September 20th, 2011
The Huffington Post
By: Stephen Ohlemacher
President Barack Obama makes it sound as if there are millionaires all over America paying taxes at lower rates than their secretaries.
“Middle-class families shouldn’t pay higher taxes than millionaires and billionaires,” Obama said Monday. “That’s pretty straightforward. It’s hard to argue against that.”
The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.
There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. That, however, was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
In his White House address Monday, Obama called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed that Congress overhaul the tax code and impose what he called the “Buffett rule,” named for billionaire investor Warren Buffett.
The rule says, “People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.”
“Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There is no justification for it,” Obama said. “It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million.”
Buffett wrote in a recent piece for The New York Times that the tax rate he paid last year was lower than that paid by any of the other 20 people in his office.
This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.
Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.
The latest IRS figures are a few years older – and limited to federal income taxes – but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.
Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
Obama’s claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.
With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress’ official scorekeeper on revenue issues.
The Tax Policy Center estimates that 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year. Most, however, will pay other taxes, including Social Security payroll taxes.
“People who are doing quite well and worry about low-income people not paying any taxes bemoan the fact that they get so many tax breaks that they are zeroed out,” said Roberton Williams, a senior fellow at the Tax Policy Center. “People at the bottom of the distribution say, but all of those rich guys are getting bigger tax breaks than we’re getting, which is also the case.”
Treasury Secretary Timothy Geithner was pressed at a White House briefing on the number of millionaires who pay taxes at a lower rate than middle-income families. He demurred, saying that people who make most of their money in wages pay taxes at a higher rate, while those who get most of their income from investments pay at lower rates.
“So it really depends on what is your profession, where’s the source of your income, what’s the specific circumstances you face, and the averages won’t really capture that,” Geithner said.
September 19th, 2011
The New York Times
By: Jeff Zeleny and Megan Thee-Brenan
President Obama’s support is eroding among elements of his base, and a yearlong effort to recapture the political center has failed to attract independent voters, according to the latest New York Times/CBS News poll, leaving him vulnerable at a moment when pessimism over the country’s direction is greater than at any other time since he took office.
The president’s effort to seize the initiative on the economy was well received by the public, and clear majorities support crucial pieces of his new job-creation program. But despite Mr. Obama’s campaign to sell the plan to Congress and voters, more than half of those questioned said they feared the economy was already in or was headed for a double-dip recession, and nearly three-quarters of Americans think the country is on the wrong track.
Republicans appear more energized than Democrats at the outset of the 2012 presidential campaign, but have not coalesced around a candidate. Even as the party’s nominating contest seems to be narrowing to a two-man race between Mitt Romney and Gov. Rick Perry of Texas, a majority of their respective supporters say they have reservations about their candidate. Half of Republicans who plan to vote in a primary say they would like more choices.
A snapshot of the Republican Party, four months before the first primary ballots are cast, shows that voters are evenly divided between preferring a presidential nominee who can defeat Mr. Obama or one who aligns with them on most issues. A majority of voters who support the Tea Party movement place a higher priority on winning back the White House.
The Republican primary campaign is unfolding in a more conservative electorate than four years ago, with 7 in 10 Republican voters calling themselves conservative and one-quarter who say they are moderate.
The poll, which was conducted after Mr. Obama’s economic address to Congress last week, contains considerable warning signs for the president. The poll found a 12-point jump since late June, to 43 percent, in the number of Americans who say the economy is getting worse. And for the first time since taking office, his disapproval rating has reached 50 percent in the Times and CBS News polls.
“I don’t disapprove of Barack Obama as a person, but as a president he has disappointed me greatly,” said Ann Sheets, 69, a Democrat from Chattanooga, Tenn., speaking in a follow-up interview. Ms. Sheets added, “I’m realistic enough to know how difficult it is and I am not against compromise, but I voted for a backbone. You have to draw some lines in the sand, and I don’t think he has done that.”
The poll found a 43 percent approval rating for Mr. Obama. It is significantly higher than Jimmy Carter, who had an approval rating of 31 percent at a similar time in his presidency, according to the Times and CBS News poll, which showed Ronald Reagan with an approval of 46 percent and the elder George Bush at 70 percent.
The president’s support has fallen to its lowest levels across parts of the diverse coalition of voters who elected him, from women to suburbanites to college graduates. And a persistent effort over the past year to reclaim his appeal to independent voters has shown few signs of bearing fruit, with 59 percent of this critical electoral group voicing their disapproval.
While Mr. Obama has not yet succeeded in winning over independent voters, who comprise the most influential piece of the electorate, neither have Republicans. The field is largely unknown to independents, and few have a favorable opinion of any of the candidates.
As the Republican Party experiences something of a reinvention, with Tea Party activists often clashing with the party’s weakening establishment, the poll found an overall electorate that is not entirely in step with the campaign messages of the party’s candidates.
More than 8 in 10 Republicans voters would like to see the national health care law repealed, at least in part. About half say illegal immigrants should be deported, rather than offered a chance at citizenship or an opportunity to serve as guest workers.
Yet in stark contrast to the positions taken by some presidential candidates, three-quarters of Republicans say global warming exists — either as a result of human activity, natural patterns in the earth’s environment, or both. Nearly 6 in 10 favor allowing same-sex couples to either form civil unions or marry. And only one-third of Republicans support a ban on abortion.
A slim majority of Republican voters say it is important for a presidential candidate to share their religious beliefs. And more than one-third of Republican primary voters say that most people they know would not vote for a candidate who is Mormon.
Mr. Romney, the former governor of Massachusetts, struggled during his presidential bid four years ago to explain his Mormon traditions to some voters. Mr. Perry speaks frequently to Republican audiences about his evangelical beliefs.
The poll was taken as Republicans hopefuls are drawing sharp distinctions with one another in a series of nationally televised debates.
A fight over Social Security has emerged as one of the early yet defining differences between Mr. Perry, who has called the program a “monstrous lie,” and Mr. Romney, who has called for maintaining the current system with some changes to shore up its long-term financial condition. The poll found that nearly three-quarters of Republicans said they thought Social Security and Medicare were worth their costs.
The crosscurrents across the Republican landscape show the promise and peril for the candidates. Nearly half of Republicans surveyed said they considered themselves supporters of the Tea Party, but that finding was tempered by two-thirds of Republicans who said a candidate’s identification with the Tea Party made no difference in their vote.
“Any Republican who gets the nomination, whether it’s my first choice or not, is going to be better than what we’ve got now,” said Allen Hulshizer, 77, a Republican and retired structural engineer from Glenside, Pa. “By the time you get down to the final selections, any one of the top contenders will certainly be better than Obama.”
The nationwide telephone poll was conducted from last Saturday through Thursday with 1,452 adults, of whom 1,356 were registered to vote. The margin of sampling error is plus or minus three percentage points for both groups.
The poll found that most Americans are familiar with the American Jobs Act, the president’s $447 billion proposal to create jobs. Almost half of the public is confident the plan would create jobs and improve the economy. A substantial majority of Americans support the main proposals aimed at creating jobs, including tax cuts for small businesses, improvements in the nation’s infrastructure and payroll tax cuts for working Americans.
Yet despite their support, two-thirds of Americans from broad majorities across party lines are doubtful that Congressional Democrats and Republicans will be able to reach an agreement on a job-creation package despite near universal bipartisan support for compromise. The poll also found a historically low approval rating for Congress, with just 19 percent approving of Republicans, compared with 28 percent that approve of Democrats.
The poll had a few promising signs for Mr. Obama. Americans strongly support his position that creating jobs should be a higher priority than cutting spending. Democrats and independents agree on that view, while Republicans do not. And across party lines, Americans support his position that a deficit-reduction plan should include a mix of tax increases and spending cuts.
But the poll also found a dark mood on Mr. Obama’s handling of the economy, with 34 percent approving and 57 percent disapproving. His numbers on job creation are similarly bleak, with 40 percent approving of his performance and 53 percent disapproving. Two-thirds of the public say Mr. Obama has not made progress in fixing the economy, even though a majority of people concede the condition of the national economy is not something a president can do a lot about.
“I have incredible empathy for the spot he’s in. He walked into the huge mess left behind by George Bush,” said Barbara Cornell, 56, a Democrat and hospital chaplain from Shoreline, Wash. Ms. Cornell added, “I believe he is a good person, but there are all these issues and problems that aren’t being dealt with.”
September 19th, 2011
The Huffington Post
By: Jim Kuhnhenn
Drawing a bright line with congressional Republicans, President Barack Obama is proposing $1.5 trillion in new tax revenue as part of his long-term deficit reduction plan, according to senior administration officials.
The president on Monday will announce a proposal that includes repeal of Bush-era tax cuts for the wealthiest taxpayers, nearly $250 billion in reductions in Medicare spending, $330 billion in cuts in other mandatory benefit programs, and savings of $1 trillion from the withdrawal of troops from Iraq and Afghanistan, the officials said.
The plan includes no changes in Social Security and does not include an increase in the Medicare eligibility age, which the president had considered this summer.
The officials briefed reporters Sunday evening, but spoke on the condition of anonymity in advance of the president’s announcement.
All in all, the president’s plan is as much an opening bid as it is a political statement designed to draw contrasts with Republicans, who control the House of Representatives.
As such, it was not intended as a compromise and did not include agreements Obama had reached with House Speaker John Boehner during failed deficit reduction negotiations this summer.
The new taxes in particular have little or no chance of passing Congress as proposed. Republicans were already lining up against the president’s tax proposal before they even knew the magnitude of what he intended to recommend.
Key features of the proposal:
_$1.5 trillion in new revenue, which would include about $800 billion realized over 10 years from repealing the Bush-era tax rates for couples making more than $250,000. It also would place limits on deductions for wealthy filers and end certain corporate loopholes and subsidies for oil and gas companies.
_$580 billion in cuts in mandatory benefit programs, including $248 billion in Medicare and $72 billion in Medicaid and other health programs. Other mandatory benefit programs include farm subsidies.
_$430 billion in savings from lower interest payment on the national debt.
By adding about $1 trillion in spending cuts already enacted by Congress and counting about $1 trillion in savings from the drawdown of military forces from Iraq and Afghanistan, the combined deficit reduction would total more than $4 trillion over 10 years, senior administration officials said.
Obama backed away from proposing sweeping changes to Medicare, following the advice of fellow Democrats that it would only give political cover to a privatization plan supported by House Republicans that turned to be unpopular with older Americans.
Administration officials said 90 percent of the $248 billion in 10-year Medicare cuts would be squeezed from service providers. The plan does shift some additional costs to beneficiaries, but those changes would not start until 2017, and administration officials made clear as well that Obama would veto any Medicare cuts that aren’t paired with tax increases on upper-income people.
The deficit reduction plan represents an economic bookend to the $447 billion in tax cuts and new public works spending that Obama has proposed as a short-term measure to stimulate the economy and create jobs. He’s submitting his deficit fighting plan to a special joint committee of Congress that is charged with recommending how to reduce deficits by $1.2 trillion to $1.5 trillion over 10 years.
Republicans have ridiculed the war savings as gimmicky, but House Republicans included them in their budget proposal this year and House Speaker John Boehner, R-Ohio, had agreed to count them as savings during debt ceiling negotiations with Obama this summer.
But the Republicans’ biggest objections will be with the president’s tax increases.
“Class warfare may make for really good politics but it makes for rotten economics,” GOP Rep. Paul Ryan of Wisconsin, the House Budget Committee chairman, told “Fox News Sunday.”
Ryan was commenting on Obama’s plan to propose a new minimum tax rate for taxpayers earning more than $1 million.
The measure – Obama is going to call it the “Buffett Rule” for billionaire investor Warren Buffett – is designed to prevent millionaires from taking advantage of lower tax rates on investment earnings than what middle-income taxpayers pay on their wages. At issue is the difference between a taxpayer’s tax bracket and the effective tax rate that taxpayer pays. Millionaires face a 35 percent tax bracket, while middle income filers fall in the 15 or 25 percent bracket. But investment income is taxed at 15 percent and Buffett has complained that he and other wealthy people have been “coddled long enough” and shouldn’t be paying a smaller share of their income in federal taxes than middle-class taxpayers.
Still, the White House considers passing the jobs bill far more pressing and Obama has been looking for every opportunity to bring it to the public’s attention.
In his Saturday radio and Internet address, Obama said he would lay down a plan that would show how to pay down the nation’s debt and pay for his employment legislation.
“But right now,” he said, “we’ve got to get Congress to pass this jobs bill.”
To that end, Obama on Thursday will be at a bridge linking Ohio and Kentucky – home states to Boehner and Senate Republican leader Mitch McConnell. He will use the bridge as a prop to call for increased spending on infrastructure.
September 7th, 2011
The Huffington Post
By: Paul Wiseman and Christopher Leonard
The job market is even worse than the 9.1 percent unemployment rate suggests.
America’s 14 million unemployed aren’t competing just with each other. They must also contend with 8.8 million other people not counted as unemployed – part-timers who want full-time work.
When consumer demand picks up, companies will likely boost the hours of their part-timers before they add jobs, economists say. It means they have room to expand without hiring.
And the unemployed will face another source of competition once the economy improves: Roughly 2.6 million people who aren’t counted as unemployed because they’ve stopped looking for work. Once they start looking again, they’ll be classified as unemployed. And the unemployment rate could rise.
Intensified competition for jobs means unemployment could exceed its historic norm of 5 percent to 6 percent for several more years. The nonpartisan Congressional Budget Office expects the rate to exceed 8 percent until 2014. The White House predicts it will average 9 percent next year, when President Barack Obama runs for re-election.
The jobs crisis has led Obama to schedule a major speech Thursday night to propose steps to stimulate hiring. Republican presidential candidates will likely confront the issue in a debate the night before.
The back-to-back events will come days after the government said employers added zero net jobs in August. The monthly jobs report, arriving three days before Labor Day, was the weakest since September 2010.
Combined, the 14 million officially unemployed; the “underemployed” part-timers who want full-time work; and “discouraged” people who have stopped looking make up 16.2 percent of working-age Americans.
The Labor Department compiles the figure to assess how many people want full-time work and can’t find it – a number the unemployment rate alone doesn’t capture.
In a healthy economy, this broader measure of unemployment stays below 10 percent. Since the Great Recession officially ended more than two years ago, the rate has been 15 percent or more.
The proportion of the work force made up of the frustrated part-timers has risen faster than unemployment has since the recession began in December 2007.
That’s because many companies slashed workers’ hours after the recession hit. If they restored all those lost hours to their existing staff, they’d add enough hours to equal about 950,000 full-time jobs, according to calculations by Heidi Shierholz, an economist at the Economic Policy Institute.
That’s without having to hire a single employee.
No one expects every company to delay hiring until every part-timer is working full time. But economists expect job growth to stay weak for two or three more years in part because of how many frustrated part-timers want to work full time.
And because employers are still reluctant to increase hours for part-timers, “hiring is really a long way off,” says Christine Riordan, a policy analyst at the National Employment Law Project. In August, employees of private companies worked fewer hours than in July.
Some groups are disproportionately represented among the broader category of unemployment that includes underemployed and discouraged workers. More than 26 percent of African Americans, for example, and nearly 22 percent of Hispanics are in this category. The figure for whites is less than 15 percent. Women are more likely than men to be in this group.
Among the Americans frustrated with part-time work is Ryan McGrath, 26. In October, he returned from managing a hotel project in Uruguay. He’s been unable to find full-time work. So he’s been freelancing as a website designer for small businesses in the Chicago area.
Some weeks he’s busy and making money. Other times he struggles. He’s living at home, and sometimes he has to borrow $50 from his father to pay bills. He’s applied for “a million jobs.”
“You go to all these interviews for entry-level positions, and you lose out every time,” he says.
Nationally, 4.5 unemployed people, on average, are competing for each job opening. In a healthy economy, the average is about two per opening.
Facing rejection, millions give up and stop looking for jobs.
Norman Spaulding, 54, quit his job as a truck driver two years ago because he needed work that would let him care for his disabled 13-year-old daughter.
But after repeated rejections, Spaulding concluded a few weeks ago that the cost of driving to visit potential employers wasn’t worth the expense. He suspended his job hunt.
He and his family are getting by on his daughter’s disability check from Social Security. They’re living in a trailer park on Texas’ Gulf Coast.
“It costs more to look than we have to spend,” he says.
Eventually, lots of Americans like Spaulding will start looking for jobs again. If those work-force dropouts had been counted as unemployed, August’s unemployment rate would have been 10.6 percent instead of 9.1 percent.
Emma Draper, 23, lost her public relations job this summer. To pay the rent on her Washington apartment, she’s working part time at the retailer South Moon Under. She’s selling $120 Ralph Lauren swimsuits and other trendy clothes.
Her search for full-time work has been discouraging. Employers don’t call back for months, if ever.
“You’re basically on their timeline,” Draper says. “It’s really hard to find a job unless you know somebody who can give you an inside edge.”
Retailers, in particular, favor part-timers. They value the flexibility of being able to tap extra workers during peak sales times without being overstaffed during lulls. Some use software to precisely match their staffing levels with customer traffic. It holds down their expenses.
“They know up to the minute how many people they need,” says Carrie Gleason of the Retail Action Project, which advocates better working conditions for retail workers. “It’s almost created a contingent work force.”
Draper appreciates her part-time retail job, and not just because it helps pay the bills. It takes her mind off the frustration of searching for full-time work.
“Right now, finding a job is my job,” she says. “If that was the only thing I had to do, I’d be going insane. There is only so much time you can sit at your computer, sending out resumes.”
September 2nd, 2011
The Wall Street Journal
By: Luca Di Leo and Jeff Bater
The U.S. economy failed to add jobs for the first time in almost a year, raising the odds of a return to recession and putting more pressure on President Barack Obama and the Federal Reserve to revive a moribund labor market.
Nonfarm payrolls were unchanged last month—the worst result since a small decline in September 2010—as the government sector continued to shed jobs, the Labor Department said Friday. The private sector added only 17,000 jobs.
About 45,000 telecom jobs were off company payrolls because of a strike at Verizon Communications Inc., contributing to the worst private-sector performance since February 2010. But payrolls were weak even without the one-off Verizon impact.
Data for the previous two months were revised down by a total 58,000 to show payroll increases of 85,000 jobs in July and only 20,000 in June, the government report showed.
The unemployment rate, which is obtained from a separate household survey, was unchanged at 9.1% last month. About 14 million Americans who would like to work can’t get a job.
And the average private-sector workweek fell to 34.2 hours from 34.3 hours, a sign of a greater slowdown in activity than economists had expected.
The results were worse than expected, and stocks fell on the news. Treasury prices rose, pushing yields down. Economists surveyed by Dow Jones Newswires had forecast payrolls would rise by 80,000 last month, with the unemployment rate unchanged.
Citing the nation’s wobbly recovery, Mr. Obama on Friday asked the Environmental Protection Agency to withdraw a proposed regulation for ozone air-quality standards. Republicans and industry groups have attacked the air-quality rule for months, saying it could cost tens of billions of dollars a year or more and kill thousands of jobs.
Mr. Obama is due to unveil new measures Thursday aimed at resuscitating the jobs market, but budget constraints and sharp divisions between Democrats and Republicans make it unlikely Congress will pass a substantive package. The Federal Reserve may therefore end up taking new steps to try to spur growth. The economy slowed sharply in the first half, heightening concerns it could fall back into recession only two years after the end of the severe downturn of 2008 and 2009.
The jobs report is worrying because it is in line with the weak trend seen in recent months, but it doesn’t spell recession yet, the commissioner of the Bureau of Labor Statistics said in an interview Friday.
Keith Hall said that, while the zero payroll figure for last month “is a little bit shocking,” the more concerning aspect is that job gains have only averaged 40,000 over the past four months. Monthly employment gains of at least 130,000 are likely needed just to keep the unemployment rate steady, he warned.
In Friday’s report, several major industries showed weakness beyond the 48,000 employment decline in the information industry, which includes telecom jobs.
Manufacturing, a big creator of jobs for most of the recovery, saw employment decline by 3,000 in August. The battered construction sector showed 5,000 job losses last month. The housing sector remains a big drag on the economy. The retail sector lost nearly 8,000 jobs.
Meanwhile, government employment continued to fall—by 17,000—for the 10th month in a row. Government jobs are expected to continue struggling as administrations try to cut the huge budget gaps accumulated to fight the recession.
Facing re-election in just over a year, Mr. Obama is next week expected to call for more investments in the country’s creaking infrastructure and a possible extension to the 2011 payroll-tax credit to boost consumer spending. But Republican opposition to more spending makes the president’s job harder. The White House Thursday downgraded its outlook for the economy, saying unemployment could still be at 9% in 2012.
Fed Chairman Ben Bernanke a week ago said the nation’s challenges—including long-term unemployment and weakness in housing—are largely beyond the central bank’s control, indicating it is mainly up to Mr. Obama and Congress to fix the economy. Even so, the Fed is likely to step in if it feels the economy is at risk because of government paralysis. Some officials signaled readiness to enact a third round of the Fed’s controversial asset purchases at their latest meeting Aug. 9.
With fiscal policy options “locked up as we roll into an election year, Ben Bernanke will come under tremendous pressure to act,” said Jason Schenker, president of forecasting company Prestige economics.
The jobs report Friday showed 42.9% of unemployed Americans, or six million people, were out of work for more than six months. The longer someone is without a job, the harder it is to find work.
Yet the fact that a large number of Americans have been out of work for several months means that more expansive monetary policy won’t be as effective in helping the labor market, three economists argue in a new paper from the Federal Reserve Bank of Richmond.
“After a long period of unemployment, affected workers may become effectively unemployable,” says the paper, by Andreas Hornstein, Thomas A. Lubik and Jessie Romero. “This suggests that the natural rate of unemployment may have increased.”
Some said the news wasn’t altogether unexpected. “In summary, this report is not good news, but it is not inconsistent with other recent indicators,” said Chad Moutray, chief economist for the National Association of Manufacturers, in a statement. He said the jobs report would “embolden those who argue for new initiatives to stimulate economic growth.”
August 2nd, 2011
The US is poised to approve a deal to avoid defaulting on its debt.
The debt ceiling is the legal limit on the total amount of debt the US government can run up in order to pay its bills. Currently it is $14.3tn.
Political wrangling over the debt ceiling has caused much consternation in the financial markets and many will be happy that the deal has been done – even if the outcome pleases nobody.
So how does the deal work?
In the first instance, and perhaps most importantly as far as the markets are concerned, the deal immediately increases the debt ceiling by $400bn.
That gives the US the wiggle room to go on paying its bills – military salaries, interest on existing loans, Medicare, etc – in the short term.
The deal then raises the debt ceiling by another $500bn until February.
In principle, Congress can vote against this increase, but this is designed to be more of a political gesture and a symbolic rejection of the increase by conservatives in Congress.
President Barack Obama is expected to veto any such vote.
Decisions by committee
In the meantime, the deal puts in place measures to cut the US deficit by at least $2.1tn over 10 years.
From October, $917bn worth of spending cuts kicks in.
In November, a special joint committee of 12 people from the House of Representatives and the Senate comes back with its recommendations for up to $1.5tn in deficit reduction actions.
The panel cannot consider increasing taxes, it seems, but it can change the tax code to show additional revenues.
Congressional leaders are hopeful the compromise will win the backing of both houses, but some Republicans and Democrats in the House of Representatives remain opposed for different reasons.
By Christmas, Congress has to vote on the committee’s plan – with no amendments allowed.
The idea is that the recommendations should be accepted.
If Congress rejects the plan, then a series of automatic spending cuts – thrashed out by Democrats and Republicans over the past few days – take effect.
The cuts are designed to make both sides balk – thereby forcing them in advance to consider seriously the committee’s recommendations.
If the recommendations are rejected, cuts begin in January.
About half the spending cuts would come from defence, although Republican negotiators have managed to broaden the definition from just the military to other areas, such as the Department of Homeland Security.
Medicare – the US’s federally-funded system of pensioner healthcare – would face some cuts, though healthcare for the poorest and pension payments would be spared cuts.
The last part of the deal also has to take place before the end of the year.
Both the House and Senate must hold a vote on adding a balanced budget amendment to the constitution – a rule requiring that future federal spending cannot exceed revenues.
To begin, this requires a two-thirds majority in both houses and is again seen as a political gesture on the part of fiscal conservatives ahead of an election year.
If the amendment does somehow pass, then Mr Obama can ask for a further increase in the debt ceiling of $1.5tn.
If the amendment does not pass, Mr Obama can request an increase of $1.2tn.
A key point for Mr Obama is that the bill would raise the debt ceiling into 2013, meaning he would not face another congressional showdown on spending in the middle of his re-election campaign next year.
All very straightforward, no?
April 28th, 2011
By: Jennifer Sinco Kelleher
The family of a Honolulu doctor whose signature appears on President Barack Obama’s birth certificate woke up to the news Wednesday that the late obstetrician had delivered Obama.
Relatives of Dr. David Sinclair told The Associated Press that they were “blown away” and “honored.”
So-called “birthers” have questioned Obama’s birthplace, espousing theories that he was not born in the U.S., possibly his father’s native Kenya, and therefore ineligible to be president.
Obama released a short form copy of his birth certificate in 2008. Recently, potential Republican presidential candidate Donald Trump began questioning why he hadn’t ensured that the original certificate was released.
On Wednesday, the White House released a copy of the original birth certificate.
Below Obama’s mother’s signature was one which appeared to read: “David. A. Sinclair.”
“It’s my husband’s signature,” said his widow, Ivalee Sinclair, 82, from her downtown Honolulu office. She held up a copy of the birth certificate she printed from the Internet and pointed to the signature, recognizing his familiar left-handed cursive.
Sinclair had an obstetrics and gynecology practice in Honolulu and delivered babies all over Hawaii when Obama was born in 1961, said his son Karl Sinclair, 55, of Kailua. The doctor retired in the late 1990s and died in 2003 at 81.
“What a shocker,” said Karl Sinclair, one of six children. “It’s amazing. I’m blown away by it, quite honestly.”
They found out because one of their relatives was awake at 3 a.m. watching the news and saw the signature, said Dawn Yoshimura-Sinclair, who is married to another Sinclair son, Dr. Brian Sinclair, a neuroradiologist.
“We can attest to the fact that it is indeed dad’s signature,” Yoshimura-Sinclair said. “It’s not a common name over here. There’s no confusion that it was dad.”
Ivalee Sinclair said her husband never discussed his patients and that delivering a black child born to a white mother wouldn’t be a detail he would focus on.
“He never would have brought anything like that up,” she said. “He delivered a lot of children. I have no idea how many.”
Relatives said while they previously never made the connection, looking back it makes sense because there were few obstetricians in Honolulu at the time.
“He never turned anyone away,” said Karl Sinclair’s wife, Julie Sinclair. “Whether they could pay or not.”
Born in Portland, Ore., Sinclair moved to Hawaii at 15 because his father was an engineer who helped build Wilson tunnel on Oahu. The doctor joined the military after hearing the Pearl Harbor bombing from his front lawn, Ivalee Sinclair said. He was an Army pilot and witnessed so much death during the war that he became a doctor so he could have a career focusing on giving life, family members said.
“I think he became a doctor because he was concerned about all the people who died in the war,” his widow said. “I think he wanted to do something to make up for that.”
Ivalee Sinclair met her future husband during trigonometry class at the University of Hawaii, where he enrolled after the war. He later went to medical school at the University of California at San Francisco, where he completed his residency.
Sinclair returned to Honolulu with his wife and children in 1960. He delivered babies mostly at what is now known as Kapiolani Medical Center for Women & Children, just a couple miles from his home and where Obama was born.
Sinclair’s widow still lives in their English tudor which features a view of the Honolulu skyline and where the Sinclairs raised their six children. A shady avocado tree is planted next to plumeria flowers fronting the home that is listed on the state historic registry. A framed black-and-white portrait of the doctor and his family sits over the fireplace in the living room.
The Sinclair sons said they imagine he would be thrilled one of the babies he delivered grew up to be president.
“I’m just honored and proud of my father,” Karl Sinclair said.
“I think it’s great,” said Dr. Brian Sinclair, who pursued a career in medicine because of his father. “Hawaii was a very small place back then so I guess I’m not surprised.”
Brian Sinclair graduated from the same high school as Obama but didn’t know him personally. The Sinclair family includes Obama supporters and those who didn’t vote for him, they said.
The Sinclairs hope the birth certificate will end the speculation.
“It distracts from all the issues,” Ivalee Sinclair said.
“To me, the birth certificate doesn’t lie,” Karl Sinclair said. “I think that should put everything to bed.”
April 8th, 2011
The Huffington Post
Uncomfortably close to a deadline, President Barack Obama and top congressional leaders have only hours to avert a Friday midnight government shutdown that all sides say would inconvenience millions of people and damage a still fragile economy.
Obama said he still hoped to announce an agreement on Friday but did not have “wild optimism.”
In revealing nothing about what still divides them, Obama and the lawmakers, House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., all said another late night of talks in the Oval Office had narrowed their differences over cutting federal spending and other matters.
But Obama said ominously that the machinery of a shutdown was already in motion.
“I expect an answer in the morning,” Obama told reporters Thursday evening as representatives from the White House and Capitol Hill plunged ahead with negotiations into the night.
The aides were trying to cobble together a deal on how much federal spending to slash, where to cut it and what caveats to attach as part of a bill to fund the government through Sept. 30. A temporary federal spending measure expires at midnight Friday.
As the pressure mounted, Obama abruptly postponed plans to promote his agenda in Indiana on Friday.
For a nation eager to trim to federal spending but also weary of Washington bickering, the spending showdown had real implications.
A closure would mean the furloughs of hundreds of thousands of workers and the services they provide, from processing many tax refunds to approving business loans. Medical research would be disrupted, national parks would close and most travel visa and passport services would stop, among many others.
April 1st, 2011
President Barack Obama has signed a secret order authorising covert United States government support for rebel forces seeking to oust Libyan leader Muammar Gaddafi, government officials told Reuters yesterday.
Mr Obama signed the order, known as a presidential “finding”, within the last two or three weeks, according to government sources familiar with the matter.
Such findings are a principal form of presidential directive used to authorise secret operations by the CIA. This is a necessary legal step before such action can take place, but does not mean that it will.
“As is common practice for this and all administrations, I am not going to comment on intelligence matters,” White House spokesman Jay Carney said. “I will reiterate what the President said yesterday – no decision has been made about providing arms to the opposition or to any group in Libya.”
The CIA declined comment.
People familiar with US intelligence procedures said that presidential covert action “findings” are normally crafted to provide broad authorisation for a range of potential US government actions to support a particular covert objective.
In order for specific operations to be carried out under the provisions of such a broad authorisation – for example the delivery of cash or weapons – the White House also would have to give additional “permission” allowing such activities to proceed.
Former officials say these follow-up authorizations are known in the intelligence world as “‘Mother may I’ findings.”
In 2009, Mr Obama gave a similar authorisation for the expansion of covert US counter-terrorism actions by the CIA in Yemen. The White House does not normally confirm such orders have been issued.
News that Mr Obama had given the authorisation surfaced as the President and other US and allied officials spoke openly about the possibility of sending arms supplies to Col Gaddafi’s opponents, who are fighting better-equipped government forces.
The US is part of a coalition, including NATO, which is conducting air strikes on Libyan government forces under a United Nations mandate aimed at protecting civilians opposing Col Gaddafi.
In interviews by US networks on Tuesday, Mr Obama spoke of applying “steady pressure, not only militarily but also through these other means”, with the objective of having Col Gaddafi “ultimately step down” from power.
March 18th, 2011
By: Ambrose Evans-Pritchard
The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance.
“The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation,” he said.
Mr Geithner later qualified his remarks, insisting that the dollar would remain the “world’s dominant reserve currency … for a long period of time” but the seeds of doubt have been sown.
The markets appear baffled by the confused statements emanating from Washington. President Barack Obama told a new conference hours earlier that there was no threat to the reserve status of the dollar.
“I don’t believe that there is a need for a global currency. The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world,” he said.
The Chinese proposal, outlined this week by central bank governor Zhou Xiaochuan, calls for a “super-sovereign reserve currency” under IMF management, turning the Fund into a sort of world central bank.
The idea is that the IMF should activate its dormant powers to issue Special Drawing Rights. These SDRs would expand their role over time, becoming a “widely-accepted means of payments”.
Mr Bloom said that any switch towards use of SDRs has direct implications for the currency markets. At the moment, 65pc of the world’s $6.8 trillion stash of foreign reserves is held in dollars. But the dollar makes up just 42pc of the basket weighting of SDRs. So any SDR purchase under current rules must favour the euro, yen and sterling.
Beijing has the backing of Russia and a clutch of emerging powers in Asia and Latin America. Economists have toyed with such schemes before but the issue has vaulted to the top of the political agenda as creditor states around the world takes fright at the extreme measures now being adopted by the Federal Reserve, especially the decision to buy US government debt directly with printed money.
Mr Bloom said the US is discovering that the sensitivities of creditors cannot be ignored. “China holds almost 30pc of the world’s entire reserves. What they say matters,” he said.
Mr Geithner’s friendly comments about the SDR plan seem intended to soothe Chinese feelings after a spat in January over alleged currency manipulation by Beijing, but he will now have to explain his own categorical assurance to Congress on Tuesday that he would not countenance any moves towards a world currency.