From The Federation of Connecticut
Taxpayer Organizations, Inc.
Contact: Susan Kniep, President
Website: http://ctact.org/
Email: fctopresident@aol.com
Telephone: 860-841-8032
TAX TALK DECEMBER 4, 2009
Eye on the
Bailout
From Pro Publica
*************
From the Federation: Many municipal unions agreed to a one year
wage freeze with future wage increases factored into their contracts. Governor Rell
should again call upon the State Legislature to reform State Binding
Arbitration laws as she had initially proposed.
This would allow municipal leaders the ability to manage their employees
and budgets and in turn control property taxes.
No public sector union should expect taxpayers to pay for wage increases
as those in the private sector continue to lose their jobs, their pensions, and their healthcare.
Municipalities Face Major
Budget Challenges If State Aid Is Cut By DON
STACOM The Hartford Courant December 1,
2009 HARTFORD — - When East Hartford Mayor Melody Currey
looks at the emergency midyear budget cuts that state leaders are discussing,
she questions how her town can absorb another hit.
East Hartford would have to choose between service cuts, layoffs and a midyear
surtax, she says. "Where can I go? I'm barely able to do the services
we're providing now," Currey said Monday.
"Our unions took cuts, I cut spending $8 million from last year — I can't
go further. It's going to come to, 'What are people willing to live
without?'" At stake is $84 million
that Gov. M. Jodi Rell proposes to cut from this year's state
aid to municipalities. With its own budget deep in red ink, Connecticut has to chop its spending, she
says. Part of her plan is to slice about
3 percent from the roughly $2.7 billion in state aid. But Rell would exempt about $2 billion of that — the Education
Cost Sharing and special education grants. Preserving those grant
programs protects the core of education funding but means the local budgets
that pay for police, fire service, trash collection, libraries, parks and
street repairs will shoulder a bigger share of the load. Continued at …. http://www.courant.com/news/connecticut/hc-towns-budgets-1201.artdec01,0,7067783.story
Also Contained in
this edition of Tax Talk:
Ø
Municipalities
Face Major Budget Challenges If State Aid Is Cut
Ø
Pension
Tension on the Rise
Ø
Dollar
steady ahead of jobs data - November employment report from ADP is expected to
show 155,000 jobs lost in November
Ø
Jobless
losing a health-insurance lifeline
Ø
AIG May Soon Lose Crown as Biggest Bailout Debtor
Ø
New bank rules face big vote
Ø
UN Can't
Account for Millions Sent to Afghan Election Board
Ø
Army
Corps Liable for Katrina Damage, US
Court Finds
Ø
From Dowd Muska: Dying to Pay Taxes
Ø
NEW
HAVEN REGISTER: Dodd wrong to attack Fed
Ø
The Wall Street Journal on
Healthcare Bill
Ø
Shhh! Wall Street is Spending Again
Ø
Dubai's threat to
U.S. banks
Ø
Soaring
Unemployment and Double-dip Recession?
Ø
Why Obama Isn't Changing Washington
Ø
Junk
mortgages: It just gets worse
State Budget Updates
Governor Rell Proposes
Comprehensive Plan to Erase Deficit of Nearly $470 Million
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Pension tension on the rise -
Underfunded retirement plans are shaping up as a headache for companies and
taxpayers alike. By Colin Barr, senior writer, NEW YORK (Fortune) -- Retirement plans are
on the mend, but the healing process is going to be long and painful. In
addition to taking a big chunk out of individuals' 401(k)s,
last fall's market meltdown left 92% of corporate pension plans underfunded at year's end, according to a study by
investment consultant Wilshire Associates.
As bad as that sounds, it pales in comparison to the shortfalls in
public pension plans. At the end of 2006, public
pension plans were already underfunded by $361
billion, according to the Pew Charitable
Trusts. That was before the stock market collapse, soaring unemployment rates
and tumbling tax revenues dealt municipal finances another blow. The federal
insurer of corporate pensions, the Pension Benefit Guaranty Corp., reported
this month that it was $22 billion in the red in
the most recent fiscal year. The PBGC takes over pensions when they are underfunded or when their sponsors go into bankruptcy, and
makes up some of the payments due. Continued at …. http://money.cnn.com/2009/11/29/news/pension.pain.fortune/index.htm
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Dollar steady ahead of jobs data November employment report from ADP
is expected to show 155,000 jobs lost in November. Dec 2, 2009
LONDON
(Reuters) -- The yen weakened broadly on Wednesday as traders took Japan's new
monetary policy measures unveiled the previous day as a cue to sell, while
mixed signals from stocks and commodities kept the dollar in check.
Receding fears over Dubai's
debt problems and the prospect of U.S. interest rates staying low for
some time weighed on the dollar, but talk of Asian central banks buying and the
greenback's gains against the yen offered broad support.
The dollar has been widely considered the funding currency
of choice in recent months as investors have sold the low-yielding unit for
other currencies and assets. But the Bank of Japan's new measures have put that spotlight back on the yen. http://money.cnn.com/2009/12/02/markets/dollar.reut/index.htm
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On average, unemployed families who lose the COBRA subsidy
will see their premiums nearly triple to $1,111 a month from $389, according to
Families USA, an advocacy
group in Washington, D.C., in a report released Tuesday.
Jobless losing a
health-insurance lifeline By Jessica
Dickler, CNNMoney.com staff writer, Dec 1, 2009 As
the nine-month COBRA subsidy starts to expire, millions of unemployed Americans
could lose their benefits. NEW YORK
(CNNMoney.com) -- Millions of long-term unemployed Americans and their families
are at risk of losing their health insurance, as their eligibility for a
9-month health-premium subsidy expires. Kelly Cool, 45, has been out of work
since January. The former engineer for an auto equipment supplier in Oxford, Mich.,
has been supporting herself and her two children since then on her $387 weekly
unemployment check. She's been able to continue her health insurance thanks to
a federal program that subsidizes much of the premium, keeping the cost to a
manageable $137.51 a month. Continued at …. http://money.cnn.com/2009/12/01/news/economy/cobra_expiration/index.htm
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New bank rules face big vote CNNMoney.com Dec 2,
2009 House is pushing forward on
regulatory reform and will pass a measure to prevent banks from getting too big
to fail. The Senate? Not so much. WASHINGTON
(CNNMoney.com) -- A key House committee, culminating months of debate over how
to reform bank rules, is poised to pass legislation on Wednesday that aims to
prevent firms from growing too big and threatening the financial system. The House Financial Services is expected to
pass, largely along party lines, a bill considered key to preventing the kinds
of problems that caused last year's crisis. The bill would impose stronger
supervision of Wall Street and impose tougher capital requirements for banks,
while proposing a new way to take over big firms like American International
Group (AIG, Fortune 500). Continued at …. http://money.cnn.com/2009/12/02/news/economy/financial_reform/index.htm
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AIG May Soon Lose Crown as Biggest Bailout Debtor by Sharona Coutts and Paul Kiel, ProPublica -
December 1, 2009 4:20 pm EST AIG is coming close to losing its crown as the
biggest debtor in the bailout. The company announced today that it has
completed two deals that, together, shaved $25 billion off its tab to the Federal Reserve Bank
of New York (PDF), bringing the combined
total it owes the Fed and Treasury to about $62 billion. That’s only about $2
billion more than what Fannie Mae, the
company that’s received the biggest government bailout next to AIG,
still owes taxpayers. Fannie has said
that it expects its bailout total to continue to mount,
as it takes losses from the slumping housing market and its role in the administration’s loan
modification program. AIG has shifted
two of its prized subsidiaries – ALICO and AIA –into new arrangements, called special
purpose vehicles. The move will eventually take the subsidiaries off
AIG’s books. The Fed wrote down the $25 billion in
exchange for a stake in both new vehicles. The idea is to prep the subsidiaries
to be sold off, or to go through public offerings on the stock market.
Continued at ….. http://www.propublica.org/
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UN Can't Account for Millions
Sent to Afghan Election Board
T. Christian Miller and Dafna Linzer,
ProPublica: "The United Nations cannot account
for tens of millions of dollars provided to the troubled Afghan election
commission, according to two confidential UN audits and interviews with current
and former senior diplomats. As Afghanistan
prepares for a second round of national voting, the documents and interviews
paint the fullest picture to date of the finances of the election commission,
which has been accused of facilitating election fraud and operating ghost
polling places. The new disclosures also deepen the questions about the UN's
oversight of money provided by the United States
and other nations to ensure a fair election in Afghanistan." Continued at …. http://www.propublica.org/article/un-cant-account-for-millions-sent-to-afghan-election-board-1029
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Army Corps Liable for Katrina
Damage, US Court Finds
Patrik Jonsson, The
Christian Science Monitor, Nov 19, 2009: "Confirming what many New Orleanians already knew in their hearts, a federal judge
ruled late Wednesday that the Army Corps of Engineers - and thus the US
government - is liable for a big chunk of the damage caused when hurricane Katrina
pushed ashore on Aug. 29, 2005. The landmark ruling awards $719,000 to four
plaintiffs from the city's Lower Ninth Ward and neighboring St. Bernard Parish
who filed suit in 2006 ... More important, the ruling - which called the Army
Corps 'myopic' in its maintenance of the Mississippi River Gulf Outlet canal (aka Mr. Go) - now puts pressure on President Obama to help the region settle claims that could reach
into the billions of dollars." Continued at …. http://www.csmonitor.com/2009/1119/p02s20-usgn.html
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From Dowd Muska: Dying to Pay Taxes
November 26, 2009
Want to stick it to the federal government? Wait a month, then drop dead.
On January 1, 2010, the federal death tax disappears. No
matter what the value of the assets you leave behind -- $7,000, $700,000, or
$700 million -- the IRS won’t get a penny if you assume room temperature during
the following 12 months. On January 1, 2011, the death tax returns with a
vengeance, hitting estates in excess of $1 million at a rate of 55 percent.
Insane as that sounds, it’s fiscal reality.
Continued at ….. http://www.dowdmuska.com/
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EDITORIAL, NEW HAVEN REGISTER: Dodd wrong to attack Fed
Published: Sunday, November 29, 2009………..In describing his
legislation, Dodd said, “The financial crisis exposed a financial regulatory
structure that was ... unable to prevent threats to our economic security.” The
head spins at the audacity of the statement.
In 1999, Dodd voted for repeal of the Depression era Glass-Steagall Act, which separated commercial and investment banking.
Financial behemoths born from that action such as Citigroup and AIG are on
government life support thanks to the repeal. Further, Dodd was an opponent of
efforts to put the brakes on Fannie Mae and Freddie Mac, which underwrite 75
percent of new home mortgages. As they got deeper into the quagmire of subprime mortgages, Dodd pushed for them to loosen
standards even more. Both collapsed and were taken over by the government. Dodd has been a major
recipient of campaign cash from AIG, Fannie Mae and Freddie Mac. Financial reforms are needed. But, they are
being offered with a large helping of hypocrisy that is hard to stomach.
Continued at ….. http://www.nhregister.com/articles/2009/11/29/opinion/doc4b1093f9b663b391597040.txt
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The Wall Street Journal on
Healthcare Bill: The Worst Bill Ever
Epic new spending and taxes,
pricier insurance, rationed care, dishonest accounting: The Pelosi health bill
has it all……•The spending surge.
The Congressional Budget Office figures the House program will cost $1.055
trillion over a decade, which while far above the $829 billion net cost that
Mrs. Pelosi fed to credulous reporters is still a low-ball estimate. Most of
the money goes into government-run "exchanges" where people earning
between 150% and 400% of the poverty level—that is, up to about $96,000 for a
family of four in 2016—could buy coverage at heavily subsidized rates, tied to
income. The government would pay for 93% of insurance costs for a family making
$42,000, 72% for another making $78,000, and so forth.At
least at first, these benefits would be offered only to those whose employers
don't provide insurance or work for small businesses with 100 or fewer workers.
The taxpayer costs would be far higher if not for this
"firewall"—which is sure to cave in when people see the deal their neighbors
are getting on "free" health care. Mrs. Pelosi knows this, like
everyone else in Washington.
Complete article at …. http://online.wsj.com/article/SB10001424052748703399204574505423751140690.html
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Shhh! Wall Street is Spending Again
Confident of Getting Big Bonuses, Traders Quietly Open Wallets BY DAVID ENRICH
AND SUSANNE CRAIG Wall St Journal Nov 29, 2009
Conspicuous consumption is making a comeback on Wall Street.
But no one wants to admit they're doing it. As traders and investment bankers
near the finish line of what looks like a boom year for pay, some are spending
money like the financial crisis never happened. From $15,000-a-week Caribbean getaways to art auctions to $200,000 platinum
wristwatches that automatically adjust for leap years, signs of the good life
are returning. "What we're seeing in the last four to eight weeks is a
fairly substantial uptick" in demand for
extravagant purchases as Wall Street employees grow more confident that the
market's ... http://online.wsj.com/article/SB10001424052748704498804574558220419480840.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
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Dubai's threat to U.S. banks
1:34pm: Although there's little direct exposure to Dubai World's default risk, U.S. financial institutions could
take major indirect hits. More
Stocks slip on Dubai debt woes
European shares buck global selloff
NEW YORK (CNNMoney.com) -- The news that the sovereign
wealth fund of Dubai requested a postponement of
billions of dollars of debt this week could pose a big problem for U.S.
banks. The state-run investment company,
Dubai World,
owes about $60 billion. It rang up much of that in a building boom that
included the world's tallest skyscraper and the Palm
Islands in the Persian
Gulf, settlements shaped like palm trees. According to CMA DataVision,
which tracks credit markets, there's a 35.82% probability that Dubai will default on that debt.
What is Dubai World? - CNN New York-based Citigroup (C, Fortune 500) has the most exposure to default
risk at Dubai World, which a J.P. Morgan (JPM, Fortune 500) equity research note estimated at
$1.9 billion. Citigroup declined to comment.
While other major banks in the United
States are believed to have little direct exposure, the
ripple effect could be more crippling, according to Richard Bove,
a bank analyst with Rochdale
Securities.
Continued at ….. http://money.cnn.com/2009/11/27/news/companies/Dubai_bank_risks/index.htm
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Soaring Unemployment and
Double-dip Recession?
Economics / Recession 2008 - 2010 Nov 26, 2009 By: Mike_Whitney
Email: fergiewhitney@msn.com Mike
is a well respected freelance writer living in Washington state, interested in
politics and economics from a libertarian perspective Barack Obama's
chief economic advisor, Lawrence Summers, is
determined to sabotage a second round of stimulus. And, he's getting plenty of
help, too. Congressional Democrats are dragging their feet because they're
worried about the political backlash and midterm elections, the GOP deficit
hawks are looking for a way they can derail the Obama
agenda and reestablish their bone fides as fiscal conservatives, and the
bailout-traumatized American people are simply opposed to anything that
generates more red ink. Even Obama has joined the
fray and started badmouthing stimulus stressing the importance of living within
our means and trimming the deficits. So it looks like a done-deal; no more
stimulus. There's only one problem, without another blast of stimulus the
economy is headed for the skids. Continued
at ….. http://www.marketoracle.co.uk/Article15369.html
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OPINION
NOVEMBER 26, 2009,
Why Obama
Isn't Changing Washington, Nov 26, 2009, Wall Street Journal,
There is no way he can grow the government without
attracting more lobbyists and more political acrimony. Mr. Obama also
decried the prominent role played by lobbyists. "Lobbyists aren't just a
part of the system in Washington,
they're part of the problem," Mr. Obama said in
a May 2008 campaign speech. I was reminded of this last statement by a recent
headline on the front page of USA
Today. It read: "Health care fight swells lobbying. Number of
organizations hiring firms doubles in '09." The
article suggested that what Mr. Obama had promised to
fix had only gotten worse. …. In Washington
it's business as usual, except for one thing. The bigger the role of
government, the more lobbyists flock to town. By pushing for his policies, the
president effectively put up a welcome sign to lobbyists. Despite promising to
keep them out of his administration, he has even hired a few. So nothing has
changed, except maybe that Washington
is now more acrimonious than it has been.
Mr. Barnes is executive editor of the Weekly Standard and a commentator
on Fox News Channel. Article is
continued at …. http://online.wsj.com/article/SB10001424052748704779704574555471947300090.html?mod=rss_Today's_Most_Popular
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Harsanyi: Comfort food for Wall Street avengers By David Harsanyi, Nov 26, 2009, Denverpost.com, With good reason, the
prevailing economic concern of most Americans is jobs. With this in mind, two
Democratic congressmen have cooked up a plan to help us out. The strategy
entails sucking another $150 billion of capital investment out of the market
each year and handing it to an organization that can't balance a budget,
borrows money with abandon, runs massive deficits and excels at creating fairy
tale jobs. Under a bill being drafted by Democratic Reps. Peter DeFazio of Oregon
and Ed Perlmutter of Colorado, every purchase of a
financial instrument like stocks, options, derivatives and futures would face
an additional .25 percent tax — because capital gains taxes simply haven't been
hampering private investment enough. The idea has the tortured (both logically
and linguistically) title, "Let
Wall Street Pay for the Restoration of Main Street Act of
2009." Would legislation mean that the federal government mails $150
billion in refunded tax checks to those who laid out the money for the bank
bailout that Perlmutter supported? Of
course not. Half of the $150 billion in tax revenue would go toward
"reducing the deficit" — a confusing tidbit made all the more curious
when you consider Fazio and Perlmutter
have helped spend more of your money in the first year of this presidential
administration than any in history, $3.52 trillion in fiscal 2009. Here's a
restorative idea: Spend Less. Continued at http://www.denverpost.com/opinion/ci_13875881
E-mail David
Harsanyi at dharsanyi@denverpost.com.
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Junk mortgages: It just gets
worse
In 2007 we dissected one toxic issue. The horror story
continues, but can we still learn from our mistakes? By Allan Sloan and Doris
Burke Dec 1, 2009
NEW YORK (Fortune) -- Back
two years ago when the mortgage meltdown was heating up, we wrote an article
called "Junk Mortgages Under the Microscope"
dissecting a particularly wretched mortgage-backed securities issue peddled by
Goldman Sachs. We wanted to show how
these complex securities really worked and how Moody's and S&P, the rating
agencies, aided and abetted the process by giving two-thirds of an issue backed
by ultra-risky second mortgages the same safety rating they gave to U.S.
Treasury securities. We thought this was
a cautionary tale -- but it's turned into a horror story. All the tranches of this issue, GSAMP-2006 S3, that were originally
rated below AAA have defaulted. Two of the three original AAA -rated tranches (French for "slices") are facing losses
of about 90%, and even the "super senior," safer-than-mere-AAA slice
is facing losses of 25%. How could this happen? And what lessons can we take
away from it? Continued at …. http://money.cnn.com/2009/11/30/real_estate/mortgage_lessons.fortune/index.htm
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Owing Big On The Tax He Helped Pass`Jon Lender Government Watch
November 15, 2009If former Democratic state Sen. Gary A.
Hale hadn't voted the way he did 18 years ago, he might not owe the state
$77,951 in back taxes today.
In 1991, Hale gained a measure of fame — or notoriety, depending where you
stood on the question — when he switched his stance and voted in favor of a
state income tax, leading to its adoption when the lieutenant governor broke a
Senate tie and ended a summerlong legislative
standoff.
For the first time in history, Connecticut
citizens, including Hale, had to pay tax on their wages, not just sales tax and
other assorted levies such as the gasoline tax. Continued at ….. http://www.courant.com/news/politics/hc-lender-column-1115,0,3546019.column