I have suspended writing new posts for this blog. I watch the Republican presidential debates and listen to the debate about bombing Iran and am speechless. There is hardly anything left to say.
This is what’s happening .
1. First Republican House leadership wanted to have a two month bill that would extend the payroll tax cut and unemployment benefits.
2. Republican House members rejected this.
3. Meanwhile, the Senate passed a two-month extension by 89-10, an overwhelming bi-partisan majority for a bill endorsed by Senate Minority Leader McConnell.
4. The Senate left for the holidays and will return January 2nd.
5. Normally, with a situation this serious and a bill passed across parties by the Senate, House members would vote to pass the Senate bill. INstead, the House did not take a vote on the bill itself, but used a procedural rule to have a joint Senate-House Committee reconcile the differences. In this way, Republicans would be protected from the burden of having voted against the payroll cut and UE extensions.
So these are the choice:
1. The House passes the Senate bill that gives a 2 month extension
2. President Obama calls the Senate back to vote on a house fill for a full year extension. The Houses passes it, too
3. A House/Senate Committee works out the differences. But since the House never voted on an actual bill, how that would happen is unclear.
4. No bill is passed and unemployment insurance runs out for millions and millions more will see a significant increase in payroll taxes.
Don’t these people realize that taking money out of peoples’ pockets now is a clear and present danger to the economy?
Although House Republicans have obstructed many of President Obama’s initiatives with fillibuster threats, amendments and block voting, Obama has called for the extension of the payroll tax holiday for the next year. Leaders of both parties agree with the extension and were trying to work out exactly how it would work.
It looked like a bipartisan go – until Speaker Boehner decided to throw a totally unrelated issue into the extension bill. Approval of the TransCanada pipeline is now part of the payroll legislation. This make no sense at all
Although it would create thousands of new jobs, Mr. Obama has held up approval of the pipeline over environmental concerns. The Administration has not vetoed the pipeline.
Dragging the pipeline issue into a debate on a crucial part of Obama’s recovery/jobs bill is a way to scuffle payroll tax relief and increase everyone’s taxes this year.
The Senate will most likely reject the pipeline issue, so either it would be taken out of the legislation during conference or be vetoed when it goes to the President’s desk.
These types of gimmicks are not restricted to the GOP. Congressional rules allow either party to scum up the works of lawmakers. They certainly don’t serve the electorate.
The International Association of Machinists will withdraw its support for an NLRB (National Labor Relations Board) complaint against Boeing, which claimed the company opened a new plant in South Carolina as retaliation for strikes against Boeing by its machinists. According to the WSJ:
Late last week, Boeing moved to allay concerns by some IAM members that the tentative deal included language allowing the company wiggle room to withdraw from its pledge to make the planned 737 Max jet in Renton.
“Let me be as clear as I can possibly be: If this agreement is ratified, the [737 Max] will be built in our Renton factory,” , who heads Boeing’s commercial-airliner unit, said in a message to employees Friday.
The union contract seems fair by today’s standards. It increases the workers’ share of medical costs but gives a 2% wage increase each year, up to 4% in productivity bonuses plus a $5,000 signing bonus within the next few weeks. The assurance from Boeing executives that the move to South Carolina was not the first step in closing Boeing’s Washington operations convinced skeptical employees.
The tentative pact comes at a time when Boeing plans to increase its production of jets by a third over the next three years to reduce a huge order backlog. The company wants to avoid potential disruptions such as a strike by IAM workers, who walked off the job twice in the past six years.
The NLRB complaint had been denounced by conservatives and Republican Presidential candidates who accused the Obama Administration of interfering with ‘normal business practices’ of one of the country’s largest employers.
First of all, we don’t know how the complaint would have been addressed or solved by the NLRB. Second, the NLRB, as well as 8-hour day and Child Labor laws were first passed exact for that reason: to interfere with ‘normal business practices’ that had become unacceptable to the American public. Third, the Machinists cleverely played it as a bargaining tool for the negotiations.
Boeing, on the other hand, gets to keep ‘Dreamliner’ production in South Carolina, although I don’t think there was a chance in hell the NLRB would have been able to close the South Carolina plant down either legally or physically. Nothing like that has occurred in decades. And nothing like that would happen when the economy is weighed down by unemployment and low consumer spending.
Actually, the Boeing/Machinists process and resolution is a model of collective bargaining where both sides compromised but achieved enough of what they wanted to sign the deal.
I wish the Republican candidates would start barking up the right trees.
Supporting the payroll tax cut should be a no-brainer even for the most ideologically tilted GOP members. But conservatives are complaining it will hurt small business. Most politicians, from both parties, consider any legislation that hurts small business to be toxic. Small business is as American as apple pie and motherhood. Rightfully so. Small business creates jobs; small business owners take huge risks and work hard to make their companies successful.
has an analysis that says most, except a tiny minority of small businesses will benefit not be hurt by President Obama’s proposal:
that a to extend and expand the payroll tax cut and pay for it through a surtax on incomes over $1 million would hurt small businesses and thus weaken job growth.
This claim overlooks the benefit of the payroll tax cut not only for working families but for small businesses as well. It also greatly overstates the impact that the millionaire surtax would have on a relatively tiny number of small businesses.
The bill’s payroll tax cut would not only boost workers’ paychecks by hundreds of dollars or more in 2012 but also cut the taxes of every small business. Employers would receive a tax holiday on fully half of their 2012 Social Security taxes on the first $5 million in payroll. If employers create jobs, they would pay no Social Security taxes on the first $50 million in increased taxable payroll.
The millionaire surtax, in contrast, wouldn’t take effect until 2013 and would hit only a tiny fraction of small businesses.
With unemployment finally dropping, now is the time to rally around Obama’s job proposals. Expect partisanship to intensify in relation to the economy picking up. The Republicans are counting on the bad economy the justify their ‘refusnik’ strategy of the last three years by defeating the President in 2012.
The US economy added 120,000 jobs in November, as more jobs were filled in September and October than previously reported. According to :
The reduction in the jobless rate, which stood at 9.0% in October, stemmed in large part from a decline in the size of the labor force. Some 315,000 people stopped looking for jobs last month, which is usually not a good sign.
Yet the decline in the labor force is belied by other evidence showing that companies continue to add workers at a modest pace. The increase in hiring in November was accompanied by revisions in the October and September data that show an additional 72,000 jobs were created.
What’s more, the labor force had increased by nearly 1 million people in the three months before November, suggesting that more jobs are available. People tend to reenter the labor force when they think they have a better chance of finding a job.
A against Citigroup:
Securities law experts say there are ways that the S.E.C. might be able to strengthen its enforcement efforts and make Wall Street fearful of penalties that sting. Jill Gross, a law professor and director of the Investor Rights Clinic at Pace University, said that as a result of the judge’s decision, companies were now likely to have to admit some kind of fault in their settlements.
“It doesn’t need to be a full admission of all culpability,” Ms. Gross said, “but they are going to need some type of admission that something went awry.”
Goldman Sachs did so last year when it settled S.E.C. charges similar to the case against Citigroup that Judge Rakoff rejected. Both firms were charged with selling a mortgage bond investment without telling investors that the people assembling the portfolio were betting that it would drop in value.
In its S.E.C. settlement, Goldman acknowledged that its marketing materials “contained incomplete information,” and that it committed “a mistake” in leaving the full disclosures out of its marketing documents.
I don’t know what the New York Times meant to say in this piece but it only underscored that, while bankers are complaining about the burden of anti-business regulation, the S.E.C. enforcement regime is actually a farce. Not that the two aren’t related. If the S.E.C. legal and enforcement regime had teeth, lawmakers would not have to keep making new laws to hide the fact the first ones didn’t work and CEOs could play golf instead of complain
What is the difference between Citigroup giving no examples of what it did that brought about the settlement and Goldman Sachs offering excuses like its materials ‘contained incomplete information’ or we made a ‘mistake’ not giving full disclosure in marketing documents.
Neither company made a ‘mistake.’ They knew what they were doing. Goldman and otherinvestment houses had clients who wanted to ‘short’ (sell the home mortgage securities market by betting that it would collapse. So they got busy putting together some of the worst mortgages they found and selling them ‘long’ to other investors betting that the market would go up. Goldman had clients betting against each other and not knowing it.
In Las Vegas, this would be called a rigged game. It is illegal. The action go farther than making mistakes in marketing materials or even in tiny prospectus print. Transparency and disclosure are touted are guards against fraud and phony schemes like this. The errors here were only a symptom of a much larger transgression. Not only should Goldman be punished for disclosure errors, it should be openly found guilty of violating security laws.
People all over the country are asking why Wall Street officials haven’t been charged indicted like bankers were in the late 1980s S&L scandal. The derivative market has functioned on private contracts between firms and individuals. Wall Street believes the investors who buy these products are savvy and wealthy enough to handle negative consequences. However, this time the consequences went far beyond a clubby group of financiers on Wall Street, bringing down the global financial system, robbing retirement funds of years of returns, aggravating unemployment and diverting financing from innovation, entrepreneurs and small business.
Goldman can’t seriously believe Americans will believe that the company’s near collapse resulted from a few ‘marketing errors’?
Then again, the Republican Party has diligently hyped up a strange meme saying liberal politics are worse for Wall Street than bankers lying.
He should be. We all should be. On Monday, the Federal District Court judge rightly by the Securities and Exchange Commission to settle a securities fraud case against Citigroup, saying that was “neither fair, nor reasonable, nor adequate, nor in the public interest.”It’s not only that the money was not enough, though it certainly seems puny compared with the damage done. The S.E.C. charged that Citigroup had not adequately disclosed to investors its role and interest in creating and selling — and betting against — a mortgage-backed investment that was intended to fail. When the investment did, indeed, tank, the bank made $160 million, according to the S.E.C., while investors lost $700 million. – New York Times
The Judge found that the deal did not properly disclose what Citigroup did. The SEC routinely allows banks and other financial institutions to pay a fine while admitting no wrong-doing. And the puny fine of $250 million is a drop in the bucket for Citigroup, certainly far below the punishment needed to keep them from withholding information from investors again.
Banks mostly fear consumer/investor lawsuits
For too long the SEC has said it does not have the money or staff to go forward with trials involving complicated financial dealings, especially since the financial institutions being sued have big pockets that can hire a phalanx of lawyers.
This is the problem with the government and Congress. Congress could either allocate more money to these cases or allow Federal prosecutors to ‘hire’ big law firms on a contingency basis. Or the SEC could detail their investigations to meet Judge Rakoff’s standards (at least).
The SEC isn’t going to take the chance. A ruling that finds Citigroup engaged in fraud would be a savior for investors who lost money on a deal full of secret agreements and want to sue Citibank themselves.
Obviously, a negative SEC finding could cause a run on Citibank’s money or incur so many liabilities that the company falls into bankruptcy. The financial institutions have effectively neutered regulation that is supposed to prevent malpractice and fraud in the financial sector.
Or maybe it’s another example of Citigroup being ‘to big to fail’. If so, it is too big to be in business.
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