Each morning, Bill Scher and Terrance Heath serve up what progressives need to effect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
MORNING MESSAGE: Taxpayer-Backed Mortgage Giant Bets Against Its Customers
OurFuture.org's Richard Eskow: "The short version is this: A government-backed agency used billions in taxpayer money to bet against the economic well-being of those taxpayers. (Even people who don't have mortgages are being hurt, because the housing crisis is crippling the entire economy.) It undercut its own social function. And because these were risky bets, it went back to the glory days of banker recklessness - once again gambling with our money but keeping the bonuses for themselves it worked out. Heads they win, tails we lose. The moral of the story? Government is better than the private sector at doing many of its historical functions. More often than not, when it comes to well-run agencies we need to re-learn a lesson: Privatization stinks."
WH To Reveal New Refi Plan
President to propose mortgage refinancing plan today. WSJ: "The plan aims to help borrowers who are current on their mortgages refinance into lower-interest federally insured loans. Borrowers would qualify even if they owe more than their homes are worth or if they have trouble securing a new mortgage from a private lender ... to fund the effort's estimated $5 billion to $10 billion price tag [Obama] is proposing a tax on large banks—something Republicans have said they oppose ... Mr. Obama intends to unveil other housing initiatives the White House can implement unilaterally, that won't need congressional approval. Among them, officials said, is an auction process for bulk sales of foreclosed homes that federally controlled mortgage entities would sell to investors who maintain them as rentals."
Atlanta suffering most from housing crisis. NYT: "The region, plagued by mortgage fraud and developers who dotted the exurban landscape with large luxury homes that never sold, is inundated with foreclosed properties. In fact, Atlanta has the most government-owned foreclosed properties for sale of any large city, according to the Federal Reserve. Nationwide, sales of existing homes have recently picked up, prompting some economists to suggest that the housing market is finally starting to repair itself. But the number of new homes sold fell to a record low in December, and many homeowners are stuck in houses that are worth far less than they owe on their mortgages ... The glut is likely to grow. According to RealtyTrac, Atlanta has a nearly 12-month supply of foreclosed homes, about 70 percent of which are sitting on the books of servicers and lenders, waiting to go on sale."
W. Post's Harold Meyerson lauds NY AG Schneiderman's effort to secure a federal investigation of the banks: "With just 15 lawyers at his disposal, Schneiderman couldn’t have waged a far-reaching investigation anyway. He’s now secured commitments of much greater resources from the Justice Department, the FBI, the Internal Revenue Service, the Securities and Exchange Commission, the new Consumer Financial Protection Bureau, and various U.S. attorneys and other state attorneys general. There will be several hundred investigators, as well as state and federal statutes under which alleged lawbreakers can be charged. All of this means that the government will be able to commit resources comparable to those that a mega-bank can bring to its defense."
Regulators weigh Volcker Rule exemption. Bloomberg: "U.S. banking regulators are exploring whether they can exempt sovereign debt from the Dodd-Frank ban on proprietary trading after foreign governments complained that the rule could raise borrowing costs and impede the flow of capital ... The global backlash against the Volcker rule has been welcomed by U.S. banks ... Granting an exemption may have to overcome skepticism in Congress in the midst of the European debt crisis and the probe of MF Global Holdings Ltd, which collapsed after making a $6.3 billion bet on European government bonds."
House GOP Threatens Transportation Jobs Bill
House GOP introduces transportation bill loaded with poison pills. Politico: "...drilling in the Arctic National Wildlife Refuge, cutting Amtrak’s budget, forcing approval of the Keystone XL pipeline and ending mandatory spending on bicycle and pedestrian paths ... former T&I Chairman Jim Oberstar (D-Minn.) [said] 'It seems to me that fringe policymakers have hijacked the transportation bill.' ... There were no Democrats at the press conference. Even one of the Senate’s most conservative members, Environment and Public Works Committee ranking member Jim Inhofe (R-Okla.), opposes the House’s use of expected oil revenues to pay for the five-year proposal."
President celebrates auto turnaround at the Washington Auto Show. Politico: "The president viewed more than a dozen new electric and hybrid models from Ford, Dodge and General Motors, and even sat in the drivers seat of a few, checking out the interiors. 'When you look at all these cars, it is a testimony to the outstanding work that’s been done by workers, American workers, American designers,' he said. 'The U.S. auto industry is back.' ... 'It’s good to remember the fact that there were some folks who were willing to let this industry die ... Because of folks coming together, we are now back in a place where we can compete with any car company in the world.'"
China encroaching on US auto parts industry. Politico: "Along with the United Steel Workers and United Auto Workers, Sens. Bob Casey of Pennsylvania, Sherrod Brown of Ohio and Debbie Stabenow of Michigan, and Rep. Sander Levin (D-Mich.) asked the president on Tuesday to make good on his State of the Union pledge to investigate unfair trade practices. A brief released ... by the Alliance for American Manufacturing claims the Chinese government engages in 'a variety of illegal and predatory practices' to protect its auto-parts industry, including an $8.7 billion subsidy in 2010, mandates that any autos assembled in China feature engines made there, tax incentives, low-interest loans and export duties on auto parts."
President proposes small biz bill. W. Post: "Obama’s proposals, which build on the Startup America initiative the administration launched last year, include eliminating taxes on capital gains from investments in small businesses, providing a 10 percent tax credit for companies that create jobs or increase wages this year and ending country-specific immigration caps in order to attract highly skilled workers ... The White House acknowledged that Republicans have supported similar ideas and cast the president’s legislation as a vehicle to bring the parties together in an effort to craft a bill on which both can agree."
"Buffet Rule" Proposed In Senate
Sen. Sheldon Whitehouse (D-R.I.) to introduce "Buffet Rule" bill. NYT edit board praises, calls for more to achieve fairness: "[The bill] would impose a new rate of up to 30 percent that would phase in gradually on incomes between $1 million and $2 million. The new rate would have to be paid if it is higher than the taxpayer’s current rate. It would operate like the alternative minimum tax, superseding all brackets and the lower rates for investment income, though it would preserve the incentive for charitable donations ... [That's] only the beginning. Sound tax policy calls for raising the capital gains tax, which, at 15 percent, is the lowest since the Great Depression ... It is also important that the Bush tax cuts expire for all tax brackets at the end of this year."
WH also pushing tax on overseas profits. Politico: "While details remain sketchy ... The administration figures that if the IRS gets to collect the money anyway, then multinationals have less of a reason to move jobs out of the country. The tax could deter companies from hopscotching around the world to whichever country cuts them the best deal."
Huge support for tax incentives that boost domestic manufacturing. Politico: "Eighty percent of Democrats and 89 percent of Republicans said they favor giving U.S. corporations tax breaks for bringing home manufacturing jobs from abroad - known as 'insourcing' - while 77 percent of Democrats and 71 percent of Republicans said they support putting pressure on Beijing to allow fairer trade between the U.S. and China."
FL Win Doesn't End Questions About Romney
Who's funding Romney? NYT: "Close to 60 corporations and wealthy individuals gave checks of $100,000 or more to a “super PAC” supporting Mitt Romney in the months leading up to the Iowa caucuses ... Millions of dollars came from financial industry executives, including Mr. Romney’s former colleagues at Bain Capital, who contributed a total of $750,000; senior executives at Goldman Sachs, who contributed $385,000; and some of the most prominent and politically active Republicans in the hedge fund world .... Harlan Crow, the Texas construction magnate, gave $300,000 personally and through his company. William Koch, whose brothers Charles and David are among the country’s most prominent backers of conservative causes, gave $1 million personally or through Oxbow Carbon, the energy company he founded. Members of the Walton family, founders of the Walmart chain, gave over $200,000 ..."
"Romney Team Silent On Key Outstanding Tax Avoidance Question" reports TPM: "...despite multiple inquiries in the days since the conference call, the Romney camp has not set the record straight one way or another. Romney has disclosed a substantial individual retirement account (IRA) that, as the Wall Street Journal first noted, could have made offshore investments that circumvented an obscure U.S. tax called the Unrelated Business Income Tax (UBIT) ... at 35 percent that’s no small tax to get around ..."
GOP Obstruction On Taxes Increases Deficit
CBO projects federal deficit to stay over $1T this year. USA Today: "Obama's deficit-cutting goal fell short in part because of opposition to his support of a tax increase on the wealthiest of Americans."
Center for American Progress' Michael Linden details how the Bush tax cuts increased the deficit: "...higher spending under Obama accounts for less than 20 percent of this year’s deficit, and nearly half of that was additional defense spending—not domestic spending. Bottom line: The narrative that an 'Obama spending spree' caused our deficit problem is utterly false ... 35 percent of the swing from a $170 billon projected surplus to a $1.079 billion deficit is directly attributable to events that preceded the current president’s term ... The remainder of the deterioration did happen after 2009, but higher spending wasn’t even close to the main culprit. The real problem was lower-than-expected revenues ... [The Dec. 2010] deal, which extended all of the Bush tax cuts, even those that exclusively benefit the very wealthy, is the legislative factor by far most responsible for this year’s deficit."
"Will Germany Bully Europe Over the Brink?" asks New Deal 2.0's Jeff Madrick: "The audacity Germany has shown in floating a demand to manage Greece’s finances is a window on the leaders of that country and how much perspective they’ve lost ... I am tempted to say that antediluvian economics is ruling in Germany, but it may not really be about economic theory, but rather superior pride, irrational fear of inflation, and perhaps vindictiveness. It’s as if a German version of our own Tea Party is now running economic policy in Europe."
After wasteful subsidies to private insurers are killed by "ObamaCare," Medicare Advantage enrollment goes up, premiums down. USA Today: "That continues a trend for the Medicare Advantage program that counters the negative predictions about the effects of the 2010 health care law, which said enrollment would drop and premiums would rise."
