Budget Battle Is On
Obama's budget seeks to divide Republicans. Bloomberg: "Obama proposes busting defense spending caps with $38 billion in new money, matched with a similar amount in new domestic funding. That could pit Republican defense hawks like Senator John McCain of Arizona against budget hawks like Senator Ted Cruz of Texas, a Tea Party favorite. Even Obama’s plan for new corporate taxes on overseas profits puts two of the party’s most powerful interests in conflict: U.S. companies with foreign earnings versus the Chamber of Commerce, which has been pushing for a new way to pay for infrastructure projects."
Treasury Secretary testifies to House Ways & Means Committee today. TNR's Danny Vinik on the import: "The hearing will give us our first look to see if corporate tax reform is really possible in the 114th Congress ..."
Corporations not interested in real tax reform, argues NYT's Andrew Ross Sorkin: "While chief executives often give lip service to the need for corporate tax reform — and some believe in it — when it comes right down to it, companies aren’t necessarily interested in a simpler tax system, just one that significantly lightens their tax burden. That’s a pretty high hurdle when you consider that the true tax rate for cash sitting abroad isn’t the statutory 35 percent, it’s zero..."
"Obama’s shift from ‘mindless austerity’ derided by GOP as ‘envy economics’" reports W. Post: "The competing catchphrases could set the parameters of Washington’s financial debate in the last two years of the Obama presidency and play a central role in campaigns to replace him."
"Obama budget could aid poor, GOP-led states like Mississippi" reports McClatchy: "It would offer a belated Christmas tree of funding for education programs, work incentives and social services that might appear tailor-made for Mississippi, which had the nation’s lowest median household income over the last three years. Seven other southern states also on rungs near the bottom would benefit as well ..."
Investing in education will pay for itself in economic growth. NYT: "Moving up just a few notches to 19th [in the world in math and science scores] would add 1.7 percent to the nation’s gross domestic product over the next 35 years, according to estimates by the Washington Center, a nonpartisan, liberal-leaning research group focused on narrowing inequality. That could lead to roughly $900 billion in higher government revenue, more than making up for the cost of such an effort."
Greece Shows Flexibility
Syriza offers concession. Bloomberg: "Greece’s retreat from its call for a debt writedown may shift attention to the second front in Prime Minister Alexis Tsipras’s conflict with euro-area leaders: His desire to increase spending and roll back austerity ... Greek stocks and bonds rallied after Finance Minister Yanis Varoufakis outlined plans to swap some Greek debt owned by the European Central Bank and the European Financial Stability Facility for the new securities."
Obama lends rhetorical support to Greece. AFP: "'You cannot keep on squeezing countries that are in the midst of depression. At some point, there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits,' Obama said in a message many saw as aimed at Germany."
Breakfast Sides
More Republican states embracing Obamacare. Bloomberg: "Republican-led states that blocked Obamacare’s Medicaid expansion have found a way to embrace it, under pressure from businesses to tap the flood of federal dollars it brings ... States that balked at accepting more residents into Medicaid stand to lose $424 billion in federal funding through 2022..."
Consumers boosting economy, not CEOs. Bloomberg: "Company profits -- and their shares -- have been sideswiped by tumbling energy prices, a strengthening dollar and rising labor costs. Those same forces are lifting consumers’ spirits ..."
