Your tax dollars at work….

Deadlock broken…

Is the tea party dead ?

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We’ve heard a lot of talk about the one percent and the 99 percent. With the release of his proposed budget for fiscal 2013, President Obama has opened a new front in the class war. He’s pitting yuppies against the overclass, the struggling well-off against the very rich.

This declaration of class warfare can be found on page 39 of the section on cutting waste and reducing the deficit. President Obama’s deficit-cutting proposals rest in part on making life more expensive for the very rich. He wants to let the Bush-era marginal tax cuts for those making $250,000 or more (about 3 percent of American households) expire, and limit the amount of deductions they can take. He proposes to end the loophole through which “carried interest” —the money private equity magnates are paid for managing other people’s money — is taxed at a low, long-term capital gains rate. And he’s proposing to codify what’s come to be known as the Buffett Rule, the notion that “those making over X million $ should pay no less than 30 percent of their income in taxes.” That’s a proposal that would really impact the tiniest minority of American households. As Jonathan Karl of ABC News notes, “There were 236,883 taxpayers who earned more than $1 million in 2009. That’s less than two-tenths of one percent of all filers.”

The funds raised from soaking the ultra-rich won’t all be used for deficit reduction. No, a good chunk of the money raised will be used to help keep the merely rich a little more dry. As the budget message notes, Obama is “proposing that 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.” In other words, Obama is proposing to stick it to a few hundred thousand extremely rich people for the sake of making life somewhat easier for tens of millions of people who may make $100,000 or more.

A bit of background is in order. (Here’s a good primer from SmartMoney) The Alternative Minimum Tax was created in the 1970s to try to prevent really rich people from taking massive deductions to avoid paying taxes. The thinking was relatively simple: Above a certain amount, people should pay a 28 percent marginal rate on income, regardless of the amount or number of deductions they’ve taken. So taxpayers must calculate how much they owe under the regular tax regime, and then calculate how much they owe under the AMT scenario, which limits the ability to deduct items like state, local and property taxes from taxable income. They have to pay whichever is higher.

Over time, as frequently happens, the tax aimed squarely at plutocrats caught up more and more people. The AMT wasn’t indexed for inflation, and didn’t account for rising tax rates and levels. As time went on, people who lived in certain areas — high-income districts in states with income taxes — and who have high property values and property taxes have come to expect that they’ll get hit by the AMT. Since many of the AMT hot zones are on the coasts — places like New Jersey, New York, Connecticut, Massachusetts, California — the AMT may be considered a tax on yuppies or, as I dubbed several years ago, a Tax on Democrats. Those screams you hear while driving through Fairfield County, Connecticut, in early April are thousands of members of the top five percent confronting the AMT yet again.

The AMT, which ensures that people pay a 28 percent rate on marginal income above $175,000, falls heavily on people who are wealthy by any standard — i.e. they earn a multiple of the national and state and even local median income. But these folks don’t feel by wealthy because they’ve chosen to live in zip codes where housing prices are high and lots of other rich people live. The AMT thus contributes to one of the big ironies in American politics. It’s been a great mystery to many on the political right that so many people who live in high income areas aren’t more enthusiastic about voting for candidates that aim to preserve the Bush-era tax levels. (President Obama won a majority of the votes in 2008 in Greenwich, Connecticut.) Attitudes toward social policy have a lot to do with it. But the reality is that many people who live in high-income areas and who derive their income predominantly from wages never really felt the full benefit of the Bush tax cuts thanks to the AMT.

With each passing year, more and more people fall into this category. (Here’s some background data from Tax Policy Center.) But because their income tends to come more from wages than from lightly taxed capital gains or dividends, the merely rich are more likely to get sucker-punched by the AMT than the very rich. As the Tax Policy Center notes, “In 2011, 42 percent of tax filers with cash income greater than $1 million were affected by the AMT, compared with nearly 52 percent of those with cash income between $200,000 and $500,000.”

Almost every year, Congress passes a “patch” that prevents the AMT from ensnaring vastly more people. Had Congress not acted, as the Tax Policy Center points out, in 2012, “45 percent of all tax filers with cash income between $75,000 and $100,000 will pay the AMT, up from 0.4 percent in 2011, when the temporary AMT fix or ‘patch’ is in place.”

For politicians, the AMT has become a double-edged sword. With each passing year, it gets more annoying to constituents and more expensive to fix. On the other hand, with each passing year the AMT brings in more revenues, which means it would be difficult to replace. So it’s not surprising that the AMT hasn’t been permanently “fixed.”

So, here’s the deal Obama is proposing in this budget: Better and simpler tax treatment for millions of people in exchange for ensuring that a few hundred thousand others aren’t able to use their resources and ingenuity to avoid paying a significant chunk of their annual earnings in taxes. It sounds like a winner.

What could go wrong? Well, this budget proposal, like every other presidential budget proposal in recent memory, has been pronounced dead upon its arrival in Congress. What’s more, this is precisely how the AMT got started in the first place. Note that Obama isn’t proposing indexing the AMT to inflation. Twenty years from now, there will likely be many more people making $1 million than there are today, and they’ll begin to argue that they, too, are simply middle-class.

What do you think? Do you favor swapping the Buffett Rule for the AMT fix? Give us your thoughts in the comment section below.

Who get’s what in this settlement….

Jiabao actually said it is time for China to observe financial conditions and react to them in a timely manner; this of course sparked speculation that easing will begin shortly.

Joe Weisenthal

For the first time since the Great Recession, the economy is showing some signs of being on a “sustainable” recovery path. And the timing is pretty great for Obama, if the momentum can continue through the year — a big if.

But it’s hard to argue with the fact that through the first couple years of the administration, job creation was achingly slow, even as GDP bounded back nicely from the ’08-’09 depths.

A new article from Noam Scheiber at TNR — adapted from a forthcoming book of his — sheds new light on the fumbling, dysfunctional economic team that Obama had in place during the first two years. It’s a depressing read.

Probably the saddest part is how quickly the administration pivoted to deficits, rather than stimulus.

The article tells how in the summer of 2009, after the first stimulus, Larry Summers and Peter Orszag still had wildly different views on stimulus and deficits. Orszag reportedly wanted deficit cuts; Summers recognized that the economy needed new stimulus.

In the end…

Seated in the Roosevelt Room in early December 2009, the president wondered why both sets of ideas were so timid. Orszag grumbled that it was, in fact, disappointing to offer so little on the deficit front. Summers interjected that the economy was in dire need of more stimulus. Each side then labeled the other’s proposals political nonstarters, and the president lost his patience. “You know what, this is the same meeting we’ve been having,” he said, excusing himself. “Talk to me when you’ve thought this through.” The bickering soon grew so loud that Orszag’s deputy, Rob Nabors, lunged to shut the door.

With no agreement forthcoming, it was Orszag who filled the vacuum throughout the fall. He urged the president to freeze domestic spending in his next budget and favored setting up a commission of Washington elders to recommend trillions in savings over a decade. Summers believed such ideas were gimmicks unworthy of a president. To colleagues he complained that “what’s really important in life is not to believe your own bullshit.” The president sided with Orszag.

Again, the key here is that this was 2009, with the economy barely out of technical recession.

Read the rest here.

* Top U.S. corporate tax rate is 35 percent

* Obama seen calling for lower rate, in line with peers

* Opening salvo in corporate tax revamp (Adds administration official, Bernstein comments)

By Kim Dixon

WASHINGTON, Feb 10 (Reuters) – U.S. President Barack Obama will call for cutting the top 35 percent corporate tax rate as early as this month, according to two sources close to the administration.

The president is likely to propose a rate closer to an average of that seen in peer nations, the sources said.

This would jibe with remarks made last year by U.S. Treasury Secretary Timothy Geithner, who suggested the United States should be moving to a rate more in line with its major trading partners in the high 20-percent range.

Obama outlined tax measures – including closing tax loopholes for companies that move facilities and jobs overseas – in his State of the Union speech in January, and will lay out principles for revamping corporate taxes by the end of February, a senior administration official said.

“We will talk more before the end of the month on what corporate tax reform would look like,” the official said on Friday, confirming that it would include a call for “lower rates.”

Facing a potentially tough presidential re-election challenge this November, Obama will propose cutting the rate following the release of his 2013 budget plan on Monday, Feb. 13, according to the sources, who were not authorized to speak on the record.

Read the rest here.

Warren Buffett’s stake in Bank of America Corp. increased in value by $154 million after President Obama and the U.S. Justice Department announced a $25 billion foreclosure abuse settlement with the five largest U.S. banks Thursday, records show.

Buffett invested $5 billion in Bank of America (BofA) on Aug. 25, 2011. As part of his investment deal, Buffett gained warrants that allow him to buy 700 million shares of Bank of America stock at a strike price of $7.14 a share. However, on Dec. 19, 2011, it was reported that Buffett was $1.5 billion underwater on his stock warrants, with shares of BofA stock trading at $4.94. But on Thursday, after President Obama personally announced the details of the settlement, BofA stock closed at $8.13 a share. The stock opened Friday morning at $8.31 and reached as high as $8.35 a share.

If Buffett had exercised his warrants Friday morning, he would have made $847 million. $154 million of that profit would have been related to the foreclosure deal.

This is not the first time Buffett has profited from Obama administration policies. In November 2011, it was reported that President Obama’s two-year postponement of the deadline to determine the future of the proposed Keystone XL pipeline would force North Dakota oil producers to rely more heavily on the Burlington Northern Santa Fe Railroad. Buffett’s Berkshire Hathaway Inc. holding company purchased the Burlington Northern Santa Fe Railroad Corp. in a total package worth $44 billion in 2009.

Buffett has personally contributed $5,000 to Obama this election cycle, while Berkshire Hathaway has contributed $30,800 to the Democratic National Committee.

This summer, Obama will accept the Democratic Party’s 2012 presidential nomination with a speech at Bank of America Stadium in Charlotte, N.C.

Source

MOSCOW — A military court on Friday convicted a Russian officer of passing missile secrets to the CIA and sentenced him to 13 years in prison, officials said.

Lt.-Col. Vladimir Nesterets also was stripped of his military rank after he pleaded guilty to passing classified information about Russian missile tests to the CIA for money, said the Federal Security Service, the main agency that replaced the KGB.

The agency said Nesterets committed treason as he worked as a senior engineer at the Plesetsk launch pad in northwestern Russia, a facility the military uses to launch satellites and test missiles.

The security service’s terse statement did not say when Nesterets had been arrested or give any further details about his case.

The conviction comes amid growing tension in U.S.-Russian relations, despite President Barack Obama’s efforts to “reset” them from strains that had developed during the previous U.S. administration.

Relations between Moscow and Washington have worsened over a new U.S.-led missile defense system being developed by NATO around Europe, and Russia teaming with China to block a U.N. Security Council resolution that would have urged Syrian President Bashar Assad to step down.

Russian Prime Minister Vladimir Putin also has been increasingly eager to challenge the U.S. as he campaigns to reclaim his nation’s presidency in next month’s election. He has accused Washington of fueling the massive protests that have recently taken place against his rule in order to weaken the nation.

Earlier this week, Putin’s protege, President Dmitry Medvedev, praised the Federal Security Service for exposing 41 foreign intelligent officers and 158 of their agents last year.

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At a closed-door retreat in a Long Island mansion late last October, United Nations Secretary General Ban Ki-moon and his topmost aides brainstormed about how the global organization could benefit from a “unique opportunity” to reshape the world, starting with the Rio + 20 Summit on Sustainable Development, which takes place in Brazil in June.

A copy of the confidential minutes of the meeting was obtained by Fox News. According to that document, the 29-member group, known as the United Nations System Chief Executives Board for Coordination (CEB), discussed bold ambitions that stretch for years beyond the Rio conclave to consolidate a radical new global green economy, promote a spectrum of sweeping new social policies and build an even more important role for U.N. institutions “ to manage the process of globalization better.”

At the same time, the gathering acknowledged that their ambitions were on extremely shaky ground, starting with the fact that, as Ban’s chief organizer for the Rio gathering put it, “there was still no agreement on the definition of the green economy, the main theme of the [Rio] conference.”

But according to the minutes, that did not seem to restrain the group’s ambitions.

Its members see Rio as the springboard for consolidation of an expanding U.N. agenda for years ahead, driven by still more U.N.-sponsored global summits that would, as one participant put it, “ensure that the U.N. connected with the roots of the current level of global discontent.”

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While criticism surrounding Operation Fast and Furious has so far focused on the Bureau of Alcohol, Tobacco and Firearms, three other federal agencies knew about the operation and some of their agents tried to stop it, according to the former chief of the U.S. Drug Enforcement Administration in Tucson.

Tony Coulson, the DEA’s agent in charge of Southern Arizona during Fast and Furious, says many federal field agents knew the ATF was walking guns to Mexico, but supervisors told them to back off when they objected.

“Clearly, we went too far,” Coulson said. “The question we had among rank and file law enforcement was, ‘When is someone going to call ATF on this, when is someone going to tell them to stop?’”

Coulson’s remarks jibe with what is already known about the operation. The DEA, the FBI and ICE, also known as Immigration Customs and Enforcement, all played roles in the investigation.

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Amid a backlash from many Catholics and proponents of religious liberty, President Barack Obama announced Friday that his administration will not require religious institutions like hospitals and universities to provide free contraception to their employees in their health insurance.

Speaking to reporters at the White House Friday, Obama offered a compromise that would allow women to obtain free contraception but would require them to obtain it directly from their insurance companies if their employers object to birth control because of religious beliefs.

“Whether you’re a teacher or a small businesswoman or a nurse or a janitor, no woman’s ‘s health should depend on who she is, or where she works, or how much money she makes,” Obama said, calling free contraceptive care a “core principle” of his health care law, which requires that all preventive services be provided at no cost to patients.

Obama went out of his way to say that he supports freedom of religion, pointing out that one of his stints as a community organizer in Chicago was funded by a Catholic group.

“As a citizen and as a Christian I cherish this right,” Obama said. “I saw that local churches did more good for a community than a government program ever could.”

Planned Parenthood and the Catholic Health Association each approved of the compromise, which the White House is calling an “accommodation,” in statements on Friday.

Full article

Lobbyists not officially named as such do not get any restrictions….

The EU announced they will take on reform in the $700 billion derivatives markets vowing to correct the opacity….

In a game of musical chairs transparency is shunned and un-American behavior continues to favor the in crowd…

Sanctions may cause serious pain for many industries not involved with petroleum as Iran was Europe’s largest trading partner in 2010.