Economy & Budget

Capital Gains tax hike will hurt state coffers

The Buffett Rule, a measure to raise income tax rates on individuals and capital gains of top-earning Americans, recently received its first close up in the U.S. Senate and failed. Nevertheless, President Obama, Senate leaders and others have pledged to continue to raise the Buffett Rule again and again this campaign season in the name of tax “fairness.”
Many arguments against the Buffett Rule have been made, but perhaps a very compelling is the unintended consequences this war on savings and investment could have on our economic recovery, particularly in states whose budget receipts are dependent on collection of capital gains taxes.


The GOP's immoral budget

Republicans were quick to cozy up with Catholic bishops in opposition to the Obama Administration's requirement that contraception be covered at no cost under health insurance plans. These days the GOP has its own prickly Catholic problem.

Catholic bishops have sized up the GOP budget proposal – praised by presumptive Republican nominee Mitt Romney  – and found it morally bankrupt. In a series of stinging letters to the House of Representatives, the U.S. Conference of Catholic Bishops condemned the budget for slashing anti-hunger programs and asking the most vulnerable to bear a disproportionate burden while the richest Americans are given more tax breaks. Rep. Paul Ryan (R-Wis.), a conservative wunderkind and architect of the budget, has claimed these proposals are inspired by the values of his Catholic faith. Bishops and other Catholic leaders are not letting him get away with that fiction.


Wall Street should stop trying to gut financial reform

Recently on Meet the Press, Jamie Dimon, the CEO of JPMorgan Chase, lamented that his company’s then-$2 billion trading loss (which has since swelled to at least $3 billion) would “absolutely” embolden proponents of tighter regulation of Wall Street. I think that Mr. Dimon is most definitely correct; however, unlike Mr. Dimon, I think that emboldening champions of financial reform is actually a good thing.
Mr. Dimon has tried to downplay the scale of the losses; after all, the firm made $19 billion last year. But reassurances notwithstanding, the trading failure clearly has rattled a bank that is considered a financial giant, and made the public question just how much bigger the losses could have been given the lack of adult supervision of our still opaque capital markets. So it’s true that a turn of event like this – particularly when it happens so publicly, at such a critical time, and to such an outspoken critic of financial reform – is the type of scandal that galvanizes public opinion. And it’s that type of pressure that can reignite real momentum for financial reform.


America: We need to nation build at home

A $1.2 trillion investment in rebuilding American roads, bridges, transit and water systems would create 27 million jobs over the next 5 years. In the first year alone, the economy would add 5.2 million new jobs and grow by $400 billion. In the second year unemployment would be reduced to 5.6%. These are among the findings of the New America Foundation report The Way Forward.

Nearly everybody agrees that America’s infrastructure is broken and is in need of immediate repair and replacement. The American Society of Civil Engineers gave America a D grade in infrastructure quality and has estimated that $2.2 trillion is needed to bring our nation’s infrastructure to good repair. The World Economic Forum (WEF) ranks the United States 24th in infrastructure quality.


Renewed focus needed on American economy

As we get closer to Election Day and Americans decide who will lead this country over the next 4 years, one item has become abundantly clear – voters want the president and the Republican Congress to focus on the economy and jobs. With an unemployment rate at over 8 percent and thousands of Americans suspending their search for work, voters are demanding answers.

In every election, Americans vote with the wallets and pocketbooks.  Since the founding of our great nation, American families and parents have wanted their children to have a better life than their own.  This ideal, once thought to be guaranteed, is in jeopardy.  

The time has come for President Obama and the Republican Congress to speak in terms that all Americans can understand and appreciate. Keep it simple. Both parties must outline polices that will work to improve our country's economy and to help create new jobs.


Too big to fail is too big to exist

Is it any wonder why banks like JP Morgan can take such great risks?  We have set a precedent whereby our major banks operate with an implicit guarantee that the government will be standing by to bail them out. JP Morgan’s multibillion dollar debacle is just the latest example of why we must better regulate Wall Street, and break up entities that are deemed too big to fail. Taxpayers may not have needed to bail JP Morgan out this time, but a recent history lesson should remind us why banks that are too big to fail are too big to exist.
In October 2008, some big Wall Street firms that had made bad investments in the imploding mortgage market decided that taxpayers should cover their losses. Wall Street flooded into Congress and demanded that taxpayers bail them out by using tax money to buy $700 billion worth of their bad mortgages. Wall Street called them “toxic assets” and called their bailout plan TARP, the Toxic Asset Recovery Program. The plan was for the taxpayers to buy their near-worthless toxic assets, so Wall Street could recover their investments. Our cash, for their trash.


How Obama's 'Too big to fail' policies have made banks too big not to fail

Last week, JP Morgan Chase announced that it had a $2 billion-plus loss on a synthetic credit security hedge as esoteric as the name would suggest.
That is the bad news. The good news?

Markets continue to function. Facebook is still planning its much anticipated IPO. Sales of existing homes were 5.3 percent higher in the first quarter than a year ago.  The world continues to spin.

Meanwhile, shares of JP Morgan are down a reasonable amount for a corporation that just lost assets equal to 0.1 percent of its total assets under management. An efficient marketplace penalizes bad news and rewards good.


We need a plan to turn the economy around

Every day I hear stories of how more layoffs are threatened and economic uncertainty is being brought about by bills such as the health care law and regulations that stifle innovation. In order to create jobs and get folks back to work, Congress needs to work together in a bipartisan way to be a part of the solution.
The best way to lower the unemployment rate and promote job growth is to create an atmosphere that rewards hard work, keeps government out of the way of innovation and incentivizes our businesses to invest in new jobs and equipment.  However, we cannot achieve this if the current administration continues to propose and enact the same failed economic policies. Policies from Washington are making it difficult for small businesses to grow. Massive government expansion into health care, banking and a wide variety of other areas has become a major hurdle to job creation — and small businesses are being hit the hardest.


It's time to end bailout subsidies

The 112th Congress was supposed to change the way business was done in Washington. We were going to make tough choices to lower spending and put our country back on a path to prosperity. We were going to be more open and transparent to shine light on a process often darkened by backroom deals. And, we were going to end the practice of earmarks so that taxpayers were protected from funding powerful Members’ pet projects back home.

Yet, once again, this Congress takes two steps forward and one step back in the name of political expediency. This week, the House of Representatives will vote on the National Defense Authorization Act (NDAA) and unfortunately, I will have to propose an amendment which bans the government from once again interfering in the private market to prop up a failing business.


SAFE Act necessary in wake of JP Morgan loss

When JP Morgan, the nation’s largest bank reports a $2 billion gambling loss, it’s time to reconsider a measure that failed to make the cut when Congress approved financial reform law in 2010: a limit on bank size. On May 9, Senator Sherrod reintroduced  the Safe, Accountable, Fair and Efficient Banking Act (SAFE  Act). This limits any bank from holding more than 10 percent of total U.S. deposits, and caps total liabilities to about $1.3 trillion.

Even bankers agree that we haven’t solved the “too big to fail” problem, where failure of a large bank could lead to another taxpayer bailout. 

Yes, Dodd Frank includes many important tools to restrict excessive risk-taking, such as the Volcker Rule. CEO Jamie Dimon, however,  claims the Volcker Rule didn’t apply. He claims the failed bet constituted a “hedge” undertaken for risk management. If risk management undertaken by the firm credited with inventing the discipline can go this wrong, sterner measures may be necessary. MIT economist Simon Johnson concludes, “The lessons from JP Morgan’s losses are simple. Such banks have become too large and complex for management to control what is going on.”