iBankCoin
Home / Politics (page 41)

Politics

Lessons From the Decades Long Upward March of Government Spending

Josh Barro

Below is a chart of total government spending (federal, state and local) as a share of GDP, going all the way back to 1929, the first year for which Bureau of Economic Analysis Data are available. This chart shows that government spending in 2010 was as high as it’s ever been as a share of the economy, 36.2 percent, slightly outstripping the previous high water mark of 35.3 percent reached in 1945, during World War II.

This chart has a lot to teach us about what we can expect from the coming fiscal adjustment.

Read the rest here.

Comments »

Paper Tiger? Consumer Financial Protection Bureau Seems to Be Lacking Gonads

Source

“Is the new Consumer Financial Protection Bureau (CFPB), under attack since the moment of its conception, already in danger of becoming a paper tiger? Congress created CFPB in 2010 as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act, to protect consumers from the sort of unfair, deceptive, and abusive practices that banks and other financial companies engaged in and that helped crash the economy in 2007. Nevertheless, the financial industry and its allies in Washington have never stopped trying to kill the agency.

Senate Republicans, who voted against Dodd-Frank by a margin of 38 to 3refused even to allow a vote on President Barack Obama’s nominee for Director, Richard Cordray, whom Obama then recess-appointed on January 4, 2012. House Republicans, who voted against the bill 173 to 3, have also tried to abolish the agency by refusing to fund it.
In the face of all that hostility, some critics are charging that last week’s decision by CFPB to rescind a regulation limiting credit card sign-up fees is a sign the agency is quitting before the fight has even begun. The 2009 Credit Card Accountability, Responsibility and Disclosure Act caps fees charged by credit card issuers during the first year after an account is opened at 25%  of the account’s initial credit limit. When some banks began evading the law by charging hefty sign-up fees, technically paid “before” the account’s opening, the Federal Reserve Board (which had jurisdiction) interpreted the cap to include fees a consumer paid before opening an account, such as an application fee. In 2011, however, a federal judge in South Dakota (a state popular with credit card companies because it has no usury law) granted a financial industry request to block the expanded rule, saying the Act did not intend to cap upfront fees.
After CFPB announced its rolled-back rule change, a coalition of four consumer groups—the National Consumer Law Center (NCLC),National Council of La RazaU.S. PIRG and Consumer Action—urged CFPB to “stay strong” against efforts by “predatory lenders” to roll back rules that protect consumers. Noting that sign-up fees hit the poor the hardest, they want the bureau to appeal the federal court injunction against the cap: “Charging $170 for a credit card with available credit of $225 is exactly the sort of abuse that the fee-harvester rule should prohibit,” said Chi Chi Wu, an attorney with the NCLC. “The CFPB should not back down in protecting consumers from this sort of chicanery.”
Those defending the agency, like Bill Bartmann, a financial lawyer, debt-collection executive and financial newsletter publisher who generally supports the agency, termed it “strategic thinking” by Richard Cordray, who, he surmises, is “picking battles, and it’s unrealistic to think you can win them all.”
Comments on the proposed rule are due June 11.”

Comments »

Jim Yong Kim Chosen to Be World Bank President

“Jim Yong Kim was chosen to be president of the World Bank, becoming the first physician and Asian-American to head the lender after emerging markets failed to rally around a challenger to the U.S. monopoly on the job.

The World Bank board of directors said today it chose Dartmouth College President Kim to succeed Robert Zoellick, whose term ends June 30. A specialist in HIV/AIDS with a Ph.D. in anthropology, Kim, 52, faced rival bids from Nigeria and Colombia.

The candidacies “enriched the discussion of the role of the president and of the World Bank Group’s future direction,” the board said in an e-mailed statement. “The final nominees received support from different member countries, which reflected the high caliber of the candidates.”

Kim, a graduate of Harvard Medical School, breaks the mold of World Bank presidents, who have been drawn from government and finance. Kim, who was born in Korea and grew up in the U.S., has pledged to be a bridge between developed and advanced economies at the poverty-fighting institution, which committed $57 billion last year on everything from building roads to taking stakes in companies in emerging economies.

Kim’s expertise on health and development issues, as well as his experience at Dartmouth, “puts him in a prime position to initiate a much-needed reorientation of the World Bank’s role in global development,” said Eswar Prasad, a senior fellow at the Brookings Institution and a former official at the International Monetary Fund.”

Read more

Comments »

Get Ready for Major Spin Over Taxes in the Coming Months

Source

“One of the most pernicious falsehoods you’ll hear during the next seven months of political campaigning is there’s a necessary tradeoff between fairness and economic growth. By this view, if we raise taxes on the wealthy the economy can’t grow as fast.

Wrong. Taxes were far higher on top incomes in the three decades after World War II than they’ve been since. And the distribution of income was far more equal. Yet the American economy grew faster in those years than it’s grown since tax rates on the top were slashed in 1981.

This wasn’t a post-war aberration. Bill Clinton raised taxes on the wealthy in the 1990s, and the economy produced faster job growth and higher wages than it did after George W. Bush slashed taxes on the rich in his first term.

If you need more evidence, consider modern Germany, where taxes on the wealthy are much higher than they are here and the distribution of income is far more equal. But Germany’s average annual growth has been faster than that in the United States.

You see, higher taxes on the wealthy can finance more investments in infrastructure, education, and health care – which are vital for growth and the economic prospects of the middle class.

Higher taxes on the wealthy also allow for lower taxes on the middle – potentially restoring enough middle-class purchasing power to keep the economy growing. As we’ve seen in recent years, when disposable income is concentrated at the top, the middle class doesn’t have enough money to boost the economy.

Finally, concentrated wealth can lead to speculative bubbles as the rich in the same limited class of assets – whether gold, dotcoms, or real estate. And when these bubbles pop the entire economy suffers.

What we should have learned over the last half century is that growth doesn’t trickle down from the top. It percolates upward from working people who are adequately educated, healthy, sufficiently rewarded, and who feel they have a fair chance to make it in America.

Fairness isn’t incompatible with growth. It’s necessary for it. “

Comments »

President Obama’s Secretary Paid Higher Tax Rate Than He Did

President Obama today released his 2011 federal income tax, with he and his wife reporting an adjusted gross income of $789,674. The Obamas paid $162,074 in total tax – an effective federal income tax rate of 20.5%. The Obamas also reported donating approximately 22% of their income to charity — $172,130.

President Obama has been making a big political push for the “Buffett Rule,” which would require millionaires to pay a minimum of 30% of their income in taxes. To illustrate the point, the president has pointed out that billionaire investor Warren Buffett pays a lower tax rate than does his secretary.

President Obama’s secretary, Anita Decker Breckenridge, makes $95,000 a year. White House spokeswoman Amy Brundage tells ABC News that Breckenridge “pays a slightly higher rate this year on her substantially lower income, which is exactly why we need to reform our tax code and ask the wealthiest to pay their fair share. ”

It should be noted that president would not be impacted by the Buffett Rule, though he would see his taxes go up if the so-called Bush tax cuts on higher income wage-earners were allowed to expire, as the president says he wants.

-Jake Tapper

Source

Comments »

Why the Buffett Rule Actually Adds to the Deficit

The case for the Buffett tax keeps eroding. When President Obama announced the idea, he said it would help “stabilize our debt and deficits over the next decade.” Then came the inconvenient revelation that the new 30% millionaire’s tax would raise only $46.7 billion over 10 years, and would leave about 99.5% of the deficit intact in 2013. It was a far cry from “stabilizing the debt.”

Now we learn that the Buffett tax the Senate is expected to vote on early next week will make the deficit worse. That’s because both Mr. Obama and Senate Democrats have made it clear that their new “fairness” tax is to offset the revenue loss from another provision related to the Alternative Minimum Tax.

That measure would exempt more than 20 million middle class Americans with incomes as low as $80,000 a year from getting nailed by the AMT. This year’s Obama budget clearly describes their intent: “The Buffett Rule should replace the Alternative Minimum Tax, which now burdens middle-class Americans rather than stopping the richest Americans from paying too little as was originally intended.”

The Joint Tax Committee—the official scoring referee on tax bills—calculates that the combination of AMT repeal for the middle class and the Buffett tax would add $793.3 billion to the debt over the next decade. As Mr. Obama has said, “This isn’t politics, this is math.”

The Buffett Tax Loss

It turns out this Obama proposal will cost federal revenue.

The Buffett tax is losing any serious rationale by the day. Mr. Obama’s position now is that we need a new fairness tax, because the old AMT fairness tax that was targeted at millionaires and billionaires isn’t raising much money from the Warren Buffetts of the world. Instead it’s siphoning income out of more and more nonmillionaires. So they argue it’s time for a new Buffett rule, that is almost identical to the old Buffett rule, and no doubt in time will have the same unintended consequences.

The Buffett rule itself may die, but the name will live on as a metaphor for pointless public policy.

Source

Comments »

UN Security Council Discusses NK Missile Launch

Pyongyang, North Korea (CNN) — The U.N. Security Council met Friday to discuss North Korea’s botched rocket launch amid concerns that the secretive and often unpredictable regime will try to recover from its embarrassing failure with a nuclear test or military move.

“Members of the Security Council deplored this launch,” said U.S. Ambassador to the United Nations Susan Rice, who said she was speaking on behalf of the council. “Members of the Security Council agreed to continue consultations on an appropriate response, in accordance with its responsibilities given the urgency of the matter.”

The rocket broke apart 81 seconds into its launch Friday morning, then fell into the ocean, according to a U.S. official.

The launch drew condemnation from United States and countries in the region, as well as an unusual admission of failure from Pyongyang. The normally secretive regime has previously insisted that failed launches had actually been successful.

“Scientists, technicians and experts are now looking into the cause of the failure,” North Korea’s official Korean Central News Agency said in a report, which was also read out in a news broadcast on state-run television.

Comments »

U.N. Cease Fire in Syria Has Brought Peace for the Moment

“(Reuters) – Syrian troops held their fire in the hours after a U.N.-backed ceasefire took effect at dawn on Thursday, casting a silence over rebellious towns they had bombarded heavily in recent days.

But the lull did little to convince opposition activists and Western powers of President Bashar al-Assad’s good faith in observing a peace plan agreed with international envoy Kofi Annan. In defiance of that deal, Syrian troops and tanks were still in position inside many towns, activists told Reuters.

The exile opposition, calling the truce “only partially observed” due to that failure to withdraw, urged a renewal of mass protests on Friday. But it warned those taking to the streets, after months when once weekly rallies have been subdued by fear, that they could expect government forces to open fire.

The Interior Ministry urged rebels to surrender, promising to free those who had not killed, and broadcast an appeal to the thousands who fled battered cities like Homs and Hama to return from the havens they found in Turkey, Lebanon and within Syria….”

Read more

Comments »

The Jobs Act Bubble

Don’t take my title for accusation. Time needs to pass to make the correct assumption, but it appears more people are jumping on the band wagon that the jobs act is a can of worms in the making.

You have to wonder if government and their bipartisan action is a desperate move to revitalize the economy without stimulus and oversight. We know where no oversight has gotten us over the last decade.

Full article

 

Comments »

Government can’t fix college costs

Read here:

President Obama said in his State of the Union Address that he is putting colleges on notice to lower costs. A few days later, he spoke to students at the University of Michigan, with a promise of more federal aid. Politicians claim they can make college affordable. No They Can’t!

In the last 30 years, inflation is up 160%, but tuition costs are up 750%.

It’s because colleges have no incentive to cut prices when students can get money from government. Federal aid, adjusted for inflation, increased from 32 billion in 1987, to 169 billion in 2010.

Government tells us, “Here’s the gap between what you can afford and what the college is charging, we will now make up that gap. And then the college just inches up the tuition a little bit higher,” says Naomi Riley author of The Faculty Lounges: and Other Reasons Why You Won’t Get the College Education You Paid For.

Colleges don’t use all or even most of that money in the classroom. We were stunned at the gyms and dining halls that serve lobster and sushi. Check out the University of Missouri, which is proud of its spa, rock climbing wall and “Tiger Grotto” – an elaborate pool complex.

Government creates perverse incentives. Colleges compete on prestige and luxury amenities, not their price tag. Administrators don’t worry about high tuition costs because their customers have government subsidies.

Comments »

White House warns NK launch undermines food aid

Read here:

The White House Tuesday cautioned the North Korean plan to launch a rocket in defiance with the United Nations resolution could have impacts on aid to the country.

White House press secretary Jay Carney said it would be nearly impossible to follow through with the US planned aid in the form of nutritional assistance to the isolated country should they violate sanctions. “The proposed missile launch, if conducted, would represent a clear and serious violation of North Korea’s obligations under two United Nations Security Council resolutions that explicitly prohibit North Korea from testing ballistic missiles,” Carney said aboard Air Force One.

While North Korea says their rocket is ready for lift off this week, the White House is working with international partners to discourage otherwise. Carney says the United States is working with international partners “to work to persuade North Korea to consider a different path, the path that would lead to progress towards feeding its people, educating its people, and ending its severe, self-imposed isolation.”

Comments »

Matt Taibbi Shreds Obama Over JOBS Act That Will ‘Nearly Legalize Fraud’

“Matt Taibbi thinks the JOBS Act signed by President Obama last week is just about the worst thing ever.

To backup, the JOBS act has been called the “crowdfunding act” because it lifts various regulations on startups raising money, and how many shareholders it can have.

The JOBS Act has been hailed as a bipartisan triumph.

Here’s the left’s response, per Rolling Stone’s Taibbi: The JOBS Act “couldn’t suck worse.” It will nearly legalize and encourage fraud on Wall Street. And it completely goes against the populist anger against Wall Street that sparked Occupy Wall Street.

The worst aspect of the bill, Taibbi argues, is one that exempts firms from independent tests of internal controls. It’s a “comedy routine,” he writes, because the rationale is that it is costly for a firm to hire independent auditors and fill out legal forms.

Here’s a good analogy:

This is like formally eliminating steroid testing for the first five years of a baseball player’s career. Yes, you can pretty much bet that you’ll see a lot of home runs in the first few years after you institute a rule like that. But you’d better be ready to stick a lot of asterisks in the record books ten or fifteen years down the line.

In the same way, get ready for an avalanche of shareholder suits ten years from now, since post-factum civil litigation will be the only real regulation of the startup market. In fact, there are already supporters talking up future lawsuits as an appropriate tool to replace the regulations being wiped out by this bill.


Here’s Taibbi talking about his column and why he thinks the JOBS Act is a disaster on Eliot Spitzer’s Current TV show:

 

Read Taibbi’s full shredding of the bill at Rolling Stone.

 

Full article

Comments »

73%–Just the Beginning for Obama

SOURCE

Buffett Rule tax just the start for Obama

By James Pethokoukis

April 10, 2012, 11:13 am

It won’t stop with the Buffett Rule, at least if President Barack Obama has his way. Making sure “no millionaire pays less than 30 percent of their income in taxes” — as the White House describes its proposal — would be just the beginning of radical remaking of the U.S. tax code.

Just how radical? Well, Team Obama drops a pretty big hint in the briefing document it produced about the Buffett Rule. In section V of the document — titled “The Economic Argument for the Buffett Rule — the report starts off immediately by favorably citing this piece of evidence:

In a recent paper, Nobel-Prize winning economic Peter Diamond and renowned tax economist Emmanuel Saez note the relatively greater ability of high income taxpayers to avoid taxes, and argue that “the natural policy response should be to close tax avoidance opportunities” (Journal of Economic Perspectives, Fall 2001).

Oh, but that Diamond-Saez study the White House likes so much — “The Case for a Progressive Tax:From Basic Research to Policy Recommendations” — says so much more.  In fact, what the study is best known for is its stunning conclusion — much talked about in liberal policymaking circles — that the “optimal tax rate” is “73 percent, substantially higher than the current 42.5 percent top U.S. marginal tax rate (combining all taxes).”

73%! The top U.S. tax rate hasn’t been that high since 1969. It was 70 percent when Ronald Reagan took office in 1981 and cut taxes across the board, helping launch a 25-year economic boom after the stagflation-ridden 1970s. (And other research by Saez suggest the top tax rate should be 83%, back where it was in the 1940s.)

But it is interesting to note, especially in light of the White House’s embrace of the Diamond-Saez research, that Obama himself doesn’t think too much of those Reagan tax cuts. As Obama wrote in The Audacity of Hope: “The high marginal tax rates that existed when Reagan took office may not have curbed incentives to work or invest … but they did lead to a wasteful industry of setting up tax shelters.”

So the only downside of 70% tax rate to Obama was excessive tax planning, not a huge disincentive to working, saving and investing?

Indeed, Obama made it clear in his Osawatomie, Kansas speech last December that America’s three-decade economic experiment in enhanced economic freedom—lower tax rates, less regulation, freer trade—has been a failure. Indeed, Obama said in that speech that although the “theory fits well on a bumper sticker … it has never worked.” Reagan and Clinton blew it. (Tax cutting JFK, too, apparently.) Time for a different formula. Time to raise taxes and create more rules for business with a goal of “shared prosperity and shared responsibility.”

But Operation: Reverse Reagan is already under way. In additional to cutting marginal tax rates, Reagan indexed tax brackets to inflation, stopping the automatic, inflation-induced tax hikes that were so notorious in the ’70s. But as AEIeconomist  Jim Capretta points out, the Obamacare tax hikes associated with Medicare — 0.9% on wages and 3.8% on non-wage income — are not indexed for inflation. While they will start out only hitting  high-income taxpayers ( individual with incomes exceeding $200,000 and couples with incomes above $250,000),  ever year they will affect more and more Americans, rich and middle-income alike. Bracket creep is back.

And don’t forget about the tax hike plans of liberal House members. Their recent “Budget for All” proposal would a0 allow the top-end Bush tax cuts to expire, b) create five new tax brackets — 45%, 46%, 47%, 48%, and 49% — for “millionaires and billionaires, c) slap a European-style wealth tax of 0.5% on fortunes of $10 million or more, d)  raise income taxes on the broad middle by allowing the “28% and 25% brackets to sunset once the economy is on solid footing, in 2017 and 2019, respectively.” That means higher taxes on families making over $70,000 a year.

The Buffett Rule? It would be just the beginning for Obama.

Comments »

Banks Lobby Congress to Cut Off Credit Unions From Small Business Lending

Source

“Banks currently control 95% of the small business lending market. Now they are lobbying Congress to stop credit unions from cutting into the market.

 At issue is S. 2231, the Credit Union Small Business Jobs Act, which would raise the cap on the amount that credit unions can loan small businesses from 12.25% of assets to 27.5%. Many credit unions are coming up against the current cap, which limits the opportunities of small businesses to receive necessary loans. This would probably reduce the banks’ share of small business loans to a mere 90%.
Many small businesses support the bill because they say banks have not been willing to help them with financing.
Supporters of the bill say its passage would free up credit unions to make up to $13 billion in new loans to small businesses in just the first year. The new lending could mean the creation of 140,000 new jobs, they say.”

Comments »

Iran Agrees to Nuclear Talks With the U.S.

“The U.S. and its European allies will press Iran for tangible action to curb its nuclear program when talks restart later this week after a 15-month hiatus.

Nuclear negotiations between Iran and the five permanent United Nations Security Council members plus Germany will take place starting April 14 in Istanbul, European Union spokesman Michael Mann said yesterday. In Washington, State Department spokeswoman Laura Seal confirmed the plans.

“We have agreed to launch talks in Istanbul on April 14,” Mann said. “We hope that this first round will produce a conducive environment for concrete progress. We are of course aiming at a sustained process.”

The U.S. and its allies are seeking to avoid a repeat of the previous meeting in January 2011, also in Istanbul, when talks broke down after Iran demanded a lifting of UN sanctions as a condition for discussing the nuclear program. Iran is under increasing economic pressure from trade, financial and energy sanctions, including U.S. and EU measures to cut oil purchases from Iran.

In a joint statement March 8, the U.S. and its five partners in the talks — ChinaFrance, Germany, Russia and the U.K. — said they wanted sustained discussions with Iran and for the Persian Gulf nation to allow UN inspectors into its secret Parchin military installation.

Israeli Defense Minister Ehud Barak said the six powers should demand that Iran stop enriching uranium to 20 percent and give up any material already processed to that level. Iran also must shut down the Fordo underground enrichment facility near Qom, Barak said in an interview broadcast yesterday on CNN’s “Fareed Zakaria GPS” program….”

Read more

Comments »

Earmarks to Return if GOP Porkers Get Their Way

Proving they’ve learned nothing from lessons of the past, some House Republicans are pushing to bring back the wide-scale use of earmarks to Congress. These pigs in elephants’ clothing want to end a three-year moratorium on earmarks and start trading pork projects for votes in order to pass legislation, even though their big spending, earmarking ways during the George W. Bush era cost them dozens of elections.

Read the rest here.

Comments »