire by the end of this year. Congress must decide whether to extend or modify temporary improvements to tax credits that help low- and moderate-income working families that were made as part of last year's American Recovery and Reinvestment Act.

The Recovery Act expanded the Child Tax Credit, increased the Earned Income Tax Credit (EITC) for families with three or more children, increased marriage-penalty relief under the EITC, and created the new American Opportunity Tax Credit to help families pay for college.

If the current Child Tax Credit improvements expire, 594,000 North Carolina children would lose all or some of their credit. If the EITC improvements expire, 455,000 children in North Carolina would lose some or all of their EITC benefits.

The Bush tax cuts, by contrast, primarily benefited the wealthiest households. This year, the richest one percent of taxpayers will receive more than a third of all the benefits of those tax cuts, while those in the bottom 60 percent will get less than a fifth of the benefits. Extending the portion of the Bush income tax cuts for the wealthiest two percent will account for roughly $1 trillion in new federal debt over the next ten years.

"Both revenue collection and tax rates are at near-historic lows and deficits are at levels not seen since the Second World War," said McLenaghan. "Extending tax cuts for the wealthy would do little if anything to stimulate the economy, but would create devastating deficits."

Click here to read the full report by the North Carolina Budget & Tax Center.

Almost 90 percent of people aged 65 and older receive some of their family income from Social Security.  Without Social Security benefits, 45.2 percent of elderly Americans would have incomes below the poverty line, all else being equal. With Social Security benefits, only 9.7 percent are poor. Some 13.2 million elderly Americans are lifted out of poverty by Social Security.

Social Security reduces elderly poverty dramatically in every state in the nation. Without Social Security, the poverty rate for those aged 65 and over would exceed 40 percent in 42 states. With Social Security, the elderly poverty rate in the large majority of states is less than 10 percent. Social Security lifts 1.1 million elderly people out of poverty in California and Florida, almost 900,000 in Texas, 800,000 in New York, and 461,000 in North Carolina.

Social Security is important for children and their families as well as for the elderly. About 6 million children under age 18 (8 percent of all U.S. children) lived in families that received income from Social Security in 2008, according to Census data. Over 3 million children received their own benefits as dependents of retired, disabled, or deceased workers. Others lived with parents or relatives who received Social Security benefits. In all, 1.1 million children are lifted out of poverty by Social Security.

Records show that 3.2 million children under age 18 qualified for Social Security payments themselves in December 2009. Of these, 1.3 million were the survivor of a deceased worker. Another 1.6 million received payments because their parent had a severe disability. And 301,000 children under 18 received payments because their parent or, in some cases, grandparent was retired.

To read the full report by the Center on Budget and Policy Priorities, click here.

To read the Top Ten facts about Social Security on the 75^th anniversary, click here.

A recent report by Action for Children North Carolina finds that too many Latino children in North Carolina are denied access to health care, high quality education, safety, and family economic security. The report compares the well-being of Latino children with the general child population of the state and considers whether individual indicators of child well-being have worsened or improved for Latino children over the past few years.

The report, Latino Children in North Carolina, finds that Latino children comprise the fastest growing segment of the child population in the state, increasing 34 percent in just three years. Estimates show that in 2005-06, the Latino community contributed more than $9 billion to the state's economy through purchases and taxes — more than 100 times the estimated net cost to the state budget for health care, education and corrections for Latinos. This critical population is helping drive North Carolina's economy.

"Every child has the potential to be an asset to North Carolina," said Barb Bradley, President & CEO of Action for Children. "It is the decisions we make today about what we are willing to invest in our children that will determine whether they all have the opportunity to fulfill that potential."

The report finds that Latino children in North Carolina are more likely than the overall child population of the state to live in poverty or low-income and suffer from food insecurity, even though most Latino children in our state live with parents who work. On average, Latino parents have less education, lower wages and fewer worker protections than white parents.

The report also finds that low-income status and other barriers to health care access mean that a greater percentage of Latino children lack health insurance coverage, a medical home and a regular dental clinic, and fewer Latina mothers receive adequate prenatal care than in the general population.

Latino youth in North Carolina are more likely than the general child population to feel unsafe at school. Latino youth are also more likely to score below "proficient" on end-of-grade tests and eventually drop out of school.

"Children's well-being is largely determined by their families' financial security," says Bradley. "The systems we have in place marginalize many Latino children and families. Seventy-seven percent of Latino children in North Carolina live in immigrant families. But nearly 90 percent of these children are U.S. citizens. These are our children, and they are being denied access to the building blocks of a better future."

"As a state and a society, we have a choice. We can invest now and ensure that all of our children are equipped with the tools they need to build a better North Carolina going forward, or we can divest in children and pay a much higher price down the road."

The report also highlighted protective factors present for many Latino children in North Carolina that can help improve outcomes. The low birthweight and infant mortality rate for Latino babies are lower than those of the general population, and breastfeeding and Safe Sleep practices are prevalent among Latina mothers. Nearly 50 percent of Latinos own their own homes. Latino parents also seem to be engaged in their children's lives - fewer Latino children are home alone after school and more eat dinner regularly with their families than in the general population. Latino adolescents are also more likely to report that they feel good about themselves.

To read the full report, click here.

Public confidence in government is at an all-time low, according to a major new survey commissioned by the Center for American Progress. And yet clear majorities of Americans of all ages want and expect more federal involvement in priority areas such as energy, poverty, and education, the poll found.

The key lesson embedded in these seemingly paradoxical results: Americans want a federal government that is better, not smaller. CAP's new research shows people would rather improve government performance than reduce its size. And they are extremely receptive to reform efforts that would eliminate inefficient government programs, implement performance-based policy decisions, and adopt modern management methods and information technologies.

The May survey of 2,523 adults conducted by Hart Research Associates found that public lack of confidence in government's ability to solve problems is more closely related to perceptions of government performance than it is a function of partisan affiliation or political ideology.

A majority of respondents indicated they would be more likely to support political candidates who embrace a reform agenda of improving government performance, effectiveness, and efficiency.

While recession-fueled record low levels of confidence are sobering, the broader lesson for policymakers is that a better-run government will increase public confidence in public institutions.

According to the survey, a majority of Americans respondents favor more government involvement in the following five areas:

• Developing new energy sources
• Improving public schools
• Making college education affordable
• Reducing poverty
• Ensuring access to affordable health care

Apart from health care, over three-fourths of liberals/progressives— and over 60 percent of moderates—favor a stronger government role in every area. Remarkably, at least 40 percent of conservatives/libertarians support a larger role in pursuing each of these four goals. Even on health care, we see a 56 percent majority of moderates supporting more federal engagement.

To read the full report by the Center for American Progress, click here. You can also download the report to your mobile devices or e-reader from Scribd.

Last year, state leaders addressed the shortfall of $4.6 billion through a balanced approach of spending cuts, tax increases and federal aid. This year, the range of tools employed by policymakers was narrowed due to the unreliability of federal aid and the fact that leaders decided before the session that raising revenue was "off the table." Ultimately, the final FY 2010- 2011 adjusted budget limits cuts to critical services essential for the state's recovery by employing a series of one-time, unsustainable fixes.

Policymakers relied on spending reductions, technical adjustments and federal recovery dollars to close the gap-reducing the 2010-2011 budget by $601 million to $18.96 billion (See Figures 1 and 3). The result is that the state is making the lowest level of investment per capita in fourteen years. For North Carolinians and the state economy as a whole, such low levels of spending reduce economic activity that contributes to the state's economic recovery. Accounting for the contribution of federal recovery dollars, the state's ability to deliver services at 2008-2009 levels was reduced by 8.6 percent.

Policymakers made significant cuts to programs and services fundamental to education, safety and health. The public school system received $275 million less in state funds including teachers' salary adjustments and cuts to technology systems that can facilitate classroom learning. The Health and Human Services system reductions in state funding totaled $553 million and included an array of cuts and changes to mental health programs that will likely impact services. Funding changes in the budget will result in an estimated loss of 573 filled and vacant positions in the public sector.

Nevertheless policymakers made a significant effort to preserve a number of investments that train and educate the workforce of tomorrow and protect the health of the state's citizens. Notably, policymakers fully funded the increased enrollment in community colleges and the surging demand for Medicaid services, partially restored funding for mental health community services funds, as well as expanded enrollment in the NC Health Choice children's health insurance program. In addition, K-12 classroom funding was largely insulated from significant cuts. The state's only education program for prison inmates-a key tool for successful re-entry into the community and participation in the workforce - was reinstated with partial funding.

North Carolina's budget represents an essential tool for supporting economic life. In this report, the Budget and Tax Center provides an analysis of the decisions made during today's difficult economic times. Due to the changing economic forecasts that arose throughout the budget process, this report will focus on the ultimate priorities set out in the final budget rather than comparing the final budget to those offered by the Governor, Senate and House. An in-depth analysis of the impact budget decisions will have for low- and moderate-income families in North Carolina and on the state's long-term economic prospects will require a longer time frame to conduct. However, the public systems that can best connect North Carolinians to opportunity and prosperity have no doubt been affected by the Great Recession and the difficult decisions that were required in this year's budget.

Click here to read the full report by the NC Budget & Tax Center's Alexandra Forter Sirota, Stephen Jackson, and Edwin McLenaghan.

An analysis of disclosure reports through June 30 reveals that the five Republican members of the US House of Representatives from North Carolina have out-fundraised their Democratic challengers by a whopping 12 to 1 margin - $2,968,000 to $245,000. Meanwhile, the eight NC Democrats in the House have raised more than three times as much as their Republican opponents- $5,244,000 to $1,569,000.

Altogether, the 13 incumbents are swamping their challengers by a nearly a 5-to-1 fundraising advantage, $8.2 million to $1.8 million.

The advantage that both Republican and Democrat incumbents enjoy is largely due to the money they raise from political action committees sponsored by business, labor and other special interest groups, according to an analysis by the watchdog group Democracy North Carolina.

PACs for insurance companies, banks, agribusiness, public employees, attorneys, doctors, military contractors, and other groups have given $4.6 million to the 13 North Carolina members of the US House, or more than half [55%] of their total receipts through June 30. By contrast, PACs have given only $62,000 to all the challengers, less than 4% of their total income.

Most of the challengers' campaign money comes from individual donors and the candidate's own funds. They would be in a more competitive position if incumbents only relied on the same sources, but the millions flowing in PAC money tilt the odds against them.

"Big money from special interests has become such a dominating force that it distorts the whole democratic process," said Bob Hall, director of Democracy North Carolina. "The tea party activist, social reformer and ordinary citizen all feel frustrated and ignored, because lawmakers in both parties are preoccupied with raising money and wealthy interests get special access to shape legislation for their benefit at the public's expense - on taxes, pollution, food safety, you name it."

Several members of Congress from North Carolina agree that change is needed. "As the system currently works, special interests contribute heavily to Congressional campaigns," says Rep. Walter Jones, a Farmville Republican. "This system creates the perception that special interest groups have too much influence, and many Americans believe that the Congress cannot tackle tough issues because of that influence." See http://cha.house.gov/UserFiles/242_testimony.pdf

Jones and five NC colleagues (G.K. Butterfield, Larry Kissell, Brad Miller, David Price and Mel Watt) are among the 156 House members sponsoring the Fair Elections Now Act which would provide a public financing option for Congressional candidates who voluntarily refuse to rely on PACs or out-of-state large donations. The program is funded through a fee on large contractors, not from general tax funds.

According to the Democracy North Carolina analysis, the advantage incumbents enjoy is even more stark after campaign expenses are deducted:

• As of June 30, the North Carolina incumbents had 16 times as much cash on hand as their opponents - a total of $7 million compared to $430,000.

• The biggest gaps between incumbent and challenger are in the 11th, 5th and 2nd Districts, where Reps. Heath Shuler (D-Waynesville), Virginia Foxx (R-Banner Elk), and Bob Etheridge(D-Lillington) each have more than $1.2 million in the bank, while their opponents have less than$71,000. Renee Ellmers got a quick burst of money after the damaging video of Bob Etheridge appeared, but her fundraising has slowed down and she had only $42,000 on June 30.
• In the race considered the most closely contested, Rep. Larry Kissell (D-Biscoe) has raised $780,600 and has nearly $300,000 on hand, while his opponent Republican Harold Johnson,spent much of the $481,500 he has raised on a primary and runoff election; 60% of his money came from his own funds and he has less than $82,000 left to spend as of June 30.
• In the 7th District, Republican Ilario Pantano boasts that he raised more than Rep. Mike McIntyre (D-Lumberton) in the second quarter of 2010, but McIntyre has stockpiled money from his previous campaigns and has $842,000 on hand compared to Pantano's $99,000.
• Rep. David Price (D-Chapel Hill) has raised less money from PACs than his NC Democratic colleagues so far this election cycle ($218,000), but he still has 6 times as much cashon-hand as Republican opponent, B. J. Lawson.
• Republican Bill Randall, the tea party favorite who won the runoff in the 13th District against a better financed opponent, now faces Brad Miller (D-Raleigh) who has raised $603,000and has $348,000 on hand compared to Randall's mere $5,000, as of June 30.
• Among NC Republicans in the US House, Howard Coble (6th District) and Patrick Henry (10th District) are relying the heaviest on PAC funds - for 63% and 56% of their totals,respectively. Coble and McHenry have only token Democratic opposition; it's a good thing for McHenry because he has only $83,000 left after an expensive primary, plus a debt of $90,000 for loans from earlier campaigns. McHenry's opponent Jeff Gregory has raised less than $5,000.
• Charlotte's Sue Myrick (R-9th District) and Mel Watt (D-12th District) are in safe, partisan districts and both have better than a 30-to-1 advantage over their opponent when it comesto cash on hand. Myrick has raised almost half her money so far from PACs (48%), while Watt leads the NC delegation by relying on PAC funds for 84% of his total receipts through June.
• Rep. Watt is one of eight House members nationally under investigation for violating an ethics rule against raising campaign money from an interest group near the time of voting on anissue affecting that group. Because fundraising events are scheduled weeks in advance, Hall says "the proximity to a crucial vote is the inevitable consequence of a pay-to-play culture that hasimpaired both political parties. A fundraiser with lobbyists and PACs is held virtually daily in Washington - and once a week to benefit a North Carolina lawmaker."

Hall points out that the Sunlight Foundation's PoliticalPartyTime.org website shows Virginia Foxx has held 6 fundraising events since March 2009 at the Washington townhouse ofthe Associated General Contractors. Patrick McHenry and G.K. Butterfield each held at least 14 in Washington in the same period. Mel Watt, Brad Miller, Larry Kissell and Heath Shuler have eachheld as least 8; David Price, Walter Jones and Mike McIntyre have each held 4; and Bob Etheridge has held 7 - all in Washington since March 2009. That's 85 fundraising events in 72 weeks.

"There's no law against federal legislators holding fundraisers with PACs and lobbyists while in session, as there is for our state legislators," Hall said, "and with year-round sessions, a huge appetite for campaign money, and no public financing alternative, that's not likely to change."

Read the full research report by Bob Hall and the team at Democracy North Carolina here.

The expiration of the special unemployment compensation provisions enacted earlier in the recession has brought the problems of long-term unemployment and the role of unemployment compensation to the fore. The June unemployment rate was 9.5%, and 45.5% of the unemployed have been seeking work for more than six months. Roughly a quarter of the unemployed have been jobless for more than a year. In this context, more than 2 million unemployed workers have already lost their unemployment insurance benefits because of the failure to renew the program that provides extended benefits to the long-term unemployed. This is unfortunate because providing unemployment benefits during a recession fulfills two important national needs: assisting those most hurt by the recession and generating jobs in the midst of a deep downturn.

First, unemployment benefits help cushion the blow of unemployment for millions of unemployed workers. This recession has caused the most job loss by far of any recession in the last seven decades. During the first half of 2010, unemployment averaged nearly 15 million workers, and that will likely remain the case for the rest of the year. However, the number of people experiencing unemployment will be far greater since some unemployed will gain employment and some of those employed now will become unemployed.

For instance, in 2008 (the year for which we have the latest data) there were 8.9 million people unemployed on average. However, over the course of the year, 21.2 million people experienced unemployment, a number 2.38 times the level of unemployment in the average month. This means that in 2010 we might have 35.0 million people experience unemployment at some point during the year. Given that there have been at least five unemployed workers for every job opening in recent months, many of those who are unemployed have and will continue to need assistance to weather this economic calamity. For the week ending May 29, 10.2 million people were receiving unemployment insurance benefits, over 50% of who had exhausted regular state benefits and were receiving benefits under provisions that were included in the Recovery Act. This is a crucial lifeline to those families most hurt by the downturn.

Second, providing assistance to the unemployed is a very effective mechanism for injecting spending into the economy and generating jobs. The reasoning is simple. Those who are unemployed are experiencing a major challenge to maintain anything close to their regular standard of living, so any assistance they receive will be spent on necessities, not saved. The spending that results as the unemployed pay their rent, buy groceries, and so on saves and creates jobs throughout the economy.

This paper provides estimates of the impact of the unemployment compensation system on jobs. We consider the impact of both the special provisions included in the Recovery Act (in particular, the extension of benefits beyond the normal 26 weeks, the expansion of weekly benefits by $25, and subsidies to help unemployed workers cover the cost of health insurance under COBRA) and the natural expansion of regular unemployment benefits as the number of unemployed workers grew in the recession.

We find that in early 2010:

• The expansion of the unemployment compensation system since 2007, including health insurance • subsidies, was supporting 1.7 million full-time equivalent positions that would not have been there absent this spending. The provisions included in the recovery package-extended unemployment benefits beyond the normal 26 weeks, the extra $25 weekly benefit, and the health care subsidies-were responsible for over 1.2 million full-time equivalent positions.

• These jobs were generated by the increase in spending on unemployment compensation of $152.1 billion, which, in turn, raised gross domestic product (GDP) by $244.8 billion, a 1.7% boost.

• Two components of the unemployment compensation provisions of the Recovery Act have not been included in the legislation under consideration to extend this program-the COBRA subsidies and the $25 weekly benefit supplement. These provisions were responsible for 302,000 full-time equivalent jobs in early 2010.

• The jobs impact of the boost to GDP takes the form of both increased employment and increased hours worked by those who already have jobs. Both of these increases are good news, because they mean either new jobs, or more hours (and hence higher paychecks) for those with jobs. To capture the impact of both increases, hours and employment, we present (following the methods of the Congressional Budget Office) the change in full-time equivalent employment jobs (the number of 40 hours per week jobs) generated by unemployment compensation spending. Looking at the impact on the job count alone, payroll employment was 1.15 million higher as a result of the expanded unemployment compensation system, helping to offset the more than 8.0 million payroll jobs that had been lost in the downturn through the first quarter of 2010.

Read the full report by EPI President Lawrence Mishel and economist Heidi Shierholz here .

While nearly two-thirds of all school districts have used the federal stimulus money from the American Recovery and Reinvestment Act (ARRA) to save or create teaching jobs in the 2009-10 school year, as many as three-quarters of the nation's school districts expect to cut teaching jobs in 2010-11 due to budget decreases, according to a new survey of districts released this week by the Center on Education Policy (CEP).

The report, based on a nationally representative sample of district-level administrators surveyed in the spring of 2010, finds that nearly 95 percent of the nation's school districts have received or been promised funding from the State Fiscal Stabilization Fund (SFSF) authorized by ARRA. However, districts with funding declines are likely to face serious problems in the coming school year because much of the federal stabilization funding they have received has already been spent. An estimated 68 percent of school districts expect their total budgets, excluding ARRA funds, to decrease for school year 2010-11. As a result, 75 percent of districts that received SFSF funds expect to lay off teachers in 2010-11 to address their persistent budget shortfall.

SFSF funds helped to stabilize local budgets in 2009-10, though they were often insufficient to compensate for budget decreases not covered by the federal stimulus money. The report also finds that even with the ARRA funds, about 45 percent of districts with SFSF grants had to cut teaching staff in the 2009-10 school year.

"Unless additional recovery money is provided, the education jobs crisis that had been averted to some extent this year may emerge in full force in the coming school year, creating unprecedented shortages of classroom teachers that could undermine progress in school reform," said Jack Jennings, CEP's president and CEO.

CEP asked districts about actions they were undertaking to implement ARRA's four reform areas. CEP found that districts focused more aggressively on reform goals relating to improving teacher quality, bolstering standards and improving assessments, and participating in state longitudinal data systems than on improving low-performing schools. CEP suggests that this may be because districts have focused heavily on aligning their education reforms with state priorities and because not all districts have low-performing schools.

The majority of school districts have received or have been promised supplemental funding through ARRA for Title I of the Elementary and Secondary Education Act and for the Individuals with Disabilities Education Act (IDEA). More than half of districts receiving this funding are using the money to save or create jobs, as well as to purchase materials, technology, and equipment.

You can access the full report, at CEP's web site.

Based in Washington, D.C., the Center on Education Policy is a national, independent advocate for public education and for more effective public schools. The Center works to help Americans better understand the role of public education in a democracy and the need to improve the academic quality of public schools.

Conservative lawmakers and Wall Street lobbyists are waging a last-ditch effort to convince a few wavering senators to vote against the Dodd-Frank Wall Street Reform and Consumer Protection Act, the financial regulatory reform bill, when it comes up for a vote later this week. The legislation, which emerged from a congressional conference committee last month, was already approved by the House of Representatives. This means that there is just one more vote left before the bill reaches President Barack Obama’s desk.

The Dodd-Frank bill is not perfect—no legislation ever is in our democratic give and take—but it is an important step toward building a stable, fair financial system that works for consumers and not solely in the interest of the country’s biggest banks. It addresses a critical gap in the regulatory framework by creating a new Consumer Financial Protection Bureau, giving government regulators the tools they need to wind down failed firms without resorting to the ad-hoc overnight bailouts of 2008, and putting rules in place that will shed light on the opaque $600 trillion derivatives market that was at the heart of the economic meltdown. It will also rein in the riskiest trading practices of too-big-to-fail banks, keeping federally insured dollars out of the Wall Street casino.

In their first attempt to kill the legislation, conservatives coalesced around their favorite faux populist talking point, arguing that the bill will result in permanent bailouts for big banks. "This bill sets up a permanent bailout regime that puts the government in charge of picking winners and losers," said Rep. Randy Neugebauer (R-TX), one of many such comments in the conservative media echo chamber. It’s easy to see why conservatives would want to raise the specter of more and bigger bailouts to gin up opposition to the bill, but their rhetoric doesn’t match the reality.

In fact, the bill creates a clear resolution authority for unwinding big financial institutions without calling on taxpayers to bear the burden. Dodd-Frank lays out a process for identifying whether a failing financial institution is too systemically entangled for traditional bankruptcy and, if so, puts it into an FDIC-style receivership, after receiving approval from a panel of bankruptcy judges. It is the opposite of the shotgun approach to which the government was limited in 2008.

Having failed to scuttle the legislation using this false allegation, conservatives and their Wall Street allies turned to kindred executives in corporate America, asking them to make the case that the derivatives portion of the bill will drive up costs for companies that want to use these complex instruments to hedge against risk. Case in point: Tom Deas, treasurer of the chemicals manufacturer FMC Corp., claims that companies like his “will need to post hundreds of millions of dollars in additional margin. Nobody ever did a cost-benefit study of the effect of this bill on end users.” And the International Swaps and Derivatives Association, which includes Wall Street derivatives dealers as well as corporate end-users, estimates that derivatives reform will require companies to post an extra $1 trillion in collateral against possible derivatives losses.

Treasury Secretary Tim Geithner has replied that there is “no basis for those estimates or those concerns in my view,” adding that the bill allows companies to continue hedge risk “in ways that meet their specific needs, but to make sure the system as a whole is safer, that stuff happens in the light of day with transparency and disclosure.” Indeed, the bill already includes exemptions from the exchange and clearing requirements for end-users that are legitimately hedging risk, particularly corporate America.

Plus, as Commodity Futures Trading Commission Chairman Gary Gensler explained in an address before the U.S. Chamber of Commerce, transparency in the derivatives market should lower costs across the board:

You have concerns that the margin—or collateral—required to clear derivatives could be costly. Derivatives dealers, however, already charge counterparties for credit extensions when they do not clear their transactions. How can you know that these costs charged by the dealers—embedded and opaque—are less than the margin associated with clearinghouses? At least margin requirements imposed by clearinghouses are transparent to all market participants and subject to review by the appropriate regulator.

To be sure, regulators will have to ensure that appropriate hedging doesn’t get caught up by the new regulations. But it is in the interest of these companies to have a functional and fair market for derivatives. And they will have ample opportunity to weigh in on any legitimate concerns about their hedging needs when the regulators seek comment on the rules they design based on the Dodd-Frank legislative language.

So let’s step back a moment. With the chorus of conservatives warning of cataclysm should Dodd-Frank become law, it is worth remembering how the nation found itself in such desperate straits in 2008. Not only did federal regulators under the Bush administration actively remove regulations that kept Wall Street in check, but they also refused to enforce the rules that remained on the books, particularly when it came to consumer protection.

Remember, just a few months before the economic meltdown, the Bush administration released its sweeping plan for deregulating the financial industry. A deregulatory philosophy espoused by, among others, former Federal Reserve Chairman Alan Greenspan, held that the market would automatically correct for any imbalances, including a proliferation of predatory lending.

Warnings from officials such Sheila Bair (now chairman of the Federal Deposit Insurance Corp.) and housing advocates such as the Greenlining Institute did nothing to shake this vision; and in the meantime, Wall Street ran wild, securitizing subprime loans, selling them around the world, and then placing bets that the whole system would fall apart.

Greenspan, at least, has come around and said that his views at the time were misguided. “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he said in October 2008. If only today’s conservative lawmakers had the same belief in the strength of hindsight. Instead, they conjure up imagined dangers to score political points and curry favor with important Wall Street political donors—never mind the very real dangers to our financial markets and businesses large and small if comprehensive financial reform were scuttled in favor of the status quo that led us into the Great Recession in the first place.

Pat Garofalo is an Economics Researcher at the Center for American Progress and a Blogger at the Center for American Progress Action Fund.