Economists Urge Obama Not to 'Overreact' to High Food Prices...added 3-7-11
By James Rosen - Courtesy of Foxnews.com
Leading advocates for the world’s poorest and hungriest are urging President Obama not to “overreact” to recent spikes in food prices, particularly by imposing export bans on U.S. agricultural products.
In its February report, the World Bank noted “sharp increases” in the global prices of wheat, maize, sugar, and edible oils over the last six months, with an accompanying rise, albeit smaller, in the price of rice. The bank’s food price index surged by 15 percent over the last quarter of 2010, and stands only three percentage points below its peak, reached in June 2008. Since then, an estimated 44 million people in developing countries have fallen below the poverty line.
Rising food prices have been linked to the unrest that has swept through the Middle East and North Africa in recent weeks. In most of the uprisings, calls for greater personal and political freedoms have been accompanied by complaints about unaffordable staple food prices.
Asked by FOX News how they would advise the Obama administration to contend with the spikes – which have as much to do with natural disasters and weather shocks as with human factors – both Hassan Zaman, lead economist at the World Bank’s Poverty Reduction and Equity Group, and Manuel Hernandez, a postdoctoral fellow at the International Food Policy Research Institute (IFPRI), said they would caution the president not to manipulate food markets with trade policy.
“I would tell him, ‘Try to not overreact to the increasing prices we are seeing right now,’” said Hernandez, a Peruvian-born economist educated at the University of Texas. “We should expect fluctuations, but we shouldn't exacerbate these fluctuations by…imposing obstructions to the market that could make things worse…The situation is not the same as in 2007 and 2008. So there is no major concern that we should worry about another food crisis.”
“What’s important,” agreed Zaman, “is that the international community in general – through, say, mechanisms like the G-20 – collectively engage in steps such as ensuring that there are as few exports restrictions as possible on food grains. That is fundamental, because we've seen that export restrictions are highly related to spikes in food prices.”
Those hardest hit by the current inflation in food costs are poor people in urban areas, where there is no subsistence farming and residents must always pay for food at market prices. After that, Zaman said, women and children tend to suffer disproportionately, especially in foreign cultures that do not accord them preferential treatment when it comes to distribution of food within the home.
The middle of the last decade witnessed the worst crisis in food prices in recent times. An IFPRI report found that between January 2004 and May 2008, the price of rice spiked by 224 percent; wheat prices soared by 108 percent; and the cost of corn shot up by 89 percent. Thirty-six countries appealed for food aid, with several experiencing civil unrest.
“It is important for vulnerable countries to know that if there is a crisis, the global community will respond,” said Assistant Secretary of State P.J. Crowley, in a recent statement in which the Obama administration articulated the “lessons learned” from the 2007-2008 crisis. Among them the State Department cited restrictions on imports, “targeted safety nets” for the poor and hungry, and record investment in the agricultural sectors of China, Russia, and India.
“We still have plenty of stocks, and the productions are not as bad as in 2007 and 2008,” said IFPRI’s Hernandez, in arguing that the world, despite last year’s spikes, is not hurtling toward a repeat of dismal recent history. “Just to give an example, in the case of wheat, we have stocks of over 177 million metric tons, which is over 50 million metric tons more than [we had] in 2007 and 2008. Additionally, rice is doing good, which is another important agricultural commodity; oil prices are not as high as in 2008; and also, the governments are not overreacting, as they overreacted before.”
Leading advocates for the world’s poorest and hungriest are urging President Obama not to “overreact” to recent spikes in food prices, particularly by imposing export bans on U.S. agricultural products.
In its February report, the World Bank noted “sharp increases” in the global prices of wheat, maize, sugar, and edible oils over the last six months, with an accompanying rise, albeit smaller, in the price of rice. The bank’s food price index surged by 15 percent over the last quarter of 2010, and stands only three percentage points below its peak, reached in June 2008. Since then, an estimated 44 million people in developing countries have fallen below the poverty line.
Rising food prices have been linked to the unrest that has swept through the Middle East and North Africa in recent weeks. In most of the uprisings, calls for greater personal and political freedoms have been accompanied by complaints about unaffordable staple food prices.
Asked by FOX News how they would advise the Obama administration to contend with the spikes – which have as much to do with natural disasters and weather shocks as with human factors – both Hassan Zaman, lead economist at the World Bank’s Poverty Reduction and Equity Group, and Manuel Hernandez, a postdoctoral fellow at the International Food Policy Research Institute (IFPRI), said they would caution the president not to manipulate food markets with trade policy.
“I would tell him, ‘Try to not overreact to the increasing prices we are seeing right now,’” said Hernandez, a Peruvian-born economist educated at the University of Texas. “We should expect fluctuations, but we shouldn't exacerbate these fluctuations by…imposing obstructions to the market that could make things worse…The situation is not the same as in 2007 and 2008. So there is no major concern that we should worry about another food crisis.”
“What’s important,” agreed Zaman, “is that the international community in general – through, say, mechanisms like the G-20 – collectively engage in steps such as ensuring that there are as few exports restrictions as possible on food grains. That is fundamental, because we've seen that export restrictions are highly related to spikes in food prices.”
Those hardest hit by the current inflation in food costs are poor people in urban areas, where there is no subsistence farming and residents must always pay for food at market prices. After that, Zaman said, women and children tend to suffer disproportionately, especially in foreign cultures that do not accord them preferential treatment when it comes to distribution of food within the home.
The middle of the last decade witnessed the worst crisis in food prices in recent times. An IFPRI report found that between January 2004 and May 2008, the price of rice spiked by 224 percent; wheat prices soared by 108 percent; and the cost of corn shot up by 89 percent. Thirty-six countries appealed for food aid, with several experiencing civil unrest.
“It is important for vulnerable countries to know that if there is a crisis, the global community will respond,” said Assistant Secretary of State P.J. Crowley, in a recent statement in which the Obama administration articulated the “lessons learned” from the 2007-2008 crisis. Among them the State Department cited restrictions on imports, “targeted safety nets” for the poor and hungry, and record investment in the agricultural sectors of China, Russia, and India.
“We still have plenty of stocks, and the productions are not as bad as in 2007 and 2008,” said IFPRI’s Hernandez, in arguing that the world, despite last year’s spikes, is not hurtling toward a repeat of dismal recent history. “Just to give an example, in the case of wheat, we have stocks of over 177 million metric tons, which is over 50 million metric tons more than [we had] in 2007 and 2008. Additionally, rice is doing good, which is another important agricultural commodity; oil prices are not as high as in 2008; and also, the governments are not overreacting, as they overreacted before.”
Senate Passes Spending Bill to Avoid Shutdown...added 3-2-11
Courtesy of FoxBusiness.com
The U.S. Congress on Wednesday was on its way to sending to President Barack Obama a stopgap spending bill that averts an imminent government shutdown but does nothing to resolve a bitter debate over the federal budget.
The Senate overwhelmingly passed a two-week funding bill that cleared the House of Representatives on Tuesday. Obama is expected to sign the measure, which includes $4 billion in relatively noncontroversial cuts, into law before current funding expires on Friday.
The U.S. Congress on Wednesday was on its way to sending to President Barack Obama a stopgap spending bill that averts an imminent government shutdown but does nothing to resolve a bitter debate over the federal budget.
The Senate overwhelmingly passed a two-week funding bill that cleared the House of Representatives on Tuesday. Obama is expected to sign the measure, which includes $4 billion in relatively noncontroversial cuts, into law before current funding expires on Friday.
Wisconsin Assembly Charges Toward Vote on Budget Bill, Senate Remains Stuck...added 2-24-11
Courtsey of FoxNews.com
Wisconsin Republicans in the state Assembly charged toward a vote on their controversial budget bill Thursday after compelling
Democrats to limit debate, though the Senate remained stuck on account of 14 boycotting lawmakers.
The modest breakthrough on the Assembly side was announced at dawn following more than 42 hours of debate which began
Tuesday morning. Under the plan, the Republican majority will allow another 38 amendments to be considered, for no more than 10 minutes apiece. That puts the Assembly on track for a vote perhaps as early as midday.
Though the announcement was pitched as a deal, state Democrats said Republicans were unilaterally bringing the debate to a close. One aide in Minority Leader Peter Barca's office said Republicans gave the Democrats two options: debate 38 additional amendments or end debate immediately.
"We will strongly make our points, but understand you are limiting the voice of the public as you do this," said Democratic state Rep. Mark Pocan of Madison. "You can't dictate democracy. You are limiting the people's voice with this agreement this morning."
Democrats, who are in the minority, don't have the votes to stop the bill once the vote occurs.
The movement on the Assembly side, though, stood in contrast to the situation in the Senate, where 14 Democratic lawmakers were still absent, blocking a vote on Gov. Scott Walker's plan to curb union benefits and collective-bargaining rights.
Senate Majority Leader Scott Fitzgerald's office confirmed to Fox News that state patrol officers had once again been dispatched to the homes of Democratic senators in the hope of persuading them to return. However, one of the 14 absent lawmakers said the caucus is still out of state and will not be swayed by police showing up at their doors. Democratic Sen. Jon Erpenbach said the senators will not be returning Thursday.
Tens of thousands of people have protested the bill for nine straight days, with hundreds spending the night in sleeping bags on the hard marble floor of the Capitol as the debate was broadcast on monitors in the rotunda. Many of them were still sleeping when the deal to only debate 38 more amendments, for no more than 10 minutes each, was announced.
Passage of the bill in the Assembly would be a victory for Republicans and Walker, but the measure must still clear the Senate.
The battle over labor rights has been heating up across the country, as new Republican majorities tackle budget woes in several states. The GOP efforts have sparked huge protests from unions and their supporters and led Democrats in Wisconsin and Indiana to flee their states to block measures.
Republicans in Ohio offered a small concession on Wednesday, saying they would support allowing unionized state workers to collectively bargain on wages -- but not for benefits, sick time, vacation or other conditions. Walker's proposal also would allow most public workers to collectively bargain only for wages.
In Ohio, Republican Senate President Tom Niehaus denied protests have dented the GOP's resolve, saying lawmakers decided to make the change after listening to hours of testimony. He said he still believes the bill's core purpose -- reining in spending by allowing governments more flexibility in dealing with their workers -- is intact.
Senate Democratic Leader Capri Cafaro called the changes "window dressing." She said the entire bill should be scrapped.
Wisconsin Democrats have echoed Cafaro for days, but Walker has refused to waver.
Walker reiterated Wednesday that public workers must make concessions to avoid thousands of government layoffs as the state grapples with a $137 million shortfall in its current budget and a projected $3.6 billion hole in the next two-year budget.
The marathon session in the Assembly was grand political theater, with exhausted lawmakers limping around the chamber, rubbing their eyes and yawning as Wednesday night dragged on.
Around midnight, Rep. Dean Kaufert, R-Neenah, accused Democrats of putting on a show for the protesters. Democrats leapt up and started shouting.
"I'm sorry if democracy is a little inconvenient and you had to stay up two nights in a row," Pocan said. "Is this inconvenient? Hell, yeah! It's inconvenient. But we're going to be heard!"
Ohio's measure sits in a Senate committee. No vote has been scheduled on the plan, but thousands of protesters have gathered at the Statehouse to demonstrate, just as in Wisconsin.
In Indiana, Democrats successfully killed a Republican bill that would have prohibited union membership from being a condition of employment by leaving the state on Tuesday. They remained in Illinois in hopes of derailing other parts of Republican Gov. Mitch Daniels' agenda, including restrictions on teacher collective bargaining.
And in Oklahoma, a Republican-controlled state House committee on Wednesday narrowly approved legislation to repeal collective bargaining rights for municipal workers in that state's 13 largest cities.
Wisconsin Republicans in the state Assembly charged toward a vote on their controversial budget bill Thursday after compelling
Democrats to limit debate, though the Senate remained stuck on account of 14 boycotting lawmakers.
The modest breakthrough on the Assembly side was announced at dawn following more than 42 hours of debate which began
Tuesday morning. Under the plan, the Republican majority will allow another 38 amendments to be considered, for no more than 10 minutes apiece. That puts the Assembly on track for a vote perhaps as early as midday.
Though the announcement was pitched as a deal, state Democrats said Republicans were unilaterally bringing the debate to a close. One aide in Minority Leader Peter Barca's office said Republicans gave the Democrats two options: debate 38 additional amendments or end debate immediately.
"We will strongly make our points, but understand you are limiting the voice of the public as you do this," said Democratic state Rep. Mark Pocan of Madison. "You can't dictate democracy. You are limiting the people's voice with this agreement this morning."
Democrats, who are in the minority, don't have the votes to stop the bill once the vote occurs.
The movement on the Assembly side, though, stood in contrast to the situation in the Senate, where 14 Democratic lawmakers were still absent, blocking a vote on Gov. Scott Walker's plan to curb union benefits and collective-bargaining rights.
Senate Majority Leader Scott Fitzgerald's office confirmed to Fox News that state patrol officers had once again been dispatched to the homes of Democratic senators in the hope of persuading them to return. However, one of the 14 absent lawmakers said the caucus is still out of state and will not be swayed by police showing up at their doors. Democratic Sen. Jon Erpenbach said the senators will not be returning Thursday.
Tens of thousands of people have protested the bill for nine straight days, with hundreds spending the night in sleeping bags on the hard marble floor of the Capitol as the debate was broadcast on monitors in the rotunda. Many of them were still sleeping when the deal to only debate 38 more amendments, for no more than 10 minutes each, was announced.
Passage of the bill in the Assembly would be a victory for Republicans and Walker, but the measure must still clear the Senate.
The battle over labor rights has been heating up across the country, as new Republican majorities tackle budget woes in several states. The GOP efforts have sparked huge protests from unions and their supporters and led Democrats in Wisconsin and Indiana to flee their states to block measures.
Republicans in Ohio offered a small concession on Wednesday, saying they would support allowing unionized state workers to collectively bargain on wages -- but not for benefits, sick time, vacation or other conditions. Walker's proposal also would allow most public workers to collectively bargain only for wages.
In Ohio, Republican Senate President Tom Niehaus denied protests have dented the GOP's resolve, saying lawmakers decided to make the change after listening to hours of testimony. He said he still believes the bill's core purpose -- reining in spending by allowing governments more flexibility in dealing with their workers -- is intact.
Senate Democratic Leader Capri Cafaro called the changes "window dressing." She said the entire bill should be scrapped.
Wisconsin Democrats have echoed Cafaro for days, but Walker has refused to waver.
Walker reiterated Wednesday that public workers must make concessions to avoid thousands of government layoffs as the state grapples with a $137 million shortfall in its current budget and a projected $3.6 billion hole in the next two-year budget.
The marathon session in the Assembly was grand political theater, with exhausted lawmakers limping around the chamber, rubbing their eyes and yawning as Wednesday night dragged on.
Around midnight, Rep. Dean Kaufert, R-Neenah, accused Democrats of putting on a show for the protesters. Democrats leapt up and started shouting.
"I'm sorry if democracy is a little inconvenient and you had to stay up two nights in a row," Pocan said. "Is this inconvenient? Hell, yeah! It's inconvenient. But we're going to be heard!"
Ohio's measure sits in a Senate committee. No vote has been scheduled on the plan, but thousands of protesters have gathered at the Statehouse to demonstrate, just as in Wisconsin.
In Indiana, Democrats successfully killed a Republican bill that would have prohibited union membership from being a condition of employment by leaving the state on Tuesday. They remained in Illinois in hopes of derailing other parts of Republican Gov. Mitch Daniels' agenda, including restrictions on teacher collective bargaining.
And in Oklahoma, a Republican-controlled state House committee on Wednesday narrowly approved legislation to repeal collective bargaining rights for municipal workers in that state's 13 largest cities.
Freeze Frame? In porposing jobs agenda, Dems say they'll embrace Obama's discretionary spending freeze..added 2-16-11
Written by Trish Turner - Courtsey of Foxnews.com
Senate Democrats intend to unveil a jobs and competitiveness agenda Wednesday, but in a surprise move, the leaders are expected to embrace a deficit reduction component, Fox has learned.
Dems will embrace President Obama's five-year domestic discretionary spending freeze, a move the White House estimates will save $400 billion over 10 years, according to a senior Senate Democratic leadership aide. Dems made the decision "to strike the right balance between helping create jobs...while also living within our means and reining in the deficit," the aide said.
Accordingly, Dems are expected to promise that any new spending be offset with equivalent reductions in spending (ie, no revenue increases like tax hikes).
But Republicans scoffed. Don Stewart, senior aide to Senate GOP Leader Mitch McConnell, R-K.Y., panned the plan, recalling his boss' recent comment that "a budget on cruise control won't cut spending."
Earlier in the day, Sen. Rob Portman, R-Ohio and former Budget Director under President George W. Bush, told reporters, "The president has a (spending) freeze, but the freeze locks in the 24 percent increase in that spending over the last two years. That 24 percent, by the way, does not include the additional funding from the stimulus and from the supplemental, which would take it up to about 80 percent increase in the last two years."
The Democratic aide said the jobs measures the leadership will propose Wednesday at an 11:15a.m. ET news conference, were specifically chosen for their past GOP support.
Senate Democrats intend to unveil a jobs and competitiveness agenda Wednesday, but in a surprise move, the leaders are expected to embrace a deficit reduction component, Fox has learned.
Dems will embrace President Obama's five-year domestic discretionary spending freeze, a move the White House estimates will save $400 billion over 10 years, according to a senior Senate Democratic leadership aide. Dems made the decision "to strike the right balance between helping create jobs...while also living within our means and reining in the deficit," the aide said.
Accordingly, Dems are expected to promise that any new spending be offset with equivalent reductions in spending (ie, no revenue increases like tax hikes).
But Republicans scoffed. Don Stewart, senior aide to Senate GOP Leader Mitch McConnell, R-K.Y., panned the plan, recalling his boss' recent comment that "a budget on cruise control won't cut spending."
Earlier in the day, Sen. Rob Portman, R-Ohio and former Budget Director under President George W. Bush, told reporters, "The president has a (spending) freeze, but the freeze locks in the 24 percent increase in that spending over the last two years. That 24 percent, by the way, does not include the additional funding from the stimulus and from the supplemental, which would take it up to about 80 percent increase in the last two years."
The Democratic aide said the jobs measures the leadership will propose Wednesday at an 11:15a.m. ET news conference, were specifically chosen for their past GOP support.
GOP: Defeat of Health Law Repeal Is Step Toward Victory in 2012...added 2-3-11
Courtsey of Foxnews.com
WASHINGTON -- To hear Senate Republicans tell it, the defeat of their attempt to repeal the Democrats' health care overhaul was really a victory of sorts on the long the march to the 2012 congressional and presidential elections.
The repeal effort sank Wednesday along party lines, 51-47 as expected. But in the process, Republicans forced Democrats on the record in favor of President Barack Obama's signature overhaul and launched what they described as a two-year effort to discredit it in the lead-up to a bid for a second term.
"These are the first steps in a long road that will culminate in 2012, whereby we will expose the flaws and the weaknesses in this legislation," said Texas Sen. John Cornyn, the party's campaign chief.
"We think this is just the beginning," said Republican leader Mitch McConnell. "This issue is still ahead of us."
What's certain is that Wednesday's vote changed nothing about the debate that consumed Congress for two years, dominated the midterm elections and has now moved to the courts.
Two federal judges have ruled the law is unconstitutional, partially or in its entirety, citing a requirement for individuals to purchase coverage and pay a penalty in taxes if they fail to do so. Two other judges have upheld the law.
The controversy is all but certain to be settled by the Supreme Court. Sen. Bill Nelson, D-Fla., announced he would file legislation urging the justices to act quickly.
In spite of the maneuvering and the side-taking, senators overwhelmingly voted to cancel the law's requirement that businesses, charities and state and local governments file income tax forms for every vendor that sells them more than $600 in goods. That repeal was approved 81-17 after Republicans pointed out it had originally been their idea. Obama said he would accept the change.
Acutely aware that they'll be defending 23 seats in the next election, Democrats sought to shrug off the GOP's efforts. Senate Majority Leader Harry Reid, who said earlier in the week he hoped the vote would help Republicans get it out of their systems, called on them to "set aside the battles of the past."
But even as Reid dismissed the repeal effort, he used stark terms to describe how canceling the overhaul would affect millions of Americans. It would, Reid warned, "kick kids off their parents' health care" and "take away seniors' rights to a free wellness check."
The maneuvering reflected the depth of the controversy that still surrounds one of the most ambitious policy overhauls in recent years.
At its core, the law requires most Americans to purchase insurance, a so-called individual mandate that has become one of the principal points of opposition among Republicans and the tea party activists who propelled them to gains last fall.
The bill's critics argue the law gave government too large a role in the health care system, will harm Medicare and burden the economy by raising taxes and fees.
At the heart of the debate is a dispute over how the overhaul would affect the federal deficit.
The Congressional Budget Office reported that the law, once it takes effect, would cut federal budget deficits. But Republicans dispute that, arguing that the forecasts rest on spending cuts to Medicare and other programs that will not materialize.
Democrats tried to argue that the policy debate is largely over.
Sen. Barbara Mikulski, D-Md., called the Republican repeal effort "one more hollow, symbolic, pander-to-the-masses amendment."
"I want to hear their ideas for replacement," she said.
Republicans made clear they have plenty of ideas for replacement -- of Democratic senators, if not the health care reform.
"Yes, we were unsuccessful today, but we do know where everybody stands," said Sen. Orrin Hatch, R-Utah.
"We've made some headway," said Sen. John Thune of South Dakota.
WASHINGTON -- To hear Senate Republicans tell it, the defeat of their attempt to repeal the Democrats' health care overhaul was really a victory of sorts on the long the march to the 2012 congressional and presidential elections.
The repeal effort sank Wednesday along party lines, 51-47 as expected. But in the process, Republicans forced Democrats on the record in favor of President Barack Obama's signature overhaul and launched what they described as a two-year effort to discredit it in the lead-up to a bid for a second term.
"These are the first steps in a long road that will culminate in 2012, whereby we will expose the flaws and the weaknesses in this legislation," said Texas Sen. John Cornyn, the party's campaign chief.
"We think this is just the beginning," said Republican leader Mitch McConnell. "This issue is still ahead of us."
What's certain is that Wednesday's vote changed nothing about the debate that consumed Congress for two years, dominated the midterm elections and has now moved to the courts.
Two federal judges have ruled the law is unconstitutional, partially or in its entirety, citing a requirement for individuals to purchase coverage and pay a penalty in taxes if they fail to do so. Two other judges have upheld the law.
The controversy is all but certain to be settled by the Supreme Court. Sen. Bill Nelson, D-Fla., announced he would file legislation urging the justices to act quickly.
In spite of the maneuvering and the side-taking, senators overwhelmingly voted to cancel the law's requirement that businesses, charities and state and local governments file income tax forms for every vendor that sells them more than $600 in goods. That repeal was approved 81-17 after Republicans pointed out it had originally been their idea. Obama said he would accept the change.
Acutely aware that they'll be defending 23 seats in the next election, Democrats sought to shrug off the GOP's efforts. Senate Majority Leader Harry Reid, who said earlier in the week he hoped the vote would help Republicans get it out of their systems, called on them to "set aside the battles of the past."
But even as Reid dismissed the repeal effort, he used stark terms to describe how canceling the overhaul would affect millions of Americans. It would, Reid warned, "kick kids off their parents' health care" and "take away seniors' rights to a free wellness check."
The maneuvering reflected the depth of the controversy that still surrounds one of the most ambitious policy overhauls in recent years.
At its core, the law requires most Americans to purchase insurance, a so-called individual mandate that has become one of the principal points of opposition among Republicans and the tea party activists who propelled them to gains last fall.
The bill's critics argue the law gave government too large a role in the health care system, will harm Medicare and burden the economy by raising taxes and fees.
At the heart of the debate is a dispute over how the overhaul would affect the federal deficit.
The Congressional Budget Office reported that the law, once it takes effect, would cut federal budget deficits. But Republicans dispute that, arguing that the forecasts rest on spending cuts to Medicare and other programs that will not materialize.
Democrats tried to argue that the policy debate is largely over.
Sen. Barbara Mikulski, D-Md., called the Republican repeal effort "one more hollow, symbolic, pander-to-the-masses amendment."
"I want to hear their ideas for replacement," she said.
Republicans made clear they have plenty of ideas for replacement -- of Democratic senators, if not the health care reform.
"Yes, we were unsuccessful today, but we do know where everybody stands," said Sen. Orrin Hatch, R-Utah.
"We've made some headway," said Sen. John Thune of South Dakota.
Judge's Ruling on Health Care Lawsuit Will Shift Momentum in Coverage Debate...added 1-31-11
Courtsey of Foxnews.com
With Congress at an impasse on repealing President Obama's signature health insurance law, all eyes are on a federal judge who is expected to deliver a ruling Monday about whether portions of the new law pass constitutional muster.
U.S. District Judge Roger Vinson's ruling will be the biggest judicial decision to come down the pike since groups began filing lawsuits against the bill passed by Congress last March. Twenty-six states are parties to the suit, which claims a mandate to insist Americans purchase a product is unconstitutional.
In October, Vinson dismissed four of the six counts in the suit led by then-Florida Attorney General Bill McCollum. But he allowed two counts, including one challenging the law's controversial requirement that Americans buy health insurance, to proceed. Arguments were heard in December.
In his earlier ruling, Vinson said that a government report called the requirement to buy insurance legally unprecedented and worth examining in court.
"The individual mandate applies across the board. People have no choice and there is no way to avoid it. Those who fall under the individual mandate either comply with it, or they are penalized. It is not based on an activity that they make the choice to undertake. Rather, it is based solely on citizenship and on being alive," he wrote. "Of course, to say that something is 'novel' and 'unprecedented' does not necessarily mean that it is 'unconstitutional' and 'improper.' There may be a first time for anything."
If Vinson orders an injunction against that portion of the law, the federal government will most likely seek an immediate stay against the ruling. The case already appears destined for the U.S. Supreme Court.
Nearly two dozen suits have been filed in federal courts, but Monday's ruling will have the largest impact by far against the law -- Obama's signature legislation aimed at covering 30 million uninsured Americans whether they want insurance or not.
Last week, the U.S. House of Representatives passed a repeal of the 10-year, $1 trillion plan that critics say will cost closer to $2.6 trillion. But the repeal bill will likely die in the Senate, meaning Vinson's ruling will be the grounds by which supporters and opponents proceed.
Defenders of the law point to Congressional Budget Office figures that show if repealed, the law as enacted will raise government deficits by $230 billion over the next 10 years.
Critics counter with a "junk in, junk out" description of the CBO's estimates, claiming the numbers used to reach the conclusions are bogus and based on best-case scenarios that don't realize additional spending and unlikely savings, particularly as the law, in the first decade, collects taxes for 10 years though it only pays for six years of coverage.
Other courts have already ruled on portions of the case. In Michigan, the argument concerning the "individual mandate" -- the central tenet that requires Americans to start buying health insurance in 2014 or pay a penalty -- was thrown out. A federal district judge in Richmond, Va., ruled the individual mandate is unconstitutional.
However, while the judge in Virginia ruled that the mandate creates an "unbridled exercise of federal police powers," left standing other parts of the law, as does Vinson's earlier decision.
In his State of the Union address, Obama said he was willing to open his mind to changes in the law if they made dollars and sense and didn't prevent patients with pre-existing conditions or other barriers to insurance companies from gaining coverage.
He pointed to the near-universally hated 1099 provision that orders businesses to report to the Internal Revenue Service all purchases exceeding $600 as the first provision to be scrapped.
Obama Chief of Staff Bill Daley repeated the president's position on Sunday, adding that the law was intended to help employers as much as patients.
"The president has said he's open to changes to this. He is not open to re-fighting the entire fight of health care," Daley told CBS' "Face the Nation."
"I absolutely believe, having been in business and hearing from business people, the importance of a need for the reform of health care. It was the business community that was really saying to the politicians, this is costing us too much, it's too much of a wet blanket on the economy," he said.
With Congress at an impasse on repealing President Obama's signature health insurance law, all eyes are on a federal judge who is expected to deliver a ruling Monday about whether portions of the new law pass constitutional muster.
U.S. District Judge Roger Vinson's ruling will be the biggest judicial decision to come down the pike since groups began filing lawsuits against the bill passed by Congress last March. Twenty-six states are parties to the suit, which claims a mandate to insist Americans purchase a product is unconstitutional.
In October, Vinson dismissed four of the six counts in the suit led by then-Florida Attorney General Bill McCollum. But he allowed two counts, including one challenging the law's controversial requirement that Americans buy health insurance, to proceed. Arguments were heard in December.
In his earlier ruling, Vinson said that a government report called the requirement to buy insurance legally unprecedented and worth examining in court.
"The individual mandate applies across the board. People have no choice and there is no way to avoid it. Those who fall under the individual mandate either comply with it, or they are penalized. It is not based on an activity that they make the choice to undertake. Rather, it is based solely on citizenship and on being alive," he wrote. "Of course, to say that something is 'novel' and 'unprecedented' does not necessarily mean that it is 'unconstitutional' and 'improper.' There may be a first time for anything."
If Vinson orders an injunction against that portion of the law, the federal government will most likely seek an immediate stay against the ruling. The case already appears destined for the U.S. Supreme Court.
Nearly two dozen suits have been filed in federal courts, but Monday's ruling will have the largest impact by far against the law -- Obama's signature legislation aimed at covering 30 million uninsured Americans whether they want insurance or not.
Last week, the U.S. House of Representatives passed a repeal of the 10-year, $1 trillion plan that critics say will cost closer to $2.6 trillion. But the repeal bill will likely die in the Senate, meaning Vinson's ruling will be the grounds by which supporters and opponents proceed.
Defenders of the law point to Congressional Budget Office figures that show if repealed, the law as enacted will raise government deficits by $230 billion over the next 10 years.
Critics counter with a "junk in, junk out" description of the CBO's estimates, claiming the numbers used to reach the conclusions are bogus and based on best-case scenarios that don't realize additional spending and unlikely savings, particularly as the law, in the first decade, collects taxes for 10 years though it only pays for six years of coverage.
Other courts have already ruled on portions of the case. In Michigan, the argument concerning the "individual mandate" -- the central tenet that requires Americans to start buying health insurance in 2014 or pay a penalty -- was thrown out. A federal district judge in Richmond, Va., ruled the individual mandate is unconstitutional.
However, while the judge in Virginia ruled that the mandate creates an "unbridled exercise of federal police powers," left standing other parts of the law, as does Vinson's earlier decision.
In his State of the Union address, Obama said he was willing to open his mind to changes in the law if they made dollars and sense and didn't prevent patients with pre-existing conditions or other barriers to insurance companies from gaining coverage.
He pointed to the near-universally hated 1099 provision that orders businesses to report to the Internal Revenue Service all purchases exceeding $600 as the first provision to be scrapped.
Obama Chief of Staff Bill Daley repeated the president's position on Sunday, adding that the law was intended to help employers as much as patients.
"The president has said he's open to changes to this. He is not open to re-fighting the entire fight of health care," Daley told CBS' "Face the Nation."
"I absolutely believe, having been in business and hearing from business people, the importance of a need for the reform of health care. It was the business community that was really saying to the politicians, this is costing us too much, it's too much of a wet blanket on the economy," he said.
Supreme Court Justices Could Be No-Shows for Obama's State of the Union Address...added 1-24-11
Written by Lee Ross - Courtsey of Foxnews.com
Just one day before President Obama’s State of the Union address, it’s still not clear whether Chief Justice John Roberts will attend or, like high court colleague Justice Samuel Alito, skip the event.
The recent uptick in collegiality from lawmakers on Capitol Hill in the run-up to Tuesday’s speech contrasts sharply with the lingering controversy from last year’s speech in which President Obama rebuked the justices over a campaign finance decision. If Roberts decides not to attend, it would be his first absence at a State the Union Speech since joining the court in 2005.
Roberts’s decision -- or that of any other justice for that matter -- wouldn’t normally be an issue but for the instant uproar that resulted from last year’s address and the observations he and some of his colleagues have made over the last 12 months about the celebrated but often hyper-partisan evening.
An official with the University of Hawaii Law School confirms to FOX News that Alito, who was a significant part of the controversy last year, will be with students in Honolulu all week and therefore will not attend Tuesday night’s speech. It will be the first time he will not show.
“To the extent the State of the Union has degenerated into a political pep rally, I’m not sure why we’re there,” Roberts said last March. But the escalated calls for bipartisan civility on Capitol Hill might argue against Roberts sending his regrets.
Another factor that could play into his decision is U.S. District Judge John Roll’s murder during the Tucson shooting rampage. Roberts is the highest-ranking member of the federal judiciary and has twice publically noted Roll’s death, offering high praise for Roll’s service. It will almost certainly be acknowledged by President Obama Tuesday night.
"If I were advising, I would say, ‘man up and go,’" said Linda Greenhouse, a former Supreme Court reporter and Knight Journalist in Residence at Yale University.
"Objectively, he's completely correct," she said about Roberts’s assertion. Greenhouse noted that justices have for many years expressed concerns about attending the speech. “As Justice Alito learned, to his dismay, you can't react like an ordinary human being without becoming the news."
The controversy from President Obama’s 2010 annual message to Congress came in two parts.
First, some people objected to the substance and setting of the president’s direct critique of the court’s 5-4 ruling in Citizens United v. FEC, a high-profile decision giving corporations and labor unions the right to spend unlimited amounts of money on political speech.
“With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests -- including foreign corporations -- to spend without limit in our elections,” Obama said with six members of the court, including Roberts and Alito, seated just a few feet in front of him. “I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities.”
It was Alito’s reaction to the president’s remarks, caught on camera, that fueled the resulting firestorm. He shook his head and appeared to mouth the words “not true” as the Democrats in the House chamber cheered.
“For many years the more senior members of the Supreme Court, Justice [John Paul] Stevens before he retired, Justice [Antonin] Scalia, stopped the practice of attending State of the Union addresses because they have become very political events and very awkward for the justices,” Alito told a group at the Manhattan Institute in October. “We have to sit there like the proverbial potted plant most of the time. And we're not allowed to applaud--and those of us who are more disciplined refrain from manifesting any emotion or opinion whatsoever.”
Indeed, the State of the Union has often produced the odd visual juxtaposition of a House chamber full of lawmakers standing and applauding while the justices remain seated and expressionless.
"I don't go because it has become so partisan," Justice Clarence Thomas said to students in Florida last year just days after the State of the Union speech, which he did not attend. "And it's very uncomfortable for a judge to sit there. There's a lot that you don't hear on TV: the catcalls, the whooping and hollering and under-the-breath comments. One of the consequences is now the court becomes part of the conversation, if you want to call it that, in the speeches. It's just an example of why I don't go."
Scalia was even more stinging in his critique.
"It is a juvenile spectacle, and I resent being called upon to give it dignity, Justice Scalia told the Federalist Society in November. “It's really not appropriate for the justices to be there."
But the court is hardly unanimous on the matter. Justice Stephen Breyer has only missed one State of the Union address since joining the court in 1994. He recently told “FOX News Sunday” host Chris Wallace that he’ll be there again Tuesday night.
“I think it's very, very, very important -- very important -- for us to show up at that State of the Union, because people today, as you know, are more and more visual,” Breyer said. “I'd like them to read, but they are visual. And what they see in front of them in that State of the Union is the federal government, every part -- the president, the Congress, the cabinet, the military, and I would like them to see the judges, too, because federal judges are also part of that government. And I want to be there.”
When asked about Roberts’s concern about silent justices being surrounded by raucous politicians Breyer, a former Senate staffer said, “that's his opinion. He says what he thinks. And I say what I think. And what I think is what I said. I'll be there next year.”
University of Richmond law professor Carl Tobias says Breyer has a “peculiar fascination" with the interaction of the government’s branches. Last week Breyer spoke to a bipartisan group of members and staff from the House Judiciary Committee about how to better work with each other. The visit was organized by Chairman Lamar Smith, R-Texas.
“I like Democrats on the committee personally, but I think there are ways for us to find common ground despite the strong feelings on a lot of issues,” Smith told a reporter for The Hill newspaper. A committee spokeswoman said Breyer’s appearance was well-received but refused to comment when asked if Smith thought the justices should attend Tuesday night’s speech.
As of late Friday, a court spokeswoman couldn’t confirm the attendance plans for any of the justices. There is no requirement for any of the justices to attend, and none attended in 2000.
"Given what the chief said about Judge Roll, he may be obligated to be there," Tobias observed.
Just one day before President Obama’s State of the Union address, it’s still not clear whether Chief Justice John Roberts will attend or, like high court colleague Justice Samuel Alito, skip the event.
The recent uptick in collegiality from lawmakers on Capitol Hill in the run-up to Tuesday’s speech contrasts sharply with the lingering controversy from last year’s speech in which President Obama rebuked the justices over a campaign finance decision. If Roberts decides not to attend, it would be his first absence at a State the Union Speech since joining the court in 2005.
Roberts’s decision -- or that of any other justice for that matter -- wouldn’t normally be an issue but for the instant uproar that resulted from last year’s address and the observations he and some of his colleagues have made over the last 12 months about the celebrated but often hyper-partisan evening.
An official with the University of Hawaii Law School confirms to FOX News that Alito, who was a significant part of the controversy last year, will be with students in Honolulu all week and therefore will not attend Tuesday night’s speech. It will be the first time he will not show.
“To the extent the State of the Union has degenerated into a political pep rally, I’m not sure why we’re there,” Roberts said last March. But the escalated calls for bipartisan civility on Capitol Hill might argue against Roberts sending his regrets.
Another factor that could play into his decision is U.S. District Judge John Roll’s murder during the Tucson shooting rampage. Roberts is the highest-ranking member of the federal judiciary and has twice publically noted Roll’s death, offering high praise for Roll’s service. It will almost certainly be acknowledged by President Obama Tuesday night.
"If I were advising, I would say, ‘man up and go,’" said Linda Greenhouse, a former Supreme Court reporter and Knight Journalist in Residence at Yale University.
"Objectively, he's completely correct," she said about Roberts’s assertion. Greenhouse noted that justices have for many years expressed concerns about attending the speech. “As Justice Alito learned, to his dismay, you can't react like an ordinary human being without becoming the news."
The controversy from President Obama’s 2010 annual message to Congress came in two parts.
First, some people objected to the substance and setting of the president’s direct critique of the court’s 5-4 ruling in Citizens United v. FEC, a high-profile decision giving corporations and labor unions the right to spend unlimited amounts of money on political speech.
“With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests -- including foreign corporations -- to spend without limit in our elections,” Obama said with six members of the court, including Roberts and Alito, seated just a few feet in front of him. “I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities.”
It was Alito’s reaction to the president’s remarks, caught on camera, that fueled the resulting firestorm. He shook his head and appeared to mouth the words “not true” as the Democrats in the House chamber cheered.
“For many years the more senior members of the Supreme Court, Justice [John Paul] Stevens before he retired, Justice [Antonin] Scalia, stopped the practice of attending State of the Union addresses because they have become very political events and very awkward for the justices,” Alito told a group at the Manhattan Institute in October. “We have to sit there like the proverbial potted plant most of the time. And we're not allowed to applaud--and those of us who are more disciplined refrain from manifesting any emotion or opinion whatsoever.”
Indeed, the State of the Union has often produced the odd visual juxtaposition of a House chamber full of lawmakers standing and applauding while the justices remain seated and expressionless.
"I don't go because it has become so partisan," Justice Clarence Thomas said to students in Florida last year just days after the State of the Union speech, which he did not attend. "And it's very uncomfortable for a judge to sit there. There's a lot that you don't hear on TV: the catcalls, the whooping and hollering and under-the-breath comments. One of the consequences is now the court becomes part of the conversation, if you want to call it that, in the speeches. It's just an example of why I don't go."
Scalia was even more stinging in his critique.
"It is a juvenile spectacle, and I resent being called upon to give it dignity, Justice Scalia told the Federalist Society in November. “It's really not appropriate for the justices to be there."
But the court is hardly unanimous on the matter. Justice Stephen Breyer has only missed one State of the Union address since joining the court in 1994. He recently told “FOX News Sunday” host Chris Wallace that he’ll be there again Tuesday night.
“I think it's very, very, very important -- very important -- for us to show up at that State of the Union, because people today, as you know, are more and more visual,” Breyer said. “I'd like them to read, but they are visual. And what they see in front of them in that State of the Union is the federal government, every part -- the president, the Congress, the cabinet, the military, and I would like them to see the judges, too, because federal judges are also part of that government. And I want to be there.”
When asked about Roberts’s concern about silent justices being surrounded by raucous politicians Breyer, a former Senate staffer said, “that's his opinion. He says what he thinks. And I say what I think. And what I think is what I said. I'll be there next year.”
University of Richmond law professor Carl Tobias says Breyer has a “peculiar fascination" with the interaction of the government’s branches. Last week Breyer spoke to a bipartisan group of members and staff from the House Judiciary Committee about how to better work with each other. The visit was organized by Chairman Lamar Smith, R-Texas.
“I like Democrats on the committee personally, but I think there are ways for us to find common ground despite the strong feelings on a lot of issues,” Smith told a reporter for The Hill newspaper. A committee spokeswoman said Breyer’s appearance was well-received but refused to comment when asked if Smith thought the justices should attend Tuesday night’s speech.
As of late Friday, a court spokeswoman couldn’t confirm the attendance plans for any of the justices. There is no requirement for any of the justices to attend, and none attended in 2000.
"Given what the chief said about Judge Roll, he may be obligated to be there," Tobias observed.
Higher pump prices coming your way this spring...added 1-21-11
Courtsey of FoxNews.com
Gas pump prices that are around $3 a gallon now may seem like a bargain by the time your kids are on Easter egg hunts.
Pump prices have risen nearly 9 percent since Dec. 1 and topped $3.10 a gallon this week. That's the highest level since October 2008. The price may rise or fall a little over the next few months, but analysts expect it to range between $3.20 and $3.75 gallon by March and April ahead of the summer driving season.
The national average for regular gasoline about $3.12 a gallon on Friday, according to AAA, Wright Express and Oil Price Information Service. That's nearly 12 cents more than a month ago and 38 cents above a year ago.
Average pump prices range from $2.81 to $3.70 in major cities. For example, the average in Salt Lake City is $2.74 a gallon and in New Orleans it's $2.97 a gallon. Drivers in San Francisco pay $3.44 a gallon, and in Honolulu gas is $3.58 a gallon.
Americans typically drive less in the winter. Demand is about 1 percentage point higher than a year ago but remains weaker than the historical average, said energy analyst Jim Ritterbusch. The nation's gasoline supplies remain above the five-year average.
Over the next couple of months, refineries will conduct regular maintenance to prepare for the changeover to summer driving mixes. That could affect supplies, but gas prices should remain steady to a few cents more, according to oil analyst Tom Kloza of Oil Price Information Service.
By spring he expects the average price to rise to between $3.50 and $3.75 a gallon. Ritterbusch expects $3.20 to $3.25 a gallon by Memorial Day.
For every penny the price at the pump increases, it costs consumers overall an additional $4 million, according to Cameron Hanover analyst Peter Beutel. If the price goes up a dime a gallon, consumers pay $40 million more each day for that increase.
Crude oil prices fell again on Friday as traders speculated about whether China may impose more restrictions to control the growth of its economy, and looked for more signs that the U.S. economy is headed for better days.
Benchmark oil for March delivery fell 29 cents to $89.30 a barrel in midday trading on the New York Mercantile Exchange.
In other Nymex trading, heating oil rose 2.20 cents at $2.6452 a gallon, and gasoline added 3.99 cents at $2.4624 a gallon. Natural gas for March delivery gained 2.9 cents at $4.721 per 1,000 cubic feet.
In London, Brent crude rose 84 cents to $97.42 a barrel on the ICE futures exchange.
Gas pump prices that are around $3 a gallon now may seem like a bargain by the time your kids are on Easter egg hunts.
Pump prices have risen nearly 9 percent since Dec. 1 and topped $3.10 a gallon this week. That's the highest level since October 2008. The price may rise or fall a little over the next few months, but analysts expect it to range between $3.20 and $3.75 gallon by March and April ahead of the summer driving season.
The national average for regular gasoline about $3.12 a gallon on Friday, according to AAA, Wright Express and Oil Price Information Service. That's nearly 12 cents more than a month ago and 38 cents above a year ago.
Average pump prices range from $2.81 to $3.70 in major cities. For example, the average in Salt Lake City is $2.74 a gallon and in New Orleans it's $2.97 a gallon. Drivers in San Francisco pay $3.44 a gallon, and in Honolulu gas is $3.58 a gallon.
Americans typically drive less in the winter. Demand is about 1 percentage point higher than a year ago but remains weaker than the historical average, said energy analyst Jim Ritterbusch. The nation's gasoline supplies remain above the five-year average.
Over the next couple of months, refineries will conduct regular maintenance to prepare for the changeover to summer driving mixes. That could affect supplies, but gas prices should remain steady to a few cents more, according to oil analyst Tom Kloza of Oil Price Information Service.
By spring he expects the average price to rise to between $3.50 and $3.75 a gallon. Ritterbusch expects $3.20 to $3.25 a gallon by Memorial Day.
For every penny the price at the pump increases, it costs consumers overall an additional $4 million, according to Cameron Hanover analyst Peter Beutel. If the price goes up a dime a gallon, consumers pay $40 million more each day for that increase.
Crude oil prices fell again on Friday as traders speculated about whether China may impose more restrictions to control the growth of its economy, and looked for more signs that the U.S. economy is headed for better days.
Benchmark oil for March delivery fell 29 cents to $89.30 a barrel in midday trading on the New York Mercantile Exchange.
In other Nymex trading, heating oil rose 2.20 cents at $2.6452 a gallon, and gasoline added 3.99 cents at $2.4624 a gallon. Natural gas for March delivery gained 2.9 cents at $4.721 per 1,000 cubic feet.
In London, Brent crude rose 84 cents to $97.42 a barrel on the ICE futures exchange.
House Set to Vote on Repealing Health Law...added 1-19-11
Courtsey of Foxnews.com
WASHINGTON -- The new Republican-controlled House of Representatives is certain to vote Wednesday to repeal President Barack Obama's health care reform. The Democratic-controlled Senate is just as certain to let the measure die.
Republicans and Democrats adopted a more civil tone without angry shouts as they debated the repeal legislation on the House floor Tuesday just 10 days after the shooting rampage in Arizona that left a Democratic congresswoman wounded and lawmakers of both parties stunned.
Rep. Steny Hoyer, the second-ranking Democrat, said he expected that "members will heed their own advice and will address the issues in a way that will deal with them on the merits." In the past, he added, too much of the public debate was "about incitement rather than informing, about making people angry, disrespecting the ... point of view of the other side."
The House vote had been slated for last week as the Republicans' first order of business -- a campaign promise that helped them regain the majority in the lower chamber. But action was put off after the attack on Arizona Rep. Gabrielle Giffords, who was shot through the head. She is hospitalized in serious condition but six others who attended her meeting with constituents in Tucson, Arizona, were killed. They include a federal judge and a 9-year-old girl.
Now, the House vote is back on after more than a week of national soul-searching and questions about whether the brutal tone of the political dialogue helped fuel the deadly attack in Arizona.
While most politicians agree that the heated rhetoric had gotten out of hand, little has changed in narrowing the deep partisan divide on such key issues as the health care reform legislation.
The measure that Obama signed into law last March extended health care coverage over a period of four years to 32 million Americans who now lack it, and reshaped the way most Americans receive and pay for medical treatment. The signing followed a year of intense political battles and marked a victory that eluded presidents stretching back almost half a century.
Obama said Tuesday that he is willing to work with Democrats and Republicans to improve the health care law but warned that lawmakers shouldn't "go backward" and repeal the measure.
In a statement, Obama said Americans deserve the freedom and security of knowing insurance companies can't deny, cap or drop their health care coverage when they need it most.
The House action to repeal the law is merely symbolic given that the Senate will not even take up the measure and that Obama is certain to veto it should it somehow pass through Congress. But it does signal the beginning of the Republican effort to chisel away at the law through attempts to deny funding for parts of the legislation as they go into effect in the coming years.
An Associated Press-GfK poll taken earlier this month finds Americans almost evenly divided on the law. The poll found that 40 percent of those surveyed said they support the law, while 41 percent oppose it. Strong opposition to the law stands at 30 percent, close to the lowest levels registered in AP-GfK surveys dating to September 2009.
As for repeal, only about one in four said they want to do away with the law completely. Among Republicans support for repeal has dropped sharply, from 61 percent after the elections to 49 percent now.
Dissatisfaction with the law stems in part from a powerful campaign by Republicans and the conservative tea party movement to portray it as further intrusion into citizens' private lives by the federal government. Some insisted the new legislation amounted to socialized medicine, even though parts of the law were lifted from a Republican plan drawn up in the 1990s.
In some extreme cases, opponents falsely claimed that the legislation would set up so-called government "death panels" to decide when to end treatment for elderly patients.
Others object to it on the basis that it's too expensive, especially given the spiraling U.S. deficit.
Now, Republicans are warning the health care reform law will cost 650,000 U.S. jobs if it is not repealed. Experts debunk that claim as a creative use of statistics from the nonpartisan Congressional Budget Office.
What the CBO actually said is that the impact of the health care law on supply and demand for labor would be small. Most of it would come from people who no longer have to work, or can move to less demanding employment, because insurance will be available outside the job. Under the previous system, most Americans got their health insurance through work.
The Obama administration released a study Tuesday saying repeal of the existing law could threaten between 50 million and 129 million nonelderly men, women and children with denial of affordable health insurance because they have pre-existing medical conditions. The administration built its estimate on changes in the law that already have taken effect or might take effect by 2014.
House Republicans issued a point-by-point rebuttal that said the administration's claim was vastly overstated and accused Democrats of "scare tactics."
WASHINGTON -- The new Republican-controlled House of Representatives is certain to vote Wednesday to repeal President Barack Obama's health care reform. The Democratic-controlled Senate is just as certain to let the measure die.
Republicans and Democrats adopted a more civil tone without angry shouts as they debated the repeal legislation on the House floor Tuesday just 10 days after the shooting rampage in Arizona that left a Democratic congresswoman wounded and lawmakers of both parties stunned.
Rep. Steny Hoyer, the second-ranking Democrat, said he expected that "members will heed their own advice and will address the issues in a way that will deal with them on the merits." In the past, he added, too much of the public debate was "about incitement rather than informing, about making people angry, disrespecting the ... point of view of the other side."
The House vote had been slated for last week as the Republicans' first order of business -- a campaign promise that helped them regain the majority in the lower chamber. But action was put off after the attack on Arizona Rep. Gabrielle Giffords, who was shot through the head. She is hospitalized in serious condition but six others who attended her meeting with constituents in Tucson, Arizona, were killed. They include a federal judge and a 9-year-old girl.
Now, the House vote is back on after more than a week of national soul-searching and questions about whether the brutal tone of the political dialogue helped fuel the deadly attack in Arizona.
While most politicians agree that the heated rhetoric had gotten out of hand, little has changed in narrowing the deep partisan divide on such key issues as the health care reform legislation.
The measure that Obama signed into law last March extended health care coverage over a period of four years to 32 million Americans who now lack it, and reshaped the way most Americans receive and pay for medical treatment. The signing followed a year of intense political battles and marked a victory that eluded presidents stretching back almost half a century.
Obama said Tuesday that he is willing to work with Democrats and Republicans to improve the health care law but warned that lawmakers shouldn't "go backward" and repeal the measure.
In a statement, Obama said Americans deserve the freedom and security of knowing insurance companies can't deny, cap or drop their health care coverage when they need it most.
The House action to repeal the law is merely symbolic given that the Senate will not even take up the measure and that Obama is certain to veto it should it somehow pass through Congress. But it does signal the beginning of the Republican effort to chisel away at the law through attempts to deny funding for parts of the legislation as they go into effect in the coming years.
An Associated Press-GfK poll taken earlier this month finds Americans almost evenly divided on the law. The poll found that 40 percent of those surveyed said they support the law, while 41 percent oppose it. Strong opposition to the law stands at 30 percent, close to the lowest levels registered in AP-GfK surveys dating to September 2009.
As for repeal, only about one in four said they want to do away with the law completely. Among Republicans support for repeal has dropped sharply, from 61 percent after the elections to 49 percent now.
Dissatisfaction with the law stems in part from a powerful campaign by Republicans and the conservative tea party movement to portray it as further intrusion into citizens' private lives by the federal government. Some insisted the new legislation amounted to socialized medicine, even though parts of the law were lifted from a Republican plan drawn up in the 1990s.
In some extreme cases, opponents falsely claimed that the legislation would set up so-called government "death panels" to decide when to end treatment for elderly patients.
Others object to it on the basis that it's too expensive, especially given the spiraling U.S. deficit.
Now, Republicans are warning the health care reform law will cost 650,000 U.S. jobs if it is not repealed. Experts debunk that claim as a creative use of statistics from the nonpartisan Congressional Budget Office.
What the CBO actually said is that the impact of the health care law on supply and demand for labor would be small. Most of it would come from people who no longer have to work, or can move to less demanding employment, because insurance will be available outside the job. Under the previous system, most Americans got their health insurance through work.
The Obama administration released a study Tuesday saying repeal of the existing law could threaten between 50 million and 129 million nonelderly men, women and children with denial of affordable health insurance because they have pre-existing medical conditions. The administration built its estimate on changes in the law that already have taken effect or might take effect by 2014.
House Republicans issued a point-by-point rebuttal that said the administration's claim was vastly overstated and accused Democrats of "scare tactics."
GOP May Blow Off Obama’s Debt Limit Demand...added 1-17-11
Debt Fight Heats Up; China Zaps Obama on Dollar
By Chris Stirewalt - Courtsey of Fox News
"Put up or shut up.” Gov. Chris Christie, R-N.J., on “FOX News Sunday” encouraging Republicans in Congress to block a requested increase in the federal debt limit.
Republicans are trying on for size the possibility of actually saying no to a pending request from the Obama administration to raise the nation’s debt ceiling, despite warnings of an economic “catastrophe” worse than the Panic of 2008 if no action is taken.
The idea is gaining momentum and sets up a huge fight and a potential government shutdown. It will also prove embarrassing for Obama to have the discussion about rejecting the increase while the leader of America’s biggest creditor, China, is in town for a state visit.
Chinese President Hu Jintao will be Obama’s guest this week, and the federal government owes China’s government-controlled banks about $1 trillion. Hu has expressed concern in the past about America’s ability to meet such staggering debt obligations, causing jitters among other lenders, who together provide about 40 cents of every dollar the U.S. government spends.
If Republicans are serious about brushing off Obama’s demand to add to the current $14.3 trillion limit, which was bumped up by $1.9 trillion less than a year ago, it will not reassure Hu and the Chinese lenders that American debt is a safe haven anymore.
And Republicans may be getting serious. Polls show Americans hate the idea of borrowing more, even if it is to meet existing obligations. Add in the Tea Party 'tude of the new GOP House majority and rejecting the president’s request starts to look like a real possibility.
Even establishment Republicans behind closed doors are now talking about the possibility of waving off the Obama request, an idea that would have been unthinkable to many just a month ago.
New Jersey Gov. Chris Christie and former Minnesota Gov. Tim Pawlenty were just the latest GOPers to give voice publicly to the opposition in their appearances on “FOX News Sunday,” but they are important voices.
Christie adds some spice as the current idol of fiscal hawks across the land. He called for the GOP to refuse Obama and urged national Republicans to do what Newt Gingrich and the 1994 revolutionaries failed to do and bring the public into the process early on – to say “This is what we are doing, and this is why.”
Pawlenty, a sober and serious political player, adds additional credibility to the move. And he has also articulated a way for Republicans to avoid a total budgetary calamity if they refuse. What Pawlenty recommends is for Congress to put American obligations in sequential order so that bills that must be paid, like interest on existing debt, payrolls, etc., get paid first and long-term obligations, like planned stimulus projects and other work not underway, gets pushed off.
Pawlenty argues that Congress should oblige the president with an early answer on the debt ceiling, but tell him no. Then turn to managing the fallout so that instead of a dramatic shutdown, there would be a priority shift that wouldn’t affect most Americans.
It would be a tricky turn for Obama. While Bill Clinton may have succeeded in his budget showdown with Republicans in 1995, Obama isn’t asking for Congress to appropriate.
Obama is pushing more borrowing, a very unpopular position. And having made a big show as a senator of refusing to vote for President George W. Bush’s request for more borrowing, Obama will have a harder time denouncing political gamesmanship in his opponents.
By Chris Stirewalt - Courtsey of Fox News
"Put up or shut up.” Gov. Chris Christie, R-N.J., on “FOX News Sunday” encouraging Republicans in Congress to block a requested increase in the federal debt limit.
Republicans are trying on for size the possibility of actually saying no to a pending request from the Obama administration to raise the nation’s debt ceiling, despite warnings of an economic “catastrophe” worse than the Panic of 2008 if no action is taken.
The idea is gaining momentum and sets up a huge fight and a potential government shutdown. It will also prove embarrassing for Obama to have the discussion about rejecting the increase while the leader of America’s biggest creditor, China, is in town for a state visit.
Chinese President Hu Jintao will be Obama’s guest this week, and the federal government owes China’s government-controlled banks about $1 trillion. Hu has expressed concern in the past about America’s ability to meet such staggering debt obligations, causing jitters among other lenders, who together provide about 40 cents of every dollar the U.S. government spends.
If Republicans are serious about brushing off Obama’s demand to add to the current $14.3 trillion limit, which was bumped up by $1.9 trillion less than a year ago, it will not reassure Hu and the Chinese lenders that American debt is a safe haven anymore.
And Republicans may be getting serious. Polls show Americans hate the idea of borrowing more, even if it is to meet existing obligations. Add in the Tea Party 'tude of the new GOP House majority and rejecting the president’s request starts to look like a real possibility.
Even establishment Republicans behind closed doors are now talking about the possibility of waving off the Obama request, an idea that would have been unthinkable to many just a month ago.
New Jersey Gov. Chris Christie and former Minnesota Gov. Tim Pawlenty were just the latest GOPers to give voice publicly to the opposition in their appearances on “FOX News Sunday,” but they are important voices.
Christie adds some spice as the current idol of fiscal hawks across the land. He called for the GOP to refuse Obama and urged national Republicans to do what Newt Gingrich and the 1994 revolutionaries failed to do and bring the public into the process early on – to say “This is what we are doing, and this is why.”
Pawlenty, a sober and serious political player, adds additional credibility to the move. And he has also articulated a way for Republicans to avoid a total budgetary calamity if they refuse. What Pawlenty recommends is for Congress to put American obligations in sequential order so that bills that must be paid, like interest on existing debt, payrolls, etc., get paid first and long-term obligations, like planned stimulus projects and other work not underway, gets pushed off.
Pawlenty argues that Congress should oblige the president with an early answer on the debt ceiling, but tell him no. Then turn to managing the fallout so that instead of a dramatic shutdown, there would be a priority shift that wouldn’t affect most Americans.
It would be a tricky turn for Obama. While Bill Clinton may have succeeded in his budget showdown with Republicans in 1995, Obama isn’t asking for Congress to appropriate.
Obama is pushing more borrowing, a very unpopular position. And having made a big show as a senator of refusing to vote for President George W. Bush’s request for more borrowing, Obama will have a harder time denouncing political gamesmanship in his opponents.
Dimon, Gorman, Moynihan pitch for AIG share sale...added 1-13-11
Some of the United States' top bankers descended on a law firm in midtown Manhattan on Thursday to make a pitch for managing what could be one of the largest share sales in history -- a secondary offering for bailed-out insurer American International Group Inc.
JPMorgan Chief Executive Jamie Dimon was among the executives attending the meeting. Dimon entered the building of law firm Davis Polk & Wardwell LLP just after 9:30 a.m. EST (1430 GMT) in New York. Asked how the meeting went as he left, Dimon laughed and said: "How'd what go?"
Morgan Stanley CEO James Gorman left the building shortly after Dimon's arrival. The bankers on Gorman's team were carrying thick blue folders emblazoned with the U.S. flag. One of Gorman's colleagues carried a bag full of folders.
Gorman also declined to comment.
Bank of America Corp's Brian Moynihan arrived just before 11 a.m. EST (1600 GMT).
Security was tight, with guards keeping a close eye on all the building's entrances and trying to block reporters and passers-by from seeing executives as they came and went.
Bankers are expected to come and go throughout the day to make their case for managing a share sale that could exceed $20 billion, between the shares sold by the U.S. Treasury and those offered by AIG.
At that size, the AIG offering would rank as one of the 10 largest share sales of any kind in history.
DISCOUNT FEES
After a recapitalization deal closes on Friday, the Treasury will own 92.1 percent of AIG. The government rescued AIG from the brink of failure in September 2008 in a bailout that topped $182 billion.
Sources told Reuters on Wednesday that bankers were expected to pitch a fee structure of 75 basis points or less -- low for a secondary offering, but still worth perhaps $150 million in fees to the winning banks if the share sale reaches $20 billion.
The first share sale is most likely to happen after mid-May, once AIG has filed its financial report for the first quarter with securities regulators, sources have said. The sale could happen as soon as March if conditions were right.
AIG shares were trading 25 cents lower at $58.15 on Thursday afternoon on the New York Stock Exchange.
The shares are expected to tumble next week into the mid-$40 range, when recently approved stock warrants begin trading. The warrants, entitling holders to 75 million AIG common shares, were the final key step in the recap deal.
By Ben Berkowitz - courtsey of Reuters
JPMorgan Chief Executive Jamie Dimon was among the executives attending the meeting. Dimon entered the building of law firm Davis Polk & Wardwell LLP just after 9:30 a.m. EST (1430 GMT) in New York. Asked how the meeting went as he left, Dimon laughed and said: "How'd what go?"
Morgan Stanley CEO James Gorman left the building shortly after Dimon's arrival. The bankers on Gorman's team were carrying thick blue folders emblazoned with the U.S. flag. One of Gorman's colleagues carried a bag full of folders.
Gorman also declined to comment.
Bank of America Corp's Brian Moynihan arrived just before 11 a.m. EST (1600 GMT).
Security was tight, with guards keeping a close eye on all the building's entrances and trying to block reporters and passers-by from seeing executives as they came and went.
Bankers are expected to come and go throughout the day to make their case for managing a share sale that could exceed $20 billion, between the shares sold by the U.S. Treasury and those offered by AIG.
At that size, the AIG offering would rank as one of the 10 largest share sales of any kind in history.
DISCOUNT FEES
After a recapitalization deal closes on Friday, the Treasury will own 92.1 percent of AIG. The government rescued AIG from the brink of failure in September 2008 in a bailout that topped $182 billion.
Sources told Reuters on Wednesday that bankers were expected to pitch a fee structure of 75 basis points or less -- low for a secondary offering, but still worth perhaps $150 million in fees to the winning banks if the share sale reaches $20 billion.
The first share sale is most likely to happen after mid-May, once AIG has filed its financial report for the first quarter with securities regulators, sources have said. The sale could happen as soon as March if conditions were right.
AIG shares were trading 25 cents lower at $58.15 on Thursday afternoon on the New York Stock Exchange.
The shares are expected to tumble next week into the mid-$40 range, when recently approved stock warrants begin trading. The warrants, entitling holders to 75 million AIG common shares, were the final key step in the recap deal.
By Ben Berkowitz - courtsey of Reuters
House GOP Challenges Obama on Debt Limit...added 1-7-11
Courtsey of Foxnews.com
WASHINGTON -- In power scarcely a day, House Republicans bluntly told the White House on Thursday its request to raise the nation's $14.3 trillion debt limit will require federal spending cuts to win their approval, laying down an early marker in a new era of divided government.
Speaker John Boehner made the challenge as the new GOP majority voted to cut funding for House members' own offices and committee operations by $35 million. Rank and file Republicans described that vote as a mere down payment on a much more ambitious assault on record federal deficits.
"It's not massive," first-term Rep. Cory Gardner, R-Colo., said of Thursday's cut. "But it is monumental."
At a news conference, Boehner, R-Ohio, also said emphatically he was standing by a pre-election pledge to cut government spending by at least $100 billion this year. "No ifs, ands or buts about it," he said, despite recent comments from other Republicans the total might be overly ambitious.
The Republicans who took control of the House on Wednesday include dozens of newcomers elected last fall with the support of tea party activists eager for a smaller, less intrusive government. And Thursday's events suggested a bone-jarring struggle could be mere weeks away as conservative lawmakers use the Treasury's need for more borrowing authority to try and extract concessions from President Barack Obama and congressional Democrats.
Obama has spoken favorably but in general terms about a need to reduce federal deficits. An administration official said the White House wants that issue to proceed independently of the debt limit increase.
"The American people will not stand for such an increase unless it is accompanied by meaningful action by the president and Congress to cut spending and end the job-killing spending binge in Washington," Boehner said.
"While America cannot default on its debt, we also cannot continue to borrow recklessly, dig ourselves deeper into this hole, and mortgage the future of our children and grandchildren."
Boehner's statement was triggered by a letter from Treasury Secretary Tim Geithner, who wrote congressional leaders the government could exhaust its borrowing authority of $14.29 trillion between March 31 and May 16.
He said the precise date depends on the economy, tax receipts and other matters, but added, "It will be necessary for Congress to act by the end of the first quarter of 2011." Without an increase, he said the government would eventually default on its obligations and "catastrophic damage to the economy" could result.
Congressional legislation is required to increase the government's borrowing ability. Such bills periodically prompt showdowns in Congress, where many lawmakers in both parties cringe at having to cast votes that acknowledge the government is living beyond its means.
By contrast, the House has unilateral authority to cut its own spending, and GOP leaders chose a 5 percent reduction as a symbolic initial action by lawmakers on their first full day on the job.
The $35 million would be enough to keep the government running for about five minutes.
Republicans said there would be more to come - much more.
"We will carry out the most expansive reduction of discretionary spending in the history of our nation, said Rep. Hal Rogers of Kentucky, newly installed as chairman of the House Appropriations Committee.
The vote Thursday was a bipartisan 410-13.
More broadly, Congress must act by early March to replenish spending authority for government activities ranging from the Pentagon to the National Park Service and the courts. In their campaign manifesto, a Pledge to America, House Republican candidates promised to pare most non-defense programs by $100 billion, the amount they said had been added since Obama took office.
In recent days, though, numerous Republicans have said that figure was calculated based on an assumption that the cuts would take effect at the beginning of the fiscal year. By March, five months will have elapsed, and they said that meant the $100 billion figure was too high.
In his letter to legislative leaders, Geithner said an increase in the debt limit "simply permits the Treasury to fund those obligations Congress has already established."
Without an increase, he said the government would be forced to default, "causing catastrophic damage to the economy" that could rival the effects of the near collapse of the banking system in 2008 and 2009.
In his statement, Boehner did not question the need for an increase, but said it must be accompanied by other measures.
"Spending cuts - and reforming a broken budget process - are top priorities for the American people and for the new majority in the House this year, and it is essential that the president and Democrats in Congress work with us in that effort."
Senate Republican leader Mitch McConnell has said previously any debt limit increase "will not be without some strings attached if it happens, because they're going to have to seriously address spending and debt. The American people want it. They expect it."
Senate Democratic leader Harry Reid of Nevada approvingly cited Boehner's statement that "we're going to have to deal with it as adults" -- talking about the debt limit. "Whether we like it or not, the federal government has obligations and we have obligations on our part.'`
Sen. Dick Durbin of Illinois, the Senate's second-ranking Democrat, was less forgiving. "Using this doomsday scenario and putting the American economy at risk I don't think is a responsible way to govern," he said of the Republicans.
WASHINGTON -- In power scarcely a day, House Republicans bluntly told the White House on Thursday its request to raise the nation's $14.3 trillion debt limit will require federal spending cuts to win their approval, laying down an early marker in a new era of divided government.
Speaker John Boehner made the challenge as the new GOP majority voted to cut funding for House members' own offices and committee operations by $35 million. Rank and file Republicans described that vote as a mere down payment on a much more ambitious assault on record federal deficits.
"It's not massive," first-term Rep. Cory Gardner, R-Colo., said of Thursday's cut. "But it is monumental."
At a news conference, Boehner, R-Ohio, also said emphatically he was standing by a pre-election pledge to cut government spending by at least $100 billion this year. "No ifs, ands or buts about it," he said, despite recent comments from other Republicans the total might be overly ambitious.
The Republicans who took control of the House on Wednesday include dozens of newcomers elected last fall with the support of tea party activists eager for a smaller, less intrusive government. And Thursday's events suggested a bone-jarring struggle could be mere weeks away as conservative lawmakers use the Treasury's need for more borrowing authority to try and extract concessions from President Barack Obama and congressional Democrats.
Obama has spoken favorably but in general terms about a need to reduce federal deficits. An administration official said the White House wants that issue to proceed independently of the debt limit increase.
"The American people will not stand for such an increase unless it is accompanied by meaningful action by the president and Congress to cut spending and end the job-killing spending binge in Washington," Boehner said.
"While America cannot default on its debt, we also cannot continue to borrow recklessly, dig ourselves deeper into this hole, and mortgage the future of our children and grandchildren."
Boehner's statement was triggered by a letter from Treasury Secretary Tim Geithner, who wrote congressional leaders the government could exhaust its borrowing authority of $14.29 trillion between March 31 and May 16.
He said the precise date depends on the economy, tax receipts and other matters, but added, "It will be necessary for Congress to act by the end of the first quarter of 2011." Without an increase, he said the government would eventually default on its obligations and "catastrophic damage to the economy" could result.
Congressional legislation is required to increase the government's borrowing ability. Such bills periodically prompt showdowns in Congress, where many lawmakers in both parties cringe at having to cast votes that acknowledge the government is living beyond its means.
By contrast, the House has unilateral authority to cut its own spending, and GOP leaders chose a 5 percent reduction as a symbolic initial action by lawmakers on their first full day on the job.
The $35 million would be enough to keep the government running for about five minutes.
Republicans said there would be more to come - much more.
"We will carry out the most expansive reduction of discretionary spending in the history of our nation, said Rep. Hal Rogers of Kentucky, newly installed as chairman of the House Appropriations Committee.
The vote Thursday was a bipartisan 410-13.
More broadly, Congress must act by early March to replenish spending authority for government activities ranging from the Pentagon to the National Park Service and the courts. In their campaign manifesto, a Pledge to America, House Republican candidates promised to pare most non-defense programs by $100 billion, the amount they said had been added since Obama took office.
In recent days, though, numerous Republicans have said that figure was calculated based on an assumption that the cuts would take effect at the beginning of the fiscal year. By March, five months will have elapsed, and they said that meant the $100 billion figure was too high.
In his letter to legislative leaders, Geithner said an increase in the debt limit "simply permits the Treasury to fund those obligations Congress has already established."
Without an increase, he said the government would be forced to default, "causing catastrophic damage to the economy" that could rival the effects of the near collapse of the banking system in 2008 and 2009.
In his statement, Boehner did not question the need for an increase, but said it must be accompanied by other measures.
"Spending cuts - and reforming a broken budget process - are top priorities for the American people and for the new majority in the House this year, and it is essential that the president and Democrats in Congress work with us in that effort."
Senate Republican leader Mitch McConnell has said previously any debt limit increase "will not be without some strings attached if it happens, because they're going to have to seriously address spending and debt. The American people want it. They expect it."
Senate Democratic leader Harry Reid of Nevada approvingly cited Boehner's statement that "we're going to have to deal with it as adults" -- talking about the debt limit. "Whether we like it or not, the federal government has obligations and we have obligations on our part.'`
Sen. Dick Durbin of Illinois, the Senate's second-ranking Democrat, was less forgiving. "Using this doomsday scenario and putting the American economy at risk I don't think is a responsible way to govern," he said of the Republicans.
Obama Likely to Pursue Corporate-Tax Cut, Way to Pay for It ...added 12-3-2011
President Obama
Courtesy of The Wall Street Journal
All signs point to President Barack Obama pursuing far-reaching changes to the corporate income tax, seeking to lower one of the highest statutory corporate-tax rates in the world by eliminating deductions, credits and loopholes.
If he proceeds, the administration will insist that any changes raise as much revenue as the existing, 35% corporate tax. That's to constrain those who want to lighten the business-tax burden and those who want to get more money from business. But the constraint means that for every company that saves a dollar, another will pay a dollar more.
The White House says no decisions have been made and that the president has yet to have a session with his economic team devoted to corporate taxes. But Treasury tax technicians are sifting through options, CEOs are buzzing and the president has voiced his druthers: "We would be very interested," he said in October, "in finding ways to lower the corporate-tax rate so that companies that are operating overseas can so do effectively and aren't put at a competitive disadvantage." In a recent interview with National Public Radio, Mr. Obama talked about "a conversation over the next year" aimed at "simplifying the system, hopefully lowering rates, broadening the base."
Any Obama pitch, perhaps in his State of the Union address, will be that corporate-tax reform will make America more competitive, induce more companies to invest here, reduce costly complexity and improve long-term growth prospects. Truth be told, this won't do a whole lot to boost growth, but this is one of the options that is free and doesn't widen the budget deficit. Congressional Republicans say they're at least interested in talking.
Unlike income and payroll taxes, the corporate tax has been shrinking. From 3.8% of gross domestic product, the value of goods and services produced in a year, in the 1960s, it was down to 2% of GDP before the recent recession. "The corporate tax is a shadow of its former self," Congressional Research Service economist Jane Gravelle has said.
It's largely a big-company tax: Half of all business profits go to entities organized to be taxed as individuals, a way to pay less in taxes; 85% of corporate income taxes are paid by 0.5% of companies, fewer than 10,000 in all.
In the past 25 years, the corporate tax has grown barnacles, some crafted to encourage investment, others narrow provisions with little economic merit. With the capitulation of Japan and the U.K., the U.S. is the only major economy that tries to tax multinationals on world-wide income instead of profits made at home, an unsustainable perch. Although various deductions mean most companies pay far less than the 35% statutory rate, most estimates suggest that the actual U.S. federal-state corporate-tax rate in ordinary times (when the government isn't offering the temporary investment tax breaks it is now) is higher than in many, although not all, other big countries. Several others, most recently Japan and Canada, are moving to cut corporate rates, which could put the U.S. at a disadvantage at a time when capital moves across borders with increasing ease.
Before the financial crisis, the Bush Treasury was eyeing the corporate tax, arguing that it distorted decisions, fostered inefficiency and cost business $40 billion a year in compliance. Mr. Obama's Presidential Economic Recovery Advisory Board (Perab) picked up the baton, saying in August that the current corporate tax has "deleterious economic consequences," encourages borrowing and induces investment "for tax reasons rather than for reasons of economic efficiency."
In short, the corporate income tax has few defenders. But changing it without losing revenue is challenging. Each percentage-point cut in the existing corporate tax reduces revenue by about $120 billion over 10 years. Closing a few loopholes won't do enough to reduce the rate significantly: Taxing credit unions as corporations yields $19 billion over 10 years, for instance; taxing Blue Cross/Blue Shield yields $8 billion.
To make this worth doing, the rate probably needs to fall toward 25%. That means big changes. Take the 2004 tax break for "domestic production," described as a way to boost manufacturing but so broadly defined that it covers hamburger making. If it were eliminated, the corporate tax rate for all companies—from Wall Street to the Rust Belt—could be reduced by 1.4 percentage points. But to the one-third of companies that get the tax break today, the savings are the equivalent of shaving their tax rate by 3.5 percentage points. So if the tax break were wiped out, their taxes would go up unless some other popular deductions are eliminated, such as accelerated depreciation (which allows companies to write off investments for tax purposes more quickly than for accounting purposes).
Basically, there's a trade-off: Fewer tax breaks for companies to do what Congress has been convinced (either by economists or lobbyists) they should do, versus a lower tax rate. Deeper rate cuts may mean bigger changes, perhaps limits on the interest on debt that companies can deduct or forcing big businesses now outside the corporate tax to pay it.
Deficit hawks will say any savings should reduce debt, not tax rates. Some executives will say just cut the rate, forget the base-broadening. Some liberals will object to shielding business from paying more. And every loser will lobby hard. Ultimately, Mr. Obama likely will try to make this a problem for big business: If you want lower rates, he'll say, find us a way to pay for it.
All signs point to President Barack Obama pursuing far-reaching changes to the corporate income tax, seeking to lower one of the highest statutory corporate-tax rates in the world by eliminating deductions, credits and loopholes.
If he proceeds, the administration will insist that any changes raise as much revenue as the existing, 35% corporate tax. That's to constrain those who want to lighten the business-tax burden and those who want to get more money from business. But the constraint means that for every company that saves a dollar, another will pay a dollar more.
The White House says no decisions have been made and that the president has yet to have a session with his economic team devoted to corporate taxes. But Treasury tax technicians are sifting through options, CEOs are buzzing and the president has voiced his druthers: "We would be very interested," he said in October, "in finding ways to lower the corporate-tax rate so that companies that are operating overseas can so do effectively and aren't put at a competitive disadvantage." In a recent interview with National Public Radio, Mr. Obama talked about "a conversation over the next year" aimed at "simplifying the system, hopefully lowering rates, broadening the base."
Any Obama pitch, perhaps in his State of the Union address, will be that corporate-tax reform will make America more competitive, induce more companies to invest here, reduce costly complexity and improve long-term growth prospects. Truth be told, this won't do a whole lot to boost growth, but this is one of the options that is free and doesn't widen the budget deficit. Congressional Republicans say they're at least interested in talking.
Unlike income and payroll taxes, the corporate tax has been shrinking. From 3.8% of gross domestic product, the value of goods and services produced in a year, in the 1960s, it was down to 2% of GDP before the recent recession. "The corporate tax is a shadow of its former self," Congressional Research Service economist Jane Gravelle has said.
It's largely a big-company tax: Half of all business profits go to entities organized to be taxed as individuals, a way to pay less in taxes; 85% of corporate income taxes are paid by 0.5% of companies, fewer than 10,000 in all.
In the past 25 years, the corporate tax has grown barnacles, some crafted to encourage investment, others narrow provisions with little economic merit. With the capitulation of Japan and the U.K., the U.S. is the only major economy that tries to tax multinationals on world-wide income instead of profits made at home, an unsustainable perch. Although various deductions mean most companies pay far less than the 35% statutory rate, most estimates suggest that the actual U.S. federal-state corporate-tax rate in ordinary times (when the government isn't offering the temporary investment tax breaks it is now) is higher than in many, although not all, other big countries. Several others, most recently Japan and Canada, are moving to cut corporate rates, which could put the U.S. at a disadvantage at a time when capital moves across borders with increasing ease.
Before the financial crisis, the Bush Treasury was eyeing the corporate tax, arguing that it distorted decisions, fostered inefficiency and cost business $40 billion a year in compliance. Mr. Obama's Presidential Economic Recovery Advisory Board (Perab) picked up the baton, saying in August that the current corporate tax has "deleterious economic consequences," encourages borrowing and induces investment "for tax reasons rather than for reasons of economic efficiency."
In short, the corporate income tax has few defenders. But changing it without losing revenue is challenging. Each percentage-point cut in the existing corporate tax reduces revenue by about $120 billion over 10 years. Closing a few loopholes won't do enough to reduce the rate significantly: Taxing credit unions as corporations yields $19 billion over 10 years, for instance; taxing Blue Cross/Blue Shield yields $8 billion.
To make this worth doing, the rate probably needs to fall toward 25%. That means big changes. Take the 2004 tax break for "domestic production," described as a way to boost manufacturing but so broadly defined that it covers hamburger making. If it were eliminated, the corporate tax rate for all companies—from Wall Street to the Rust Belt—could be reduced by 1.4 percentage points. But to the one-third of companies that get the tax break today, the savings are the equivalent of shaving their tax rate by 3.5 percentage points. So if the tax break were wiped out, their taxes would go up unless some other popular deductions are eliminated, such as accelerated depreciation (which allows companies to write off investments for tax purposes more quickly than for accounting purposes).
Basically, there's a trade-off: Fewer tax breaks for companies to do what Congress has been convinced (either by economists or lobbyists) they should do, versus a lower tax rate. Deeper rate cuts may mean bigger changes, perhaps limits on the interest on debt that companies can deduct or forcing big businesses now outside the corporate tax to pay it.
Deficit hawks will say any savings should reduce debt, not tax rates. Some executives will say just cut the rate, forget the base-broadening. Some liberals will object to shielding business from paying more. And every loser will lobby hard. Ultimately, Mr. Obama likely will try to make this a problem for big business: If you want lower rates, he'll say, find us a way to pay for it.
Obama, Congress Maneuver to Extend Unemployment Benefits in Exchange for Current Tax Rates ...added 12-5-10
Capitol Hill
Courtesy of Fox News
WASHINGTON -- After Senate Republicans, with the help of a few Democrats, refused to cave on extending tax rates for the wealthy next year, a deal to extend unemployment benefits in exchange for White House agreement on continuing everyone's current rate appears to be gaining traction.
Senate Republican leader Mitch McConnell said Sunday that it's clear to him taxes will not be raised for anyone next year -- and that unemployment compensation for those jobless beyond 99 weeks could be extended. McConnell did not say how long tax rates would be extended though unemployment compensation could last another year.
Sen. Jon Kyl, R-Ariz., speaking on CBS' "Face the Nation," suggested a deal would be for tax rates to last considerably longer than one year.
"I think that most folks believe that the recipe would include at least an extension of unemployment benefits for those who are unemployed, and an extension of all of the tax rates for all Americans for some period of time," Kyl said.
"It could happen. I'm not going to rule it out," added Sen. Dick Durbin, D-Ill., who appeared with Kyl.
But some liberal lawmakers, like Sen. John Kerry, D-Mass., said the GOP is "absolutely prepared to deny unemployment insurance" to people."
"They've said no, we're willing to hold that hostage so that we can give the wealthiest people in the country a bonus tax cut," Kerry said on NBC's "Meet the Press."
Sources told Fox News on Sunday that Obama is trying to "sell" liberals in the House on his potential acceptance of tax rates across the board and for the wealthy, potentially marrying the cuts to jobless benefits, and he wants a deal done this week. A senior House aide told Fox News to expect things "to accelerate quickly on Monday."
The news of a potential breakthrough came after the Senate on Saturday voted down efforts to limit any extension of the Bush-era tax cuts for the top-earning Americans. The vote prompted Obama to huddle with Senate Democratic leaders on a possible compromise that included a veto on an across-the-board extension if unemployment benefits are not included.
"The president told Democratic congressional leaders today that he was open to compromise, but he would oppose even a temporary extension of the Bush tax cuts if it did not include an extension of benefits for the unemployed and extensions of the other tax cuts that benefit middle class families. Without them, taxes would still rise for 95 percent of Americans," a White House aide said late Saturday.
But as lawmakers fret over a growing deficit, even the purported tight-fisted among them acknowledge they need to come up with $265 billion next year to pay for the jobless aid as well as the gap in budget estimates based on current rates and a hike in taxes next year.
Extending all the current rates would add $115 billion to deficit spending next year while extending jobless benefits for another year would cost $150 billion in unbudgeted spending. That number could grow to $800 billion over two years.
Sen. Kent Conrad, D-N.D., a member of Obama's deficit commission, told "Fox News Sunday" that short- and long-term priorities are different.
"In the short term, I think it's imperative that we extend the tax cuts, at least for the middle class, because the economic consequences of a failure to extend the tax cuts are severe," he said. "But that doesn't take away from the fact we then have to pivot and have a longer term plan to control the debt and bring it down.
Rep. Jeb Hensarling, R-Texas, who is also a member of the commission said he doesn't want rates to increase for anybody, but spending must come down
"We don't want no tax increases on nobody. Now, that may be poor grammar, but it's great economics," he said. "The cost of government has averaged 20 percent of the economy in the post-war era, and over the course of the next generation it's due to double."
Durbin added that any talk about extending tax rates should be coupled with discussions on raising the debt ceiling.
"I'm troubled. I know that in a few months we're going to have a debt ceiling vote ... and many of the people who are going to vote for this tax cut for the wealthiest people in America, adding to our deficit, lamenting that deficit, will refuse to vote on the debt ceiling out of principle," he said.
WASHINGTON -- After Senate Republicans, with the help of a few Democrats, refused to cave on extending tax rates for the wealthy next year, a deal to extend unemployment benefits in exchange for White House agreement on continuing everyone's current rate appears to be gaining traction.
Senate Republican leader Mitch McConnell said Sunday that it's clear to him taxes will not be raised for anyone next year -- and that unemployment compensation for those jobless beyond 99 weeks could be extended. McConnell did not say how long tax rates would be extended though unemployment compensation could last another year.
Sen. Jon Kyl, R-Ariz., speaking on CBS' "Face the Nation," suggested a deal would be for tax rates to last considerably longer than one year.
"I think that most folks believe that the recipe would include at least an extension of unemployment benefits for those who are unemployed, and an extension of all of the tax rates for all Americans for some period of time," Kyl said.
"It could happen. I'm not going to rule it out," added Sen. Dick Durbin, D-Ill., who appeared with Kyl.
But some liberal lawmakers, like Sen. John Kerry, D-Mass., said the GOP is "absolutely prepared to deny unemployment insurance" to people."
"They've said no, we're willing to hold that hostage so that we can give the wealthiest people in the country a bonus tax cut," Kerry said on NBC's "Meet the Press."
Sources told Fox News on Sunday that Obama is trying to "sell" liberals in the House on his potential acceptance of tax rates across the board and for the wealthy, potentially marrying the cuts to jobless benefits, and he wants a deal done this week. A senior House aide told Fox News to expect things "to accelerate quickly on Monday."
The news of a potential breakthrough came after the Senate on Saturday voted down efforts to limit any extension of the Bush-era tax cuts for the top-earning Americans. The vote prompted Obama to huddle with Senate Democratic leaders on a possible compromise that included a veto on an across-the-board extension if unemployment benefits are not included.
"The president told Democratic congressional leaders today that he was open to compromise, but he would oppose even a temporary extension of the Bush tax cuts if it did not include an extension of benefits for the unemployed and extensions of the other tax cuts that benefit middle class families. Without them, taxes would still rise for 95 percent of Americans," a White House aide said late Saturday.
But as lawmakers fret over a growing deficit, even the purported tight-fisted among them acknowledge they need to come up with $265 billion next year to pay for the jobless aid as well as the gap in budget estimates based on current rates and a hike in taxes next year.
Extending all the current rates would add $115 billion to deficit spending next year while extending jobless benefits for another year would cost $150 billion in unbudgeted spending. That number could grow to $800 billion over two years.
Sen. Kent Conrad, D-N.D., a member of Obama's deficit commission, told "Fox News Sunday" that short- and long-term priorities are different.
"In the short term, I think it's imperative that we extend the tax cuts, at least for the middle class, because the economic consequences of a failure to extend the tax cuts are severe," he said. "But that doesn't take away from the fact we then have to pivot and have a longer term plan to control the debt and bring it down.
Rep. Jeb Hensarling, R-Texas, who is also a member of the commission said he doesn't want rates to increase for anybody, but spending must come down
"We don't want no tax increases on nobody. Now, that may be poor grammar, but it's great economics," he said. "The cost of government has averaged 20 percent of the economy in the post-war era, and over the course of the next generation it's due to double."
Durbin added that any talk about extending tax rates should be coupled with discussions on raising the debt ceiling.
"I'm troubled. I know that in a few months we're going to have a debt ceiling vote ... and many of the people who are going to vote for this tax cut for the wealthiest people in America, adding to our deficit, lamenting that deficit, will refuse to vote on the debt ceiling out of principle," he said.
Top Democrat signals deal on Bush-era tax cuts ...added 11-16-10
By Richard Cowan and Kim Dixon Courtesy of Reuters
"This is something we will take a look at," Senate Majority Leader Harry Reid told reporters, referring to a plan to extend all the cuts for two or three years.
Many leading Democrats like Reid previously opposed continuing tax cuts for the wealthiest, while they want a permanent extension of existing tax cuts for those individuals making $200,000 or less annually.
Reid and his fellow Democrats will hold a second day of closed meetings on Wednesday to talk about upcoming legislation. While agreeing to look at extending all current tax cuts, Reid said he personally opposed the idea.
"For people to say that these upper-income tax cuts affect most small business is simply not true. My main concern is to prevent a tax hike on the middle class," he said.
Democrats are politically weakened following the Republican takeover of the House of Representatives and their big gains in the Senate in the November 2 congressional elections.
Powerful Democrats are still pushing to give added tax protection to the middle class. Senate Finance Committee Chairman Max Baucus said it was "my intent, my hope, my desire" to put forward a permanent extension of middle class tax cuts this year.
President Barack Obama will meet Republican and Democratic leaders on November 30, the White House said. He had asked to meet them on Thursday to discuss the tax cuts, but the meeting was shifted at the request of Republican leaders who said there was a scheduling clash.
Legislation is not expected to come up for a vote until after next week's Thanksgiving break at the earliest.
A deal on a temporary extension of the Bush-era tax rates could also be linked to renewal of unemployment benefits for 2 million Americans about to lose them, a senior Republican in the House of Representatives said.
Representative Pete Sessions, a Republican in leadership, said he could back extending jobless benefits, favored by Democrats like House Speaker Nancy Pelosi, in exchange for an extension of all Bush-era tax cuts, including for the wealthiest groups.
"What we're going to do is sit down and talk with Mrs. Pelosi," Sessions told Reuters as he left a meeting of House Republicans. "I see nothing wrong with her winning as long as the American people do."
Jobless benefits for 800,000 Americans will expire on November 30 if Congress fails to act. Two million in total would lose benefits by the end of December.
The benefits have been renewed several times as the country struggles with near 10 percent unemployment, but Republicans have sought to limit them.
UNEMPLOYMENT BENEFIT
A top Democrat also suggested a deal on taxes and unemployment benefits could be linked.
"It really strikes me as hard to explain why we would give charity to the richest people in America with additional tax cuts of $100,000 a year and deny the basic necessities of life to people who are out of work through no fault of their own," said Richard Durbin, the No. 2 Democrat in the Senate.
Liberal Democratic Representative Jan Schakowsky said a temporary extension of all rates was looking like a possible outcome.
"It may be" the deal that can pass, she said, after a meeting of House Democrats. "I'd pass the middle class and not the upper income. I hope if we do extend (the upper income rates), it's for not more than a year."
Bush-era tax cuts for all individuals expire on December 31 and Democrats, who still control Congress, have only a few weeks to make a deal with Republicans on extending them.
The parties agree on an extension of lower rates for individuals earning less than $200,000 but disagree whether to extend those rates for the highest earners. Republicans say the economy cannot stomach any higher taxes, while Democrats say the nation cannot afford the cost of lower rates for the wealthiest taxpayers.
Obama signaled willingness to compromise with Republicans following their election gains but says he wants to make the lower tax rates permanent for the middle class and signaled any extension for the wealthy must be temporary.
But Democrats, who now control both houses of Congress, were unable to broker a deal before the election, and may now have to settle for a temporary extension of all the rates to prevent taxes rising on January 1 on nearly every American.
Still, the chances that lawmakers will not get in line to make a deal remain, especially with an empowered Republican conservative Tea Party movement.
The leader of the Republicans' Tea Party Caucus in the House rejected the idea of linking a tax cut extension to an extension of unemployment benefits.
"I don't think that the American people should have to pay for that by having to have some new massive spending tied to it," Representative Michele Bachmann said in an interview with ABC's "Good Morning America." "If that's the case, I don't think you are going to see the Republicans go along with it."
"This is something we will take a look at," Senate Majority Leader Harry Reid told reporters, referring to a plan to extend all the cuts for two or three years.
Many leading Democrats like Reid previously opposed continuing tax cuts for the wealthiest, while they want a permanent extension of existing tax cuts for those individuals making $200,000 or less annually.
Reid and his fellow Democrats will hold a second day of closed meetings on Wednesday to talk about upcoming legislation. While agreeing to look at extending all current tax cuts, Reid said he personally opposed the idea.
"For people to say that these upper-income tax cuts affect most small business is simply not true. My main concern is to prevent a tax hike on the middle class," he said.
Democrats are politically weakened following the Republican takeover of the House of Representatives and their big gains in the Senate in the November 2 congressional elections.
Powerful Democrats are still pushing to give added tax protection to the middle class. Senate Finance Committee Chairman Max Baucus said it was "my intent, my hope, my desire" to put forward a permanent extension of middle class tax cuts this year.
President Barack Obama will meet Republican and Democratic leaders on November 30, the White House said. He had asked to meet them on Thursday to discuss the tax cuts, but the meeting was shifted at the request of Republican leaders who said there was a scheduling clash.
Legislation is not expected to come up for a vote until after next week's Thanksgiving break at the earliest.
A deal on a temporary extension of the Bush-era tax rates could also be linked to renewal of unemployment benefits for 2 million Americans about to lose them, a senior Republican in the House of Representatives said.
Representative Pete Sessions, a Republican in leadership, said he could back extending jobless benefits, favored by Democrats like House Speaker Nancy Pelosi, in exchange for an extension of all Bush-era tax cuts, including for the wealthiest groups.
"What we're going to do is sit down and talk with Mrs. Pelosi," Sessions told Reuters as he left a meeting of House Republicans. "I see nothing wrong with her winning as long as the American people do."
Jobless benefits for 800,000 Americans will expire on November 30 if Congress fails to act. Two million in total would lose benefits by the end of December.
The benefits have been renewed several times as the country struggles with near 10 percent unemployment, but Republicans have sought to limit them.
UNEMPLOYMENT BENEFIT
A top Democrat also suggested a deal on taxes and unemployment benefits could be linked.
"It really strikes me as hard to explain why we would give charity to the richest people in America with additional tax cuts of $100,000 a year and deny the basic necessities of life to people who are out of work through no fault of their own," said Richard Durbin, the No. 2 Democrat in the Senate.
Liberal Democratic Representative Jan Schakowsky said a temporary extension of all rates was looking like a possible outcome.
"It may be" the deal that can pass, she said, after a meeting of House Democrats. "I'd pass the middle class and not the upper income. I hope if we do extend (the upper income rates), it's for not more than a year."
Bush-era tax cuts for all individuals expire on December 31 and Democrats, who still control Congress, have only a few weeks to make a deal with Republicans on extending them.
The parties agree on an extension of lower rates for individuals earning less than $200,000 but disagree whether to extend those rates for the highest earners. Republicans say the economy cannot stomach any higher taxes, while Democrats say the nation cannot afford the cost of lower rates for the wealthiest taxpayers.
Obama signaled willingness to compromise with Republicans following their election gains but says he wants to make the lower tax rates permanent for the middle class and signaled any extension for the wealthy must be temporary.
But Democrats, who now control both houses of Congress, were unable to broker a deal before the election, and may now have to settle for a temporary extension of all the rates to prevent taxes rising on January 1 on nearly every American.
Still, the chances that lawmakers will not get in line to make a deal remain, especially with an empowered Republican conservative Tea Party movement.
The leader of the Republicans' Tea Party Caucus in the House rejected the idea of linking a tax cut extension to an extension of unemployment benefits.
"I don't think that the American people should have to pay for that by having to have some new massive spending tied to it," Representative Michele Bachmann said in an interview with ABC's "Good Morning America." "If that's the case, I don't think you are going to see the Republicans go along with it."
County, colleges to explore possible tech center ...added 10-29-10
Quantico Corporate Center
Courtesy of PotomacLocal.com
North Stafford –– A new center for technology and education may be coming to Boswells Corner’s expanding Quantico Corporate Center.
Stafford County officials , University of Mary Washington, George Mason University and Germanna Community College officials today all signed a memorandum of understanding to explore the possibility of building a new technology education center on Corporate Drive.
As part of the three-year agreement, officials from the respective organizations will examine the potential growth and demand of a technology center near Quantico Marine Corps Base.
A business plan is still needed before any work on such a center could begin, according to the agreement.
Word of the accord comes just weeks after Quantico Base Commander Col. Daniel J. Choike urged the Stafford County Board of Supervisors to not development of Boswells Corner into a planned mixed use development, including business, commercial and residential areas.
Noise from nearby demolition ranges on the Marine Corps Base would be problematic for those who may someday live or work in the area, he said.
Stafford County is home to the newest campus of Germanna Community College, located in a shopping center off U.S. 1 in North Stafford.
North Stafford –– A new center for technology and education may be coming to Boswells Corner’s expanding Quantico Corporate Center.
Stafford County officials , University of Mary Washington, George Mason University and Germanna Community College officials today all signed a memorandum of understanding to explore the possibility of building a new technology education center on Corporate Drive.
As part of the three-year agreement, officials from the respective organizations will examine the potential growth and demand of a technology center near Quantico Marine Corps Base.
A business plan is still needed before any work on such a center could begin, according to the agreement.
Word of the accord comes just weeks after Quantico Base Commander Col. Daniel J. Choike urged the Stafford County Board of Supervisors to not development of Boswells Corner into a planned mixed use development, including business, commercial and residential areas.
Noise from nearby demolition ranges on the Marine Corps Base would be problematic for those who may someday live or work in the area, he said.
Stafford County is home to the newest campus of Germanna Community College, located in a shopping center off U.S. 1 in North Stafford.
Wittman: Repeal health care reforms, pass new energy policy ...added 10-18-10
Congressman Wittman and the 6/3 Network-Stafford.
Courtesy of PotomacLocal.com
Stafford, Va. –– Congressman Rob Wittman met with a group of small business owners Friday at a popular Stafford County restaurant as part of his efforts to rally the vote as he takes on Democratic challenger Krystal Ball for Virginia’s 1st congressional seat.
During the meeting, he told attendees that government should relax restrictions placed on small businesses, create a new energy policy that includes nuclear energy and conservation, and to repeal the health care overhaul passed last year by congress.
“The healthcare reform overhaul that happened as we see is not bending the cost curve down, actually costs are going up, and if we are looking at access for folks, we need to look at reducing costs, and unfortunately that’s not happening,” said Wittman.
Wittman said electronic medical records, allowing insurance companies to market across state lines, and reviewing where physicians practice would improve the nation’s healthcare system.
According to Ball’s Web site, she has no upcoming campaign appearances Stafford County prior to the election on Nov. 2.
Stafford, Va. –– Congressman Rob Wittman met with a group of small business owners Friday at a popular Stafford County restaurant as part of his efforts to rally the vote as he takes on Democratic challenger Krystal Ball for Virginia’s 1st congressional seat.
During the meeting, he told attendees that government should relax restrictions placed on small businesses, create a new energy policy that includes nuclear energy and conservation, and to repeal the health care overhaul passed last year by congress.
“The healthcare reform overhaul that happened as we see is not bending the cost curve down, actually costs are going up, and if we are looking at access for folks, we need to look at reducing costs, and unfortunately that’s not happening,” said Wittman.
Wittman said electronic medical records, allowing insurance companies to market across state lines, and reviewing where physicians practice would improve the nation’s healthcare system.
According to Ball’s Web site, she has no upcoming campaign appearances Stafford County prior to the election on Nov. 2.
SUPREME COURT BEGINS NEW TERM; FREE SPEECH ARGUMENT THIS WEEK ...added 10-04-10
Courtesy of CSPAN
As the Supreme Court opened a new term today, Justice Elena Kagan joined the bench as the third woman and the 100th Associate Justice to serve on the Court.
One of the more notable cases the Court will hear takes place this Wednesday when they hear an oral argument to see if protests at military funerals, by the Topeka, Kansas, Westboro Baptist Church, are protected under the First Amendment. A judge awarded Albert Synder $5 million for emotional distress following a protest at a 2006 funeral, but the case was later thrown out after an appeals court said the protests were protected speech.
Last week, the Supreme Court announced that it will release each Friday all the oral arguments from that week on the Supreme Court website. The Court also announced that it will no longer release an oral argument the same day it is heard. Several media organizations, including C‑SPAN, have in the past requested same day audio release of high profile cases which the court hears.
Earlier this morning on the Washington Journal, New York Times' Supreme Court Correspondent, Adam Liptak, provided a preview of the Supreme Court’s 2010-2011 session.
As the Supreme Court opened a new term today, Justice Elena Kagan joined the bench as the third woman and the 100th Associate Justice to serve on the Court.
One of the more notable cases the Court will hear takes place this Wednesday when they hear an oral argument to see if protests at military funerals, by the Topeka, Kansas, Westboro Baptist Church, are protected under the First Amendment. A judge awarded Albert Synder $5 million for emotional distress following a protest at a 2006 funeral, but the case was later thrown out after an appeals court said the protests were protected speech.
Last week, the Supreme Court announced that it will release each Friday all the oral arguments from that week on the Supreme Court website. The Court also announced that it will no longer release an oral argument the same day it is heard. Several media organizations, including C‑SPAN, have in the past requested same day audio release of high profile cases which the court hears.
Earlier this morning on the Washington Journal, New York Times' Supreme Court Correspondent, Adam Liptak, provided a preview of the Supreme Court’s 2010-2011 session.
Justice at the Justice Department? ...added 9-30-10
Congressman Frank Wolf (R-Va.) says it's time for answers, and he's tired of the Department of Justice "stonewalling" him. He's referring to allegations from current and former DOJ attorneys that leadership within the department has advised employees that voting rights laws are meant to protect minorities, not whites, and will be enforced accordingly.
Wolf says other DOJ employees, who wish to remain anonymous, have made similar allegations. "I made it very clear to Eric Holder he ought not to be pushing these people around, that they should be encouraged to go forward and testify openly," Wolf says.
The Virginia Republican says he, and other members, have repeatedly asked House Judiciary Committee Chairman John Coyners (D-Mich.) to launch a congressional probe. That has yet to happen, but if Republicans retake the House on November 2nd, there is a strong possibility that will change.
It is clear that commissioners now hearing the case view the testimony and evidence very differently. Todd Gaziano, who holds one of the independent seats, says the reasons behind the decisions regarding the New Black Panther case equal "a scandal of epic proportions," Gaziano says. "The only evidence we have from live witnesses is that this case was dismissed because of hostility to race-neutral enforcement of the civil rights law." He has voiced serious concerns about the current culture within the Department of Justice's Civil Rights Division.
By contrast, Commissioner Michael Yaki, who holds one of the Democratic seats on the Commission, believes the New Black Panthers case has been blown out of proportion. "The Assistant Attorney General came to our commission and testified that he would enforce the law in voting rights in a race-neutral fashion," Yaki says of Assistant Attorney General Thomas E. Perez.
Yaki says in addition to that verbal testimony, DOJ has proven this commitment by working to enforce the rights of white voters in a prominent case now playing out in Mississippi. Yaki says those actions speak louder than words, and that, "It is important for the American people to understand that DOJ is committed to protect the rights of all voters: white, black, Asian, Latino, women - you name it."
The commission's work is far from done, and while it continues to look into the New Black Panther case another investigation will be running parallel. Justice Department Inspector General Glenn A. Fine has launched a probe as well, saying his focus will be on the overall issue of voting rights enforcement within the division.
Wolf says other DOJ employees, who wish to remain anonymous, have made similar allegations. "I made it very clear to Eric Holder he ought not to be pushing these people around, that they should be encouraged to go forward and testify openly," Wolf says.
The Virginia Republican says he, and other members, have repeatedly asked House Judiciary Committee Chairman John Coyners (D-Mich.) to launch a congressional probe. That has yet to happen, but if Republicans retake the House on November 2nd, there is a strong possibility that will change.
It is clear that commissioners now hearing the case view the testimony and evidence very differently. Todd Gaziano, who holds one of the independent seats, says the reasons behind the decisions regarding the New Black Panther case equal "a scandal of epic proportions," Gaziano says. "The only evidence we have from live witnesses is that this case was dismissed because of hostility to race-neutral enforcement of the civil rights law." He has voiced serious concerns about the current culture within the Department of Justice's Civil Rights Division.
By contrast, Commissioner Michael Yaki, who holds one of the Democratic seats on the Commission, believes the New Black Panthers case has been blown out of proportion. "The Assistant Attorney General came to our commission and testified that he would enforce the law in voting rights in a race-neutral fashion," Yaki says of Assistant Attorney General Thomas E. Perez.
Yaki says in addition to that verbal testimony, DOJ has proven this commitment by working to enforce the rights of white voters in a prominent case now playing out in Mississippi. Yaki says those actions speak louder than words, and that, "It is important for the American people to understand that DOJ is committed to protect the rights of all voters: white, black, Asian, Latino, women - you name it."
The commission's work is far from done, and while it continues to look into the New Black Panther case another investigation will be running parallel. Justice Department Inspector General Glenn A. Fine has launched a probe as well, saying his focus will be on the overall issue of voting rights enforcement within the division.
Spin Meter: Expiring tax cuts spark exaggeration, misleading rhetoric from both parties. ...added 9-23-10
A.P. Courtesy of Fox News
Washington--The expiration of Bush-era tax cuts in January has sparked a partisan bickering match this election season, and much of the rhetoric from both Democrats and Republicans is misleading. A look at three prominent arguments, sorting the spin from the facts:
THE SPIN:
Republicans warn that America faces the largest tax increase ever if Congress doesn't extend the tax cuts enacted in 2001 and 2003, which are due to expire in January.
"Democrats in Washington are now plotting the largest tax increase in history," says the website for Republicans on the House Ways and Means Committee. Sen. Orrin Hatch, R-Utah, makes a similar claim in a press release, and so does Rep. Tom Price of Georgia, chairman of the Republican Study Committee.
THE FACTS:
Few members of Congress want to let all the tax cuts expire. Republicans want to extend all the tax cuts, and President Barack Obama — along with Democratic leaders in Congress — want to extend them for individuals making less than $200,000 and married couples making less than $250,000.
But what if they don't reach an agreement — a distinct possibility — and the result is that all the tax cuts expire?
The potential tax increases would be significant if Congress does not act, affecting taxpayers at every income level. But by most measures, they wouldn't be nearly as big as those imposed during World War II.
If all the tax cuts expire, the government would collect about $198 billion more in revenue in 2011 and $295 billion more in 2012. Over the next decade, taxes would go up a total of about $3.9 trillion, according to the nonpartisan Joint Committee on Taxation, which provides the official estimates for Congress.
That would be equal to about 2 percent of the nation's Gross Domestic Product each year, the most common measure used by economists.
The Revenue Act of 1942 increased taxes by slightly more than 5 percent of GDP, and the Revenue Act of 1941 increased taxes by 2.2 percent of GDP, according to a 2006 Treasury Department research paper.
To measure it another way, the 1942 tax increase accounted for more than 71 percent of federal revenues, while next year's potential tax increase would raise revenues by less than 10 percent.
Republicans argue that the dollar amount of next year's potential tax increase would be the largest, even taking into account inflation. That's true, but it doesn't take into account population increases — the population in 1942 was less than half of what it is today — or the size of the economy.
___
THE SPIN:
Democrats argue that Republicans want to add $700 billion to the national debt over the next decade by extending tax cuts for the wealthiest Americans.
"We can't give $700 billion away to some of America's wealthiest people," Obama said Monday. "We've got to make sure that we are responsible stewards for our budget."
___
THE FACTS:
It is true that extending tax cuts for top earners would add an additional $700 billion to the national debt over the next decade. But Democrats rarely mention that Obama's plan to extend tax cuts for middle- and low-income workers would add more than $3 trillion to the national debt over the same period.
The government's official budget projections envision all the tax cuts expiring in January because that is what current law says. When the tax cuts were passed in 2001 and 2003, the Republicans who controlled Congress at the time decided to have them expire to conform with budget rules.
Making all the tax cuts permanent would add about $3.9 trillion to the national debt over the next decade. Obama's plan would cost a little more than $3 trillion over the next decade, about $700 billion less than the Republican plan.
___
THE SPIN:
Republicans say small businesses would be hurt by Obama's plan to let tax cuts expire for individuals making more than $200,000 and couples making more than $250,000; Democrats say few small businesses would be affected.
___
THE FACTS:
Both sides make valid points on the small business debate, though neither side tells the full story.
Most small business owners report income from their businesses on their individual income tax returns, paying taxes at the same marginal rates as everyone else. Just under 750,000 taxpayers who report business income would get a tax increase under Obama's plan, according to the Joint Committee on Taxation.
That's about 3 percent of the people who report business income, which is why Democrats say few small businesses would be affected.
However, those taxpayers who would see an increase account for half the business income reported on individual returns, about $500 billion in income. Republicans argue that those business owners — the ones making the most money — are more likely to hire workers than small business owners who make less money.
Washington--The expiration of Bush-era tax cuts in January has sparked a partisan bickering match this election season, and much of the rhetoric from both Democrats and Republicans is misleading. A look at three prominent arguments, sorting the spin from the facts:
THE SPIN:
Republicans warn that America faces the largest tax increase ever if Congress doesn't extend the tax cuts enacted in 2001 and 2003, which are due to expire in January.
"Democrats in Washington are now plotting the largest tax increase in history," says the website for Republicans on the House Ways and Means Committee. Sen. Orrin Hatch, R-Utah, makes a similar claim in a press release, and so does Rep. Tom Price of Georgia, chairman of the Republican Study Committee.
THE FACTS:
Few members of Congress want to let all the tax cuts expire. Republicans want to extend all the tax cuts, and President Barack Obama — along with Democratic leaders in Congress — want to extend them for individuals making less than $200,000 and married couples making less than $250,000.
But what if they don't reach an agreement — a distinct possibility — and the result is that all the tax cuts expire?
The potential tax increases would be significant if Congress does not act, affecting taxpayers at every income level. But by most measures, they wouldn't be nearly as big as those imposed during World War II.
If all the tax cuts expire, the government would collect about $198 billion more in revenue in 2011 and $295 billion more in 2012. Over the next decade, taxes would go up a total of about $3.9 trillion, according to the nonpartisan Joint Committee on Taxation, which provides the official estimates for Congress.
That would be equal to about 2 percent of the nation's Gross Domestic Product each year, the most common measure used by economists.
The Revenue Act of 1942 increased taxes by slightly more than 5 percent of GDP, and the Revenue Act of 1941 increased taxes by 2.2 percent of GDP, according to a 2006 Treasury Department research paper.
To measure it another way, the 1942 tax increase accounted for more than 71 percent of federal revenues, while next year's potential tax increase would raise revenues by less than 10 percent.
Republicans argue that the dollar amount of next year's potential tax increase would be the largest, even taking into account inflation. That's true, but it doesn't take into account population increases — the population in 1942 was less than half of what it is today — or the size of the economy.
___
THE SPIN:
Democrats argue that Republicans want to add $700 billion to the national debt over the next decade by extending tax cuts for the wealthiest Americans.
"We can't give $700 billion away to some of America's wealthiest people," Obama said Monday. "We've got to make sure that we are responsible stewards for our budget."
___
THE FACTS:
It is true that extending tax cuts for top earners would add an additional $700 billion to the national debt over the next decade. But Democrats rarely mention that Obama's plan to extend tax cuts for middle- and low-income workers would add more than $3 trillion to the national debt over the same period.
The government's official budget projections envision all the tax cuts expiring in January because that is what current law says. When the tax cuts were passed in 2001 and 2003, the Republicans who controlled Congress at the time decided to have them expire to conform with budget rules.
Making all the tax cuts permanent would add about $3.9 trillion to the national debt over the next decade. Obama's plan would cost a little more than $3 trillion over the next decade, about $700 billion less than the Republican plan.
___
THE SPIN:
Republicans say small businesses would be hurt by Obama's plan to let tax cuts expire for individuals making more than $200,000 and couples making more than $250,000; Democrats say few small businesses would be affected.
___
THE FACTS:
Both sides make valid points on the small business debate, though neither side tells the full story.
Most small business owners report income from their businesses on their individual income tax returns, paying taxes at the same marginal rates as everyone else. Just under 750,000 taxpayers who report business income would get a tax increase under Obama's plan, according to the Joint Committee on Taxation.
That's about 3 percent of the people who report business income, which is why Democrats say few small businesses would be affected.
However, those taxpayers who would see an increase account for half the business income reported on individual returns, about $500 billion in income. Republicans argue that those business owners — the ones making the most money — are more likely to hire workers than small business owners who make less money.
U.S. Homes Lost to Foreclosure Up 25 Percent ...added 9-16-10
A.P. Courtesy of Fox News
LOS ANGELES -- Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis.
The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday.
In all, banksrepossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.
August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high was in May.
Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market, but they can't afford to simply dump the properties on the market.
Concerns are growing that the housing market recovery could stumble amid stubbornly high unemployment a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.
That's one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.
"These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer's market with too much distressed inventory for fear of what it would do for house prices," he said.
As a result, lenders are putting off initiating the foreclosure process on homeowners who have missed payments, letting borrowers stay in their homes longer.
The number of properties receiving an initial default notice -- the first step in the foreclosure process -- slipped 1 percent last month from July, but was down 30 percent versus August last year, RealtyTrac said.
Initial defaults have fallen on an annual basis the past seven months. They peaked in April 2009.
Still, the number of homes scheduled to be sold at auction for the first time increased 9 percent from July and rose 2 percent from August last year. If they don't sell at auction, these homes typically end up going back to the lender.
More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American house holds are likely to lose their homes to foreclosure this year.
In all, 338,836 properties received a foreclosure-related warning in August, up 4 percent from July, but down 5 percent from the same month last year, RealtyTrac said. That translates to one in 381 U.S. homes.
The firm tracks notices for defaults, scheduled home auctions and home repossessions -- warnings that can lead up to a home eventually being lost to foreclosure.
Among states, Nevada posted the highest foreclosure rate last month, with one in every 84 households receiving a foreclosure notice. That's 4.5 times the national average.
Rounding out the top 10 states with the highest foreclosure rate in August were: Florida, Arizona, California, Idaho, Utah, Georgia, Michigan, Illinois and Hawaii.
Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.
Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.
The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. Nearly half of the 1.3 million home owners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.
The program, known as Making Home Affordable, has provided permanent help to about 422,000 homeowners since March 2009.
Regardless, many troubled borrowers have seen their efforts to get a loan modification stymied.
Larry Book of Winter Garden, Fla., was one packet away from a permanent loan modification from Chase under the Obama administration's foreclosure prevention plan after more than a year of back and forth and one failed attempt.
But his modification never went through. Instead, his loan was transferred from Chase to IBM Lender Business Process Servicers in July and he was told he owed $9,562.62 and must bring his mortgage current by Sept. 15 or foreclosure proceedings will begin.
"It just becomes too exhausting," Book said about the modification process. "That's why some people walk away. But I've invested too much and given up too much to just let it go."
LOS ANGELES -- Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis.
The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday.
In all, banksrepossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.
August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high was in May.
Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market, but they can't afford to simply dump the properties on the market.
Concerns are growing that the housing market recovery could stumble amid stubbornly high unemployment a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.
That's one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.
"These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer's market with too much distressed inventory for fear of what it would do for house prices," he said.
As a result, lenders are putting off initiating the foreclosure process on homeowners who have missed payments, letting borrowers stay in their homes longer.
The number of properties receiving an initial default notice -- the first step in the foreclosure process -- slipped 1 percent last month from July, but was down 30 percent versus August last year, RealtyTrac said.
Initial defaults have fallen on an annual basis the past seven months. They peaked in April 2009.
Still, the number of homes scheduled to be sold at auction for the first time increased 9 percent from July and rose 2 percent from August last year. If they don't sell at auction, these homes typically end up going back to the lender.
More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American house holds are likely to lose their homes to foreclosure this year.
In all, 338,836 properties received a foreclosure-related warning in August, up 4 percent from July, but down 5 percent from the same month last year, RealtyTrac said. That translates to one in 381 U.S. homes.
The firm tracks notices for defaults, scheduled home auctions and home repossessions -- warnings that can lead up to a home eventually being lost to foreclosure.
Among states, Nevada posted the highest foreclosure rate last month, with one in every 84 households receiving a foreclosure notice. That's 4.5 times the national average.
Rounding out the top 10 states with the highest foreclosure rate in August were: Florida, Arizona, California, Idaho, Utah, Georgia, Michigan, Illinois and Hawaii.
Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.
Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.
The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. Nearly half of the 1.3 million home owners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.
The program, known as Making Home Affordable, has provided permanent help to about 422,000 homeowners since March 2009.
Regardless, many troubled borrowers have seen their efforts to get a loan modification stymied.
Larry Book of Winter Garden, Fla., was one packet away from a permanent loan modification from Chase under the Obama administration's foreclosure prevention plan after more than a year of back and forth and one failed attempt.
But his modification never went through. Instead, his loan was transferred from Chase to IBM Lender Business Process Servicers in July and he was told he owed $9,562.62 and must bring his mortgage current by Sept. 15 or foreclosure proceedings will begin.
"It just becomes too exhausting," Book said about the modification process. "That's why some people walk away. But I've invested too much and given up too much to just let it go."
Obama's Short-Term Measures Don't Create Long-Term Growth ...added 9-9-10
By Dunstan Prial courtesy of Fox Business
President Barack Obama is trying to turn the tables on Congressional Republicans ahead of November’s mid-term elections by offering up a slew of pro-business measures his opponents might have offered up themselves under different circumstances.
Among them is a tax breakthat allows companies to immediately write off 100% of their investments in new plants and equipment, a move designed to motivate corporations to start dusting off expansion plans put on hold during the recent financial crisis.
By some estimates, U.S. companies are sitting on $1.84 trillion in cash they’ve been hoarding as they wait for the economy to regain its health. The Obama administration would like to see some of that money put to work, preferably in ways that increase production levels and create jobs.
To help kick start the economy in 2008 and 2009, businesses were allowed to write off 50% of many capital purchases the first year they were made.
But in a speech this week in a Cleveland suburb, Obama supported the 100% investment proposal that would let companies deduct the full cost of all their capital investments in the same year that the investments are made rather than spreading those deductions out over long periods that could stretch to two decades.
The administration says the 100% tax break will save an estimated 1.5 million businesses about $200 billion.
But here’s the catch: the tax break is only good through the end of 2011. In that way it mimics other temporary stimulus measures that helped for a while but failed to serve as the long-term economic catalysts the administration had hoped for.
There is growing sentiment among economists and other financial types that these short-term fixes aren’t helping and that permanent measures are needed.
“It shouldn’t be temporary, it should be permanent,” said Axel Merk, president of Merk Investments and author of the book ‘Sustainable Wealth.’ “They should have done this a long time ago. They need to encourage investment.”
The stimulus efforts that have been enacted so far -- the Cash for Clunkers program, the $8,000 first-time home buyers credit, and various ‘shovel ready’ infrastructure programs – all target short-term consumption, according to Merk.
Cash for Clunkers, which briefly energized the auto sector last year, and the home buyer credit, which did the same for the housing sector this year, both encouraged Americans to buy cars and homes. The infrastructure programs, meanwhile, were designed to put cash in peoples’ pockets so that they can go out and spend.
None of these programs encourage long-term economic growth, said Merk. What’s more, as others have pointed out, when these kinds of programs expire, or the infrastructure job ends, the economy is hurt by the falloff in consumer activity, a dynamic that has contributed to the recent sluggishness in economic growth.
An underlying problem, according to Merk, is that since politicians are always focused on the next election they tend to focus on programs that generate the quickest results.
“Politicians don’t embrace these kinds of tax policies because they take longer to go into effect and for the benefits to become apparent, but they absolutely should be encouraged,” said Merk.
Merk said the private sector, if given the right incentives, can be trusted to deploy their capital in investments that will increase their productivity. And when that productivity increases, companies will need to expand and hire more people. All of that translates to long-term economic growth.
“It’s economics 101,” he said.
The investment tax break is one of several proposals that also include $50 billion in spending on infrastructure improvements mostly on roads, railroads and airports, as well as a $100 billion expansion and extension of the expired research-and-development tax credit. The latter tax credit, widely popular among both Democrats and Republicans, would be made permanent under the president’s proposal.
All of the measures need to be approved by Congress.
Surprisingly perhaps, the U.S. Chamber of Commerce has been sharply critical of the president’s ostensibly pro-business tax proposals.
Arguing that the investment tax is not enough to encourage significant expansion by U.S. businesses, the Chamber called on the Obama administration to formulate a long-term tax policy. Uncertainty is the greatest hurdle to economic growth, according to the Chamber.
“The biggest impediment to business investment is not lack of capital – they have a record $1.8 trillion in reserves – but rather uncertainly brought about by the policies wrought by this administration and the Congress. Think of the investment tax credit as an incentive to buy a house built on a marsh, or a flood plain,” the Chamber wrote on its Web site.
Merk said it probably won’t matter one way or the other because Congress isn’t likely to approve any of Obama’s proposals. The public has soured on anything that smacks of “stimulus spending,” and besides, Obama hurt his own credibility on the issue by not making job creation a priority until less than two months ahead of the mid-term elections.
“Washington lacks the commitment to pass this sort of legislation,” said Merk.
President Barack Obama is trying to turn the tables on Congressional Republicans ahead of November’s mid-term elections by offering up a slew of pro-business measures his opponents might have offered up themselves under different circumstances.
Among them is a tax breakthat allows companies to immediately write off 100% of their investments in new plants and equipment, a move designed to motivate corporations to start dusting off expansion plans put on hold during the recent financial crisis.
By some estimates, U.S. companies are sitting on $1.84 trillion in cash they’ve been hoarding as they wait for the economy to regain its health. The Obama administration would like to see some of that money put to work, preferably in ways that increase production levels and create jobs.
To help kick start the economy in 2008 and 2009, businesses were allowed to write off 50% of many capital purchases the first year they were made.
But in a speech this week in a Cleveland suburb, Obama supported the 100% investment proposal that would let companies deduct the full cost of all their capital investments in the same year that the investments are made rather than spreading those deductions out over long periods that could stretch to two decades.
The administration says the 100% tax break will save an estimated 1.5 million businesses about $200 billion.
But here’s the catch: the tax break is only good through the end of 2011. In that way it mimics other temporary stimulus measures that helped for a while but failed to serve as the long-term economic catalysts the administration had hoped for.
There is growing sentiment among economists and other financial types that these short-term fixes aren’t helping and that permanent measures are needed.
“It shouldn’t be temporary, it should be permanent,” said Axel Merk, president of Merk Investments and author of the book ‘Sustainable Wealth.’ “They should have done this a long time ago. They need to encourage investment.”
The stimulus efforts that have been enacted so far -- the Cash for Clunkers program, the $8,000 first-time home buyers credit, and various ‘shovel ready’ infrastructure programs – all target short-term consumption, according to Merk.
Cash for Clunkers, which briefly energized the auto sector last year, and the home buyer credit, which did the same for the housing sector this year, both encouraged Americans to buy cars and homes. The infrastructure programs, meanwhile, were designed to put cash in peoples’ pockets so that they can go out and spend.
None of these programs encourage long-term economic growth, said Merk. What’s more, as others have pointed out, when these kinds of programs expire, or the infrastructure job ends, the economy is hurt by the falloff in consumer activity, a dynamic that has contributed to the recent sluggishness in economic growth.
An underlying problem, according to Merk, is that since politicians are always focused on the next election they tend to focus on programs that generate the quickest results.
“Politicians don’t embrace these kinds of tax policies because they take longer to go into effect and for the benefits to become apparent, but they absolutely should be encouraged,” said Merk.
Merk said the private sector, if given the right incentives, can be trusted to deploy their capital in investments that will increase their productivity. And when that productivity increases, companies will need to expand and hire more people. All of that translates to long-term economic growth.
“It’s economics 101,” he said.
The investment tax break is one of several proposals that also include $50 billion in spending on infrastructure improvements mostly on roads, railroads and airports, as well as a $100 billion expansion and extension of the expired research-and-development tax credit. The latter tax credit, widely popular among both Democrats and Republicans, would be made permanent under the president’s proposal.
All of the measures need to be approved by Congress.
Surprisingly perhaps, the U.S. Chamber of Commerce has been sharply critical of the president’s ostensibly pro-business tax proposals.
Arguing that the investment tax is not enough to encourage significant expansion by U.S. businesses, the Chamber called on the Obama administration to formulate a long-term tax policy. Uncertainty is the greatest hurdle to economic growth, according to the Chamber.
“The biggest impediment to business investment is not lack of capital – they have a record $1.8 trillion in reserves – but rather uncertainly brought about by the policies wrought by this administration and the Congress. Think of the investment tax credit as an incentive to buy a house built on a marsh, or a flood plain,” the Chamber wrote on its Web site.
Merk said it probably won’t matter one way or the other because Congress isn’t likely to approve any of Obama’s proposals. The public has soured on anything that smacks of “stimulus spending,” and besides, Obama hurt his own credibility on the issue by not making job creation a priority until less than two months ahead of the mid-term elections.
“Washington lacks the commitment to pass this sort of legislation,” said Merk.
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