Congress Adjournment

Review of the current article -

Congress moves to adjourn with no deal on AMT - Thank you.

By JIM ABRAMS, Associated Press Writer 25 minutes ago -

WASHINGTON - The House prepared to adjourn for the year Monday with no deal on a major tax relief package, increasing the odds that businesses will lose out on critical tax breaks and millions could get hit by the alternative minimum tax this year.

House Majority Leader Steny Hoyer, D-Md., suggested that it might be next year before consensus can be reached on a tax initiative that includes adjusting the AMT, providing tax relief to disaster victims and extending tax credits for renewable energy development, business investment and individual education and child care costs.

Lawmakers in both the House and Senate stressed that the bill would create tens of thousands of jobs and contribute to the nation's energy independence. But House Democrats insisted that more of the package, totaling $138 billion in House bills, be paid for so as not to increase the deficit. Senate Republicans, averse to new taxes, said any changes in the Senate-passed tax bill would kill the entire package.

The House "has taken the morally and fiscally responsible position," said Rep. Mike Ross, D-Ark., a leader of the 49-member Blue Dogs, a group of fiscally conservative Democrats. Meanwhile, "Republicans in the Senate continue to hold up this important legislation," he said.

As Ross spoke, across the Capitol Senate Majority Leader Harry Reid, D-Nev., tried to bring up a House-passed bill dealing with renewable energy and extension of business and individual tax breaks that expired last year or will lapse at the end of this year. Republicans objected to consideration of the bill.

Reid acknowledged that "we can't get it done" because Senate Democrats don't have the votes to move the bill without GOP cooperation. He said he hoped the Blue Dogs "would understand we are not trying to embarrass them or anyone else."

Hoyer, joining the Blue Dogs at a news conference, said "there's not an intention" to return to Washington after the House votes on the financial bailout bill and adjourns Monday afternoon."I'm going to continue to work with Sen. Reid to see what can be done even if it is next year," he said.

That delay would be a blow, at least temporarily, to a wide group of business and individual taxpayers.Without congressional action, those affected by the AMT, originally aimed at just a few very rich tax dodgers, would grow from around 4 million to up to 26 million. Those hit by the tax, most earning less than $200,000, would pay an average extra tax of $2,000.

The solar industry alone has estimated that it could create more than 400,000 jobs if it receives an eight-year extension of its investment tax credit.

"With hundreds of thousands of American jobs and billions of dollars in clean energy investment at risk, we urge congressional leaders not to leave for the election recess" until reaching an agreement, the CEOs of national hydropower, geothermal, solar and wind energy associations said in a statement.

Business groups have warned of serious repercussions if Congress does not renew the R&D credit, which expired at the end of last year, and various advocacy groups have pleaded for renewals of individual tax breaks affecting those paying college tuition, those from states with state and local sales taxes and teachers with out-of-pocket expenses.

The Senate last week, on a 93-2 vote, passed a massive package that included AMT relief, $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana, and some $78 billion in renewal energy incentives and extensions of expiring tax breaks. In a compromise worked out with Republicans, the bill does not pay for the AMT and disaster provisions but does have revenue offsets for part of the energy and extension measures.

That wasn't enough for the House, which insisted that there be complete offsets for the energy and extension part of the package.

Fiscal irresponsibility was a major factor in Wall Street's meltdown and the need for Congress to step in with a bailout plan, said Rep. Dennis Cardoza, D-Calif. "It's time for us to say no more."

The House included steps to boost tax revenues from the oil and gas industries and close loopholes used by hedge fund managers and corporations to avoid taxes on their overseas incomes.

Senators also included in their bill a far-reaching measure to ensure parity in insurance benefits for mental health problems.

______________________________

Review and Analysis: The democratic society exercise voting rights to elect a representative in Congress and Senate to address issues affecting their daily lives and pass necessary legislation to primarily benefit the people through businesses and other economic infrastructure.

The legislators’ “priorities” from the above article should be of concern to the constituents. Their decision to leave for the election recess “after having returned from a long recess in August”, without reaching an agreement on issues like energy independence, tax relief to millions in small businesses, education and childcare costs reflects minimal importance to major economic crisis.

With election around the corner, it is important for legislators to recognize their obligations to the electorate and fulfill the commitments in restoring the nation back on track. In a gloomy economic climate, that is saddled with multi-trillion dollar debt conveniently passed on to the hard working lower and middle income groups struggling to meet ends, vacation should be the last thing on the mind of the lawmakers.

The electorate should demand that their elected officials resolve all of the above issues related to tax initiative that includes adjusting the AMT, providing tax relief to disaster victims and extending tax credits for renewable energy development, business investment and individual education and childcare costs with no further procrastination.

To quote the House Speaker “Nancy Pelosi” at the announcement of bailout deal “The Party is over” not just for the “Wall Street” but the entire “Power” specifically elected for policymaking and solving problems confronting the nation at all fronts.

When the “Presidential candidates” are advocating “performance based” salaries for “teachers” and others , the same principle should apply to “Washington” and “Wall Street” that are primarily responsible for the current economic mess.

The voter frustration and disappointment with “Washington” and “Wall Street” should be clearly demonstrated in the forthcoming electoral process.

Thank you.

Padmini Arhant

Economic Security

The legislators are currently addressing the financial crisis confronting our nation and it appears that a consensus has been reached to bailout the Corporations from the burden of bad debts. According to the lawmakers, the “bill” is structured to largely benefit the taxpayers and assist with the stabilization of the financial market.

It is important to recognize the fact that the twenty first century economy is a global economy and the investments are tied to one another directly or indirectly and traded in the global markets. Therefore, it is vital for the U.S. economy to remain stable and provide necessary market assurance to both domestic and foreign investors with stakes in U.S. investments.

The other important factor for the unprecedented government intervention in a “free market” environment is to eliminate loopholes to avert such catastrophe in the future. When the actual agreement proposal is presented to the taxpayers, it should reflect the absolute protection of the taxpayer’s funds and profitable return on any investments.

At the same time, politics should not take precedence over “American taxpayers” interest in terms of “Appropriation of funds” for a certain political faction like “ACORN” or for that matter a “private sector” from the “Wall Street” with any misrepresentation to provide insurance on the “mortgage backed” securities with no prospective buyer in sight.

The “bill” must include provisions for full disclosure of the deals regardless of the nature and size of the bailout amount.

Further, it is essential for the “impending bill” to fund the bailout in “installments” rather than a lump sum settlement as it would indicate the initial results on the venture carried out on a “trial and error” basis. This would also allow public opinion to analyze the “pros and cons” of such investment and facilitate the required liquidity in the financial market with a “majority” approval.

The task ahead of our nation is to restore economic security with the revival of the “housing” and “job” market. As stated earlier, the “housing market” crisis is directly related to the “credit crunch” and “subprime mortgage” failure leading to “foreclosures” and that could be resolved by overhauling the lending practices and assisting the “homeowners” with affordable revised mortgage package. The foreclosed homes should be made available for sale to potential investors with verifiable income and credit history.

Commercial lending should resume freely yet carefully to promote and revitalize the small businesses and Corporations relying on credit for the growth and development in the job market. The flow of goods and services without any disruption will contribute to the anticipated growth and help the nation in reducing the multi-trillion dollar debt due to trade and budget deficit which otherwise will be the inevitable burden on the next and future generation.

It is time to focus on this crisis as “national” rather than “individual” and collectively deal with the issue for a better future of all.

Thank you.

Padmini Arhant

P.S. Source - www.padminiarhant.com for more views and thoughts on "economy", "energy", "environment" and more.

Economic Crisis

Our nation is currently experiencing a deep financial crisis due to the failure of major financial institutions, investment banks and insurance industry. It all started crumbling like the “house of cards” beginning with Fannie Mae and Freddie Mac, Lehman Brothers, AIG and others in line with bad loans from the sub-prime mortgage crisis. The “economic meltdown” precipitated late 2006 as borrowers experienced the “credit crunch” with respect to “real estate mortgages” that was ominously prevalent in the decline of housing market nationwide.

The entire network in the real estate and financial sector with hedge fund managers, underwriters, financial institutions processing the mortgage applications, mortgage brokers, realtors, homebuyers and sellers were primarily interested and vigorously involved in promoting and wrapping the deal with minimal and/or non-compliance of the standard rules and regulations that are specifically set up to avert such catastrophe.

The “housing market” bubble eventually burst contributing to the worsening of credit crunch and massive foreclosures across the nation. The commercial sectors were also hit in the process due to the streamlining of measures by the lenders and legislation by the “Congress” in an effort to slow down the escalating “credit crisis”.

Subsequently the ripple effect was felt in the job market with small businesses and medium size corporations struggling to maintain their credit limit from the sharp increase in interest rates on the borrowings and depletion of capital resources essential for survival in the highly competitive market economy.

Meanwhile, some investors diverted their attention from “real estate” to the “stock market” for short-term gains and as a result certain “stocks” earned the “preferred status” in stock value despite the lack of any performance history. The “stock market” was warming up with superficially inflated stock prices combined with speculators on “futures trade” in “oil stocks” mostly responsible for the elevation of crude oil price per barrel triggered the sensitive energy crisis.

At the top level, the monetary authority and incumbent administration as the “oversight” for the economic growth and development implemented policies including lowering of “prime” rates to an unprecedented level in recent times thus creating opportunities for financial institutions to outreach borrowers with no solid credit history. The euphemism by the “executive branch” of the government to display “patriotism” through “home ownership” is another factor for unscrupulous practices in the “housing market” debacle.

It has further come to light that some legislators are beneficiaries of personal financial deals as “VIP PATRONS” of the failed financial institutions such as “Fannie Mae and Freddie Mac,” “Lehman Brothers” and more. However, it does not exclude Presidential contenders’ “Campaign Advisors, confirmed to be the lobbyists/former executives” of those financial institutions thereby enlarging the conflict of interest in the oversight.

Hence, proving the theory….“Corruption and Cronyism thrives under Capitalism.”

Strategy:

The government proposal to bail out these Corporations indulging in reckless undertakings with staggering $700 billion of American taxpayer’s money is currently being debated in the House of Congress. There is also the anxiety over the “cavalier” approach by the “executive branch” for immediate approval of the “clean bill” i.e. without any protection of tax payer investment or oversight for such unprecedented and historic venture.

The irony is the “Treasury Department” and the “Federal Reserve Bank” with the primary responsibility to monitor and recommend any regulation in the financial sector is experiencing the “labor pain” after nearly twenty two months of gestation and demanding “Congress” to deliver regardless of the outcome!

With current “Presidential race” in process, one has to hope that this situation does not lead to the controversial “Pro-Life” vs. “Pro-Choice” debate on the financial crisis. It appears that “Congress” is in favor of “Pro-Choice” to ensure the safety and security of the bearer i.e. the taxpayer bankrolling the bailout of Corporations and their erroneous decisions.

The urgency by the administration to regulate the financial sector by granting unilateral authority to an “individual” i.e. the “Treasury Secretary” with a sum approximately equivalent to the combined GDP of “Argentina and Chile” rightfully arouses skepticism among legislators on both sides of the aisle. Some of them are also reminiscent of the scenario prior to the invasion and occupation of “Iraq” with a similar demand by the current administration.

“Fool me once, Shame on you”, “Fool me twice, Shame on me”.

Remedy:

Since the bailout is imminent and crucial for the stabilization of the financial markets, it is imperative for legislators to secure the investment with conditional offers;

Several economists and experts have come forward and presented their thoughts and strategies for the existing national crisis.

1. The consensus among all of them is to establish an “Independent Oversight” with absolutely no infiltration by “Special Interests” or “Lobbyists” posing conflict of interest. Both Presidential candidates also share similar views in this regard.

2. The proposal to invest in “mortgage-backed” securities to relieve the remaining financial institutions of the “bad debts” burden is to be reviewed and approved by the “Oversight Committee”.

3. The purchase price of these securities must be carefully taken into consideration with a set profitable return upon sale of these instruments. It is also important to identify the buyers and sellers.

4. Complete transparency in terms of “Open Bid” during purchase and sale of these investments is vital for investor confidence and enhancement of the investment value.

5. The huge “pay off” to “Corporate Executives” for the lack of judgment and utter failure in their performance is to be eliminated as a precedence to existing and future Corporations heading in that direction.

6. The “hedge fund managers” have to be subject to strict scrutiny and ethical standards and the issues such as “Management Fees” and “Asset Allocation” has to be determined in a manner to yield nothing less than “profitable return” to the investors i.e. the taxpayers.

7. The proposal by “Congress” to place a “Moratorium” on foreclosures must be honored on bipartisan basis to relieve the “homeowners” across the nation. At the same time, the home owners must be evaluated on individual basis by the lenders with “Oversight Committee” alongside and encouraged to make payments equivalent to rental payments or “interest only” on revised mortgage package whatever is affordable. Again, this offer should be made available only to the first home buyers dealing with foreclosures and not an “aggressive” investor with more than a single home. An aggressive sales and marketing of “foreclosed” homes to potential investors will assist in the revival of housing market as well as help communities restore social and economic security through property taxes used for funding public school education and other services.

8. The “external” audit must be conducted on financial institutions listed as “risky” and brought to public focus.

9. The firewall between the commercial and investment banks must be resurrected to protect public funds.

10. Markets must be revived with sound and solid lending practices in both private and public sector.

United States economy has proven record of accomplishment to rebound during any crisis throughout the twentieth century. The United States economy is resilient with a highly productive work force that has risen to the occasion and challenged the Market forces acting against it. The economic boom will resume and prosperity shared by the global markets.

The temporary turmoil in the market will be settled with prudent economic strategy, robust fiscal policy, leadership and confidence of the people of the United States of America.

Thank you.

Padmini Arhant