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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: CommanderCricket who wrote (9100)	10/5/2001 1:59:51 PM
From: stockman_scott	Respond to of 23153

Want Fiscal Stimulus? Simplify Taxes Friday October 5, 8:29 am Eastern Time BusinessWeek Online Daily Briefing: SOUND MONEY By Christopher Farrell You have to hand it to Federal Reserve Board Chairman Alan Greenspan: Once again, he's showing he knows how to exercise leadership during an economic crisis. The Fed has acted decisively since September 11 by reducing its benchmark interest rate by a percentage point in two swift moves, to 2.5% -- the lowest rate since 1962. And despite criticisms that the nation's central bank is simply pushing on a string, a steady stream of rate cuts all year did keep the economy out of recession before the terrorist attacks. Low interest rates propped up the housing market, a gain that more than offset the losses many investors suffered in the stock market. Consumers also shored up their balance sheets by taking advantage of cheap rates to refinance their mortgages. FAVORED SCHEMES. However, monetary policy is no longer enough to revive an economy plunged into negative growth by terrorism. The key question now is fiscal policy. A consensus appears to be growing among policymakers that any fiscal-policy stimulus package should be more than $100 billion. Congress and the Bush Administration have already hiked government spending by some $45 billion, much of it targeted toward defense and national security. And on Oct. 4, President Bush said he would push for a stimulus plan as large as $75 billion to ``invigorate this economy.'' Now comes the difficult part. Plenty of proposals are floating around Washington, many of them favored schemes of industry and other special interests that are being dusted off in the current environment. Among the most popular proposals: A lower capital-gains tax rate, reduced corporate income taxes, a tax rebate, a temporary cut in payroll taxes, or more likely, some combination of these ideas. Each proposal may have individual merit. But taken singly or together, these maneuvers will only make a far too complicated tax code even more Byzantine. Already, it's full of credits, deductions, exemptions, and income phase-outs, especially after the passage of President's Bush's gargantuan, gimmick-laden tax bill earlier this year. For instance, new education tax breaks that take effect in 2002 expire in 2006; the estate tax is phased out until 2010 but is restored in 2011; and it takes years for families to escape the widely reviled marriage penalty. ELIMINATE INEQUITIES. Why not take the opportunity offered by the nation's need for fiscal stimulus to ditch the mess of the 2001 tax-cut law and create a far simpler tax code instead. Get rid of as many deductions, credits, and phase-outs as possible, including eliminating the distinction between taxing ordinary income and capital gains. Broadening the tax base would allow Congress to sharply reduce income tax rates and get rid of the many inequities that have crept into the code over the years. Congress could act quickly since the supporting data are available -- tax specialists such as Joel Slemrod of the University of Michigan have long studied the trade-offs inherent in populist tax simplification. A concerted push to steer Washington away from the hard-to-track tax-subsidy game would maintain fiscal discipline. Tax simplification would mark a genuine improvement in fiscal policy, and best of all, it would accomplish these goals while stimulating the economy. Go to www.businessweek.com to see all of our latest stories.

To: CommanderCricket who wrote (9100)	10/5/2001 2:27:00 PM
From: JungleInvestor	Respond to of 23153

The beat goes on in California - wonder what this will do to rates? Thanks, Commander, for the tip - always on the lookout for 10 baggers. Friday October 5, 2:16 pm Eastern Time Federal judge approves SCE settlement (UPDATE: Updates with Edison reaction in paragraph 4, additional background in paragraph 5, stock price in 10th paragraph) LOS ANGELES, Oct 5 (Reuters) - U.S. District Judge Ronald Lew on Friday approved the settlement of a lawsuit filed by thefinancially struggling utility, Southern California Edison (SCE), against state regulators. Lew called the settlement, which was presented to him Tuesday, ``fair, adequate and reasonable.'' SCE, a unit of Edison International (NYSE:EIX - news), has said it believes the settlement will save it from bankruptcy. It allows the utility to recover an estimated $3.3 billion of its debts through future customer rates. John Bryson, chief executive officer of the parent company, said the decision ``now finalizes a workable plan created by SCE and the CPUC (California Public Utilities Commission) for the utility to become creditworthy once again, to pay its obligations, and to remove the state from the power business.'' The utility's financial woes, which led to its credit ratings falling to junk status, meant that it has been unable to buy power on the wholesale market on behalf of its customers for several months. A state agency, the California Department of Water Resources, has taken over that role. SCE has estimated it ran up debts of $6.35 billion buying power at soaring prices on the wholesale market. It was not allowed to fully pass on those costs due to a retail price freeze imposed under California's power deregulation laws. The burden drove it to the brink of bankruptcy. The deal between the utility and the CPUC settles a federal lawsuit filed by SCE, which claimed the regulators had broken federal law and unconstitutionally taken its property by not letting it bill customers for the full cost of their electricity. Lew had allowed two intervening parties, Los Angeles County and the consumer group, The Utility Reform Network (TURN), to file papers outlining their opposition to the plan before ruling. Consumer groups regarded the settlement as a ``bailout'' of the utility at ratepayer expense. Edison shares were unchanged at $15.80 Friday on the New York Stock Exchange. Rosemead, California-based SCE is California's second largest utility with about 11 million customers. California's largest utility, PG&E Corp. (NYSE:PCG - news) unit Pacific Gas & Electric, filed for Chapter 11 bankruptcy protection in April after running up similar debts.