taxes

Romney Booed For Waffling On Releasing Tax Returns

by Amanda Terkel on January 20, 2012

Huffington Post…

CNN debate moderator John King put all the GOP presidential candidates on the spot about their tax returns Thursday night, asking whether they will make their filings public. It was an easy question for former House Speaker Newt Gingrich, who released his returns just as the debate began. Rep. Ron Paul (R-Texas) said he hadn’t given the issue much thought and didn’t have any intention of doing so. “I’d probably be embarrassed to put my financial statement up against their income,” Paul said, referring to the wealth of the other candidates. “I don’t want to be embarrassed because i don’t have a greater income. Now, I mean, it may come to that. But right now, I have no intention of doing that.” He added that he has no conflicts of interest, doesn’t talk to lobbyists and doesn’t “take that kind of money.” Romney, who has faced the most pressure on this topic, said he will release his tax returns in April, if he’s the nominee, and would “probably” release his returns from other years as well. He quickly tried to change the topic, saying Democrats simply wanted to attack people for “being successful.” “And I have been successful,” he added before hitting President Obama for playing “90 rounds of golf” while Americans are struggling in the tough economy. King pointed out that Republicans are often calling on Romney to release his tax filings. “Why not, should the people of South Carolina, before this election, see last year’s return?” asked King to applause from the audience. “Because I want to make sure that I beat President Obama,” replied Romney. “Every time we release things drip by drip, the Democrats go out with another array of attacks. As has been done in the past, I’ll put these out at one time so we have one discussion of all of this. I obviously pay all full taxes. I’m honest in my dealings with people. People understand that. My taxes are carefully managed. I pay a lot of taxes. I’ve been very successful. When I have our taxes ready for this year, I’ll release them.” Romney recently revealed that his effective tax rate is 15 percent , below the rate paid by many middle-class families . Gingrich did not directly attack Romney, saying, “Look, he’s got to decide. The people of South Carolina have to decide. If there’s anything in there that will help us lose the election, we should know it before the nomination.” Santorum said he does his own taxes. “They’re on my computer and I’m not home,” he said. “And there’s nobody at home right now until I get home. When I get home, you’ll get my taxes.” Finally, Romney refused to commit to the transparency and disclosure of his father, George Romney, who was governor of Michigan. In 1967, the elder Romney released his tax returns for 12 years. “Maybe. I don’t know how many years I’ll release,” responded Mitt Romney when asked if he’d follow in his father’s footsteps. “I’ll take a look at what our documents are.” The audience booed him. “I’m not going to apologize for being successful,” he added. “I’m not suggesting these people are doing that. But I know the Democrats will go after me on that basis. That’s why I want to release these things all at the same time. My dad, as you know, born in Mexico, poor, didn’t get a college degree, became head of a car company. I could have stayed in Detroit like him and gotten pulled up in the car — I went off on my own. I didn’t inherit money from my parents. What I have, I earned. I worked hard. The American way.”

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Romney Booed For Waffling On Releasing Tax Returns

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PHOTO: Jay-Z Hangs Out With Warren Buffett

by Jordan Zakarin on January 19, 2012

Huffington Post…

Here’s a question: who pays the tab when these two hang out? Jay-Z reopened his 40/40 club in New York City on Wednesday , and joining him at the hot event was billionaire investor and philanthropist Warren Buffett. The two are friends, having traded appearances in cartoons and magazine interviews, and clearly were enjoying themselves, joking like the global icons they are. Hard to say what they were talking about; maybe it was the finer points of fatherhood, or perhaps their willingness to pay more in taxes . PHOTO (courtesy Tom Murro):

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PHOTO: Jay-Z Hangs Out With Warren Buffett

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Ryan Mack: Year 2012: Back to Basics

January 10, 2012

Here we are in the middle of yet another bad economy. Technically it is not a recession as the GDP numbers were better than expected for the year of 2011, the Dow Jones has recovered its losses, and analysts are expecting a stronger 2012 for the banks. Yet if you ask the average Joe in the Detroit area and across the country, most are concerned about their own personal economic well-being. Is Greece going to successfully deal with their debt crisis? Is Congress ever going to function properly? Will the housing market recover? Will the banks start lending again? Will the labor market pick up pace to increase employment? All these and more are questions that loom within the minds of many across the country. However, are these questions the most appropriate questions to ask at this time? When the world seems to be in total chaos and you feel as if you are losing an economic grip, the beautiful element of financial literacy is there are always factors you can control, regardless of the economic situation. So for the year of 2012, it is time to start asking the right questions which enable us to focus on those things that we can control. Here are a few basic questions you should be asking yourself for this year: Are you spending less than you earn each month? This sounds like a simple question but most in this country are not accomplishing this task and operating their household in a deficit mode because of excessive amounts of personal debt. Don’t let another day go by this year without putting together a budget for your household that reflects less spending than your earnings. Have you done everything possible to minimize your debt? You would be surprised how few people actually take the time to assemble a strategy to eliminate their debt levels. This is the year that you must start your journey to being debt free; here are some simple steps. 1. Go to www.annualcreditreport.com and print a copy of your credit report. 2. Write down all the debt you see on your report from the largest debt on the top to the smallest. Make sure you organize the headings of each column to read the name of the creditor, telephone number, amount owed, total line of credit, interest rate, telephone number, minimum due, and any other information you feel is pertinent. 3. Call EACH creditor and attempt to negotiate both the amount owed and the interest rate. 4. With your budget you have already assembled, use any surplus to pay extra money on the smallest debt until it is completely paid off and then do the same for the next smallest debt owed. This is called the “snowballing” method. Are you ensuring more of your purchases add to your net worth rather than decrease your net worth? You should be putting yourself in a position to purchase more investments that add to your net worth, such as stocks, bonds, real estate, and savings accounts, where the interest works for you. You should be gradually eliminating as much wasteful spending as possible on items that depreciate (decrease in value), such as cars, clothes, material things and bad debt; these are items where the excessive interest works against you and your money disappears into “money heaven.” Are you doing all you can to minimize your taxes? The top 400 income earners in the country have a tax rate of less than 17% because they are very proficient in maximizing tax loopholes. You have access to loopholes as well but they mean nothing if you are not taking advantage of them. Purchasing a home, maximizing tax-deferred savings accounts and that new business that you should have started long ago are great ways to take advantage of tax advantages. Plan properly and succeed at minimizing your taxes. Is your social status more important than financial independence? This question resonates to the heart of financial literacy. Rent-A-Center preys on those who desire to look good on the outside with instant gratification, while being financially strapped because of excessive fees and interest paid for material items. The Rush Card preys on those who want to look good by using a card with a Visa logo because that gives you “status,” but those who hold it pay fees they can’t afford and more than likely don’t have a bank account which can help them accumulate wealth more effectively. Did you see the mob of people who were so desperate to purchase a pair of Jordan sneakers they trampled others upon opening the store doors? People waited in long lines for hours for the “privilege” of spending $200 for a pair of shoes that were perceived to add to their social status (and incidentally cost $5 to make.) How much time, energy, and thought have you allocated to create ways to build wealth? We must be real with ourselves in 2012. The jobs that once were will probably be never more. The companies that have been laying off have now discovered how to work more effectively with a smaller workforce by maximizing productivity from the current work pool and maximizing the use of technology. If you are amongst the unemployed, underemployed, or simply are looking for additional ways to increase streams of revenue, it is up to you to create opportunities for yourself. • If you currently have expertise in a specific area, are not looking to acquire additional skill sets but were laid off, you might consider relocating in order to find employment with a firm looking to hire someone like you. • If you are willing to invest the time and energy you might consider taking additional courses at the local community college or university to learn an entire new trade or skill set. • If you are looking to create another stream of revenue you might consider doing some research on the needs in your community and creating a business that intersects your passion in life with the needs of your community. None of these are quick, none of these are easy, none of these are without risk, and most likely you will have some setbacks. However, on the other side of your hard/smart work and effort lies empowerment for yourself and community. I recently saw a graph that outlined a few employment scenarios. According to the graph, if we duplicate the BEST jobs creating year of the 1990s we won’t return to full employment until 2017. We are in this for the long haul and there is no quick fix! The chickens have come home to roost as a result of the years of greed and excess on every level from the government, to corporations, and the people. While reality states that we will be in slow economy for some time, the bright side is that we can get out; we must, however, recognize that it will not be a quick turnaround. Let 2012 be the year where we ask the right questions, have the right mindset, and collectively do the right things that will benefit us and our communities. Let’s begin the task of righting a ship that has been going in the wrong direction far too long! Let’s get to work!

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Is It Time To Drop Income Taxes?

January 7, 2012

(The author is a Reuters columnist. The opinions expressed are his own.) By David Cay Johnston Jan 6 (Reuters) – This is America’s 100th year for individual income tax, a system as out of touch with our era as digital music is with the hand-cranked Victrola music players of 1912. It is also the 26th year of the Reagan-era reform for both personal and corporate tax, a grand design now buried under special-interest favors. With U.S. elections in November, and the George W. Bush tax cuts due to expire at the end of 2012, it’s time for a debate that goes beyond ginning up anger over taxes and the superficial issue of tax rates. It’s time to consider whether to get rid of income taxes, personal and corporate. What are the strengths and weaknesses of our current system? Should we tax individual and corporate income — or something else? We need to think about it. Whatever systems we consider, we should weigh up what it takes to raise the necessary revenue along with such other attributes as minimal compliance cost, leakage and economic distortion. Times change. Tax systems must change with them or else their lubricating effect turns to sand, wearing down the gears of commerce. Just as the Industrial Revolution transformed a nation of farmers and mechanics into a land of factory hands and office workers, so too the digital revolution and globalization are fundamentally remaking society. We need for our tax system to serve our 21st century civilization and its needs, including the costs of aging infrastructure and an aging population, costs that will be borne one way or another. 5 PRINCIPLES Five ancient principles that have survived the test of time and are, therefore, profoundly conservative, should guide us. The first is the moral principle of progressive taxation — that the greater the gain you manage to attain, whether through hard work or luck, the greater your duty to pay back the society that made your riches possible so that it will endure. This concept is 2,500 years old, coming to us along with its civil twin, democracy, from ancient Athens. The second is horizontal equity. Each person, or business, with the same ability to pay should pay the same tax. We must not tolerate a system in which one family or company pays far more than another with the same income, thanks to all the fine print in the tax code. Simplicity, transparency and ease of payment should be the last three of the five guiding principles, as Adam Smith taught more than two centuries ago. So what do we do? Narrowly defining what constitutes income for tax purposes bloats the tax code. To the vast majority who earn a paycheck, defining income is simple. For the very rich and for corporations, it is a game. Too many of our most elegant and rigorous minds design techniques for tax avoidance and tax deferral instead of producing new wealth, imposing a huge cost on society. In ancient agrarian societies the ruler took a share of the crop. In the cash economies created by the Industrial Revolution the state taxed incomes. But is income the right tax base for the 21st century, when computer software makes it possible to wrap economic income in a cloak of tax invisibility? And why, in our digital era, must Americans file 140 million tax returns? Digital technology could eliminate 120 million of those tax forms, saving billions of dollars in both private and government spending. QUESTIONS ARISE In a global economy, is taxing corporate profits smart? Or could we devise rules that both promote investment and job creation while preventing the accumulation of unproductive fortunes — the great risk if corporations are tax-exempt. Look at the same question in reverse — is our tax system encouraging unproductive or even counterproductive activities? What else should we call a system that lets hedge-fund and other financial speculators defer paying taxes for years or decades on their carried interest, while discouraging investment in long-term projects that may not pay off for a decade or more? How else to explain our gross overinvestment in housing? And what about corporate tax accounting costs? Under President Barack Obama, business has been able to immediately write off 50 percent of new investment one year and 100 percent in two other years. We need to examine the long-term benefits and costs of full expensing. The White House says full expensing lowers the average cost of capital for business investment by 75 percent. But what other effects are there? More broadly, we need to debate why corporations must keep two sets of books, one for shareholders and one for the IRS. How much more efficient would taxation, and commerce, be with one set of books? With the individual income tax in its 100th year, it’s time to fundamentally rethink how we tax ourselves. Even if we end up keeping the income tax, personal and corporate, surely we can make the system easier and fairer. (Editing by Howard Goller and Eddie Evans)

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Josh Rosenblum: Speaker Boehner: Just a Regular Guy Who Only Backs Millionaires and Billionaires

December 14, 2011

This morning at the Newseum, House Speaker John Boehner was asked by Politico’s Mike Allen if he could produce any small business owner whose lives would face an impact if a millionaire surtax became law. Allen cited NPR’s Tamara Keith, who couldn’t find anyone in America who fit the bill. Among others, former Playbook colleague and Washington Post star journalist Bob Woodward sat observant and stone-faced in the front row with no visible notepad in his hand. Allen asked Boehner: An objection on your side to the proposal on the millionaire surtax has been that it would hurt small businesses. NPR went out and they went to the House Republican Leadership, to the Senate Republican Leadership, they went to business groups that were lobbying. They couldn’t find a small businessman hurt by the surtax. Have you found one? Boehner, in his only real stumble during the 45-minute conversation, first went into how he had been a small businessman but didn’t say it would have hurt him. Then Boehner said he “could rattle off half a dozen names right here and now” — small business owners that he knew but whose tax returns he didn’t have access to. Allen, to his great credit, pushed. “Name just a couple,” he said. But Boehner didn’t or couldn’t name a single person in the country, let alone in Ohio or his district, who might have suffered from a millionaire or billionaire surtax increase. He just rambled some more about small business owners and they moved on. The Speaker of the House, whose ornate offices in the U.S. Capitol have been occupied by just 52 others before Boehner in the history of the United States, also hit a main talking point twice during the free-wheeling conversation that veered from tough questions to softballs throughout. “I’m just a regular guy with a regular job,” he said. Allen also asked Speaker Boehner about the deficit talks he had with the president and asked if he bore any responsibility for the failure of the talks. Boehner said he told the president, “‘I’ll put revenues on the table only if you’re willing to make serious changes to your entitlement programs,’ and he didn’t.” When Allen pushed again, Boehner went back to the regular guy shtick and Boehner also said that ” Our debt hangs over the economy and hangs over the American people like a wet blanket .” Allen wouldn’t have had much time, even if he wanted to, to push regular guy John Boehner further under his wet blanky, even though he was a voting member of the body that created massive deficits under President Bush, and now refuses to take any responsibility for them. Boehner’s claims have also been refuted by the president and the media, who widely reported that ” President Obama said he had put $650 billion in reductions over 10 years on the table .” Boehner also gave advice to the young politicos in the room at the behest of Allen. He recommended hard work and not to burn any bridges in your career. Some might say that although Boehner said he’s grown closer to the president, he’s burning bridges by telling blatant lies about their negotiations. After the Playbook breakfast, Mike Allen and Bob Woodward hopped in a taxi outside the Newseum on Pennsylvania Ave., headed in the direction on the Capitol. They may have had a secret source in a garage near the Capitol who could tell them where to find Boehner meeting with his fellow regular guys and small businessmen who couldn’t tolerate a millionaires or billionaires surtax.

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Naomi Klein: Best of TEDTalks 2011, #13: Addicted to Risk

December 8, 2011

As a culture we have been far too willing to gamble with things that are precious and irreplaceable.

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GOP Plan Includes Soliciting Millionaires For More

November 30, 2011

WASHINGTON — Senate Republicans unveiled a plan Wednesday to cut payroll taxes that asks the rich to pay more tax if they feel like it, freezes and cuts the federal workforce, and means tests for government benefits. The measure , introduced by Sen. Dean Heller (R-Nev.), is the GOP answer to a Democratic plan to extend and expand a payroll tax holiday through 2012 by slapping a 3.25 percent surtax on incomes above $1 million. Many Republicans oppose such a tax as “punishing job creators.” But they are not above requesting alms from the wealthy in a part of their proposal that sounds like a plea to millionaires. A fact sheet the Senate GOP leadership released says the plan: “Gives Millionaires & Billionaires Another Opportunity To Help With The Deficit” and “Includes Sen. John Thune’s ‘Buffet Rule Act of 2011′ which makes it easy for millionaires like Warren Buffet who want to pay more taxes to reduce the federal deficit with a voluntary contribution via their tax returns.” Despite the unlikely appeal to the wealthy, the measure does contain several provisions Democrats will have to take more seriously, including a suggestion backed by previous deficit-reduction efforts to freeze federal pay for three years and cut the federal workforce. The GOP plan cites Congressional Budget Office numbers that found such a move would save $111.5 billion. The plan also appears to pick up on a report by Sen. Tom Coburn (R-Okla.) that found millionaires get billions of dollars in federal benefits every year. The proposal suggests means testing such things as food stamps, unemployment insurance and Medicare to exclude millionaires. It also suggests freezing Social Security cost-of-living adjustments for three years for higher income recipients — which was first included in the health care reform law. Democrats were nonplussed by the offer, but said at least it shows Republicans favor the payroll tax cut. “We are glad Republicans have seen the light and taken up Democrats’ call to pass a middle-class tax cut, just a few days after their leadership indicated they would oppose it,” said Adam Jentleson, a spokesman for the Democratic leadership in a statement. “However, Democrats’ proposal would put more money in the pockets of middle class families and create more jobs.” “The Republican proposal cannot pass the Senate as it stands, but now that Republicans have reversed their position on this middle-class tax cut,” Jentleson said, “we look forward to working with them to negotiate a consensus solution.”

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Krugman: America’s New Normal Requires Tax Hikes

November 28, 2011

The supercommittee was a superdud — and we should be glad. Nonetheless, at some point we’ll have to rein in budget deficits. And when we do, here’s a thought: How about making increased revenue an important part of the deal?

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Jack Daniel’s Toasts Failure Of Proposed Whiskey Tax

November 22, 2011

NASHVILLE, Tenn. — Jack Daniel’s officials are toasting the defeat of a proposal to tax whiskey at its celebrated Tennessee distillery. The Moore County Council in Lynchburg, Tenn., voted 10-5 Monday evening to kill a proposal that could have taxed Jack Daniel’s up to $5 million annually, with all the revenue going to local coffers. “We hope we’ve been able to demonstrate that the distillery pays more than its fair share of taxes and that we’ve contributed to our way of life in Lynchburg,” said Tom Beam, senior vice president and general manager of production at the facility. The vote reversed an earlier one that had asked the Tennessee legislature to authorize a local referendum on the per-barrel tax proposal. “We’ve educated the community a little more,” Beam said Tuesday in a telephone interview from the distillery, located in the hills of south-central Tennessee. “They realized after we got our side of the story out how much we do.” The 145-year-old distillery and its employees, along with Lynchburg, have been the focus of Jack Daniel’s folksy advertising for years. Bottles of the charcoal mellowed sippin’ whiskey list Lynchburg’s population as 361, but the town and county really have about 6,400. The distillery, owned by Louisville, Ky.-based Brown-Forman, now pays $1.5 million in local property taxes. “We hated to see this drive a wedge through our family here,” Beam said. “This is our home and we’ll try to do the right thing.” The Jack Daniel Distillery, with about 450 employees, is the largest employer in Moore County. The local Chamber of Commerce came out against the proposal at the meeting. Supporters of the proposal said the issue is dead for now and they may quit trying. “That’s democracy in action, I suppose,” Charles Rogers said of the vote after spearheading the proposal. “I may bow out of this,” he added. “But I still think people ought to have the right to vote on it (in a referendum).” Ten million cases of the sour mash whiskey, led by Old No. 7, are sold worldwide every year, making it the No. 1 brand in sales globally. “Our friends and neighbors around Moore County, the state, the country and even globally have been supportive,” Beam said. Company spokesmen never said whether the tax would have meant higher prices at the retail level. Ironically, Moore County is dry, meaning Jack Daniel’s cannot be sold legally in the county.

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Chuck Marr: A Vital Tax Table of the Holiday Season

November 22, 2011

Between Thanksgiving and Christmas, Congress has an important tax policy decision to make.  With the economy still struggling and one in eleven Americans out of work, January 1 would be an awful time to cut every paycheck in America.  But, every paycheck in America will shrink unless Congress acts to extend, and preferably expand, the payroll tax holiday by the end of the year. Up and down Wall Street, economists are warning about the severe consequences of inaction on payroll taxes and extended unemployment benefits.  Goldman Sachs estimates that expiration of the payroll tax cut would reduce growth by as much as two-thirds of a percentage point in early 2012.  Moody’s Mark Zandi adds that if Congress does not extend the payroll tax holiday and unemployment benefits for 2012, “there will be approximately one million fewer jobs by year’s end.” Failure to extend the payroll tax cut would hurt workers in nearly every job and income category.  For example, the nation’s 1.4 million truck drivers, whose salaries average $39,450, would pay $789 more in payroll taxes, on average. The nation’s 2.7 million nurses, whose salaries average $67,720, would lose $1,354, on average. The table below is one that every member of Congress should study: Related Posts: CBO Ranks “Repatriation Holiday” Dead Last in Job Creation Without the Safety Net, More Than a Quarter of Americans Would Have Been Poor Last Year Exploding, Once Again, the “Non-Payer” Tax Myth This post originally appeared on the Center on Budget and Policy Priorities’ blog, www.OfftheChartsBlog.org.

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Michael Sigman: Cain Case Shines Light on Workplace Sexual Harassment

November 7, 2011

Sharon Bialek’s stunning accusation of sexual harassment literally at the hands of a certain former pizza magnate may or may not finally trigger a Cain Mutiny among his hardcore Republican supporters. But whatever the outcome, the trajectory of this story — which began with anonymous claims first reported by Politico — brings the vagaries of sexual harassment in the workplace front and center. Over several decades of running companies, I’ve seen the good, the bad and the ugly of harassment scenarios. Long ago and far away, when sexual innuendo in the office was typical and HR stood for “Home Run,” a young woman at one company I managed was repeatedly pressured for sex by her older, married male supervisor. When she complained about this clear-cut harassment, the supervisor expressed outrage that she would dare make such an insulting allegation. But others had observed the bad behavior and, facing a potential lawsuit and the loss of his job, her harasser changed his ways, though he never admitted any wrongdoing. Years later, at a larger and more prosperous company, a female with a litigious history turned a couple of nasty comments from a manager into a full-blown lawsuit faster than you could say “hostile work environment.” Our “corporate counsel” knew she had no case; nevertheless, he pushed for a substantial “nuisance” payment to the plaintiff, so we could avoid the legal fees and the tsouris. It made me sick to reward her and her famous contingency attorney, but we settled. Though the vast majority of workplace sexual harassment involves males mistreating females, that’s not always the case. A flamboyantly gay employee at one firm where I worked made a practice of greeting male staffers with the provocative, “Hey sailor, new in town?” Sometimes he pressed the point with more overt pick-up lines. This was funny to most and quite disturbing to a few, but no one filed a complaint. Then there was a woman who said to a female colleague, “Your breasts look great today.” The second woman was shocked and offended, and let this be known to management. The person who made what she thought was a playful comment felt awful, apologized and that was the end of it. That HR (human resources) sexual correctness can run amok is illustrated by the case of a friend of a friend, who was formally accused of harassment for jokingly offering an intern a ride on his motorcycle. To avoid a lawsuit, he was pressured by “corporate” to write an abject apology stripped of any explanation or defense. Making him write “I can now see that it was wrong to have offered someone a ride on my motorcycle” undermines the many legit claims of workplace sexual harassment. The corporatization of America has, to some degree, replaced a Wild West business environment with a consistent set of sexual harassment guidelines and training. But more often, in my experience, corporate bigwigs treat harassment claims as merely a cost of doing business , similar to, and much cheaper than, fines regularly paid for environmental misbehavior or financial shenanigans. If the corporation is mega enough, the costs of defending against sexual harassment claims — whether those claims are valid, inconclusive or bogus — are a drop in the bucket; and companies can afford to wear employees down with threats and endless delaying tactics. Conversely, they can dole out five or even six-figure settlements with virtually no effect on “shareholder value.” As in the case of the National Restaurant Association and Herman Cain, sexual harassment settlements almost always come with confidentiality agreements, so no one besides the parties involved ever finds out what really happened. This protects the corporation from exposure while forever silencing employees who have already effectively been told to “shut up” by the act of harassment itself. And these agreements do nothing to prevent further incidents. Whether or not it’s proven that Cain harassed his accusers, the pizza magnate’s fondness for dismissive language — “End of story,” ” Period ,” “What part of ‘no’ don’t you understand” and sarcastically, ” Excuse me ” — evokes a corporate autocrat who enjoys lording his power over others. If we expect profound menschiness from candidates for office, we’d have to choose from among the Lives of the Saints, and even some of them were problematic: St. Augustine, a dedicated womanizer in his youth, was said to have prayed, even after entering a monastery, “Give me chastity, but not yet!” But if the credible-sounding charges from Sharon Bialek — a conservative Republican — are to be believed, Herman Cain’s behavior was a bridge way, way too far.

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Gas Prices Dropped Nearly 4 Cents In The Past 2 Weeks

November 7, 2011

(Reuters) – U.S. average retail gasoline prices fell almost 4 cents a gallon over the last two weeks as the weak economy prevented refiners and retailers from passing their higher costs along to consumers, according to an industry analyst. The national average for self-serve regular unleaded gas was nearly $3.43 a gallon on Nov 4, having fallen 3.82 cents per gallon since the last report on Oct. 21 by the Lundberg survey. The survey is based upon visits to about 2,500 gas stations in the United States. “Prices of crude oil rose in the past two weeks, but we did not see it at the pump,” said Trilby Lundberg, editor of the survey. She said refiners suffered declining margins during the period, meaning there was a smaller difference between the wholesale selling price of gasoline and the cost of crude oil. Retailers, meanwhile, were also unable to pass along higher costs due to declining gasoline demand. “This is directly because of poor economic conditions,” Lundberg said. “The economy has damaged the work commute, which is the chief input to gasoline demand.” Should crude oil prices keep climbing, Lundberg said refiners and retailers will not be able to continue swallowing their higher costs. But she said costs of crude might not rise in the near-term, in part because of expanding supplies from Libya. Los Angeles, at $3.83 a gallon, had the highest average price for self-serve regular unleaded gas, while the lowest price was $3.06 a gallon in Albuquerque, New Mexico. (Reporting by Ransdell Pierson; editing by Gunna Dickson)

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No Increased Taxes: Colo. Measure Would Have Funded Schools

November 2, 2011

DENVER — Colorado voters on Tuesday overwhelmingly rejected the nation’s only statewide tax increase on ballots this year – a proposal to raise income and sales taxes for five years to revive schools decimated by years of budget cuts. The measure would have sent an estimated $2.9 billion to K-12 schools and public colleges and universities, and the vote indicates Americans may not be willing to consider higher taxes in this down economy, despite deep budget cuts to high-priority services like schools. With 59 percent of the projected vote counted, Proposition 103 was trailing 65 percent to 35 percent. The measure would have raised individual and corporate tax rates from 4.63 percent to 5 percent, and Colorado’s sales and use tax rate from 2.9 percent to 3 percent. The rates would have been in effect from 2012 through 2016, with an estimated $2.9 billion in new revenue during that time going to K-12 schools and public colleges. Earlier this year, Colorado lawmakers cut K-12 schools’ funding by more than $200 million, to $2.8 billion. Still, most voters felt like Denver voter Mike Tiderman. “I understand the plight of schools and everything, but personally, I don’t want to pay more taxes right now,” said Tiderman, a 44-year-old customer service worker. Because Colorado’s state constitution forbids lawmakers to raise taxes, the higher tax rates were petitioned onto ballots thanks in great part to the efforts of Democratic Sen. Rollie Heath. Other Democrats, including Gov. John Hickenlooper, declined to get behind the idea. On the final day of voting in the mostly mail election, Hickenlooper released his budget proposal for next year, which calls for $89 million in cuts for public schools. Public colleges and universities would get $60 million less. Also, Denver voters rejected a measure to require employers to provide paid sick leave. The suggestion was pushed by a worker’s advocacy group, but it elicited strong opposition from business owners and even the mayor and Hickenlooper, a former restaurant owner. ___

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Occupy Wall Street Has Raised $450,000, Spent Just Over $50,000

October 28, 2011

ALBANY, N.Y. — The first financial report of the Occupy Wall Street demonstration in New York City shows protesters have raised more than $454,000 and have spent slightly more than $50,000 in the movement’s first five weeks, a person close to the movement said Friday. The financial report, given to The Associated Press by the person, was to be released Friday evening in Manhattan’s Zuccotti Park, where the protesters have an encampment. The person spoke on the condition of anonymity because the spreadsheet analysis hadn’t been released. The demonstrators are providing reporters daily updates showing more than $500,000 has been donated, but this is the first fiscal report of the Occupy Wall Street movement and part of its move to provide greater transparency. The loosely assembled group’s spreadsheet shows most of the spending is for food, clothing, laundry, medical supplies and treatment, Internet services, cameras and telephone and computer expenses. Park expenses including sanitation have cost more than $1,100, according to the report. “These statements will be released regularly, and open meetings will be held by members of the general assembly to speak with finance,” the report states. “We’re small potatoes financially, but we’re going to make public all of what we do. This effort isn’t about money. We’ve received very little, even as we grow enormously around the world.” The report includes: _Income is broken down by $333,199 from total public donations and $121,237 from park donations. _Comfort expenses totaled $20,407, the largest expense. That was spent on clothing, laundry and sleeping material costs. _Communications expenses totaled $18,985, which includes “computer, WiFi hotspots, livestream cameras, supplies, telephone, video and audio expenses, associated with Media Working Group, LiveStream, and related.” The Occupy Wall Street movement began Sept. 17 with a small group of activists and has swelled to include several thousand people at times, from many walks of life, inspiring similar demonstrations across the country. The protesters’ demands are amorphous, but they are united in blaming Wall Street and corporate interests for the economic pain they say all but the wealthiest Americans have endured since the financial meltdown.

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Web Startup Tackles Student Debt ‘Crisis’

October 14, 2011

(By Jon Cook) – Sue Khim was in her third year of medical school, $50,000 in debt and wondering if she would ever dig herself out. Instead of simply making the minimum monthly payments on her student loans, Khim scoured the Web to find banks that offered better interest rates. The discrepancies shocked her, with rates varying from 11 percent to 6 percent. “The comparison shopping took forever and it was really painful,” said Khim, noting the best rates, most often offered by credit unions, were hidden while the less consumer-friendly terms from major lenders were more front and center. “Students are, many times, overpaying for loans, because the info to compare their options isn’t available to them.” Khim, who describes the situation as a “college affordability crisis,” wanted to ease the pain for other students and dropped out of school to turn her idea into Chicago-based startup Alltuition (www.alltuition.com). The site, which originally launched as EduLender in July 2010, boasts the largest database of student loans in the U.S., said Khim. Users are able to track rates, fees and terms for hundreds of lenders and compare them to help students choose the best fit. The recent name change was made because Khim felt EduLender was too limiting and she wanted something that would better showcase the platform’s offering as “a really comprehensive kind of encyclopedic-type of process” that she added, “lets you customize your complete tuition costs.” Khim coded the original platform herself and entered it into a business-plan competition at the University of Chicago. She didn’t win, but got a lot of positive reaction, including some from local investors that ultimately fell through. Dejected, Khim was forced to put the venture on the backburner while she worked a part-time job to support her parents and younger brother and programed on the side as a freelancer. In her spare time Khim used dating service OKCupid to find software developers that she could potentially work with and met Sam Solomon, who helped perfect her business model and quickly became a co-founder. Shortly thereafter the pair ended up pitching Alltuition to OKCupid founder Sam Yagan, who became one of the company’s first investors. Yagan was also included in Alltuition’s first major funding round of $1 million that was announced last spring. The round was led by Chicago’s Hyde Park Angels. Alltuition works on a “freemium” model, offering its loan search database for free, but charging for premium services that include helping students manage their debt and apply for government loans. “It’s a process that could take days, and we make it into an intuitive process that takes minutes,” Khim said. THE PITCH Overall U.S. student debt hit a record $945 billion last month and the average American student now graduates with $24,000 in debt, an increase of about 25 percent from an average of about $18,000 in 2004, according to FindAid.com. Khim, who won’t disclose the site’s number of users, said Alltuition has been enjoying “double-digit, month-over- month growth” in both traffic and users and has helped repay more than $40 million in student debt so far this year. The company, which employs a fulltime staff of nine, is targeting 2012 as a big growth year, where it takes on competitors that Khim referred to as “consumer hostile,” because they promote the higher loan rates offered by the banks that advertize on their websites. “If a business is incentivized to advertise to you the most expensive loans, by the lenders that have the biggest marketing budgets, that’s not a business that helps consumers,” she said, noting that online student lending is a multi-billion dollar space. “We’re trying to collapse the market. And that’s a real challenge for a small business.” Copyright 2011 Thomson Reuters. Click for Restrictions .

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Starbucks, General Electric Seek Cover In Arms Of Small Business

October 4, 2011

(Reuters) – Facing talk of “class warfare” in Washington and protest marches on Wall Street, some of the biggest players in corporate America are linking arms with small business in what observers see as moves to bolster their images at a time of rising public anger. Starbucks Corp (SBUX.O) Chief Executive Howard Schultz started the ball rolling on Monday with word that the world’s biggest coffee chain was donating $5 million to start a fund dedicated to lending money to small businesses and nonprofit organizations. General Electric Co (GE.N), the largest U.S. conglomerate, will also tout the virtues of smaller businesses on Thursday when it hosts a meeting in Columbus, Ohio, to discuss how to encourage the growth of mid-sized companies. Both companies, giants in their own industries, are throwing their weight behind beneficiaries who are generally better regarded in the public eye, in hopes of picking up some of their shine, experts contend. “Small businesses, entrepreneurs are the corporate equivalent of dolphins. Everybody likes dolphins … It’s a good group to associate with,” said Scott Galloway, a marketing professor at New York University’s Stern School of Business. While associating with dolphins may make corporate leviathans seem cuter, it is unlikely to do much to boost the ailing U.S. economy, where unemployment has hovered near or above 9 percent for more than two years, observers said. “It’s mostly a show. The only thing that is going to help the employment situation in the next two years is macroeconomic policy,” said Josh Bivens, an economist at the Economic Policy Institute, a Washington think tank. RISING TENSIONS The moves come at a time of rising tensions over the heading of the U.S. economy. Last month, U.S. President Barack Obama unveiled a plan to raise taxes on people who make more than $1 million a year — a move he called the “Buffett rule” in honor of billionaire investor Warren Buffett of Berkshire Hathaway Inc (BRKa.N), who backed the idea. Republican House Speaker John Boehner was quick to blast the idea, saying it amounted to “class warfare.” Over the weekend, more than 700 anti-Wall Street protesters were arrested in New York after attempting an unauthorized march across the Brooklyn Bridge. New York City Mayor Michael Bloomberg warned in his weekly radio address that the demonstrations could lead to the sort of unrest seen during the so-called Arab Spring wave of protests in the Middle East. “You don’t want those kinds of riots here,” Bloomberg said, according to media reports. Amid this turmoil, both Starbucks’ Schultz, who grew up in public housing, and GE Chief Executive Officer Jeffrey Immelt, a Dartmouth College graduate, have stepped up their involvement on the political stage, though both deny any interest in running for office. Immelt, a lifelong Republican, in January took the helm of a White House advisory board on the economy and job creation. He has taken flak this year for the company’s expected low tax rate, which GE attributes to losses at its finance arm. GE, which has a hefty finance arm, did benefit from some of the federal programs set up during the credit crisis to back private debt. Starbucks, whose business is not in the financial sector, did not. Before Schultz, a Democrat, unveiled his fund, to which Starbucks is encouraging customers to make $5 donations, he had already called on wealthy Americans and businesses to stop making campaign contributions to U.S. lawmakers until they found a “fair, bipartisan” deal on the nation’s debt, taxes and spending. NEGLECTED SEGMENT Small businesses say they are largely neglected by the nation’s largest banks, leaving many entrepreneurs to rely on personal borrowing, including credit cards and second mortgages, to fund their ventures. To that extent, they welcome attention from other sources of financing, whether they be Starbucks’ “Create Jobs for USA” fund or GE Capital. “I don’t think the banks in the current regulatory environment have the flexibility to experiment, have the understanding of small business. Their focus is elsewhere,” said Marilyn Landis, a director and former chair of the National Small Business Association. “I don’t see the banks as being significant players any time soon.” But even so, Landis is wary when big companies rush to embrace small businesses. “We’re going to see lots of posturing, lots of grand opportunities,” she said. “The question is if any of them will be meaningful.” Starbucks said its only interest in starting the fund is helping the neighborhoods where it sells its products. “Let there be no mistake: Our concern is about the communities where we do business and where our partners, which is what we call our employees, live and work,” said Jim Olson, a spokesman for the Seattle-based chain, adding that Moody’s Analytics’ top analyst had backed the idea. For its part, GE Capital said it is just trying to promote the interests of companies to which it lends. “It’s our customer base,” said spokesman Russell Wilkerson. “Sure, we have a vested interest here in seeing them do well.” While companies like GE and Starbucks focus on programs that they contend can help with social ills, it is unlikely their overall actions are going to be any different from those of any major publicly traded corporation, one observer said. Copyright 2011 Thomson Reuters. Click for Restrictions .

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AT&T To Defend $39 Billion Deal In Court

September 21, 2011

(Reuters) – A U.S. judge set a February 13 start for a trial over whether AT&T Inc (T.N) can buy rival T-Mobile USA despite competitive concerns raised in a lawsuit by the Obama administration’s Justice Department. U.S. District Judge Ellen Huvelle set aside 6 weeks for the non-jury trial. There was no discussion during the 80-minute scheduling hearing of any settlement of the case. The Justice Department sued last month to block AT&T’s $39 billion purchase of T-Mobile, owned by Deutsche Telekom (DTEGn.DE), for fear it would raise prices for consumers and hamper competition and innovation. The trial date falls between the government’s request to begin March 19 and AT&T’s petition for a January 16 date. Lawyers for the parties said the matter was unlikely to need six weeks. Mark Hansen, one of AT&T’s lawyers, had pressed the judge for a quick trial to provide certainty to the companies and the market, saying they were “already months beyond where we want to be.” The deal would combine the No. 2 and No. 4 wireless carriers. The companies could find it difficult to hold the deal together through a long proceeding and investors’ patience could wane. The ceremonial courtroom of the U.S. District Court for the District of Columbia was used for the scheduling hearing. The bigger space was needed to accommodate the large legal teams involved in the case. Sprint Nextel (S.N), the No. 3 wireless carrier, has sued separately to block the deal, but Huvelle refused to consolidate the cases and set an October 24 date for arguments over AT&T’s planned motion to dismiss that case. She said she planned to decide that issue “as swiftly as possible.” The case is USA v. AT&T, T-Mobile USA Inc and Deutsche Telekom AG, No. 11-1560. (Reporting by Jasmin Melvin and Jeremy Pelofsky; Editing by Tim Dobbyn) Copyright 2011 Thomson Reuters. Click for Restrictions .

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States Struggle For Money, Political Will To Fix America’s Failing Roads

September 17, 2011

By CRISTINA SILVA and JOAN LOWY, The Associated Press LAS VEGAS (AP) — The Hoover Dam, one of the world’s great engineering feats, is marred by roads with traffic so jammed along the Nevada-Arizona border that it tells a different story about the political will to maintain 21st century infrastructure. The road leading to the dam cannot accommodate the torrent of tourists and spills them into the overwhelmed little town of Boulder City. Nevada lawmakers are trying to find a private company to build a $400 million bypass because the state can’t afford it. The phrase “you can’t get there from here” is increasingly apt nearly everywhere one turns. America’s roads, highways, bridges and transit systems are falling apart. Even those not in disrepair are often so crowded that a horse and buggy might seem faster. Cities and suburbs are outgrowing their infrastructure far faster than local governments can find the money to fix them. While the problem is plain to all, the money and the political will to fix it isn’t there. Two congressionally mandated commissions and a slew of experts and committees have said the nation needs to double, even quadruple, what it spends each year to maintain and repair its aging transportation infrastructure and expand to accommodate population growth. So there’s the rub. No one likes traffic jams and potholes. No one wants people to die because an unsafe bridge has collapsed. But raising federal gas and diesel taxes or boosting tolls and fees isn’t popular, either. Pew Center polls in the last year show that 67 percent of those questioned said their state should not cut money for roads and public transit to balance its budget. But only 38 percent want federal spending increased and only 27 percent favor an increase in the gas tax that often pays for it. At the same time, three-quarters say more spending on roads, bridges and other public works would help create jobs. “The American public has turned selfish. They don’t really want to invest in this stuff,” said Robert Atkinson, a technology think tank executive who helped lead one of the federal transportation commissions. “It’s akin to leaving your house to your kids when you die without fixing the roof because you wanted to spend the money instead on Florida vacations.” In Delaware, officials have delayed dozens of capital projects, but still expected a $21 million shortfall in the state’s transportation trust fund this summer. The deficit is seen as growing to $1 billion by 2016. In Texas, a committee recently declared the highway system inadequate and warned lawmakers that congestion would worsen without money for road improvements. Gov. Rick Perry’s plan for a toll road across the state was abandoned in the face of uproar from ranchers whose land would be seized to build it. In Pennsylvania, 5,906 bridges, or about 27 percent of the state’s total, are graded structurally deficient, the highest rate in the nation, according to the Washington-based policy group Transportation for America. The emergency closure this month of the 50-year-old Sherman Minton Bridge, one of three spans that connect southern Indiana and Louisville, Ky., has snarled the daily commute for tens of thousands of motorists. Officials found cracks in the steel span, raising safety concerns. The two states have struggled for years to find the money to build two more bridges. Maryland business leaders persuaded the governor and lawmakers to spend more on road construction after a state commission found nearly $1 billion in transportation dollars had been diverted to the general fund budget. In Georgia, lawmakers approved legislation to allow 12 regions around the state to ask voters next year whether to raise their sales tax by a penny per dollar to pay for an approved list of transportation projects. Officials in the 10-county Atlanta region recently endorsed a $6.14 billion draft list of transportation projects, from light rail to new highways, to ease congestion that’s among the worst in the nation. The consequences of inaction are severe. Atkinson’s commission forecast “unimaginable levels of congestion” in the coming decades. Safety will be reduced. Goods and services will cost more. The quality of life will be eroded, and the nation’s economic competitiveness diminished, the commission predicted. The Federal Highway Administration predicts 40 percent of the nation’s major highways will be congested by 2035 without major fixes. “Our highways are clogged with traffic. Our skies are the most congested in the world. This is inexcusable,” President Barack Obama told Congress in a speech last week in which he demanded passage of a jobs bill. “Building a world-class transportation system is part of what made us an economic superpower. And now we’re going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America?” Despite the sense of urgency, federal highway and transit programs that underwrite about 40 percent of transportation construction have been in a kind of legislative limbo for two years, limping along under a series of short-term extensions because Congress can’t figure out how to pay for them. Republicans want the programs to be funded almost entirely through existing transportation taxes, primarily the 18.4 cents per gallon federal gas tax and 24.4 cents per gallon federal diesel tax. But revenue from the taxes is declining as people drive less and buy more fuel-efficient cars. GOP Rep. John Mica of Florida, chairman of the House Transportation and Infrastructure Committee, has proposed a six-year, $230 billion plan that would slash annual transportation spending by about 30 percent. Democratic Sen. Barbara Boxer of California, who heads the Senate Environment and Public Works Committee, has developed a plan that would last only two years and cost $109 billion. But it would maintain current spending levels with some adjustment for inflation. Federal inaction is “a big variable, right now,” Maryland Gov. Martin O’Malley, chairman of the Democratic Governors Association, said recently. “You wouldn’t have thought so because it’s been routinely extended in the past, but some of these guys in Congress really do believe that bridges are like trees and if you leave them alone long enough they grow taller and stronger with age, so it’s hard to say.” At the state level, 21 states cut transportation money last year even with a $48.1 billion infusion of federal stimulus dollars for road projects, according to the National Conference of State Legislators. The proportion of spending on transportation at the state level has held steady at 9 percent since 1995. “People need to understand all across America what’s at stake,” said Tony Dorsey of the American Association of State Highway and Transportation Officials. Ed Garcia does. The 24-year-old travels from Arizona to Nevada once a month to visit his girlfriend and often gets stuck in traffic near the Hoover Dam. The federal government last year opened a four-lane bypass that routed traffic from a bottleneck near the Hoover Dam to a new U.S. 93 bridge. But traffic remains severe west of the span, near where U.S. 93 connects with U.S. 95 in Boulder City. “You sit in traffic for hours not moving,” Garcia said. “There’s this one road that goes through town, and everyone is on it.” State legislators aren’t any more eager than members of Congress to raise their gas tax to fix roads. In Maryland, Delaware, Utah and Wyoming, lawmakers rejected gas tax increases to pay for new road work because, they said, residents couldn’t afford higher taxes. “If I got a pair of worn-out Levis, I don’t go out and buy another pair just cause I need them,” Republican state Sen. Chris Buttars of Utah said last spring as he argued against raising that state’s gas tax by 5 cents per gallon. “I’ve got to have the money.” About two dozen states are making due with the same fuel tax they charged in 1996, according to the federal government. But in California, for example, inflation has eaten away half the value of that state’s gas tax, which has remained at 18 cents per gallon since 1994. In the absence of new revenue, states are borrowing their way to better roads, with bonds accounting for about one-third of state transportation money. Virginia Gov. Bob McDonnell recently won passage of a $4 billion transportation plan, more than half from bonds. The spending needs are just to maintain roads from normal wear and tear and get ready for population growth. Vermont has a whole new set of problems. One-third of the bridges in the state were rated structurally deficient or functionally obsolete by the FHA before Hurricane Irene inundated the state last month. Weeks later, 18 state highway bridges remained closed and 200 miles of state roads were impassable, chewed away by brooks turned suddenly to torrents. The biggest worry was getting critical links into mountain towns open before winter. In the legislative session that ended in May, Vermont lawmakers approved $544 million in transportation spending. But no one thinks that will come close to accomplishing the items in the then-envisioned budget and restoring the state’s roads after Irene. ___ Lowy reported from Washington. Associated Press Deputy Polling Director Jennifer Agiesta in Washington and AP writer David Gramm in Montpelier, Vt., contributed to this report. ___ Online:

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After 9/11, Financial District Less Dominated By Finance

September 9, 2011

NEW YORK — Take a walk down Wall Street, and the change is immediately apparent. Off Nassau Street, the former Seamen’s Bank for Savings building houses a New York Sports Club, with a sign out front that reads “Invest in Yourself.” A block east, a former Bank of New York building is now the Museum of American Finance. Along the south side of the street, the monoliths of an earlier financial era now contain rental apartments. The Financial District has transformed in the decade since the terrorist attacks of Sept. 11, 2001, which initially turned the downtown area into a scene of devastation and turmoil. New businesses and residents have moved in, imbuing a neighborhood once dominated by finance with a new measure of diversity. From 2002 to 2010, the share of workers downtown employed in finance, insurance and real estate dropped from 33 percent to 28 percent, according to data from the Alliance for Downtown New York . In name, the neighborhood is still the Financial District. But experts say the city’s financial center of gravity has moved elsewhere. “The events of 9/11 were the death knell perhaps for the physical bricks and mortar manifestation of the financial capital,” said Stephen Brown, a professor of finance at the New York University Stern School of Business. “It accelerated the move that was already taking place.” Real estate brokers speak of a downtown renaissance, pointing both to the growth that has already occurred and to future plans for corporate tenants, such as the magazine publisher Conde Nast, which in May signed a lease at One World Trade Center. But the transition has been not without growing pains. The destruction of the World Trade Center towers took an economic toll on the area, and the frequent construction in the years since has affected local businesses. With rents becoming more expensive, some small businesses have left. “The place just feels very, very much like a ghost town to me,” said Steven Wilner, a partner at the downtown law firm Cleary Gottlieb, and chair of the firm’s New York real estate committee. “As you move east from the World Trade Center, those streets used to be really vibrant places. People from the Trade Center used to walk out at lunchtime and come to all those businesses. And it just doesn’t feel the same.” As the concentration of finance downtown has thinned, some local businesses have lost reliable customers. Michelle Koo, owner of Koodo Sushi on Liberty Street, recalled the days when Wall Street types would place large orders at her restaurant. The drop-off in business she said she’s suffered is partially due to the financial crisis of 2008. But there’s a demographic element as well, she said. “All the customers moved out,” she said. “All the residents who moved in are young people. At night, they hang out; they don’t stay here. It won’t benefit us.” In earlier days, she said, the restaurant received business from financiers working late: “During overtime, we got their order.” The exodus of financial firms from the downtown area was underway before the terrorist attacks, as the advent of computerized trading made physical proximity to the stock exchange less important. Firms moved to Midtown, or across the river to New Jersey. Banks opened offices in Asia and South America, capitalizing on so-called emerging markets, whose economies are rapidly growing. But the recent history of finance in the neighborhood is marked more by dilution than exodus. The years following 9/11 saw new entrants downtown, and the sense that finance dominated the landscape continued to erode. The government had a hand in that process, as Washington approved more than $20 billion in aid for New York City after the attacks, in the form of tax benefits, work projects and compensation for businesses. The Lower Manhattan Development Corporation, a combined city and state initiative, gave businesses $150 million to help retain and create jobs downtown. Small businesses with fewer than 10 employees got $29 million, according to the LMDC website . Goldman Sachs benefited from this government largess when it made the decision to move from its Broad Street headquarters to a building closer to Ground Zero, securing approval to sell $1.65 billion in special tax-free bonds, and winning tens of millions of dollars in grants. A few key developments have also given the area a new appeal. Architect Frank Gehry designed a residential tower on Spruce Street, which the New York Times ‘ architecture critic called “the finest skyscraper to rise in New York since Eero Saarinen’s CBS building went up 46 years ago.” And real estate brokers say that Conde Nast’s decision to move downtown ensures a vibrant future for the neighborhood. Dottie Herman, a well-known figure in New York real estate and chief executive of the brokerage Prudential Douglas Elliman, said in an interview that she enjoys spending Friday evenings downtown, when she’s not in the Hamptons. “You can see the Statue of Liberty. You can see all of the Hudson, and the ships. You see kids playing, and people eating outside,” she said. “It’s wonderful. It’s just wonderful. It’s probably one of the nicest places you could go. It’s like being in another country.” But others are more wary of the transformation, saying new businesses have pushed out some of the local color. “What troubles me the most is we’re losing mom and pop, and we’re getting Sprint stores, and Anne Taylor, and the Gap, and Duane Reade — all these national chains,” said Edward Sheffe, who chairs the financial district committee of Manhattan Community Board No. 1. “Mom and pop can’t afford to be here anymore.” “You can buy a Maserati down the street, you can go to Tiffany’s, but you can’t get a ham sandwich. You can’t get your shoes repaired,” added Sheffe, who goes by the name of Ro. “We may well end up with this gleaming, new, modern, sleek neighborhood that is so sterile to live in.” High-end retailers dot the Financial District: Hermes, BMW, Tumi, Tiffany & Co. The brokerage Winick Realty hosted a party last year at 75 Wall Street to attract another such tenant. “We’re really pushing for a high-end luxury retailer to come down here,” Winick broker Annie Shinn said at the time. Sheffe isn’t alone in his lamentation for the lack of ham sandwiches. A Goldman Sachs employee, who asked not to be named, said the firm’s new location at 200 West Street, on the northern edge of the Financial District, affords fewer culinary options than before. “That’s the general feeling among employees,” he said, adding that the nearby Shake Shack has become a company favorite. Still, even the neighborhood’s skeptics foresee a bright future. Wilner, of Cleary Gottlieb, said he recommended that the law firm stay downtown in 2007, when the company was renegotiating its lease. “One of the drivers for my recommendation that we stay in place was my view that this area is going to become rejuvenated, and going to become a very desirable place to be,” Wilner said. “I am hoping that all of that just comes back to life.”

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Economists: Employer Tax Breaks May Be Weakest Link In Obama Jobs Plan

September 9, 2011

WASHINGTON — President Barack Obama staked his presidency on a $447 billion jobs plan presented to Congress Thursday night, and a surprisingly large chunk of that plan — some $65 billion — is devoted to payroll tax cuts for employers. When it comes to creating an economic turnaround, however, those generous cuts may well be the weakest ingredient in the pot. They may be easier to sell to business-friendly Republicans, but according to some economists, such employer tax breaks tend to offer significantly less value than, say, infrastructure spending or unemployment benefits. The president’s plan would slash by 50 percent the taxes that employers pay on their first $5 million in payroll, capped so that the benefits would fall mostly to small businesses. The plan would also eliminate those taxes altogether for businesses that brought on new workers or increased the wages of their existing workers. “Pass this jobs bill and all small business owners will see their payroll taxes cut in half next year,” Obama told lawmakers. “You should pass it right away.” The idea is simple: If a healthy business is weighing whether or not to make new hires, these tax breaks may give it just enough incentive to finally pull the trigger. Yet some economists say many such businesses probably would have made those hires anyway, regardless of the tax breaks — and the tax breaks happen to be expensive. “That seems to me to be largely a waste,” Dean Baker , co-director of the Center for Economic and Policy Research, said of the proposed payroll tax cuts. “You’re handing money to businesses that won’t do much that they wouldn’t have done otherwise. There’s some incentive effect, but I worry just not much.” As Baker noted, the economy has been adding jobs — it’s just been losing them, as well. He said the businesses that are growing will add jobs whether or not the government sweetens the pot with employer-side tax breaks. Still, while they may not be the best way to spend money, payroll tax cuts can only help an economy stalled at 9.1 percent unemployment. “There are all these estimates of so-called bang-for-the-buck attached to these various stimulus proposals,” said Isabel Sawhill, a budget expert at the Brookings Institution. The employer tax break “is not really well targeted, but it’s a simple, straightforward way to give companies the incentive to hire more people.” The cuts may not be as effective as more direct spending, but they would certainly be more palatable politically, Sawhill said. “From a political perspective, the problem with infrastructure spending is Republicans will probably stonewall them,” she said. “They’ll have a harder time saying we don’t want a tax cut that would [help] small businesses.” On a dollar-for-dollar basis, however, an employee payroll tax break would provide a greater economic boost, according to economist Heidi Shierholz of the Economic Policy Institute, a think tank partly supported by labor unions. “Reducing taxes on [workers] is more likely to put money into the economy than reducing taxes on employers who may be sitting on cash,” Shierholz said. The proposed jobs plan would slash worker payroll taxes in half at a cost of roughly $175 million.

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U.S. Homebuilders Probed Over Wages By Labor Department

September 8, 2011

WASHINGTON — The Labor Department is investigating large U.S. homebuilders to see if they failed to pay workers the minimum wage or overtime. A spokesman says the agency is investigating compliance with wage-and-hour laws in the homebuilding industry as part of a crackdown targeting several industries. Labor Secretary Hilda Solis has made aggressive enforcement of wage-and-hour laws a cornerstone of her tenure since she took over the agency in 2009. The department has hired about 300 additional investigators to probe complaints of unpaid work, lack of overtime pay and minimum-wage violations. Labor officials say so-called wage theft is especially prevalent among immigrant workers who speak little English or who fear challenging their bosses will jeopardize their immigration status. One of the big homebuilders asked to provide documents in the probe is PulteGroup Inc. A company spokesman said Thursday that Pulte has received “a general inquiry.” The Wall Street Journal reported that Lennar Corp., D.R. Horton Inc. and KB Home also received letters from the Labor Department asking for employee pay records. Those companies didn’t immediately return calls from The Associated Press. In a copy of one such letter sent last month and obtained by The AP, the department’s Wage and Hour Division says the purpose of its investigation is to ensure that employees who work at builders’ home construction sites are being paid according to federal labor laws. Specifically, the department wants to find out whether homebuilders are complying with the Fair Labor Standards Act, which spells out the requirements for pay and other work rules most employers must follow. To learn this, Labor investigators are seeking a trove of records, including employee time sheets and payroll and Social Security records, according to the letter. The trade group Leading Builders of America said several of its members have received the letters. In a statement, the group called the requests “overbroad” and claimed they seek unrelated information. “These demands could require significant resources and thousands of hours of work,” the statement said. The department s inquiry is especially troubling given that no issues have been identified to warrant an investigation.” For more than two years, the Labor Department has been investigating the hotel, restaurant, janitorial, health care and day care industries over similar issues. Department spokesman Carl Fillichio said Thursday that homebuilders are the latest addition to the list. “We are actively looking at those industries that employ the most vulnerable workers and that engage in business practices, such as misclassifying employees as independent contractors, that result in violations of minimum-wage and overtime laws,” Fillichio said. ___ AP Real Estate Writer Alex Veiga in Los Angeles contributed to this report.

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As Obama Prepares Jobs Speech, Low-Earning Americans Gloomy About Economy

September 8, 2011

With the economy slowing to a near-standstill this year, and the prospect of a turnaround appearing increasingly unlikely, Americans’ spirits — particularly among the country’s lowest earners — seem to be sinking to greater depths all the time. Recent polls show that confidence and happiness are falling, likely as a result of the enervated economy, which has barely grown this year and added no new jobs in the past month. The downturn in public opinion has occurred at about the same time that talk in Washington has increasingly focused on economic growth and job creation, suggesting that many Americans aren’t persuaded their leaders in the public sector have answers. A weekly consumer-sentiment survey from Bloomberg, published Thursday, found that confidence was at its second-lowest point for the year in the week ending September 4. It was especially down amongst Americans who earn less than $15,000 a year — that group reported feeling less confident than at any time since the mid-1990s. Separately, a Gallup poll published Thursday showed that Americans’ overall contentedness — as measured by responses to a survey that asked whether participants felt like they were “thriving,” “struggling” or “suffering” — fell in August to the lowest level since July 2009 , the tail end of the Great Recession. Gallup noted that anxiety brought on by the weak economy may be affecting Americans’ sense of satisfaction with their lives. In particular, an annual poll in August found that a near-record number of people were worried about losing their jobs . In response to the softening economy — which grew at an annualized rate of just 1 percent in the spring , well below what economists say is needed for a robust recovery — President Obama is expected to announce a jobs-creation plan during a special address to a joint session of Congress Thursday evening. The plan, said to be worth at least $300 billion , may include provisions for infrastructure spending, unemployment benefits and payroll tax cut extensions. Meanwhile, Republican presidential candidates Mitt Romney and Jon Huntsman have each publicized jobs-and-growth plans of their own. Huntsman’s plan includes a detailed road map for energy reform , while Romney’s calls for lower taxes, fewer regulations and measures to curtail the powers of labor unions . Federal Reserve Chairman Ben Bernanke, for his part, said that the Fed will “do all it can to help restore high rates of growth and employment” in remarks to the Economic Club of Minnesota on Thursday, though he did not elaborate on what the Fed might do. Still, despite the pledges of proactivity from government officials, Americans appear to recognize the magnitude of the challenges facing the economy. Most analysts predict that the economy will continue to crawl along at a weak rate of growth for at least another several months, which may bode ill for Obama’s re-election prospects.

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Ben Bernanke: Federal Reserve Will Do ‘All It Can’ To Help Create Jobs

September 8, 2011

MINNEAPOLIS (David Bailey) – Federal Reserve Chairman Ben Bernanke on Thursday said the U.S. central bank would spare no effort to boost disappointingly weak growth and lower unemployment, and he downplayed concerns about inflation. While the Fed chairman did little to disturb expectations of a further easing of monetary policy when officials meets on September 20-21, he offered no details of steps the Fed might take, disappointing some investors “The Federal Reserve will do all it can to help restore high rates of growth and employment in a context of price stability,” Bernanke told the Economic Club of Minnesota. In what could be taken as a bid to quell concerns among some of his colleagues that a further monetary easing could spark inflation, Bernanke said a rise in prices this year would likely to be transitory. “We see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy,” he said. U.S. stocks fell, the dollar extended gains against the euro and Treasury debt prices rose on Bernanke’s comments. “The markets are going to be disappointed in this and concerned that the Fed is only acknowledging the problems without offering any real solutions,” said Joseph Trevisani, chief market analyst at FX Solutions in Saddle River, New Jersey. A widening debt crisis in Europe and collapse in consumer and business confidence in the United States has raised concern the U.S. and global economies could slide back into recession. So stark is the recent deterioration in the global economic recovery that the political debate in Washington has veered in only six weeks from a preoccupation with how to cut U.S. debts to a renewed urgency on lowering unemployment. President Barack Obama is scheduled to lay out a jobs package worth more than $300 billion later on Thursday, and job creation was a key theme for Republican presidential hopefuls at a debate late on Wednesday. FEW NEW CLUES ON EASING Other than offering a bit more detail on the outlook for inflation and emphasizing that sluggish growth is not enough to satisfy the Fed, Bernanke offered few fresh insights into thinking at the central bank on measures to aid the recovery. He largely reiterated remarks he made two weeks ago, repeating that the Fed has a range of tools to provide additional stimulus and is prepared to use them. Unusually weak household spending and persistent financial strains spurred by worry over Europe’s sovereign debt crisis and the loss of Washington’s top-tier credit rating continue to hold back the recovery, Bernanke said. The Fed chairman warned that overzealous belt-tightening by the U.S. government in the near term could also slow down the “erratic” recovery. “Substantial fiscal consolidation in the shorter term could add to the headings facing economic growth and hiring,” he said. The U.S. economy expanded at less than a 1.0 percent annual rate in the first half of the year, and looks to be doing no better now. A report on Friday showed job growth had stalled for first time in nearly a year. The Fed cut benchmark rates to near zero almost three years ago to pull the economy out of a sharp recession. It then bought $2.3 trillion worth of longer-term securities in two installments ending in June to boost faster growth. But, with confidence crumbling, the Fed on August 9 eased monetary policy further by expanding on an earlier promise to hold rates at rock-bottom levels for an extended period, saying it expected to keep them low at least through mid-2013. Copyright 2011 Thomson Reuters. Click for Restrictions .

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Regulations, Taxes Aren’t Killing Small Business, Owners Say

September 3, 2011

WASHINGTON — Politicians and business groups often blame excessive regulation and fear of higher taxes for tepid hiring in the economy. However, little evidence of that emerged when McClatchy canvassed a random sample of small business owners across the nation.

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Exclusive: Groupon taps Citydeal team to boost sales

August 23, 2011

By Nivedita Bhattacharjee BANGALORE (Reuters) – No. 1 daily deals website Groupon Inc is turning to executives from Citydeal — the European business it bought last year — to help boost slowing growth in its domestic business, ahead of a planned public listing. The company appointed Christopher Muhr as its sales chief, taking over from Darren Schwartz, a source familiar with the matter who did not want to be named, said. Muhr is moving from London where he was managing director of Groupon UK. The move seems aimed at tapping into the strength of the company’s international team as growth in its domestic market starts to mature. In June, Groupon filed to raise up to $750 million in an IPO, expected to be one of the most high-profile new listings of 2011. Groupon’s valuation has dropped 20 percent to $16 billion in the latest private auction of shares, according to brokerage Wedbush Securities. Wedbush partly blamed that on the market slump, but also highlighted slowing sales growth as a concern. “Groupon’s recently amended S-1, indicating rapidly decelerating Q2 growth, did little to help drive investor interest in the shares,” Wedbush wrote in a note to investors on Tuesday. Second-quarter revenue at the company, which offers group-buying deals on everything from spa treatments to flying lessons, was up 36 percent, down from the 63 percent increase it posted in the first quarter. Groupon ended the second quarter with just over 115 million subscribers — an increase of 32.6 million subscribers — which Wedbush called “disappointing.” Most of the slowdown in growth was in the U.S., Groupon’s most mature market. Revenue per subscriber fell 12 percent to $8.57 in North America, according to Yipit, which tracks the daily deal industry. Joining Muhr at the company’s Chicago headquarters are members of the international management team, including fellow Citydeal co-founders Rajen Ruparell, Emanuel Stehle and Jens Hutzschenreuter, the source said. The changes were communicated to Groupon employees last week, the source said. When contacted, a Groupon spokeswoman did not immediately confirm the appointments. Germany’s Citydeal, which Groupon bought last year, was used by the company to kick-start its international operations. (Reporting by Nivedita Bhattacharjee in Bangalore; Additional reporting by Alistair Barr in San Francisco; Editing by Anthony Kurian, Sriraj Kalluvila)

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BofA shares drop, debt insurance costs jump

August 23, 2011

By Joe Rauch CHARLOTTE, North Carolina (Reuters) – Bank of America Corp shares posted their steepest drop in 2-1/2 years on Tuesday as investors worried that the biggest U.S. bank might face big writeoffs. The cost of insuring the bank’s debt against default spiked to record levels. Bank of America shares closed 1.9 percent lower at $6.30 after falling as much as 6.4 percent during the day. The shares pared losses, and credit swaps largely retraced, as a broader stock market rally helped assuage investor fears about the economy. In a blog post on Tuesday, former securities analyst Henry Blodget said the bank could have $100 billion to $200 billion of writeoffs and troubled assets to sort through. These potential write-offs could eat into a substantial portion of the bank’s $222 billion of book value. “That’s why Bank of America’s stock is tanking. The owners of that stock will be the first folks to get hit if Bank of America has to raise more capital,” Blodget wrote on Business Insider, his collection of blogs. Bank of America fired back at Blodget in a statement, calling his claims “exaggerated and unwarranted,” echoing language the U.S. Securities and Exchange Commission used in a 2003 complaint against Blodget. Blodget, a former Internet analyst at Merrill Lynch, was barred from the securities industry as part of a settlement with the SEC over alleged conflicts in his research. Bank of America said the exposures that Blodget identified as the source of possible losses were inaccurate, with his sovereign exposure being off by a factor of 10. The volley between Bank of America and Blodget was the latest example of analysts and investors disagreeing with the bank. Since June, a number of analysts have said Bank of America needs to boost its capital levels by about $50 billion to comply with new global standards. At least some of that extra capital could come from issuing stock, several analysts have said. The bank itself says it can reach target capital levels by selling assets and earning more money. The bank has some time to comply with the Basel III capital rules, which are to be phased in from 2013 through 2019. Some analysts agree. Rochdale Securities analyst Dick Bove told television news outlets on Tuesday that the bank does not need to raise capital, whatever happens to its share price, and that Bank of America has ample liquidity. Chief Executive Brian Moynihan told investors on a recent conference call that the bank did not view issuing more shares as an option, after having already diluted its shareholders so much during the financial crisis. Some analysts have suggested the bank will need to raise capital if the proposed $8.5 billion settlement over Countrywide Financial Corp-created mortgage-backed securities falls apart. Outside investors have been pushing for the bank to repurchase toxic mortgages from the securities, amid allegations the loans do not meet initial guarantees made when the securities were bought, and now total $100 billion in unpaid principal. Others said pressure on the bank is increasing the chances of a capital raise. In a note to clients, JPMorgan Chase & Co analysts upgraded Bank of America’s stock to neutral from underweight, on the belief the declining stock price and rising debt insurance costs will force a capital raise. “We think it is getting more difficult for management to ignore this sentiment,” JPMorgan Chase analysts Kabir Caprihan and Matthew Hughart said in a research note. Regulators seem generally unconcerned. At a news conference on Tuesday, the Federal Deposit Insurance Corp’s acting chairman said he is comfortable with the overall amount of capital at U.S. banks. “As a general matter I would say the answer to that is yes,” Acting Chairman Martin Gruenberg said in response to a question about the amount of capital banks are holding. DOWNWARD SPIRAL The drop in the bank’s shares on Tuesday was their fourth consecutive daily decline. “It’s on a self-fulfilling downward spiral. I don’t know what’s going to make BofA go up,” said Mark Coffelt, head portfolio manager at Austin-based money manager Empiric Advisors. The shares fell even as the KBW Bank Index and the S&P 500 Index rose 3.3 percent and 3.1 percent, respectively. Credit default swap insurance on the bank’s unsecured debt jumped as much as 65 basis points to 435 basis points, before retracing to 385 basis points, meaning it would cost $385,000 per year for five years to insure $10 million in bonds, according to Markit. The level is just under the record level of 386 in March 2009, Markit data show. Traders said weakness in credit derivatives helped fuel downward pressure on the shares, as markets feed off each other. Bank of America shares closed Tuesday at levels not seen since March 2009. The key arteries of the financial system — the ability of banks and other institutions to borrow from one another on a short-term basis — continued to show rising stress on Tuesday, but not at levels associated with the panic of 2008. The cost for a bank to borrow from another bank for three months in U.S. dollars, known as the London Interbank Offered Rate, continued to rise, hitting 0.31178 percent Tuesday morning from 0.30300 on Monday. The pressures were most acute at European banks, which continued to pay more than other banks for short-term funding. Most European institutions paid more than the LIBOR fixing. (Reporting by Joe Rauch; additional reporting by Lauren LaCapra, Jonathan Spicer, Karen Brettell and David Gaffen in New York and Dave Clarke in Washington; editing by John Wallace, Matthew Lewis and Bernard Orr)

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How Many Lawmakers Actually Have Economic Degrees?

August 23, 2011

WASHINGTON — Lawmakers try to convince their constituents that they have the best answers for jumpstarting the economy and lowering the deficit, but the majority them aren’t actually economics experts — at least not academically. Eight out of 10 members of Congress lack an academic background in economics or business, according to a new project called ” Defeat the Debt ” out of Employment Policies Institute, a fiscally conservative think tank. Only 8.4 percent of federal lawmakers have a degree in economics, and 13.7 percent have a degree in business or accounting. Over half of the members of Congress (55.7 percent) hold a degree in a government-related or humanities field. EPI’s breakdown of their study: “Members of Congress are expected to provide answers for our country’s spending and economic crises,” Michael Saltsman, a research fellow at EPI, said in a press release. “But it appears many of them might have difficulty answering Econ 101 questions.” In an interview with The Huffington Post, Saltsman acknowledged that not majoring in economics or business does not mean lawmakers are incapable of solving economic difficulties. “There have been a lot of great representatives over the years who haven’t had this background, and I think it’s possible to do your job without it and do it well without it,” he said. “However, I think that right now, the nature of the policy problems we’re confronting now suggest having a familiarity with economics is really a net plus.” Saltsman added that an understanding of basic economics allows Congress to understand what is at stake in policy debates. “Your first couple weeks of economics class you learn a lot of scarcity and trade offs. You have people with unlimited wants and desires and a limited number of resources to satisfy that,” he said. “These are the sorts of trade offs that Congress is going to have to make when talking about the debt and talking about the economy.” The study excluded 24 members of Congress without a specific degree, as well the non-voting delegates from Guam, Virgin Islands, District of Columbia, Puerto Rico, the Northern Mariana Islands and American Samoa. The focus was on undergraduate degrees, but lawmakers with an advanced degree relevant to economics or business, such as a Master in Business Administration, were classified according to the advanced degree.

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Martin Cheek: Oil Comes With Hidden Costs

August 22, 2011

The oil industry recently marked a milestone. This month, the world’s oldest operating oil well celebrated 150 years of on-going production. On August 16, 1861, oil men drilled the McClintock Well No 1 in northwestern Pennsylvania to a depth of 620 feet and struck black gold. A century and a half later, the McClintock continues to pump out petroleum, although it now operates every other month at a rate of about 10 barrels a day. The McClintock Well serves as a historic reminder of the pioneering days of petroleum production, showing us how far the industrial world has come as oil evolved into a multi-billion dollar energy industry that drives the world’s economy. Oil helped build America into the world’s economic and military superpower. Americans now use about 20 million barrels of oil a day, 71 percent of it for transportation, and 23 percent for industry and manufacturing, according to the U.S. Energy Information Administration . Most of us tend to look only at the cost of oil in relation to a fill-up at the local gas station. But our nation’s high dependence on petroleum comes with a price far steeper than what consumers pay at the pump. Oil, along with coal and natural gas, comes with what economists call externality costs, the indirect expenses widely shared by human society. These externalities include the toxins released into America’s environment from oil production and consumption which add considerably to our nation’s health care costs. And pollution-related illnesses reduce worker productivity. Buying foreign oil slowly strangles American jobs and industry by weakening the value of our dollars. Ironically, as dependence on foreign oil deteriorates our economic security, Americans bear the burden of paying to protect overseas oil. According to the Institute for the Analysis of Global Security , American taxpayers fund a bill of more than $50 billion a year for our military to protect our access to Middle East oil. Also tally into the total of our oil addiction the expenses that come from changes to Earth’s climate. We’re now seeing more extreme weather events such as hurricanes, blizzards, floods, and mega-droughts, which are related to global warming resulting from burning fossil fuels. These meteorological events place a heavy toll on state and local economies. If we truly wish to revitalize our economy and preserve our quality of life, let’s honestly face the hidden and high price of our nation’s fossil fuel dependence. That will motivate us to take the burden of oil’s externality costs off the shoulders of Americans consumers and taxpayers. Instead let’s make fossil fuel corporations pay their fair share as they benefit by gaining the billions of dollars every year from oil, natural gas, and coal production. To achieve this, an innovative idea called “fee and dividend” is emerging as a hot topic of discussion in U.S. energy policy. If implemented, it would empower the American public with financial incentives to reduce our nation’s externality costs from fossil fuels and thus secure our economic and energy freedom. This market-driven mechanism works by placing a fee on fossil fuels at their point of entry into the American market (such as at an oil well, a coal mine, or a supertanker). This fee is raised gradually over time based on scientific and economic measurements. One hundred percent of this cost on carbon is divided among American citizens on a monthly basis as an offset to the higher prices households will pay from rising energy costs induced by the fee. Each household gets to spend the fee as it wishes, thus letting ordinary people (and not politicians) decide in which direction to grow America’s energy economy. If the American public spends dividend money on non-fossil fuel energy sources, we will enjoy growth in entrepreneurship and innovations leading to new industries in renewable energy and fuel efficiency. These industries will create millions of new jobs that will provide a solid economic foundation and broad revenue-generating base for America. The cardinal rule of economics it is that money motivates. So long as Americans fail to see the external costs of oil and other fossil fuels and mistakenly perceive them to be “cheap” in comparison to renewable energy resources and energy efficient consumption, the U.S. economy will continue to weaken as we waste fossil fuels and deplete our limited supply of hydrocarbon resources. When we as a people face reality and honestly acknowledge that we pay too much in our taxes, our health costs, and our quality of life because of our fossil fuel chemical dependency, we will start moving forward to upgrade America’s economy with innovative clean energy technology. Hopefully, a century and a half from now, the historic McClintock Well No 1 might serve as a reminder of the dirty and dangerous fossil fuel age we left behind.

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Mitt Romney’s S&P Pitch Played Up Taxes

August 11, 2011

Gov. Mitt Romney lobbied the credit ratings agency Standard & Poor’s in 2004 to raise his state’s credit rating in part because Massachusetts had raised taxes during an economic downturn two years earlier.

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How Casual Is Too Casual During the Summer?

August 5, 2011

From Inc.: About three-quarters (74 percent) of employees think it’s acceptable for both men and women to dress “more casually” during the summer, according to a recent report. What does “more casually” mean? It depends on who you’re asking. (Hint: Perhaps not surprisingly, men are in favor of women wearing less.)

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U.S. Shed Nearly Two Million Taxpayers In 2009: IRS

August 5, 2011

New tax data from the Internal Revenue service shows that in 2009, incomes fell, unemployment claims rose, and the U.S. economy shed nearly two million taxpayers. And of the 235,413 taxpayers who earned $1 million or more in 2009, 1,470 of them paid no taxes. According to the data, the average income for American taxpayers fell to $54,283 — a drop of $3,516, or about 6.1 percent, between 2008 and 2009. Not only that, but the overall number of taxpayers — that is, individuals or married couples filing with the IRS — fell by almost two million. “What you’re seeing is the devastation of the massive loss of jobs and the effects of the real recession on real Americans,” said Ed Kleinbard, a law professor at the University of Southern California. The numbers, part of a package analyzing 2009 tax returns that the IRS has just made available, reflect a grim picture of the recent past. Tax returns filed in 2009 largely speak to the state of the economy in 2008 — a time when unemployment ballooned, markets dropped precipitously and the economy languished in recession. The IRS’s data is unlikely to surprise any of the millions of Americans who were out of work in 2008 and 2009. The unemployment rate climbed from 5 percent in April ’08 to a 25-year high in February ’09 , and continued to rise for several months, topping double digits that fall with a rate of 10.2 percent. The IRS report shows that unemployment claims rose by nearly 2 million, or about 19 percent, between 2008 and 2009. The amount of unemployment benefits paid in 2009 nearly doubled from the previous year. The number of 1040EZ returns — the simplified tax form for filers who have no dependents, and whose taxable income is less than $100,000 — fell by 23 percent between 2008 and 2009. The decline in 1040EZs represents low-income taxpayers who lost their jobs and couldn’t remain a part of the workforce, Kleinbard told The Huffington Post. “What you’re seeing is people at the bottom rung of the economic ladder being taken off the economic ladder entirely,” Kleinbard said. According to the latest figures from the Department of Labor, U.S. unemployment is currently at 9.2 percent . A new monthly report will be released Friday.

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Ken Blackwell: Avoiding the Danger of a "Clean" BBA

July 31, 2011

Liberals are trying to kill the prospect of a Balanced Budget Amendment (BBA) in the ongoing battle over the debt ceiling. Some on the Right respond that they might settle for a “clean” BBA. But there are two types of a clean BBA, one of which would be even worse than the terrible mess we have today. Some advocate that the BBA should require only that federal outlays cannot exceed federal tax revenues. They see it as two numbers, where the former must be less than the latter. But this misses one critical point. If BBA only requires government to spend less than it collects, there are two ways to fix it. The first is cutting spending, and the second is raising taxes. Many supporters of a clean BBA are not too worried. Although acknowledging the risk, they’re willing to take it on the grounds that they can use the prospect of electoral defeat to exert political pressure on members of Congress to ensure they don’t vote for tax increases. But what about the courts? What if a judge orders a tax increase? A judge could, if the BBA only says that spending must be less than revenues. Courts currently lack the power to make changes to taxes or spending. Article I and the Sixteenth Amendment of the Constitution only authorize four types of taxes — excises, imposts, capitation taxes, and income taxes — and specify that Congress is the branch with power to levy these taxes. The Framers specifically wanted fiscal control in the hands of elected legislators. “No taxation without representation!” was the battle cry that helped precipitate the American Revolution. So three fiscal levers are exclusively in Congress’ hands: only Congress can tax, spend, or borrow. Congress’ control over the purse strings gives legislators leverage over the other branches. And the members of one congressional chamber — the House of Representatives — must stand before the people every other year, ensuring that those with taxing and spending power would be strictly accountable to the voters. But a “clean” BBA would change that. It would create a constitutional command. A private party with standing could ask a federal judge to remedy a violation of a clean BBA by ordering increases in taxes to close budgetary gaps, instead of spending cuts. Advocates of a clean BBA point out that with every provision in a BBA, it becomes harder to find the votes for a two-thirds supermajority needed to vote the BBA out of Congress and propose it to the states, where it would very likely be ratified in short order. Each of the provisions in the BBA currently proposed in Congress is there for a reason. The best version is Senate Joint Resolution 10 , the Hatch-Lee version, which has eleven sections. Section 8 of the BBA in S.J.R. 10 specifies that no federal or state court can order a revenue increase under this amendment. In other words, it leaves open the possibility that political gridlock between the elected branches might result in a court cutting federal spending, but never hiking taxes. This is critically important. Federal judges hold their offices for life to insulate them from politics so that they can faithfully uphold the Constitution and laws, even when extremely unpopular. This is especially vital when public outcry pushes Congress and the president to do something unconstitutional, leaving judges free to strike it down. But to grant judges the power to raise taxes would be antithetical to the constitutional design of political accountability for taxes. It would create a perverse incentive for members of Congress who wanted to raise taxes but were politically vulnerable to foster gridlock on spending battles, then let the courts do their dirty work for them by increasing taxes to make up the shortfall. So the bottom line is that the only type of “clean” BBA that should even be considered is a second variety. In addition to specifying that revenues must exceed spending, it must also retain the current Section 8 that no judge has power to raise taxes. America’s problem is our debt, not our debt ceiling. We desperately need a BBA to tackle our debt. But a BBA that allows judges to hike taxes would be even worse than the status quo. Given how horrible the status quo is, that’s quite a statement. Ken Blackwell and Ken Klukowski are on the faculty of Liberty University. They are the best selling authors of Resurgent: How Constitutional Conservatism Can Save America.

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Alec Baldwin: It’s Time to Suck It Up and Pay Our Bill

July 30, 2011

Working here in Rome the last two weeks has been a welcome break from the heat back home in New York, not to mention the sound of alarms going off throughout the U.S. media about the impending debt ceiling debacle. Reading websites and blogs about the possibility of the US defaulting on its debts for the first time in history, I’m reminded of the Clinton impeachment fiasco, which I also watched through the prism of overseas media while I was in South Africa for an extended trip in 1998. In the short 13-year period since Clinton’s great troubles, little of that partisan disgrace has figured much in the lives of its principal players. Hillary Clinton went on to soar in her own career as a senator, a vigorous combatant for her party’s presidential nomination and secretary of state. Her husband is still a political figure of enormous influence in the world, still admired nearly everywhere he goes and still married to his wife. Monica Lewinsky is a footnote, as most sex scandal femme fatales usually become (Christine Keeler, Donna Rice). The Clinton impeachment, when moral compasses like Henry Hyde, Newt Gingrich and Bill Bennett wanted us to relocate our outrage, was the last great rumble in the Beltway schoolyard, other than the bloodshed of an actual election, until now. Now, partisan hatred is viewed a sidearm everyone should have the right, if not the need, to carry. And on the Hill, everyone seems to be packing. However, did Americans really believe that this day would never come? Not the day of the Next Rumble. I mean the day America went broke. Americans are, by any reasonable measure, extraordinarily giving people. We have given trillions upon trillions of dollars of our nation’s wealth to the world’s poorer people. And not always with strategic military or economic goals attached. Here at home, we provide government assistance to flood victims. Americans beset by fire damage, tornados and hurricanes. You can smoke all of your life and walk into a government-funded hospital and ask your fellow Americans to save your life. You can make the poorest nutritional choices known to mankind and get diabetes medication paid for by the government. You can go hiking in some crazy-ass, remote part of some national park and certain, caring fellow Americans will attempt to find you. People pay a lot of money in taxes here in America, but still find ways to give billions privately every year to help fight disease, care for the elderly, teach painting and dance, conserve precious open spaces, give scholarships on behalf of their alma mater, or send Girl Scout cookies to the troops. Americans are caring. And what those who are opposed to raising the debt ceiling are essentially attempting to do is insist that we stop caring. That we stop doing one of the primary things that make this country what it is. That makes us who we are. This bill was coming and you knew it. And if you didn’t see it coming, then you should be very worried. Because you have a real problem. The war, brave men and women in the armed services aside, has been a disgraceful waste of this country’s time, spirit, blood and money. They used to call it “Guns and Butter.” Today, it’s drones and frappuccinos. And guess what? Both of those choices on opposite ends of that axis cost a hell of a lot more money than they used to. So we want to circumnavigate the globe in the most tricked-out military gear, sticking our energy-sucking straw into every oil reserve we can buy or battle over, and not raise the funds necessary here at home to pay for that? We want to defer the exorbitant, latter-day costs of all that energy binging, masquerading as democracy “preachifying”? Do you still actually believe that a gallon of gas costs you what it says at the pump? If so, why don’t you put a tooth under your pillow, and when you wake up, your tank will be full. How long did you think this could last? How much longer did you think a cadre of fully compromised, ethically bankrupt public officials would allow you to play in traffic before you got hit by the Reality Bus? We… owe… the money. We elected incompetent fools/rapacious petrogarchs to high office. We gave them a credit card. They maxed it out. They got several more and maxed those out, too. And we are the co-signers. Raise the debt ceiling, like every president has bitten the bullet and done. Raise taxes and take your medicine. You cared, innocently, about helping others. No shame in that. But simultaneously, you got married to a couple of idiots who blew all your money and left the whole family with nothing to show for it. Saddam’s dead? Osama’s dead? Is that gonna help you get a job? Pay your rent? Buy your kid some sneakers for school this fall? Wake up. We gotta suck it up. Pay this bill. And have loooooong talk about how we never get here again, while still maintaining our identity as a great country made up of great, caring people.

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White House, Republicans Clash As Debt Ceiling Deadline Looms

July 24, 2011

WASHINGTON — Scrambling to head off disaster, House Speaker John Boehner on Sunday readied a plan to prevent the first government default in U.S. history and said Republicans would act alone if Democrats didn’t go along. The White House said President Barack Obama would veto a plan that failed to extend the nation’s borrowing power into 2013 as time for action drew dangerously close. On a day of deepening tension, Boehner hoped to outline at least a framework of a deal by 4 p.m. EDT that could get through a divided Congress and avert panic before Asian financial markets opened hours later. The government is on pace to run out of money to pay its bills unless the debt cap is raised by Aug. 2. Boehner’s plan, still under negotiation on Capitol Hill, would likely cut spending by at least $1 trillion and extend the federal borrowing limit by a slightly smaller dollar amount, into 2012. That’s intended to get the nation beyond this crisis and snag enough votes from House Republicans who won’t raise the debt limit without spending cuts, too. “I would prefer to have a bipartisan approach to solve this problem. If that is not possible, I and my Republican colleagues in the House are prepared to move on our own,” said Boehner, R-Ohio. Deeper and more complex reductions in the nation’s deficits would be part of the deal, but under later timelines. White House chief of staff William Daley said Obama is insisting that any package must expand the debt ceiling beyond the next presidential and congressional elections and into 2013 to provide economic certainty. Daley said anything short would be a gimmick and prompt the world to say: “These people just can’t get their act together.” White House and congressional leaders talked past each other on the Sunday talks shows as negotiations unfolded in secrecy. “There will be a two-stage process. It’s just not physically possible to do all of this in one step,” Boehner said amid White House insistence that the debt limit be extended beyond 2012. “I know the president is worried about his next election. But, my God, shouldn’t he be worried about the country?” Boehner planned to update Republican House members at 4:30 p.m. EDT. Republican leaders called the rank-and-file back to Washington earlier than expected for the new work week and set a mid-afternoon Monday meeting to go over the debt-limit legislation. With an eye on the financial markets, Treasury Secretary Timothy Geithner insisted anew that United States would not default. “It’s just unthinkable,” Geithner said. “We never do that. It’s not going to happen.” The debt deal-making has consumed Washington for weeks and put on display a government that at times risks utter dysfunction. Even after talks about between Obama and Boehner broke down in spectacular fashion Friday, Geithner said the two men were still negotiating. He also suggested the ambitious framework the two leaders had discussed, targeting a deficit reduction of $4 trillion, remained under consideration. “I don’t know. It may be pretty hard to put Humpty Dumpty back together again,” Boehner said of that grand plan. “But my last offer is still out there. I have never taken my last offer off of the table and they never agreed to my last offer.” That last offer included $800 billion in new tax revenues as part of a broad reform that would lower tax rates. Obama wanted $400 billion more in tax revenue for deficit reduction to help balance out the spending cuts, he said. Or, if not that, a reduction in some of the proposed cuts being discussed to entitlement programs such as Medicare. The talks halted primarily over that issue and over how to ensure that both parties kept their reform promises in the months ahead. Staff members of the congressional leaders from both parties were working to come up with an emergency plan. Boehner said he wanted it a bipartisanship approach but was ready to move ahead if that didn’t happen. Any plan must get through the Democratic-run Senate, where Majority Leader Harry Reid, D-Nev., has called a short-term debt limit expansion unacceptable. Obama’s role looms, too. Asked if Obama would veto a plan that did not extend the government’s borrowing authority into 2013, Daley said, “Yes.” One key Republican lawmaker scoffed at the administration’s opposition to a debt-ceiling plan that doesn’t last into 2013. “I think that’s a ridiculous position because that’s what he’s going to get presented with,” said Sen. Tom Coburn, R-Okla. Under any scenario, Washington’s leaders have run themselves almost out of time. It will take days to move legislation through Congress. A default could cause catastrophic damage to the standing and the economy of the United States. Daley said, in fact, the consequences are already taking hold. “I don’t think there’s any question there’s been enormous damage done to our credit-worthiness around the world,” Daley said. Boehner appeared on “Fox News Sunday.” Geithner was on Fox, ABC’s “This Week” and CNN’s “State of the Union.” Daley and Coburn spoke on NBC’s “Meet the Press,” and Daley also appeared on CBS’ “Face the Nation.” ___ Associated Press writers Dave Espo, Alan Fram and Nedra Pickler contributed to this report.

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Consumer Prices Fall By Most In A Year

July 15, 2011

Consumer prices fell slightly more than expected in June to post their biggest drop in a year on weak gasoline costs, but underlying inflation pressures remain elevated. The Consumer Price Index fell 0.2 percent, the Labor Department said on Friday, the largest drop since June 2010, after rising 0.2 percent in May. Economists had expected prices to fall 0.1 percent. But stripping out food and energy, core CPI rose 0.3 percent after a similar gain in May and above economists’ expectations for a 0.2 percent increase. “We are getting a very, very sharp rebound in core inflation and much more than the Fed had bargained for. We will be at price stability and possibly through it before the end of this year,” said Eric Green, chief economist at TD Securities in New York. A separate report showed a gauge of manufacturing in New York State fell again in July. The New York Federal Reserve said its “Empire State” general business conditions index was at minus 3.76 from minus 7.79 in June. High inflation, driven by strong energy and food prices, undermined economic activity in first quarter, with growth slowing sharply to a 1.9 percent annual rate after a brisk 3.1 percent expansion in the final three months of 2010. The economy is believed to have grown by between 1.5 percent and 2 percent in the second quarter. Hopes of a stronger pick-up in growth during the July-September period have been dented somewhat by a weak labor market and retail sales in June. But abating commodity inflation pressures as energy prices decline, should put more money in the pockets of consumers who have been stretching to cover rising costs for gasoline and food. Federal Reserve Chairman Ben Bernanke said this week the U.S. central bank was prepared to act if growth falters further, but made it clear that Fed is not at that point yet. Bernanke noted that inflation was higher than in late 2010, when the Fed got ready for its $600 billion government bond- buying program, which ended in June. Gasoline prices dropped 6.8 percent, the largest decline since December 2008, after falling 2.0 percent in May. Food prices rose a moderate 0.2 percent after increasing 0.4 percent in May. But rising costs for housing, new vehicles, used trucks and apparel pushed up core inflation last month. Shelter costs rose 0.2 percent for a second straight month, while apparel prices jumped 1.4 percent, the largest increase since March 1990. Prices for new vehicles increased 0.6 percent last month, slowing from May’s 1.1 percent surge, likely reflecting an easing of auto shortages related to supply chain disruptions from Japan. Used cars and trucks jumped 1.6 percent, the largest increase since December 2009. In the 12 months to April, core CPI rose 1.6 percent after increasing 1.5 percent in May. Fed officials, however, would like to see that closer to 2 percent. Overall consumer prices were up 3.6 percent from a year earlier, after rising 3.6 percent in May. (Reporting by Lucia Mutikani; Editing by Neil Stempleman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Illegal Cash-Back Deals Worsened The Housing Bubble: Report

July 15, 2011

It’s a tactic that’s been in use for years : Sell a house to someone at an inflated price, but offer the buyer an incentive to take it — like a few thousand dollars in cash back. This maneuver puts extra money in the homeowner’s pocket. But it can make her more likely to experience foreclosure down the line, according to a new report. And because it involves buyers and sellers transferring money without informing the lender — and exposing the lender to risk they don’t know about — it’s also a form of mortgage fraud, and therefore illegal. In a study recently published in American Economic Journal: Applied Economics , Itzhak Ben-David, an assistant professor of finance at Ohio State University’s Fisher College of Business, offers a thorough look at how inflated housing prices and cash-back incentives took a toll on homeowners in Illinois’s Cook County, which includes Chicago. Ben-David examined more than 700,000 home sales in Cook County, spanning January 1995 to April 2008. He zeroed in on suggestive language in the real estate listings — like “Let’s talk about cash back at closing!!!”; “$10,000 back with full price”; and “Free car with full price” — that indicated price inflation was taking place. What he found was that these deals represented between 2.9 and 4.4 percent of all the transactions in that 13-year period — although in the years between 2005 and 2008, they might have accounted for as many as 6.1 percent. Residents of Arizona, Florida, and California, where cash-back deals were common during the height of the housing bubble, might not be surprised to learn how prevalent this practice was in Cook County. In 2007, a broker at a Phoenix realty company predicted to The Arizona Republic that cash-back deals “will hurt everyone in the industry and the housing market.” The same year, San Diego Magazine reported on the increasing incidence of cash-back deals in California — and in the country at large. And a few months later, The Palm Beach Post reported that so-called “cash back at closing” deals were “going on in every neighborhood in Palm Beach County,” in the words of one local detective . In Cook County, the deals didn’t work out so well for homeowners. Ben-David found that among highly leveraged borrowers — those who’d borrowed more than 80 percent of the home price — foreclosure rates were between 0.6 and 3.9 percent higher during the first year for borrowers who’d agreed to an inflated price. Such transactions may have had a ripple effect into other home sales. A report from the Government Accountability Office, released Wednesday, noted that one of the most common methods home appraisers use to determine the value of a house — the so-called “sales comparison approach,” in which a value is set based on the prices that other, similar properties have recently sold for — is sometimes susceptible to a feedback effect. The GAO report states : One criticism of the sales comparison approach is that it may perpetuate price trends in overheated (or depressed) markets. For example, the use of comparable sales with inflated sales prices (driven up by factors that increase consumer demand, such as expanded credit availability) can lead to progressively higher market valuations for other properties, which in turn become comparables for future sales transactions. This echoes a point Ben-David made about the collateral effects of cash-back deals in a press release accompanying his study. “These inflated price transactions increased the general level of prices in the neighborhood,” Ben-David said, “so that, after the boom, when houses returned to their original values, the crash was more severe.”

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Robert Teitelman: Thomas Friedman Discovers Reinvention Again

July 14, 2011

Must be summer over at The New York Times . Outside the sleek curtain walls, the debt ceiling and the euro-zone mess fuels thoughts of economic apocalypse, the Arab Spring lumbers on, and the implosion of News Corporation in London is the most deliciously spectacular scandal in years. And what are the regular pundits on the Times’ op-ed writing about? Maureen Dowd tackles Nazis and their penchant for dogs , and Thomas Friedman tells us all, once again , that we all have to imitate Silicon Valley and plunge into the free agent, reinvention, entrepreneurial lifestyle. Both columns cite the kind of books you flip through this time of year. There’s little to be said about the Dowd column, except: What’s the damn point? Who the hell cares? This is an op-ed? But it’s Friedman that pops already overloaded, heat-stressed circuits. This is what the World’s Greatest Columnist can come up with in the middle of the week? We’ve been hearing this sermonette about career reinvention not only from the persistent Friedman for years — too many years — but it’s been a commonplace of American life for, conservatively speaking, two decades now, probably more. Daniel Pink wrote ” Free Agent Nation ” in the late ’90s, just as the dot-com bubble was peaking (it seemed less pressing after the bust, but it still retains a certain validity); before that it was a business magazine staple; before that it was the kind of idea Peter Drucker and the business schools liked to chew over. The notion that Americans can’t really make career plans that work out quite right is about as obvious as the notion that economists have trouble forecasting accurately. We know that! We’ve known that for years! The folks who don’t know that are adolescents, rich people and apparently Friedman who can do (or imagine) just what they damn please. The rest of us have more problematic futures. Were jobs, blue collar and white, somewhat more stable, say, a half-century ago? Yeah, but I suspect less so than the mythology suggests. Crap happens in life. Feelings change. Decisions are made and remade. This was supposed to be the genius of those flexible American labor markets; this was why we killed off unions. From the day I started working in the late ’70s — the oil crisis was full blown — folks have been saying: Sonny, you better not get comfy. Think reinvention. Ever consider PR? Not long after that, employers began peddling defined-contribution plans to employees. There were lots of reasons for that — they were cheaper for companies than defined-benefit plans — but the stated purpose was portability. People were job-hopping; companies were restructuring more regularly; unions were fading; loyalty was so yesterday. (Not to get all pointy-headed, but Christopher Lasch published ” The Culture of Narcissism ” in 1979.) If we weren’t going to be bereft of funds in retirement — and Social Security has looked creaky since the day I started working — we better have some assets we could carry with us. That occurred in the early to mid-’80s. But it’s not just that Friedman is a little late to this realization, it’s his tone of neo-Victorian moral condescension, that wheedling, whining schoolmarm-on-a-laptop tone of his that drives me beserko. Should we all be like those engineers that work at social media companies? Maybe we can’t do math. Maybe we hate computers. Maybe we live in, say, Michigan. Maybe we have all kinds of problems. Besides, does he really think that every worker at LinkedIn is a friggin’ entrepreneurial genius? I suspect that LinkedIn has as many time-wasters, bullshitters and office politicians as other places, including The New York Times. Just because the “product” is successful — and who knows what next month or next year will bring, remember how well those Nazis did for a while — does not mean everyone who works there is some paragon. Chronic job-hopping isn’t necessarily good for the company, Silicon Valley or the nation. Yes, it is a symptom of entrepreneurial activity, but what’s left behind as the dust settles? Do we want to live in a continual dust storm? Could Apple have been Apple if the company didn’t retain a core group of geniuses, including Steve Jobs? How can you even consider a project that takes more than a quarter or two if folks up and leave at the first chance to try something new? My favorite part of Friedman’s lecture is when he waxes poetically on the wonders of Silicon Valley companies that review employees quarterly. “Today’s college grads need to be aware that the rising trend in Silicon Valley is to evaluate employees every quarter [his ham-fisted italics], not annually. Because the merger of globalization and the I.T. revolution means new products are being phased in and out so fast that companies cannot afford to wait until the end of the year to figure out whether the team leader is doing a good job.” The language here is quaint: need to be aware; a rising trend. Japan was a rising trend once. So were Rebekah Brooks and Chairman Mao. I’m also still trying to find the verb in that last sentence. Maybe he’s typing too fast. Globalization, no? Murdoch’s on his tail. Anyway, one can imagine a company where quarterly reviews are necessary, particularly those that require production of new features, apps, extensions, generations. But the notion that companies are imagining and producing truly new products annually is a lunatic exaggeration. And how destructive is this? What use is the quarterly review, except as a colossal, even Orwellian, bureaucratic time sucker or excuse for power plays? Is Friedman himself — or Dowd for that matter — eager to be reviewed every three months by some pale-faced editor? Has it dawned on Friedman that this kind of speedup, which is reflected in so many aspects of modern life including the stock market, may be a source of our deeper woes? This kind of speedup, with its affiliated traits of high compensation and job volatility, was exactly the model that Wall Street adopted as it swung to a public market structure. Quarterly earnings prevailed. Performers got enormously well paid; nonperformers found themselves looking for work. Loyalties declined; talent was still hard to judge because no one’s perfect, politics were omnipresent, and judging these things was as much a science as necromancy. The end result was not a paradise of productivity and prosperity, but the mortgage crisis. Don’t put your head up and look around. Don’t think. Just shove out product. You’re only as good as your last quarter. And folks wonder how these things, including the dot-com bubble, happen. Friedman ends by letting LinkedIn founder Reid Garrett Hoffman, “one of the premier starter-uppers in Silicon Valley,” to lead the last hymn on the wonders of networking. You know this is an exercise in casuistry or nostalgia when Hoffman tosses around the phrase “old paradigm,” meaning lifetime employment (it might also suggest where Friedman got the rest of the column, if he hadn’t used it himself many times before). The fact is, as Friedman admits, Hoffman has a book touting this notion of constant career change coming out next year (ham-fisted italics mine), which makes sense, since in pushing these well-worn ideas, he is essentially promoting, ta-dah, LinkedIn, a tool for networking. You can’t blame Hoffman for trying. You can blame Friedman for foisting this moldy set of unrealistic and creepy ideas upon us.

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U.S. Put On Review For Possible Rating Downgrade

July 13, 2011

Because of the “rising possibility” that Congress will not soon approve a deal to raise the debt limit, Moody’s Investors Service has reportedly put the U.S. on review for a possible credit rating downgrade, according to Bloomberg . From the Moody’s statement : Moody’s Investors Service has placed the Aaa bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations. On June 2, Moody’s had announced that a rating review would be likely in mid July unless there was meaningful progress in negotiations to raise the debt limit. In conjunction with this action, Moody’s has placed on review for possible downgrade the Aaa ratings of financial institutions directly linked to the US government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks. We have also placed on review for possible downgrade securities either guaranteed by, backed by collateral securities issued by, or otherwise directly linked to the US government or the affected financial institutions. From Reuters : NEW YORK (Walter Brandimarte and Daniel Bases) – The United States may lose its top-notch credit rating in the next few weeks if lawmakers fail to increase the country’s debt ceiling, forcing the government to miss debt payments, Moody’s Investors Service warned on Wednesday. Moody’s was the first among the big-three rating agencies to place the United States’ Aaa rating on review for a possible downgrade, which means a negative rating action is impending. In a statement, Moody’s said it sees a “rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on U.S. Treasury debt obligations.” Check here for additional debt ceiling updates.

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Recession Cost Average American $7,300, Fed Economist Says

July 12, 2011

The recession that struck the U.S. in 2007 has cost consumers about $7,300 each in lost spending, according to a San Francisco Federal Reserve economist. In a paper published Monday, Kevin Lansing, a senior economist at the Federal Reserve Bank of San Francisco, wrote that if personal consumption had continued on from December 2007 to the present day at the same rates that it occurred from 2000 to 2007, Americans would have each spent an extra $7,356 by now. Taken over a period of 42 months, that’s about $175 in lost spending per month, Lansing writes. However, it’s not necessarily true that personal consumption should have continued on at pre-2008 rates. That kind of spending was symptomatic of a bubble economy, Lansing notes in the paper, and “was bound to slow sooner or later.” The climbing rates of consumption may not have been “economically desirable,” he writes, in part because Americans were saving so little and taking on so much debt. And much of that spending was made possible by “unsound lending practices,” which have since come under scrutiny. In an interview with Bloomberg, Lansing said the pre-recession spending reflected an “artificial economy that was driven by debt.” Real consumer spending took a nosedive in December 2007, the official start of the recession, which was declared to have ended in June 2009. Lansing points out that after the recession of 1990-91, personal consumption took 23 months to recover to pre-recession levels; by contract, current personal consumption is still 1.6 percent below its pre-recession peak, 42 months later. Last month, the U.S. Department of Commerce reported that month-over-month consumer spending rates were virtually unchanged in May, making for the weakest month in spending since September 2009. It was suggested that inflation, particularly in the form of high gas prices, accounted for the slowdown in spending. And it seems as though spending remained sluggish during June, according to economist forecasts showing that retail sales probably stagnated during that month. The Commerce Department will release its figures for June on Thursday. In his report, Lansing notes that policymakers might have done more to address the housing bubble while it was happening. In particular, he cites monetary policy as an instrument central banks can use to prevent harmful deflation. Lansing writes that interest rate policy could have “a distinct advantage” over regulatory measures “because vigilant central bankers can deploy it against bubbles regardless of the regulatory environment.” Given the costly results of the housing-bubble burst, Lansing writes, “the case for preemptive action against bubbles may be strong indeed.”

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Foxes Guarding The Henhouse? Auditors Criticize Self-Regulation Of Hedge Funds

July 11, 2011

Allowing the hedge fund and private equity fund industry to regulate itself might not be very effective, according to a new Government Accountability Office audit released Monday . Since the Securities and Exchange Commission lacks adequate resources to police the sector, the GAO was tasked under the Dodd-Frank Act with determining the feasibility of forming a self-regulatory organization to provide primary oversight of private fund advisers. Though such an SRO could supplement oversight, it presents challenges and trade-offs, according to the report. By “fragmenting regulation between advisers that advise private funds and those that do not, a private fund adviser SRO could lead to regulatory gaps, duplication and inconsistencies,” concluded the GAO. Some of the disadvantages of a private fund adviser SRO include its potential to (1) increase the overall cost of regulation by adding another layer of oversight; (2) create conflicts of interest, in part because of the possibility for self-regulation to favor the interests of the industry over the interests of investors and the public; and (3) limit transparency and accountability, as the SRO would be accountable primarily to its members rather than to Congress or the public. Treasury Deputy Secretary Neal Wolin offered a vigorous defense of Dodd-Frank in Politico, warning that to carry out the reforms effectively, “we need to make sure regulators have the resources they need to do their jobs.” Warren Heads Back Into The Lion’s Den Elizabeth Warren, the presidential adviser who temporarily heads the Consumer Financial Protection Bureau, heads back to the lion’s den on Thursday — to testify before the House Oversight Committee. At the close of her last appearance before the committee, Rep. Patrick McHenry (R-N.C.) accused her of lying during a YouTube-worthy exchange about how much time she would be testifying. As iWatchNews.com notes, the hearing to be led by Chairman Darrell Issa (R-Calif.) is ominously titled, “”Consumer Financial Protection Efforts: Answers Needed.” Elsewhere in the world of financial regulatory reform, Monday is the deadline for public comments on a proposal to set margin and capital requirements for swap dealers and traders, and on an SEC proposal to raise the threshold at which investment advisers can charge a performance fee. ‘Fracking’ Wastewater Ruins National Forest Wastewater from natural gas hydrofracturing — known as “fracking” — decimated a national forest in West Virginia, according to a new study by a U.S. Forest Service researcher. The fracking fluids killed more than half of the trees and caused radical changes in soil chemistry in a quarter-acre section of the Fernow Experimental Forest in the Monongahela National Forest, reported Public Employees for Environmental Responsibility . The study found the following effects of the application of 75,000 gallons of fracking fluids over a two-day period in June 2008: • Within two days all ground plants were dead; • Within 10 days, leaves of trees began to turn brown. Within two years more than half of the approximately 150 trees were dead; and • “Surface soil concentrations of sodium and chloride increased 50-fold as a result of the land application of hydrofracturing fluids…” These elevated levels eventually declined as chemical leached off-site. The exact chemical composition of these fluids is not known because the chemical formula is classified as confidential proprietary information. SEC Slow to Police Problems at U.S.-Listed Chinese Companies After the SEC promised to overhaul and beef up its enforcement in the wake of the Bernie Madoff scandal, the agency been caught flat-footed with mounting problems at U.S.-listed Chinese companies. Since March, more than two dozen companies have announced auditor resignations or accounting problems, reported Reuters . Yet the SEC has been slow to respond, say critics, taking too long to tighten oversight of U.S. shell companies acquired by Chinese firms through “reverse mergers,” which allow the companies to avoid initial public offerings. Part of the problem is that such mergers fall under state law. This week, SEC officials are in China trying to get Chinese auditors access to inspect such companies. How Big Pharma Cornered Market On Asthma Inhalers Today’s must-read: how pharmaceutical companies took advantage of the 1987 ban on the use of ozone-depleting chlorofluorocarbons to corner the market on CFC-free asthma inhalers — squeezing out competitors and raising prices. Mother Jones’ Nick Bauman reports: Many of the patents for the new inhalers won’t expire for another six years, so there likely won’t be any generics until then, unless the patents are challenged in court. The switch to the new inhalers will cost American consumers, insurance companies, and the government some $8 billion by 2017, according to FDA estimates. That’s money in the drug companies’ pockets. In 2007, a top market-research firm alerted investors that the US inhaler market “will soon change from low-value to significant.” Sure enough, at nearly $1 billion a year, sales of the market-leading inhaler, ProAir, now rival Viagra’s. The FDIC vs. Forbes After Forbes published a tough piece on the Federal Deposition Insurance Corporation’s outgoing director, Sheila Bair, the agency’s counsel penned a sharp retort, calling the editorial “more personal attack than commentary.” That of course prompted editorial co-author Vern McKinley to write his own reply to the reply. It’s not exactly as scintillating as the volleys between Nadal and Djokovic at Wimbledon, but here’s the back and forth . Meanwhile, Bair will have plenty of space to vent in her upcoming book for the Free Press. In a proposal obtained by the New York Times , she wrote: “I will share perspectives on the problems of regulatory capture and the continuing reluctance of bank regulators to fully acknowledge current problems in the financial sector, which are substantial.” The Goat Watching Over The Lettuce Patch A 14-year-old program in Puerto Rico that allows companies to regulate themselves on workplace health and safety issues may not be adequately protecting the workers, reported the Centro de Periodismo Investigativo. Since 1997, the program has resulted in only two findings of a serious nature — one involved a non-work-related death in a parking lot of a company and a second incident, which was resolved outside of court and is confidential. CPI reports : Think it sounds too good to be true? Well, maybe that is precisely the problem with the Voluntary Protection Programs (VPP) – that it contradicts its own definition because it leaves in the hands of employers the establishment of health and safety parameters, with the supposed participation of the workers, and far from the eye of the state’s regulatory agencies. All of this in exchange for less inspections and exemption from fines in the majority of cases.

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Jane White: Surprise, Surprise! Folks in Highly Taxed Countries Are Happier Than Americans!

July 11, 2011

After the OECD created the Better Life Index to discern which are the happiest countries in the world an organization known as 24-7 Wall St. cherry-picked the list to narrow down those countries with the highest economic stability. Most likely, says MSNBC , “the happiest people in the developed world get loads of social services without having to work too hard.” Or maybe these lucky folks not only don’t have to pay for these services, more of them actually have jobs. With the exception of Canada and Israel, every country on 24-7 Wall St.’s list features a much higher top income tax rate than ours — currently 35% — and a value-added, or VAT, tax. What’s more, despite the fact that the Tea Party regards high taxes as job killers, all these countries also feature lower unemployment rates than that of the U.S. Below are graphs of seven of the nine “happiest countries,” along with their top tax rates and VAT taxes compared to the U.S. Highly Taxed Countries Actually Employ More People Source: Retirement-Solutions.us/taxes.html As even conservative commentator David Frum admits, Americans may hate taxes but even the right wingnuts will raise hell if someone dares mess with the benefits these taxes provide, like Medicare, as evidenced by the recent Democratic Congressional victory in upstate New York. As Frum put it , Rep. Paul Ryan’s crazy plan to “privatize” Medicare would result in senior citizens “paying two-thirds of their health coverage out of pocket by 2030″ according to the Congressional Budget Office. When you think about it, when it comes to “net worth” Americans are likely the poorest in the advanced world. Why? Because many life necessities that are subsidized by rich taxpayers in other countries are mostly paid out of pocket by Americans. From college education to health care to retirement, we bankroll more of these costs than any of our peers. American companies also get tax deductions which deprive the government of revenue. According to David Leonhardt of the New York Times , employer deductions for health care and 401(k) contributions alone cost the government more than $316 billion a year. As for potential revenues generated by a VAT, an Urban-Brookings Tax Policy Center paper released last year concluded that a VAT of only 5% on most purchased items would produce $258.6 billion in revenues in 2012, erasing a big chunk of our $1.3 trillion deficit. The question is why are we tip-toeing around a VAT of only 5%? Five of the seven “happy” countries in the graphs have VATs of 25% or more. Instead of just whining about our federal deficits, we ought to calculate how big a VAT or higher income taxes are needed to address our personal deficits that, among other things, result in Americans footing most of the bill for a college education. My goal would be to raise enough taxes to quadruple individual Pell Grants from around $5,000 a year — covering only about one fourth of the cost of a state college and one-eighth of the tab at a private university. Wonder why tax increases on the top bracket aren’t even on the political table? As I’ve pointed out before, it’s Grover Norquist’s hijacking of Congress. As Bloomberg BusinessWeek put it , 233 of the 240 House Republicans and 40 of the 47 Republican senators have signed Norquist’s so-called Taxpayer Protection Pledge. The good news is that progressives are finally mobilizing their base to demand higher taxes on the rich so that everybody else will prosper. As Huffington Post reporter Michael McAuliff observed last week, a poll commissioned by MoveOn.org and the Progressive Change Campaign Committee found that 80% of voters in the following swing states: Ohio, Missouri, Montana and Minnesota back raising taxes on folks making more than $1 million. Hear that, Michele Bachmann? Majority Leader Harry Reid has called for a vote on doing so and the liberal groups sent out a blast email asking members to contact their senators to back the resolution. If you agree, I’d urge you to do the same.

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David M. Abromowitz: Titanic Economics

July 9, 2011

When the Titanic was sinking, first class passengers got the lifeboats and the rest were left to fend for themselves. Listening to the economic plans of leading Republicans, the Titanic approach still appears to reign over conservative rhetoric a century later. Of course, some might argue it was only fair for first class passengers to get the best treatment. After all, their $4,000 tickets (costing roughly $100,000 in today’s dollars) paid for the lion’s share of the voyage. And as the job creators for the crew, didn’t they deserve to be protected first? To carry the analogy to today’s economic debate a bit further: Consider that Titanic was designed and piloted to fit the desires of the strata of society accumulating vast amounts of wealth. No expense was spared at creating a ship of luxury, but it was one equipped to be short on safety in case of disaster. And everyone was told this ship was unsinkable, so only doomsayers would argue for more lifeboats or better rescue options. But icebergs — like bursting financial bubbles — happen. And when disaster strikes, how those at the top react often impacts those at the bottom far more, and far longer. Some see it as fair that limited lifeboats go to the privileged, and also that limited money for bailouts and economic recovery seems to flow most to those who already started out with vast resources. The actual Titanic never recovered from its disaster. But imagine if instead, some of the passengers who could not board the lifeboats had gotten together, chosen Captain Obama to take command, and had managed to patch up the ship enough to stop it from slipping all the way under. Saving the ship from sinking required charting a different course than the one preferred by the first class passengers, whose preferences prevailed before disaster struck. It even required some extreme measures — including borrowing materials from other passing ships to patch the holes. Then, imagine further that after the ship was stabilized and no longer likely to sink, first class passengers came rowing back in their lifeboats. And instead of acknowledging that total disaster was averted, the first class passengers started criticizing the new captain for taking on debt to other ships, claiming that because the ship was listing half underwater, Obama’s actions had made the situation worse. The Titanic did not collide with an iceberg because the average deckhand or second class passenger was being reckless. The hubris of those who built her without knowing her limits, and piloted her into treacherous waters, brought everyone into danger. And the U.S. economy did not come near collapse because the average homeowner borrowed to stay afloat. The hubris of those who built a systemically risky subprime mortgage financing machine, and steered the economy without adequate safeguards, brought us all into economic danger. The choices being made today by leaders in Washington will determine if the titanic U.S. economy stays afloat or sinks further underwater. More importantly, choices that tilt in favor of the wealthy, who can weather troubled economic waters so far, would come at the expense of those who are most vulnerable. So it is vital that those leaders should not repeat a failed approach. Decades of rhetoric and policy that at bottom are based on class-based ideology — putting the priorities of the most privileged Americans first, while telling everyone else they are adrift on their own — has not produced a healthy economic climate. Nor will cutting deeply only programs like unemployment, housing, education, health care, transportation and other so-called discretionary budget items, without raising more revenue through closing tax loopholes or letting the Bush tax cuts expire, magically produce a stronger economy in the coming decades. Unfortunately, the approach Republicans are still bringing to the table at bottom takes the financial lifeboats away from struggling American families and hands those lifeboats over to the already-well-off. Conservatives can assert over and over that the already-well-off will then invite the less-well-off into the lifeboats, but a decade of experience with the lowest tax burden on the rich in generations proves those assertions false. It is time to change course, and to abandon Titanic economics. There are no “job creators” without job doers, and no wealth is created without buyers capable of buying whatever is produced. Instead, in a crisis like the one facing America today, more survive if everyone is asked to contribute to the solution to the fullest of their ability. David M. Abromowitz is a Senior Fellow at the Center for American Progress, www.americanprogress.org.

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Catholics Look Into Buying Crystal Cathedral

July 8, 2011

By Adelle M. Banks Religion News Service (RNS) The Crystal Cathedral, which has put its iconic campus up for sale to end a bankruptcy crisis, has an interested party that needs a large cathedral: the Roman Catholic Diocese of Orange, Calif. The diocese — the nation’s 11th largest — does not have its own cathedral but has studied the option to build one in nearby Santa Ana, Calif. While that study is ongoing, “it is prudent to evaluate the opportunity to engage in the pending auction of this property and to mitigate the chance that it cease to function as a place of worship, if acquired by others,” said Orange Bishop Tod Brown in a Wednesday (July 6) statement. Marc Winthrop, the lawyer representing the Crystal Cathedral in its bankruptcy case, told the Orange County Register that inquiries from various parties are coming in daily. “The diocese would obviously buy the property to use it for themselves, which will be a big impediment as far as the Crystal Cathedral is concerned,” he told the newspaper. Other prospective buyers — including a development company and nearby Chapman University — plan to offer the cathedral a leaseback program that would allow it to continue worship services in the renowned glass-walled edifice. In recent years, the church has been mired in family, leadership and financial problems. It owed $7.5 million to creditors when it filed for bankruptcy protection last October. On Monday, it announced that founder Robert H. Schuller had been removed from a voting position on its board.

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Top Democrat: GOP Tax Argument Flawed

July 5, 2011

WASHINGTON — A leading House Democrat thinks members of Congress could reach a deal to avoid a government default if they could get past the semantics of tax increases. Rep. Jim Clyburn of South Carolina tells MSNBC one of the biggest obstacles in talks to resolve the issue is that many Republicans consider closing tax loopholes to be the same as raising taxes. This is a problem, he says, because most House Republicans have signed a no-new-taxes pledge. Clyburn says a short-term deal to avoid default on Aug. 2 might be the only viable option “if we can’t get a longer term deal.” The veteran congressman adds: “If you consider closing loopholes raising taxes, that keeps us from having a good conversation about where to go from here. And that’s the problem.”

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American Towns Fight To Fund Cancelled Fireworks Shows

July 3, 2011

Fourth of July has come to be best represented by the fireworks that light up the skies of American cities. But this year, many celebrations across the country will have none of the pop, fizz and bang of years past. With tax revenues down, many cities just can’t fit them into the budget . For some towns in Massachusetts, Missouri and Texas, opting against fireworks this year has to do more with natural disasters, including floods, tornadoes and droughts, than anything else. But for many others, it is budget cuts, not poor weather, that will inhibit the Independence Day event. Smaller cities and towns especially lack the resources for fireworks shows. The city of Lehigh Acres, Florida has cancelled its show , as have several towns in Coachella Valley, California. In these cases, like many others, the money just wasn’t there, or needed to be used for more urgent needs, like food and financial outreach programs. And it’s not just small towns, either. Even bigger cities like Chicago and Cincinnati can’t afford fireworks displays, which typically run from $7,500 for smaller local shows to up to millions of dollars for huge multi-day events. For some, though, the possibility of having a fireworks display now lays in the hands of the corporations willing to sponsor them. Residents of New Britain, Connecticut, for example, were so disappointed with this year’s planned cancellation that they rallied around Liberty Mutual’s ” Bring Back the 4th ” contest, which offered $10,000 fireworks grants to the 10 towns that most participated. New Britain ended up one of the contest winners and, in the process of drumming up support, amassed around another $40,000 in personal and organizational donations, leading them to exceed the budget for last year’s display, FOX Business reports. For Falls Church, Virginia, thrift has been the answer. Instead of looking for outside donations, the town was able to keep its fireworks by scaling back other special town events happening this summer. It’s unclear what effect the lack of publicly-funded fireworks will have on the companies who put them on. Most of the revenue of fireworks companies comes from privately-funded clients. Zambelli Fireworks, founded in 1893, gets 60 to 65 percent of its business from companies and private organizations, FOX Business reports. However, one fireworks company who’s been in the business for about 20 years says it’s feeling the burn this year more than ever. Dan Miller, senior vice president for Indiana-based Mad Bomber Fireworks Productions, estimated in Chicago area paper The Courier-News that business is down by about 10 percent compared to three years ago. Budget cuts, corporate sponsors and sales revenue aside, towns with cancelled fireworks will likely feel that they’ve missed out on an important community building activity this year. Maybe that’s why so many went to such lengths to save them. “At the end of the display, you can look out and see all that individual attention focused on the show.” Miller is quoted in The Courier-News . “What else can you do where you make that many people happy at one time?”

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Nearly Half of Americans Exempt From Federal Income Tax

June 28, 2011

Nearly half of American tax filers will pay no federal income taxes this year, according to data released by the Tax Policy Center . Some 76 million tax filers, or 46.4 percent of the total, will be exempt from federal income tax in 2011. But with the help of the government, a similar percentage of filers — many of them among the bottom 40 percent of earners — have legally avoided paying federal income tax for the past several years. More than half the filers exempt from federal income tax in 2011 are in the lowest income quintile, meaning they make less than 80 percent of the country. As Bruce Bartlett at The New York Times notes, those in the bottom quintile have incomes of less than $16,812 . There are 40.7 million nonpayers in this group — about 93.3 percent of the quintile, and 53.6 percent of all nonpayers overall. Nonpayers are well represented in the second-lowest quintile, as well: That group includes 22.2 million filers who won’t pay federal income taxes this year. This is 60.3 percent of the quintile and 29.2 percent of the total number of nonpayers. The phenomenon of low-earning Americans escaping the federal income tax burden isn’t a new one. In 2002, The Wall Street Journal coined the term “lucky duckies” to describe people who were exempt from income tax because they didn’t make enough money. That phrase, unfortunately for the WSJ , attracted no end of ridicule, from the NYT , The New Republic , and elsewhere. “Had the editors ever met a person of little means?” wondered Farhad Majoo at Salon . “Did they realize that being poor, while perhaps an attractive tax shelter, tended to come with such hard-to-bear downsides as not knowing where your next meal will come from?” In most cases, tax filers who don’t pay federal income tax are still on the hook for other taxes. They can still be responsible for payroll taxes, withheld from their paychecks, and for excise taxes on gasoline, tobacco, alcohol, and other goods. And they may have to pay income tax at the state or local level. Many filers exempt from federal income tax are the beneficiaries of programs aimed at helping the working poor. At the NYT , Bruce Bartlett points out that between 2000 and 2008, during the presidency of George W. Bush, the percentage of filers who paid no federal income tax rose from 25.2 percent to 36.3 percent. During this time, Bartlett says, Republicans added a significant child credit to the tax code, resulting in a rise in nonpayers. In fact, the number of filers paying no federal income tax has hovered between 40 and 50 percent for the past several years. In 2010, 45 percent of households paid no federal income tax , according to the Tax Policy Center. In 2009, it was about 47 percent . In 2008, 49 percent were exempt from federal income tax. All in all, according to the Tax Policy Center, there will be 76 million nonpaying “tax units” in 2011. The Center defines a tax unit as “an individual, or a married couple who file a tax return jointly, along with all dependents of that individual or married couple.” And not all of those tax units represent the working class. Nine million nonpayers, or 12.8 percent of the total, are in the middle income quintile. Another 1.9 million — 2.6 percent of the total — are in the second-highest quintile, and some 443,000, or 0.6 percent of the total, are in the top quintile. The Tax Policy Center breaks down that last number a bit further : There are 78,000 non-paying units in the top 95th to 99th income percentile, 24,000 in the top 1 percentile, and 3,000 in the top tenth of a percentile. This group has a nickname, too: they’re the HINTs, for high income, no taxes . These might be people who get their income from tax-exempt bonds or overseas sources , as CNN reported last year. Or they might be people who have incurred losses from partnerships or S Corporations. Or people who have run up “extraordinary” medical or dental bills. As The Fiscal Times noted in December, these are other ways to realize one’s HINT status . And as The Fiscal Times notes, they’re all “perfectly legal.”

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Democrats Slam GOP As ‘Clueless’ On Debt

June 28, 2011

WASHINGTON — Republicans are clueless about the economic devastation they are courting with brinksmanship over raising the nation’s debt limit, Democrats charged Tuesday. Senate Majority Leader Harry Reid (D-Nev.) leveled the charge in his floor speech Tuesday morning, and his office followed with a press release pointing to a list of influential business leaders and economists who warn that the U.S. government’s failure to pay its bills would spark a new financial catastrophe. “Failure to avert this crisis would have dire consequences,” Reid said. “It would result in the most serious financial crisis this country has ever faced. Millions of Americans could lose their jobs. Social Security checks could stop. So could paychecks to our troops.” Reid argued that the GOP was willing to risk those financial hardships in order to protect subsidies for the oil industry and tax breaks for corporate jets. Soon after he fired that broadside, Reid’s policy shop pointed to a Tuesday morning discussion between MSNBC’s Joe Scarborough and two top Republicans — presidential contender Tim Pawlenty, the former governor of Minnesota, and Republican Party Chairman Reince Preibus. Pawlenty and Preibus had said they did not know what to expect from a default: Scarborough : What’s the impact if it’s not raised? Pawlenty : Well, we don’t know that. Scarborough : Well, I don’t know what’s going to happen to me if I jump off a cliff. But I think I’ll go splat. Preibus had a similar view: Scarborough : What do you believe, though? Do you believe that if we don’t raise the debt ceiling the economy will just keep chugging along normally or do you believe it will cause a financial crisis? Preibus : You know, I don’t know, because we’ve never been there before, Joe. Reid’s team noted that numerous economists, business leaders and Republican leaders have warned of disaster if the nation’s spending cap — now set at $14.3 trillion — is not raised by early August. Under a release titled “REPUBLICAN LEADERS CLUELESS ON THE CONSEQUENCES OF DEFAULT” Democratic Policy and Communications Center spokesman Brian Fallon named several of those who have been warning of the consequences of default. “While [Pawlenty and Preibus] may be at a loss to explain the consequences of a failure to raise the debt limit, many business leaders and fellow Republicans know the dire consequences of a failure to raise the debt limit,” the release said. Among those singled out were Warren Buffett, who said not raising the limit would be ” asinine ;” Republican elder statesmen James Baker , who backed the hike, and JP Morgan Chase boss Jamie Dimon, who echoed Treasury Secretary Tim Geithner in saying a default would be ” catastrophic .” Despite the Democrats’ criticism of Republicans, Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.) was unimpressed with Reid’s own plan to reduce the deficit, citing a list of tax cuts Reid had mentioned and arguing that Democrats want to hike taxes a lot more. “The point is, Sens. Reid and [New York's Chuck] Schumer complained this morning that Sen. McConnell doesn’t support the Democrat plan to raise hundreds of billions in new tax hikes on job creators in the middle of an employment crisis,” Stewart said. “They’re correct: Sen. McConnell does not support hundreds of billions in new tax hikes on job creators. He agrees with what the President said last year — tax hikes in a down economy will make matters worse and slow job growth.” Stewart was referring to Obama’s decision to extend the Bush-era tax cuts for the wealthy for two years. He also argued the money saved by ending the breaks for oil companies would not be nearly enough to eliminate the deficit, and suggested Democrats should offer their full list of tax hikes or revenue raisers. Fallon said the Obama administration has offered McConnell and Republican leaders hundreds of billions of dollars worth of choices to raise revenue, and all were turned down.

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George Soros: Country Leaving Euro Currency ‘Probably Inevitable’

June 26, 2011

VIENNA – Billionaire investor George Soros thinks a country will eventually exit the euro zone and urged policymakers on Sunday to come up with a “plan B” that could rescue the European Union from looming economic collapse. Soros, famous for making $1 billion by betting against the British pound in 1992, did not name any country he thought might exit the currency, but speculation is mounting about the fate of Greece as its politicians struggle to agree more austerity measures demanded by international lenders as the price for staving off bankruptcy. Soros reiterated his view in a panel discussion in Vienna that the euro had a basic flaw from the start in that the currency was not backed by political union or a joint treasury. “The euro had no provision for correction. There was no arrangement for any country leaving the euro, which in the current circumstances is probably inevitable,” he said. While he called survival of the European Union a “vital interest to all,” he said the EU needed structural changes to halt a process of disintegration. “There is no plan B at the moment. That is why the authorities are sticking to the status quo and insisting on preserving the existing arrangements instead of recognizing there are fundamental flaws that need to be corrected.” With a debt crisis in some peripheral members testing the EU’s cohesiveness at a time of popular disquiet in wealthier countries over bailouts, he said leaders had to adopt measures now to remedy the situation. “Let’s face it: we are on the verge of an economic collapse which starts, let’s say, in Greece but could easily spread. The financial system remains extremely vulnerable… “We are on the edge of collapse and that is the time to recognize the need for change.” Some steps the EU could adopt included creating a larger central budget; directing some of the income from value-added tax or a levy on financial transactions to Brussels; having a European institution guarantee banks, and tripling the size of its bailout fund by topping it up with tax revenue, he said. (Reporting by Michael Shields; editing by Sophie Walker) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Obama, Boehner Held Secret Debt Ceiling Meeting At White House

June 24, 2011

WASHINGTON (AP/The Huffington Post) — Efforts to find a bipartisan agreement blending huge budget cuts with a must-pass measure to increase how much the government can borrow have entered a new phase after Republican negotiators pulled out of talks led by Vice President Joe Biden. The exit of House Majority Leader Eric Cantor from the talks on Thursday means the most difficult decisions have been kicked upstairs to GOP House Speaker John Boehner of Ohio and President Barack Obama. The Biden-led group had made solid progress in weeks of negotiations but was at an impasse over taxes. Cantor, R-Va., said that the Republican-dominated House simply won’t support tax increases and that it’s time for Obama to weigh in directly because Biden and Democrats were insisting on tax increases. Democrats said it’s only fair to blend in additional revenues from closing tax breaks to balance trillions of dollars in spending cuts. It had long been assumed that the Biden group would set the stage for more decisive talks involving Obama and Boehner. As a result, Cantor’s move was interpreted as trying to jump-start the talks rather than blow them up – a view shared by Cantor himself. “The purpose here is to alter the dynamic,” Cantor said. In fact, Cantor’s withdrawal came after Boehner had already made a trek to the White House – in a secret meeting Wednesday night that followed up on a golf outing over the weekend. According to The Hill newspaper, Cantor’s walkout had been planned for weeks: The timing of Cantor’s exit from the talks has been discussed for weeks, and senior House Republicans cast it as a natural progression for the negotiations. “There have been discussions about when these talks need to end and when the Speaker and the president need to get in the game,” one GOP aide explained. For his part, Cantor didn’t inform Boehner of his decision to leave the talks until Thursday, shortly before the news broke, said a GOP official familiar with the situation. The official required anonymity because of the sensitivity of the information. The White House sought to put a positive spin on developments. “As all of us at the table said at the outset, the goal of these talks was to report our findings back to our respective leaders,” Biden said in a statement. “The next phase is in the hands of those leaders, who need to determine the scope of an agreement that can tackle the problem and attract bipartisan support. For now the talks are in abeyance as we await that guidance.” The Senate’s Republican negotiator, Jon Kyl of Arizona, also exited the talks. For his part, Cantor said the secretive Biden-led talks had “established a blueprint” for agreement on significant cuts in spending. One of the byproducts of Cantor’s departure was to provide an opportunity for partisans on all sides to make statements at odds with the positions they may have to take to achieve a deal. Democrats insist that at least some new revenues are needed – both to soften spending cuts and to line up the Democratic votes needed to pass the measure. “It will take Democratic votes to pass any debt-ceiling agreement,” said Sen. Chuck Schumer, D-N.Y. “As a result, certain things are going to have to be true. We cannot make cuts to Medicare benefits. We have to allow for revenues like wasteful subsidies for ethanol and oil companies. And we have to do something on jobs.” “President Obama needs to decide between his goal of higher taxes or a bipartisan plan to address our deficit,” said Senate Republican leader Mitch McConnell, R-Ky. “He can’t have both.” As for Democratic demands for new deficit-financed “jobs” initiatives, McConnell scoffed: “What planet are they on?” Cantor said that plenty of progress has been made in identifying trillions of dollars in potential spending cuts to accompany legislation to raise the $14.3 trillion cap on the government’s ability to borrow money. Passage of the legislation this summer is necessary to meet the government’s obligations to holders of U.S. Treasurys. The alternative is a market-shaking, first-ever default on U.S. obligations.

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Corporate Tax Holiday Could Create Infrastructure Bank — But Devil Is In The Details

June 22, 2011

Rahm Emanuel has a proposition. A grand one, for big business, big unions, and Congress: let a corporate income tax holiday pay for a national infrastructure bank. Let multinationals bring their money home — the money that’s parked overseas, dodging Uncle Sam’s corporate income taxes — and the federal government can use some of it to pay for the infrastructure bank, the newly minted mayor of Chicago says. Unions, big corporations, and potentially members of both parties: a virtual rainbow coalition may be assembling in favor of the infrastructure bank. But corporate watchdogs charge there’s no difference between a tax holiday with a bank and a tax holiday without one. Under Emanuel’s plan, which he is developing with Rep. Rosa DeLauro (D-Conn.), the bank would build the bridges, roads and mass transit that America has been neglecting for decades. As these structures rust and fall apart, oftentimes nothing new is being built in their place. Yet money to improve infrastructure money will not be easy to come by in the midst of a protracted deficit debate; by including the tax holiday, Emanuel’s proposition aims to win over Republicans leery of adding to the deficit. The idea for the bank is not new — former Service Employees International Union President Andy Stern mooted it in an op-ed piece months ago — but it seems to be gaining renewed attention. Reed Hundt and Thomas Mann wrote about it in the Washington Post last week, Emanuel treated it as his own in a speech to the U.S. Conference of Mayors on Saturday, and now Sen. Chuck Schumer (D-N.Y.) is feeling out the Senate . For proponents, the hope is that the proposition could unite Democrats in the Senate and Republicans in the House. Emanuel said he thinks his grand compromise “brings the parties together.” The specific terms of the tax holiday, however, would be critical. Some Democrats don’t want to give multinationals a free pass, and Republicans don’t want to be too hard on corporate America. Without some sort of deal, it’s possible that money could continue to linger offshore — parked in anticipation of a better deal from a different Congress. That has been the situation since 2005, when another tax holiday was declared, premised on the idea that it would create jobs; it didn’t . Critics of any sort of tax holiday say that the infrastructure bank is just the latest twist on corporate blackmail. “Every one of these amnesties encourage greater holding offshore and Congress is being irresponsible even to say they are thinking about it,” said Calvin Johnson, a professor at the University of Texas School of Law who specializes in tax law. Former SEIU chief Andy Stern disagreed. “The problem is the money hasn’t come back, there’s no reason to believe it will ever come back,” said Stern, now a senior fellow at Georgetown University Public Policy Institute. “Details are appropriate and important — you know, what’s the tax rate? — but we’re now in the right framework,” he argued. In his speech to the mayors, Emanuel said he would like to see the tax rate lowered to 10 or 15 percent, down from its current 35 percent, for the tax holiday. The money the government raises from those taxes would then be directed only to the infrastructure bank, ensuring, in his view, that it would actually be used to create jobs. Such a cut on the corporate income tax rate, however, might not sit well with small businesses , who can’t use creative accounting to hide their profits overseas like the multinational corporations. And a cut to 10% might not be steep enough to win over Republicans in the House, who have been talking about taxing repatriated income at a rate in the low single digits. In the Senate, Schumer has reportedly suggested a 5% rate. Rep. DeLauro told HuffPost that she’s working with Emanuel to find a balance, and she is hopeful that Republicans can be convinced to sign on to their plan. DeLauro said she has been working on plans for an infrastructure bank for 14 years, and found the recent discussion of the idea “very encouraging.” “The concept of an infrastructure bank has wide support — from the U.S. Chamber, from labor unions, from a whole bunch of people in between,” she said. Robert McIntyre, director of Citizens for Tax Justice, isn’t one of those people. He said there was “no substantive difference” between a straight tax holiday and one that was combined with an infrastructure bank. “It’s just somebody’s wacky idea that the problem the world faces today is a lack of capital. Our problem is there’s not enough consumer demand. The government should be out there shoving money out the door and stimulating the economy.” “This bank is going to be just another bank — they could have given the money to SunTrust, you know?” he said. DeLauro said capitalizing the bank via a tax holiday was not her first choice, but she thought that it would be a good approach in the GOP-controlled House. “If we are going to have another repatriation holiday, the federal government should use the incoming revenue to capitalize a national infrastructure bank, and we do know that such an entity creates jobs, long-term economic growth,” DeLauro said. Tying the repatriation to a larger reform of corporate income taxes is also critical in her mind. “Any repatriation effort has got to be a bridge to broader corporate tax reform. We have to close tax loopholes,” she said. Her infrastructure bank plan would leverage money from corporations and the federal government to create projects that include public-private partnerships. Because of the federal backing, loans for the projects could be issued at low rates. Such arrangements are common overseas; some have pointed to the European Investment Bank as a model for what could be created here. The United States has relatively fewer infrastructure projects that are operated as public-private partnerships, and any ventures that smacked of privatization might prove controversial . A privately owned toll road created with lending from the infrastructure bank, for instance, might charge a high rate to pay off its government loan. Criticism might also arise if the arrangement’s big winners are the same multinationals benefiting from the tax holiday, as opposed to small businesses.

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