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Republicans plan to repeal Obamacare

The struggle is not over for the Healthcare Reform Bill. Republicans unveiled repeal legislation Monday night — two days before they officially take charge of the House. They plan a key procedural vote on Friday and a final vote the following Wednesday, according to House GOP sources.

Democrats say the GOP is pandering to their base. Well, if their voters elected them with the expectation that they would repeal the bill, then they should probably try to repeal it.

Passage of the health care overhaul is widely viewed as Obama’s signature domestic achievement. Most political analysts believe that while a repeal of the measure can pass the new Republican House, it has no chance of surviving the Democratic-controlled Senate or overcoming a presidential veto.

Outgoing House Speaker Nancy Pelosi, D-California, cited projections from the nonpartisan Congressional Budget Office noting that the Democrats’ overhaul will lower the federal deficit over the long term.

As a result, she argued, a GOP-led health care reform repeal would “do very serious violence to the national debt” — undermining a central Republican pledge of fiscal responsibility.

The Republicans “will employ budget gimmicks” and “Enron-type accounting” to make the claim that a repeal of health care reform won’t increase the debt, predicted Rep. Chris Van Hollen, D-Maryland. “That kind of flim-flam” is what people came to expect of Republicans the last time they ran Congress, he said.

Republicans insist that they are moving forward with their push to repeal the health care law because the measure is hampering an economic recovery.

“Obamacare is a job killer for businesses small and large, and the top priority for House Republicans is going to be to cut spending and grow the economy and jobs,” said Brad Dayspring, spokesman for incoming House Majority Leader Eric Cantor, R-Virginia.

“Further, Obamacare failed to lower costs as the president promised that it would, and does not allow people to keep the care they currently have if they like it.”

 

 

Deepwater drilling ban ends

The Obama administration on Tuesday lifted its ban on deepwater drilling seven weeks ahead of schedule, saying new rules cut the risk of a repeat of the BP oil spill, the worst ever to hit the United States.

Restarting deepwater drilling could be slow, however, as oil companies will need to comply with the new regulatory regime and demonstrate they can adequately respond to blowouts before drilling can resume, the Interior Department said.

“The oil and gas industry will be operating under tighter rules, stronger oversight, and in a regulatory environment that will remain dynamic as we continue to build on the reforms we have already implemented,” Interior Secretary Ken Salazar said in a statement.

The Obama administration is lifting the controversial drilling ban as his Democrats prepare for a tough mid-term election in November, amid concerns over the economy and unemployment.

The ban drew sharp protests from Gulf of Mexico lawmakers and a court challenge from companies that complained the moratorium cost jobs and stalled an industry with a relatively good record.

While the reopening of the prized, deep Gulf waters will be good news for drillers such as Transocean Ltd and explorers like Royal Dutch Shell, analysts warn it will take months or years to return to the pace of activity prior to the Macondo disaster on April 20.

 

Obama plans new stimulus to tune of $50 billion

President Barack Obama proposed a six-year plan to rebuild infrastructure with a $50 billion investment and prepared new business tax cuts.

“We are going to rebuild 150,000 miles of our roads — that’s enough to circle the world six times. … We’re going to lay and maintain 4,000 miles of our railways — enough to stretch coast-to-coast,” Obama told a labor rally in Milwaukee where several thousand supporters cheered his every line.

The infrastructure plan received immediate criticism from Republicans. Obama is under pressure to do more to create jobs and bring down the stubbornly high 9.6 percent unemployment rate, even as economists agree he has few good options left.

An administration official said Obama will propose on Wednesday in Cleveland that businesses be allowed to write off all their new investments in plant and equipment through 2011.

The plan would cut business taxes by some $200 billion over two years, the official said. The administration hope is that businesses worried about the sagging U.S. economy will nonetheless want to take advantage of the tax break by going ahead with plans for plant and equipment investments.

Obama will also announce on Wednesday a proposal for the U.S. Congress to increase and permanently extend a tax credit for business research and development. It would cost $100 billion over 10 years.

Economists are skeptical any measures Obama takes now will make a swift difference in the $13.2 trillion U.S. economy. They point out that investments in infrastructure, for example, typically do not stimulate the economy quickly.

While Obama declared some jobs would be created immediately by the infrastructure overhaul, a senior administration official told reporters the plan would not create jobs until 2011.

“This is not a stimulus, immediate-jobs plan,” the official said.

A step in the conservative direction?

While the Obama administration was marked by expansive government over the past two years, Obama must now take conservative action.

The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions. Conservatives have long supported tax cuts, as it is a direct way to stimulate the economy.

The president’s economic team has met frequently in recent days to list ways to bolster the struggling recovery, according to government officials.

On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It’s not clear what those tax breaks would target or how much they might cost in lost revenue to the government.

Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.

Regardless of politics, the economy works in predictable ways. More spending from the public sector does little to bolster the economy, apparent with the failure of Obama’s stimulus plan.

Efforts to boost growth have taken on urgency as the economy has shown signs of flagging and is among voters’ chief concerns ahead of November’s midterm elections.

The White House is struggling with whether to propose ideas that would appeal to Republicans, and thus get support on Capitol Hill—such as tax cuts—or whether to promote ideas that officials believe could have more economic impact but might hit political resistance, such as more aid for states and more infrastructure funding.

Home sales hit 15 year low

Economic recovery seems to have halted.

As the National Association of Realtors issued the report, Chicago Federal Reserve President Charles Evans warned that the risk of a double-dip recession was higher than six months ago although he did not think output would contract, describing the recovery as ongoing but modest.

Existing home sales dropped a record 27.2 percent from June to an annual rate of 3.83 million units, the lowest since May 1995. June’s sales pace was revised down to a 5.26 million-unit pace from a previously reported 5.37 million.

U.S. stocks .SPX added to losses on the report, while prices for safe-haven government debt extended gains. The U.S. dollar fell against the yen and euro.

The housing market has been mired in weakness following the end of a homebuyer tax credit in April, which pulled forward sales and building activity.

The surprisingly weak home sales data added to signs that the economy was rapidly losing strength, even though the drop may have been exaggerated by the end of a popular housing tax credit. Stubbornly high unemployment has burdened recovery from the longest and deepest recession since the Great Depression.

Almost three-quarters of Americans are very concerned about unemployment and more people now disapprove of President Barack Obama than approve of him, a Reuters/Ipsos poll found on Tuesday.

In grim news for Democrats ahead of November’s midterm elections, 72 percent of people said they were very worried about joblessness and 67 percent were very concerned at government spending.

With congressional elections a little more than two months away, the poll showed 92 percent of those surveyed were very concerned or somewhat concerned about joblessness.

The U.S. unemployment rate has been hovering near 10 percent all year, registering 9.5 percent in June and July.

Obama’s disapproval rating was 52 percent, overtaking his approval rating for the first time in an Ipsos poll. Only 45 percent of people said they approved of the president’s performance.

That number, coupled with a hearty 62 percent who think the country is going in the wrong direction, could spell trouble for Democrats, who control both chambers of Congress and the White House.

Fannie and Freddie deserve an overhaul

Patient Zero (or, at least, #1) if the United States’s current recession is coming under fire from the Obama administration.

The Obama administration called for “fundamental change” at Fannie Mae and Freddie Mac, but a long, politically explosive debate lies ahead on the future of the bailed-out mortgage finance giants and U.S. housing policy.

This comes two years after the government seized Fannie Mae and Freddie Mac to save them from collapse.

“We will not support returning Fannie and Freddie to the role they played before conservatorship, where they took market share from private competitors while enjoying the perception of government support,” Geithner said.

“We will not support a return to the system where private gains are subsidized by taxpayer losses.”

The conference, with some of the mortgage sector’s top lenders and investors, is billed as a “listening session” for the administration to gather ideas as it develops an overhaul plan by January. No major changes are expected before 2011.

With Congress focused on elections in November, federal spending coffers depleted and nerves on edge about changes that could trigger another housing crash, lawmakers looked likely to move slowly on overhauling housing finance, analysts said.

Enthusiasm in some quarters for removing government from housing finance was certain to collide with the political reality that housing subsides, such as the mortgage interest deduction, are deeply entrenched facets of U.S. economic life.

The problems and costs of Fannie Mae and Freddie Mac were not addressed in the sweeping Wall Street reform legislation approved by the U.S. Congress in July — a yawning gap in the Democratic bill that Republicans have sharply criticized.

Jobless claims reach new heights

The number of U.S. workers filing new claims for unemployment insurance unexpectedly rose to its highest level in close to six months, a fresh signal of a weak jobs market.

The number of U.S. workers filing new claims for unemployment insurance unexpectedly rose to its highest level in close to six months, a fresh signal of a weak jobs market.

The data comes two days after the Federal Reserve downgraded its assessment of the economy’s health and said it would take steps to ensure its support for the fragile economic recovery does not wane.

So, how should we fix this? Not with any stimulus. Here’s what one politician thought:

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

No, not Ronald Reagan. This quote is from John F. Kennedy. You may remember him as a Democratic president from the 60’s. Here’s another gem of his:

“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”

The stock market has responded to the jobless data, and not in a good way. Stocks have fallen, as the data indicates a weak labor market.

This week’s wrap-up

A wrap-up for the week of August 2nd.

Bad news in the business world today.

Stocks are slumping because the job number for July were released. Number for jobs lost in the month of July is hovering around 131,000.

The value of the US dollar continues to fall in response to these numbers. Wheat prices are soaring because of prolonged drought in Russia.

People are boycotting Tylenol, Mortin, and Benadryl after the FDA slammed a children’s Tylenol facility back in May.

So much for the bad news.

Good news?

Christina Romer, head of President Barack Obama’s Council of Economic Advisers, will step down and return to her teaching post at the University of California, White House officials said on Thursday. The resignation will take effect on September 3. Romer, who has been a big supporter of health care reform and the president’s stimulus plan, is one of Obama’s principle economic advisers — certainly, one of the most visible. The two meet on almost a daily basis.

Federal officials are sounding increasingly optimistic that the end is in sight in the drive to permanently seal the well.

BP finished pouring cement down the well on Thursday in an operation known as a “static kill,” completing the job earlier than expected. The process took six hours.

And, John Goodman lost 100 pounds, so…great!

Finance Reform 2010

The other day, I searched the Internet for a PDF file of the Finance Reform Bill that passed just this week. Thinking I would find a moderately sized document, I would print out a few pages and highlight some key concepts that people would be interested in.

The document was 1,336 pages long.

I will do my best to slog through it over the next week or two, so stay tuned to the Biz Blog to get your finance reform highlights.

Bush tax cut extension

The tax cuts enacted during the Bush administration are set to expire.

Party lines are clear on part of the issue: Most Republicans want to permanently extend all the tax cuts enacted during George W. Bush’s presidency, nearly $3 trillion worth over the next decade. Democratic leaders want to let the cuts for the wealthiest Americans expire.

The Democrats want to extend them for everyone else, but perhaps only temporarily, out of concern for the rising red ink. That’s where Democratic lawmakers are struggling to find agreement.

Passing only a temporary extension would open majority Democrats to claims they are planning middle class tax hikes in the future — after the extension expires. Making any of the tax cuts permanent could increase complaints about a national debt that already exceeds $13 trillion.

Chairman of the Federal Reserve Ben Bernanke has come out to support the continuation of the tax cuts, saying it’s a means of stimulus for the economy.

On the other hand, the House speaker, Nancy Pelosi, told reporters Thursday she is adamantly against continuing the tax cuts, which expire at year’s end, for those making more than $250,000. “My stance is that the Bush-era tax cuts contributed to the deficit, did not create any jobs, and that they should be repealed,” said Pelosi, a California Democrat.

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