Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (47071)	11/9/2010 10:04:25 PM
From: Peter Dierks	Respond to of 71588

Less Bad Stuff Is Good Post a CommentBy Larry Kudlow - November 4, 2010 11:18 AM Momentous events this week -- the Republican House sweep and the Fed's QE2 -- moved the stock market needle only a little over Tuesday and Wednesday, although the net impact was a gain of about 90 points. Obamanomics was repudiated at the polls and the Republicans inflicted a crushing defeat on the Democrats in the House. However, tea partiers disappointed in several Senate elections, leaving Harry Reid & Co. in charge of the upper chamber. The real meaning of the new Senate-House-Obama triangle is not yet clear. The bad stuff will be stopped. That's good. But how much good stuff can be legislated remains to be seen. This might be what's slowing down the stock market. (Though again, I note, a 90 point rise is not nothing.) Two key Senate races produced supporters of extending all the Bush tax rates. This could be the key. Democrat Jim Manchin in West Virginia and Republican Mark Kirk in Illinois will be seated immediately to fill the Robert Byrd and Barack Obama vacancies. This raises the probability that a full extension of the Bush tax cuts will go through the Senate. I'm going to assume that the people have spoken, even to the lame ducks in the House. And a conciliatory and compromising Obama at his news conference today suggests that the president will sign a temporary full extension of the Bush tax rates. That's a pro-growth development. On the Fed side, the central bank is going to pump $600 billion of new money into the over $14 trillion economy in the next eight months. The Fed held back on a shock-an-awe program that could have been over $1 trillion. But it's going ahead with the money stimulus. This middle-ground action was already discounted by the market. The dollar did fall today, but so did gold. Of course, I would have preferred no QE2 at all. Similarly, to protect the dollar, I would replace the Fed altogether with an ounce of gold. But that's my problem. Here's a question, though. Is the Fed stimulating into an improving economy? Today's ISM for services came in above expectations. The same is true for Monday's ISM manufacturing report. September factory orders rose 2.1 percent. And monthly car sales near 12.4 million at an annual rate are the best since September 2008. It wouldn't be the first time the central bank is a lagging indicator. Commodity indexes have been booming. Bond market inflation expectations have been rising. And now the economy seems to be improving in the early part of the fourth quarter. To me, the Fed is at least doing minimal harm, although I continue to fret about the outlook for the dollar. But the possibility of a pro-growth fiscal policy coming out of the lame-duck Congress -- a large budget continuing resolution that extends the Bush tax rates and is stingy on spending -- is a good thing. Regarding the future triangulation between Obama, Reid, and Boehner, we will all have to puzzle though this. But surely stopping the bad stuff is a plus. kudlowsmoneypolitics.blogspot.com

To: Peter Dierks who wrote (47071)	11/10/2010 3:52:26 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Debt Plan Would Cut Taxes, Social Security, Medicare November 10, 2010, 3:19 PM EST By Heidi Przybyla and Brian Faler (Updates with White House statement in sixth paragraph.) businessweek.com Nov. 10 (Bloomberg) -- A presidential commission’s leaders proposed a $3.8 trillion deficit-cutting plan that would trim Social Security and Medicare, reduce income-tax rates and eliminate tax breaks including the mortgage-interest deduction. The plan would overhaul the federal budget by throwing out hundreds of tax breaks for items such as capital gains and child care. It would raise the gas tax, slash defense spending and bring down health-care costs by clamping down on medical malpractice suits. The Social Security retirement age would be raised to 68 in about 2050 and 69 in about 2075. “This country’s out of money and we better start thinking,” said Erskine Bowles, co-chairman of the panel created by President Barack Obama. Without “tough choices,” Bowles said, “we’re on the most predictable path toward an economic crisis that I can imagine.” Bowles, former President Bill Clinton’s chief of staff, and Republican former Senator Alan Simpson of Wyoming announced the proposal in Washington today, stressing that it was intended as a starting point for discussion. The savings would come between 2012 and 2020. The result would be a deficit totaling about $400 billion or about 2.2 percent of the nation’s gross domestic product in 2015. That would exceed Obama’s goal for the panel of a reduction to 3 percent, from the current 9 percent of GDP. White House spokesman Bill Burton said in an e-mail the proposals “are only a step in the process towards coming up with a set of recommendations.” He said Obama wants to give the panel “space to work on it” and wouldn’t comment on the plan. Lawmakers Balking The chairmen’s plan is already causing some Democrats and Republicans on the 18-member commission to balk. While most economists say some combination of spending cuts and tax increases is necessary, Republicans are wary of tax hikes and Democrats are reluctant to reduce U.S. government benefits. “This is not a package that I could support,” Representative Jan Schakowsky, an Illinois Democrat, said during a break in a private meeting by the commission before the chairmen released details of their plan. She said any package able to win the necessary 14 votes on the panel would have to look “very different” from the options under discussion. None of the proposals would take effect next year to avoid disrupting the economic recovery. Bowles said income-tax rates would be reduced to three levels: 8 percent, 14 percent and 23 percent. Mortgage Deduction Wiping out all tax breaks, including the home mortgage deduction, while lowering rates would save $100 billion a year, Bowles said. Members of the panel could decide to keep some tax breaks by offering offsetting cuts, he said. Bowles said about three-quarters of the savings would come from spending cuts with the remainder from tax increases. “We have harpooned every whale in the ocean and some of the minnows,” Simpson said. “No one has done this before.” The proposal calls for discretionary spending to be cut by $1.4 trillion over 10 years, while mandatory spending -- including Social Security, Medicare and Medicaid -- would be reduced by $733 billion. Taxes would be raised by $751 billion, including a 15-cent increase in the gas tax starting in 2013. Tax increases would begin in 2012, when they would total $69 billion. They would ramp up to $372 billion in 2015, $588 billion in 2018 and $761 billion in 2020. Farm subsidies would be cut by $3 billion a year. The proposal would also attempt to slow the growth of health-care costs by paying doctors participating in the Medicare health program for the elderly less and calling for “comprehensive” legislation to reduce medical malpractice costs. Freezing Federal Salaries Discretionary spending cuts in the plan include reducing congressional and White House budgets by 15 percent, freezing federal salaries and cutting the federal workforce by 10 percent. The discretionary reductions would be split equally between defense and domestic programs, Bowles said. The plan calls for $100 billion in defense cuts, including freezing federal salaries and noncombat military pay at 2011 levels for three years and reducing spending on research and development and on facilities maintenance. The government is projected to run $8 trillion in deficits over the next 10 years, which would push the national debt up to more than $20 trillion. The panel’s goals drew praise from Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, a Washington-based group that advocates balanced budgets. The plan “would fix our fiscal problems and truly reflects a balanced compromise across party lines,” she said. Some of the plan would be painful, she said, “but we must be mindful of the consequences if we fail to act.” Simpson said the plan was designed to give members of the panel something to “chew on” for further discussions. ‘Witness Protection’ “This is Al’s and my proposal, nobody else’s,” Bowles said. “The president hasn’t seen this proposal.” Some members of Obama’s financial team have seen the plan and they liked some things and not others, he said. Asked how interest groups would react, Bowles joked, “we’re going to be in the witness protection program.” Senator Dick Durbin, an Illinois Democrat, called the plan a “starting point for the conversation.” “We’re not going to have an up-or-down vote on this,” said Durbin. “There are proposals in there that are painful. I told them I said there are things in here which inspire me and other things which I hate like the devil hates holy water. I’m not going to vote for those things.” Some Republicans also expressed skepticism that the report would survive in its current form. New Hampshire Senator Judd Gregg called the plan a “starting point.” Representative Jeb Hensarling of Texas said “some of it I like, some of it disturbs me.” --With assistance from Kristin Jensen in Washington. Editors: Laurie Asseo, Jim Rubin. To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net; Brian Faler in Washington at bfaler@bloomberg.net; To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net

To: Peter Dierks who wrote (47071)	11/11/2010 12:57:49 AM
From: Peter Dierks	Read Replies (1) \| Respond to of 71588

New Push to Ban Earmarks in Senate NOVEMBER 9, 2010. By JANET HOOK Lawmakers aligned with the tea party are moving quickly to show their strength by trying to ban budget earmarking in the Senate, where support is still strong for the practice critics deride as pork-barrel spending. South Carolina Sen. Jim DeMint on Monday was collecting signatures on a letter calling for a vote by his fellow Senate Republicans to ban earmarks, in which spending is channeled to projects favored by individual lawmakers, outside the competitive federal funding system. House Republicans and President Barack Obama have endorsed such a ban, and a wave of Republicans who oppose earmarks were elected to the Senate last week. But Mr. DeMint's move puts him at odds with Senate Minority Leader Mitch McConnell, a Kentucky Republican who has defended earmarking as a legitimate exercise of Congress's power of the purse. The face-off looms as one of many tests of Republican leaders' ability to manage the demands of tea-party activists. House GOP leaders want to promote Rep. Jeb Hensarling (R., Texas) to a leadership post but unexpectedly face a challenge from Rep. Michelle Bachmann (R., Minn.), founder of the House Tea Party Caucus. On Monday, House GOP leaders moved to give newly elected conservative lawmakers a voice in leadership when they appointed tea party-backed freshmen to a panel planning the GOP transition to power. In the House, even old-guard Republicans who built their careers on earmarking have essentially agreed to a moratorium on the practice to avoid confrontation with the tea party. Senior appropriations-committee members who are campaigning to be chairman of the panel are backing an extension of the current one-year ban. One of them, Rep. Jerry Lewis (R., Calif.), is also shoring up his tea-party credentials by advocating that a committee seat be given to Rep. Jeff Flake (R., Ariz.), an anti-earmark crusader. Senate Republicans, like their House counterparts, will meet next week to choose their new leaders and organize for the new Congress. That is when Mr. DeMint plans to offer a proposed rule change to ban earmarks in keeping with the House GOP policy. We'll never be trusted to be the party of less spending while we're rationalizing more spending through earmarks," said Sen. Tom Coburn (R., Okla.). He called earmarks "the gateway drug to spending addiction in Washington." A senior GOP leadership aide said new earmark rules would be considered as part of a broader debate within the party that includes other fiscal-policy proposals, such as a cap on overall government spending. House Democrats haven't adopted an outright ban on earmarks, but prohibit them when they are made to benefit private, for-profit companies. Senate Democrats have imposed disclosure requirements but haven't banned earmarks. In 2008, the Senate rejected a proposed earmark ban by a vote of 71-29. Only six Democrats voted for the amendment, including then-Sen. Barack Obama. During the 2010 campaign, earmarks were painted by opponents as an emblem of excessive government spending. Among the Republicans who won election to the Senate last week, many campaigned against earmarks, including Marco Rubio of Florida, Mike Lee of Utah, Mark Kirk of Illinois and Rand Paul of Kentucky. But Mr. McConnell, a longtime member of the appropriations committee, has continued to defend earmarks as a way for Congress, rather than the executive branch, to decide how money is spent. He said that was why he wasn't surprised that Obama embraced the idea in his post-election press conference. "Every president would like for us to appropriate all the money and send it to them and let them spend it in any way they want to," Mr. McConnell said Sunday on NBC's "Meet the Press." "The earmark issue is about discretion—about an argument between the executive branch and the legislative branch over how funds should be spent." He also argued that the debate about earmarks distracted from the bigger-ticket items in the budget. The $15.9 billion in earmarks made in the fiscal year that ended Sept. 30 amounted to about 1% of federal discretionary spending, the part of the budget that Congress controls on an annual basis. "This debate doesn't save any money," McConnell said, "which is why it's kind of exasperating to go some of us who really want to cut spending." online.wsj.com