Diary

MI Morning Update 11-18-08

714 Days Until Election Day

November 18, 2008

QUOTE OF THE DAY:

Ms. Granholm said with any agreement for assistance from Congress "there should be strings attached and there will be" on the industry and labor.
Governor Jennifer Granholm, in reference to the auto loan package request.

MORNING UPDATE:

NEXT POLITICAL BATTLE…GONGWERS reported that Rep. Mike Nofs  (R-Battle Creek) announced Monday that he has created an exploratory committee for the 19th Senate District, which will open up shortly as Senate Minority Leader Mark Schauer (D-Battle Creek) is headed to Congress

ANOTHER BAILOUT OPTION…Americans for Tax Reform president Grover Norquist today sent the letter below to the U.S. Treasury Department requesting the full $700 billion in TARP funds.  Check it out…you may want to put in your own request.

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THE REST OF THE STORY:

November 17, 2008
 
Mr. Neel Kashkari                                        
Interim Assistant Secretary for Financial Stability
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
 
Dear Secretary Kashkari:
 
I write today to formally request $700 billion from the TARP Capital Purchase Program. Since unionized auto companies, state and local governments, and certain credit card companies are applying, I thought I should, as well.  Attached  you will find the two-page application which I downloaded from www.treas.gov
 
I am fully aware that some $125 billion has already been allocated as of October 29, 2008.  However, given that the federal government has the full weight of the army, the FBI, etc. behind it, I am confident that you can re-appropriate this money from the likes of Wells Fargo (or their successor companies, if the current over-regulatory and over-taxing economic climate has caused them to go under).
 
I have a plan for this $700 billion which should be just what’s needed to get the American economy going.  Since the money came from the taxpayers in the first place, I propose giving it back to them.  With $700 billion in TARP funding, ATR would facilitate the following tax cuts:
 
Cut the corporate income tax rate from 35% to 15%, giving us one of the lowest corporate income tax rates in the developed world. We currently have the second-highest rate in the world (behind only Japan). This new 15% rate would give us the third-lowest rate in the world (ahead of only Ireland and Iceland). It would put us well below the Euro-zone average rate of 25%.  Companies would be dying to set up shop in the United States.  Estimated JCT cost: $170 billion.
 
Eliminate the capital gains and dividends tax. These rates are currently 15%, but actually represent a double-tax on corporate profits.  When combined with the new, lower 15% rate on corporate income, capital costs would be at their lowest levels in nearly a century.  Tax something less, and get more of it.  This would also be an improvement over a suggested change we have made to the Treasury for years-allow taxpayers to index the cost basis of their capital assets to inflation (something which Treasury has the unilateral authority to do and which would be the equivalent of a 50% cut in the capital gains tax rate). Estimated JCT cost: $35 billion.

Cut the top personal income tax rate from 35% to a flat 15%.  This would give the U.S. the lowest personal income tax rate in the developed world.  Estimated JCT score: $235 billion.
 
Kill the death tax. Almost nothing is more capital-killing for small businesses and family farms than the estate, gift, and generation-skipping transfer taxes. Estimated JCT score: $24 billion.

Allow companies to fully-expense capital assets purchased the first year. Under current law, businesses and other taxpayers must usually "depreciate," or slowly-deduct, capital asset purchases the first year.  This capital-boosting proposal would allow taxpayers to deduct 100% of the purchase price from their taxes in year one.  Estimated JCT score: $240 billion.
 
Put all that together, and you arrive at almost exactly $700 billion.  It’s safe to say that allocating $700 billion this year toward these tax reduction goals would do much for economic growth.  But there’s more that can be done that doesn’t require any more resources:
 
Ensure that there is full transparency in the TARP program by putting every TARP transaction and contract online for everyone to see.  Disclose potential conflicts of interest with TARP-oversight staff.
 
Allow companies to repatriate foreign profits to the U.S. without having to pay a double tax.  The last time Congress allowed this in 2005, over $300 billion was repatriated, boosting GDP 2%.
 
I look forward to receiving the money.  Please consult my staff for any ACH transfer information your people may need.
 
 
Sincerely,
 
 
Grover Norquist

TODAY’S TOP STORIES

The following stories and more are available at my Articles of Interest online.

 

A Way Out of the Wilderness
We’ve been walloped in consecutive elections, but we can’t just dwell on the past. The future is already here.

By Karl Rove
Published Nov 15, 2008

Yes, we lost the election. But in a year when all currents were running against Republicans and our campaign was lackluster and erratic, Barack Obama received only 3.1 points more than Al Gore in 2000 and only 4.6 points more than John Kerry in 2004. The Democratic victory becomes durable only if Republicans make it so with the wrong moves.

Losing the election has led to a debate about whether the GOP should return to its Reaganite tradition or embark on a new reform course. This pundit-driven shoutfest presents a sterile, unnecessary choice. The party should embrace both tradition and reform; grass-roots Republicans want to apply timeless conservative principles to the new circumstances facing America.

In the coming year, we will be defined more by what we oppose than what we are for; the president-elect and the Democrats in Congress will control the agenda. We must pick fights carefully and center them around principle. The goal is to have the sharp differences that emerge make the GOP look like the more reasonable, hopeful and inviting party-which is easier said than done. A road map:

 

Stalemate dims prospects for $25B auto bailout
 
Nov 17, 4:55 PM (ET)
By STEPHEN OHLEMACHER and JULIE HIRSCHFELD DAVIS

WASHINGTON (AP) – Prospects dimmed Monday for enactment of a $25 billion bailout for the faltering auto industry before year’s end, as congressional Democrats and the Bush administration seemed headed for a stalemate. Help for Detroit’s Big Three, which have been battered by the economic meltdown that has choked their sales and frozen their credit, is falling victim to a partisan fight over where the money should come from.

Senate Democrats said they would press ahead with their plan to carve out a portion of the $700 billion Wall Street bailout to pay for the loans, but aides in both parties and lobbyists tracking the plan acknowledged they did not currently have the votes to do so. The White House and congressional Republicans insist that the automaker bailout money instead come from redirecting a separate $25 billion loan program approved by Congress to help the industry develop more fuel-efficient vehicles.

 

GM asks Germany for €1 billion credit guarantee

By Brian Knowlton Published:
November 17, 2008

WASHINGTON: As top Detroit auto executives prepared to make their most intense plea for aid to Congress on Tuesday, General Motors also pleaded Monday for a €1 billion credit guarantee from the German government to help its Opel subsidiary.

The request, greeted with some skepticism in Germany – Chancellor Angela Merkel promised a reply by Christmas – demonstrated how what had been building as a Washington drama involving efforts to save the venerable Detroit auto industry was fast becoming a story about how the international industry might be transformed by the spreading financial crisis. Governments around the world, from Tokyo to Berlin, are mulling over pleas by auto industries that say their very survival may be at stake. In addition to GM’s plea to the German government, the carmaker is selling its 3 percent stake in Suzuki Motor to raise $230 million.

 

Financial Crisis Tab Already In The Trillions

By CNBC.com
17 Nov 2008

Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track. CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved.  Try $4.28 trillion dollars. That’s $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.

Not only is it a astronomical amount of money, its’ a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and new releases. Strictly speaking, not every cent is directed a result of what’s called the financial crisis, but it arguably related to it. Some 68-percent of the sum falls under the Federal Reserve’s umbrella, while another 16 percent is the under the Treasury Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October.

 

States face deeper and deeper cuts to balance budgets

By Jennifer Steinhauer
November 17, 2008

LOS ANGELES: Two short months ago, lawmakers in California struggled to close a $15 billion hole in the state budget. It was among the biggest deficits in state history. Now the state faces an additional $11 billion shortfall and may be unable to pay its bills this spring. The astonishing decline in revenues is without modern precedent here, but California is hardly alone. A majority of U.S. states – many with budgets already full of deep cuts and dependent on raiding rainy-day funds or tax increases – are scrambling to find ways to get through the rest of the year without hacking apart vital services or raising taxes.

Some governors, including Arnold Schwarzenegger in California and David Paterson in New York, have called special legislative sessions to deal with the crisis. Others are demanding hiring freezes and across-the-board cuts. A few states are finding their unemployment insurance funds running dry, just as the ranks of out-of-work residents spike. The plunging revenues – the result of an unusual assemblage of personal, sales, capital gains and corporate taxes falling significantly – have poked holes in budgets that are just weeks and months old and that came about only after difficult legislative sessions.

 

Hillary Clinton to accept Obama’s offer of secretary of state job
President-elect Barack Obama reaching out to former rivals to build a broad coalition administration

Hillary Clinton plans to accept the job of secretary of state offered by Barack Obama, who is reaching out to former rivals to build a broad coalition administration, the Guardian has learned. Obama’s advisers have begun looking into Bill Clinton’s foundation, which distributes millions of dollars to Africa to help with development, to ensure that there is no conflict of interest. But Democrats do not believe that the vetting is likely to be a problem.

Clinton would be well placed to become the country’s dominant voice in foreign affairs, replacing Condoleezza Rice. Since being elected senator for New York, she has specialised in foreign affairs and defence. Although she supported the war in Iraq, she and Obama basically agree on a withdrawal of American troops. Clinton, who still harbours hopes of a future presidential run, had to weigh up whether she would be better placed by staying in the Senate, which offers a platform for life, or making the more uncertain career move to the secretary of state job.

 

Obama, McCain pledge to work together

Mon Nov 17, 2008 4:49pm EST
By Jeff Mason and Caren Bohan

CHICAGO (Reuters) – U.S. President-elect Barack Obama and vanquished rival John McCain met for the first time since the November 4 election on Monday, pledging to work together to face the financial crisis and other national challenges.

"We’re going to have a good conversation about how we can do some work together to fix up the country," Obama said before the two began their closed-door meeting, adding that he wanted to offer his thanks to McCain for "outstanding service" already rendered to the United States.

 

A Giddy Sense of Boosterism

By Howard Kurtz
Monday, November 17, 2008; C01

Perhaps it was the announcement that NBC News is coming out with a DVD titled "Yes We Can: The Barack Obama Story." Or that ABC and USA Today are rushing out a book on the election. Or that HBO has snapped up a documentary on Obama’s campaign. Perhaps it was the Newsweek commemorative issue — "Obama’s American Dream" — filled with so many iconic images and such stirring prose that it could have been campaign literature. Or the Time cover depicting Obama as FDR, complete with jaunty cigarette holder.

Are the media capable of merchandizing the moment, packaging a president-elect for profit? Yes, they are. What’s troubling here goes beyond the clanging of cash registers. Media outlets have always tried to make a few bucks off the next big thing. The endless campaign is over, and there’s nothing wrong with the country pulling together, however briefly, behind its new leader. But we seem to have crossed a cultural line into mythmaking.

"The Obamas’ New Life!" blares People’s cover, with a shot of the family. "New home, new friends, new puppy!" Us Weekly goes with a Barack quote: "I Think I’m a Pretty Cool Dad." The Chicago Tribune trumpets that Michelle "is poised to be the new Oprah and the next Jacqueline Kennedy Onassis — combined!" for the fashion world. Whew! Are journalists fostering the notion that Obama is invincible, the leader of what the New York Times dubbed "Generation O"?

 

Early Test for Obama on Domestic Spying Views

By JAMES RISEN and ERIC LICHTBLAU

WASHINGTON – President-elect Barack Obama will face a series of early decisions on domestic spying that will test his administration’s views on presidential power and civil liberties. The Justice Department will be asked to respond to motions in legal challenges to the National Security Agency’s wiretapping program, and must decide whether to continue the tactics used by the Bush administration – which has used broad claims of national security and "state secrets" to try to derail the challenges – or instead agree to disclose publicly more information about how the program was run.

When he takes office, Mr. Obama will inherit greater power in domestic spying power than any other new president in more than 30 years, but he may find himself in an awkward position as he weighs how to wield it. As a presidential candidate, he condemned the N.S.A. operation as illegal, and threatened to filibuster a bill that would grant the government expanded surveillance powers and provide immunity to phone companies that helped in the Bush administration’s program of wiretapping without warrants. But Mr. Obama switched positions and ultimately supported the measure in the Senate, angering liberal supporters who accused him of bowing to pressure from the right.

 

Russian spy in Nato could have passed on missile defence and cyber-war secrets

Roger Boyes

A spy at the heart of Nato may have passed secrets on the US missile shield and cyber-defence to Russian Intelligence, it has emerged. Herman Simm, 61, an Estonian defence ministry official who was arrested in September, was responsible for handling all of his country’s classified information at Nato, giving him access to every top-secret graded document from other alliance countries.

He was recruited by the Russians in the late 1980s and has been charged in Estonia with supplying information to a foreign power. Several investigation teams from both the EU and Nato, under the supervision of a US officer, have flown to the Estonian capital Tallinn to assess the scope of what is being seen as the most serious case of espionage against Nato since the end of the Cold War.