Perry's complicated simple flat tax

Making his flat tax optional solved one problem - its regressive nature. Howard Gleckman is a resident fellow at the Urban Institute and editor of TaxVox, the blog of the nonpartisan research organization Tax Policy Center. The opinions expressed in this commentary are solely those of the writer. One of the biggest problems with Texas Gov. Rick Perry's optional flat tax may be the choice it gives taxpayers.

Print Comment Perry says you can either pay his new tax or pay under today's system, whichever results in a lower bill. That sounds great, but it is a policy disaster. This is the tax code we're talking about, not some TV game show. Perry says he wants a system that is simple. But his option could well make tax filing far more complicated, especially for middle-income households. He says he wants certainty. But the optional tax will create more confusion. He says he wants people to be able to file on a postcard. But his option may require taxpayers to prepare their returns three times. The option does solve one problem -- the regressive nature of any consumption tax. Herman Cain has learned this the hard way as he's struggled with his 9-9-9 tax. Perry's semi-consumption tax has a similar problem. What's a flat tax? And Perry has chosen to cure the regressivity problem by telling lower income people that if his plan doesn't work for them -- which it won't -- they can continue to pay under the current system. This will help blow an even bigger hole in the budget. For Perry, a small government guy, that may be a good thing since it would drive even deeper spending cuts. And, if he can avoid describing what cuts he'd make, it might even be good politics -- at least through the primaries. The trouble is that Perry's choice creates a tax compliance mess. How much of one depends on a detail he has yet to share: How often will we get to choose which tax to pay? If we can pick each April, filing will be an even bigger headache for most Americans than it is today, although the ability to switch yearly would also make it possible for people to maximize their tax savings. On the other hand, Perry could require you to make the choice only once in your life. That would make filing relatively simple. There's just one minor downside: The wrong choice could cost you hundreds of thousands of dollars over your lifetime. A third option could allow you to switch every, say, 10 years, or if you have an important lifecycle event. Time for Congress to do right on the debt The choice between the current tax system and the Perry plan will be a no-brainer for the very rich, who would do much better under his system. And it will be easy for most low-income working-class families, especially if they have kids. They'd be far happier under a system that preserves refundable credits such as the earned income and child credits than under Perry's plan. But for everyone else, picking between the two tax laws will a huge pain in the butt. The only way to get the right answer will be to do your taxes twice. And if you happen to be among the millions at risk for paying the dreaded Alternative Minimum Tax, you'll have the pleasure of doing your returns three times each year. As my former Tax Policy Center colleague Len Burman says, the Perry choice is something like an Alternative Maximum Tax. At least with Perry's AMT, you get to pay the lowest possible tax instead of the highest. 0:00 / 03:20 Would Cain's 9-9-9 hurt the poor? Making a one-time election would avoid this annual headache, of course. But what a choice. When you first start paying taxes on your own, you'd have to anticipate how many kids you're going to have, how much money you're going to make, and whether you're going to itemize decades in the future (and unless Perry exempts dependent filers from the election, some 3-year-olds would be forced to choose). Guess right, and you can maximize your lifetime tax savings. Guess wrong, and you'll be an unhappy camper for a lot of years. Oh, and there is one other question: Which current system do you get to choose from? Does Perry assume the Bush tax cuts are extended indefinitely or do they expire? If the former, the pre-Perry tax code would itself be quite generous. So far, he has not said. Whatever you think of the rest of Perry's plan, giving taxpayers a choice about how much tax to pay is just plain dumb. If Perry really wants to make his tax plan progressive, there are far better ways to do it. 

Savings rate falls, lowest since 2007

NEW YORK (CNNMoney) -- The good news is, a recent pick-up in consumer spending is fending off fears of another U.S. recession. The bad news is, it's coming at the expense of Americans' savings. Print Comment On average, consumers put 3.6% of their hard-earned dough into savings in September, the government reported Friday. It marks the lowest level of saving since December 2007, when consumers stashed away only 2.6% of their income.

But deciphering the meaning of the savings rate is a tricky business. On one hand, many economists had hoped the Great Recession would spark a newfound period of thrift and frugality, lessening consumers' vulnerability to financial shocks in the future. (The recession did have this effect for a while, sending the savings rate as high as 7.1% in mid 2009.) On the other hand, American businesses have argued that without an increase in demand for their products, there's no incentive for them to create more jobs. If consumers continue to save rather than spend their money, why should the restaurant down the street, the local big-box retailer or even large American manufacturers ramp up their hiring? On Thursday, the government's latest report on U.S. economic growth showed that since July, consumers have started to slow down the amount they add to their savings, to ramp up their spending more instead. Adjusted for inflation, consumer spending rose 2.4% in the third quarter. That was not only strong enough to boost overall economic growth in the recent quarter, it also led some economists to boost their forecasts for fourth quarter growth. But at the same time, others are reluctant to carry their optimism into their 2012 forecasts. Mark Vitner, a senior economist at Wells Fargo, points out that the increase in spending has come even as consumers saw their disposable income fall 1.7% in the third quarter (adjusted for inflation and taxes). "The sluggish income growth cast doubts on how sustainable the pickup in economic growth is," he said. "Without an increase in income, consumers can't afford to keep increasing their spending at the the pace that they have." 

'Dear Jamie Dimon': O.W.S. writes to bankers

Members of the Occupy Wall Street movement delivered letters on Friday at the Manhattan headquarters of some of Wall Street's biggest banks. NEW YORK (CNNMoney) -- Occupy Wall Street is getting personal. After railing against Wall Street greed for weeks from their encampment at Zuccotti Park in New York, a group went on the move Friday, dropping off thousands of letters addressed to Wall Street executives. Print Comment Although the protestors have based themselves at the park in Lower Manhattan, a number of the biggest "Wall Street" banks actually have their corporate headquarters in Midtown, a few miles to the north. While bank executives did not emerge from their offices to accept the letters, group members outside the bank buildings used their "people's mic" system to ensure that their sentiments were heard loud and clear.

"Every day, the 99% are fighting to survive, and it's the hardest work you can imagine," said Maria Maisonet of Brooklyn, reading out a letter addressed to JPMorgan Chase CEO Jamie Dimon, Bank of America's Brian Moynihan, Citigroup's Vikram Pandit and Wells Fargo's John Stumpf. "My nephews and my son tell me they feel like bums because, even though they're trying and trying, they can't get a job. You are the problem, not us." Who are the 1%? After gathering around 300 people in Bryant Park, organizers broke the marchers into two groups. One traveled to the headquarters of Bank of America ( BAC , Fortune 500) and Morgan Stanley, while the other went to Citigroup and Wells Fargo, before they converged at the imposing JPMorgan Chase building. Police formed a cordon around the group and provided security outside the bank buildings, but the march was a peaceful affair, with a singing protest outside Wells Fargo and a number of marchers in costume ahead of the Halloween weekend. Elsewhere around the country this week, however, similar "Occupy" protests have been faced with disorder. Three protestors in Tampa were arrested Friday after members of the group allegedly shoved a police officer, while 51 people were arrested early that morning in San Diego for violating a park curfew and assembling unlawfully. On Thursday, Oakland mayor Jean Quan apologized after police cracked down earlier this week on a protest in the city in a violent episode that left an Iraq war veteran hospitalized with a fractured skull. 0:00 / 1:54 Occupy Wall Street goes global Prior to the gathering in New York, organizers printed off copies of more then 6,000 letters submitted to the website OccupyTheBoardroom.com over the past few weeks and directed to Wall Street leaders. Upon arriving at Bank of America headquarters, protestors folded copies of the letters into paper airplanes and launched them toward the entrance of the building, where they landed among the police and security guards massed outside. At Morgan Stanley, march organizer Austin Guest left his phone number with security outside. Guest asked that it be given to CEO James Gorman, inviting him to have lunch with some of the demonstrators. "We'll pick up the tab," Guest joked. "We've been doing it for the last few years." The march concluded at JPMorgan Chase ( JPM , Fortune 500) headquarters, where several marchers shared their stories before lining up to deliver their letters as bank staffers looked on from inside the building. Mimi Pierre Johnson, from Elmont, New York, told the crowd that she had been struggling to make her mortgage payments since losing her job four years ago. In a letter directed to CEO Jamie Dimon, Johnson said that despite more than a dozen applications, Chase still has not granted her a mortgage modification. "I am sure that if you came to Southeast Queens and saw the devastation, the vacant houses with their littered lawns and boarded-up windows, you would sing a different tune when it came to mortgage modifications," Johnson said. "Name the time and date, Mr. Dimon, and I will personally escort you through the community." 

Dear China, buy our debt! XOXO, Europe

French president Nicolas Sarkozy and Chinese president Hu Jintao may have to do more than shake hands. Europe wants (and needs) China to invest in the EFSF bailout fund. NEW YORK (CNNMoney) -- New dad Nicolas Sarkozy is apparently hoping for a great baby gift from China president Hu Jintao. A couple of hundred billion euro or so should do. With Sarkozy and other European leaders finally reaching a deal to cut Greece's debt load, bolster the broader EU bailout fund and recapitalize the continent's banks, attention now turns to just who will pay for much of the plan.

Print Comment Once again, the world is hoping China will come to the rescue. One of the most tantalizing parts of Europe's latest proposal is the creation of a special investment vehicle that would allow sovereign wealth funds to invest in the European Financial Stability Facility (EFSF) bailout fund. Sarkozy had a phone conversation with Hu after the debt deal was reached in Brussels early Thursday morning. I'm guessing they weren't sharing war stories about late night changes of poopie diapers. According to a report from Chinese news agency Xinhua , the two leaders spoke about more ways to work together to promote global growth. But there was no mention of China being asked to buy EFSF debt. Still, it looks like Sarkozy won't be the only European official making a pitch to China for much-needed funding. Klaus Regling, the CEO of the EFSF, is said to be planning a trip to China (and possibly Japan as well) in the next few days to meet with potential investors. Why you should be worried about Europe The push to get Asian central banks to invest more in Europe makes perfect sense. For one, the EU is a key export market for both China and Japan. It is not in the best interests of either nation to let Europe sink even deeper into an economic morass. Japan, and to a lesser extent China, have also already invested in the EFSF. According to figures from the EFSF, Japan owns about 20% of the bonds issued by the EFSF so far. There are no specific figures for China but "Asia-ex Japan" nations are listed as sizeable investors in various EFSF issues as well. So making further investments may be merely a case of being in for a penny and in for a pound. Or euro if you will. The EFSF may also be a compelling alternative to U.S. Treasuries. China and Japan are the two largest foreign holders of Uncle Sam's debt, owning $1.14 trillion and $937 billion in Treasury bonds respectively. China has made no secret of its irritation with the U.S. regarding the debt ceiling drama in Congress this summer and how that has impacted China's investments. China also can't be thrilled that the Fed's two rounds of quantitative easing and Operation Twist have left interest rates near historic lows. 0:00 / 1:54 Cork popped on EU deal... hangover later And the EFSF bonds have the Triple A stamp of approval from all the major credit rating agencies -- unlike the U.S. Still, experts said it's not a given that China (or other sovereign wealth funds) will make a big bet on the EFSF. "This is a big question mark going forward. It's probably likely that China and others will participate, but it's not definite. There is some skepticism," said Anthony Valeri, fixed income investment strategist with LPL Financial in San Diego. Valeri said that while China does complain about the many fiscal challenges facing the U.S., China realizes that no matter what Standard & Poor's might say, Treasuries are still a better horse to bet on than European bonds. "China will need a lot of convincing that EFSF bonds are an attractive option for them. At the end of the day, Treasuries may still suit their needs as a safe haven investment," he said. Brazil cuts rates. Is China next? And China and other sovereign wealth funds have complicated objectives, added Bhaskar Chakravorti, senior associate dean of International Business and Finance at The Fletcher School at Tufts University. They have political interests as well as financial motives. That could make negotiations difficult. "The road to a beautiful end game in Europe is paved with potholes. The Chinese will still probably be quite cautious and demand a lot both economically and politically," said Chakravorti. "I'm sure that Germany will not be thrilled about that." But Lionel Mellul, co-partner with Momentum Trading Partners, an independent broker-dealer in New York, thinks China eventually will make an investment. Still, he doesn't think that this is necessarily great news. Mellul argues that it's a sign of how desperate Europe is and how nervous leaders are about the possibility that Italy and Spain may also need bailouts like Greece, Portugal and Ireland did. "It just goes to show how bad the situation is in Europe that they are forced to try and strike a deal with China. Europe needs Asian participation for this to work," he said. And that means that China and other potential investors have the bargaining leverage. Mellul said China could make any EFSF purchases contingent on more favorable trade deals, for example. "China will probably participate, but the question is at what cost?" he said. CNN's Jaime FlorCruz in Beijing contributed to this story. The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.  

For most seniors, a small Medicare rate hike

WASHINGTON (CNNMoney) -- Some 35 million Medicare recipients will have to dig a little deeper into their pockets when they go to the doctor next year. Premiums for office visits and outpatient hospital services will go up by $3.50 a month, the Obama administration announced Thursday. Print Comment At the same time, 12 million recipients who had been paying higher premiums because they are recent enrollees or have higher incomes will see their monthly payments decrease by an average of $15.50 a month. Officials with the Department of Health and Human Services were quick to note that the $3.50 increase for most seniors -- to $99.90 a month -- was "far less" than the $10 hike originally forecast for those who get the so-called Medicare Part B, which also covers home health services. "In 2012, people will find more meaningful choices and overall lower cost," said Donald Berwick, administrator for the Centers for Medicare and Medicaid Services.

However, Medicare beneficiaries could be out a bit more if they end up in a hospital or nursing home next year. Medicare Part A -- which nearly all Medicare beneficiaries buy -- is getting a $24 annual hike in the deductible to $1,156. 0:00 / 2:52 Medicare's toll on America's budget The changes announced Thursday will have the biggest impact on Medicare Part B enrollees with higher incomes or who turned 65 in 2008 or later. They've been paying an average of $115.40 a month but will now pay $99.90 a month. In addition, all Medicare Part B enrollees will see their annual deductibles fall by $22 to $140. The reason for the divergence in premiums has to do with the Social Security cost-of-living allowance increase announced earlier this month. Over the past few years, there has been no COLA boost, and Medicare premiums in those years have been capped at $96.40 for most seniors. The $3.50-a-month increase for earlier enrollees helps bring down the rates for those who enrolled more recently. AARP, the lobbying group for seniors, applauded the changes. "Millions of America's seniors are struggling with higher expenses -- particularly higher health care costs, lower incomes, depleted savings and reduced home equity or homes lost to foreclosure, and this small increase is welcome news," said AARP Legislative Policy Director David Certner in a statement.  

Top 1% are getting even richer

Household income for top 1% more than triples, while middle-class incomes grow by less than 40%. NEW YORK (CNNMoney) -- From 1979 to 2007, average household income for the nation's top 1% more than tripled, while middle-class incomes grew by less than 40%, according to a new report from a research arm of Congress. While those at the top have seen their incomes soar over the past three decades, middle-class and lower incomes have stagnated, the report by the Congressional Budget Office found. Print Comment "Over the past three decades, the distribution of income in the United States has become increasingly dispersed -- in particular, the share of income accruing to high-income households has increased, whereas the share accruing to other households has declined," the CBO said. For the top 1% of the population, average inflation-adjusted household income grew by 275%.

The rest of wealthiest fifth of the population, not including the top 1%, saw household income grow by 65% during that time, faster than the rest of the population, but "not nearly as fast as for the top 1%." For middle-class earners, it was a different story. The growing wealth gap Household income grew by just under 40% and the poorest fifth of the population saw their incomes rise by just 18% in a little less than 30 years, according to the study, which was based on IRS and Census data. During that time, income ballooned at the top of the spectrum and government policy did less to redistribute wealth, the CBO found. "The rapid growth in average real household income for the 1% of the population with the highest income was a major factor contributing to the growing inequality in the distribution of household income between 1979 and 2007," the report said. "Shifts in government transfers and federal taxes also contributed to that increase in inequality." 0:00 / 1:54 Occupy Wall Street goes global That's also, in part, what has spurred the recent Occupy Wall Street movement. Protesters refer to themselves as "the other 99%," which suggests that they represent a broad segment of the U.S. demographic, excluding the wealthiest 1% of Americans. Their aim, they say, has been to bring attention to the country's growing economic gap. Occupy Wall Street began on Sept. 17 in Manhattan's Financial District and has since grown into a global movement. 

Troubled homeowners get a lifeline

NEW YORK (CNNMoney) -- In the latest attempt to address the ailing housing market, the government on Monday announced changes to a federal program that will make it easier for struggling homeowners to refinance to today's near-record low rates. Under the new program, homeowners who owe more on their homes than they are worth will be able to refinance no matter how much they are underwater, as long as they are current on their payments. Print Comment More than 1 million homeowners could get cheaper mortgages as a result, officials estimated. The revamped Home Affordable Refinance Program (HARP) will also streamline the refinancing process, doing away with certain types of appraisals and underwriting requirements, and reducing or eliminating fees that prevented homeowners from refinancing in the past. More than 890,000 homeowners have already refinanced under HARP, which is available to borrowers with loans backed by Fannie Mae and Freddie Mac originated before May 31, 2009.

But hundreds of thousands more could not qualify -- mainly because of the previous 125% loan-to-value limit on the program or because banks would not take on the risk. The 4% mortgage -- good luck getting one "We know there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach," said Edward DeMarco, acting director for the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac. Currently, about 11 million borrowers are underwater on their mortgages, with about 4.7 million of those loans meeting or exceeding the 125% loan-to-value limit, according to CoreLogic, a financial analytics company. By the time HARP expires in 2013, the federal housing agency estimates, up to 1 million more borrowers may benefit from the new regulations. Many of those borrowers will be from states like Florida, California, Nevada and Arizona where home values have been hit the hardest. In metro areas like Las Vegas, for example, prices have plunged nearly 60% from their early-2006 peak. The new rules and other details have yet to be finalized, but FHFA said that should all be worked out by Nov. 15. Banks may be able to start issuing refinanced loans by Dec. 1. Lifting the loan-to-value restrictions may still only help a limited number of borrowers, according to Jaret Seiberg, an analyst for MF Global Inc.'s Washington Research Group, which analyzes public policy for institutional investors. 0:00 / 03:12 How Fannie Mae spruces up foreclosures The problem: Mortgage holders still must be current on their payments for the past six months -- with no more than one missed payment in the past 12 months --and they also must be able to qualify for a new loan. However, Seiberg believes, the changes should allow banks to refinance loans without worrying that Fannie Mae ( FNMA , Fortune 500) and Freddie Mac ( FMCC , Fortune 500) will force them to repurchase the loans if the borrower defaults. In the past, banks have been reluctant to refinance loans because they didn't want to take on that liability, explained Shaun Donovan, the secretary of the U.S. Department of Housing and Urban Development. By doing away with that liability, more lenders will compete to refinance the loans, which he believes will make them more affordable for borrowers. That should help remove one of the biggest barriers to refinancing through HARP, said Gene Sperling, director of the National Economic Council. What about us? Responsible homeowners get left out in the cold Under the newly-revamped program, Fannie and Freddie will also reduce the fees they have charged in the past in order to enable borrowers to better afford the new loans. Among the fees that may be reduced or eliminated are those for loan level price adjustments. Going forward, borrowers may not be penalized for less-than-perfect credit scores, for example. Fees will also be waived for some underwater borrowers who refinance into 20-year or other, shorter-term loans. By doing so, it could help homeowners get above water faster. A homeowner who has a $200,000 balance on a 30-year mortgage with a 6.5% rate and a home value of $160,000, for example, currently makes payments of $1,264 a month. If they refinance into a 20-year fixed-rate loan at 4.25%, it will reduce monthly payments to $1,238 and slash the balance to $160,000 in just five-and-a-half years. If they refinance to a 30-year loan at 4.5%, however, their monthly payments will be much lower, $1,038, but it will take 10 years to reach $160,000. "It's an opportunity for borrowers to improve their household balance sheets by repaying their mortgages much quicker," said DeMarco. 

Inflation (CPI)

NEW YORK (CNNMoney) -- Inflation took a bigger bite out of consumers' wallets over the last 12 months, with September marking the biggest rise in three years. But at the same time, monthly price increases are starting to slow. Print Comment The Consumer Price Index, the government's key measure of inflation at the retail level, jumped 3.9% in September from the year before. Higher food and energy prices again were the biggest culprits, with food 4.7% more expensive than a year earlier, and energy prices jumping 19.3%. Even core CPI, which strips out volatile food and energy prices, posted a 2% gain -- the higher end of the range that is generally believed to be acceptable by the Federal Reserve.

But there were also signs that the pace of increase is abating. The one-month change in prices was a rise of 0.3%, down from a 0.4% increase in August. And monthly core CPI increased by 0.1%, down from the 0.2% increase from the previous month and the smallest rise since March. Economists surveyed by Briefing.com had forecast a 0.3% rise for overall CPI in September, and a 0.2% rise for core CPI. Higher prices this year will mean a 3.6% increase in Social Security benefits in 2012, the first increase for recipients since 2009. Little to no inflation following the financial crisis meant that seniors received no cost-of-living increases in 2010 and 2011. 0:00 / 1:39 Why it sucks to be middle class Social security recipients aren't the only ones who have seen their income squeezed in recent years. High unemployment and weak hiring has kept average hourly wages down to a 1.9% annual increase in September. With prices increasing at nearly twice that rate, consumers are seeing their purchasing power erode. And declining wages are not just a result of the Great Recession. Adjusted for inflation, middle class wages, as measured by median household income, have fallen 7% over the last decade. 

Federal Reserve: GOP's whipping boy

Most of these Republicans don't like the Federal Reserve all that much. NEW YORK (CNNMoney) -- The Federal Reserve. It's the one institution almost every Republican presidential hopeful loves to hate. And during the latest CNN debate, the candidates came to play, attacking the central bank with rhetorical broadsides usually reserved for enemies of the state. Print Comment Rick Perry reiterated that Ben Bernanke might be guilty of treason for instituting a bond buying program.

Michele Bachmann said she wants to put the central bank on "such a tight leash that they're going to squeak." Other complaints: The Fed should be audited. Its policies are weakening the dollar. It has almost unlimited power. And Ron Paul -- a notorious Fed basher -- wasn't even asked to weigh in! Of course, this isn't the first time in the central bank's history it has been criticized by influential politicians in a very public setting. But now, the frequency of the criticism suggests the Fed is becoming a primary issue. And that's just what the bank doesn't want. "The Fed tries as mightily as it can to make its monetary policy decisions as apolitical as it knows how to do," said William Poole, a senior fellow at the Cato Institute and former president of the Federal Reserve Bank of St. Louis. So what does the Fed really do anyhow? The central bank has essentially two jobs: Use monetary policy to keep inflation under control and unemployment rates low. What does Rick Perry really want from the Fed? Politics is not part of the mission. Some of the recent criticism of the Fed stems from the 2008 financial crisis and its aftermath, when the bank was forced to take extraordinary measures to help stabilize financial markets. The bank made special loans, cut key interest rates and worked closely with the Treasury Department to backstop large financial institutions. That role has opened Bernanke and company to complaints from candidates who view the Fed's actions as suspect. But not everybody is buying what the candidates are selling. "It's inaccurate to suggest the Federal Reserve acted in a political manner during the economic crisis" said Steve Bartlett, CEO of the Financial Services Roundtable and a former Republican congressman from Texas. "They've acted in a transparent way and fulfilled their statutory responsibilities." Perry, the current governor of Texas, apparently does not agree, and has stepped up his criticisms of the Fed to a level rarely seen. 0:00 / 6:04 PIMCO CEO: Bernanke's cry for help "If this guy [Bernanke] prints more money between now and the election, I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas," Perry said last month in Iowa. On Monday night, Perry stuck by his comments, saying it would be be almost treasonous for the Fed to print more money -- a reference to quantitative easing, a bond-buying program designed to boost the economy. Bartlett said Perry's comments about Bernanke are not particularly helpful. "The name calling -- I don't know if that's happened in the past. And it's bad," he said. Another reason to attack the Fed? It's a soft target. The central bank doesn't often fight back -- and when it does, the language used is measured. And the 2012 GOP primary is still a tight race. Political points are on the line. "Most ... informed observers understand this kind of language does seep out of politicians' mouths from time to time when they are trying to gather votes and win office," Poole said. "I think it's very unfortunate that it happens, and I think it's very unfortunate that voters seem to respond positively to it," he added. But the Fed anger might die down as the race moves toward the general election and independent voters become the focus. "I don't think it has legs as a campaign issue," Bartlett said. "It's only an issue if it has legs with the voters, not with the candidates."  

'Too big to fail' foe picked for top FDIC post

Former KC Fed President Thomas Hoenig is President Obama's pick for the No. 2 position at the FDIC. NEW YORK (CNNMoney) -- A conservative critic of "too big to fail" banks has been tapped for a key position to do something about them. Thomas Hoenig, a former Federal Reserve bank president, will be nominated by President Obama to become vice chairman at the Federal Deposit Insurance Corp., the federal agency that insures banks and closes them when they fail. Print Comment Hoenig is a vocal critic of large banks, technically known as "systemically important financial institutions," or SIFI, under the recent Dodd-Frank regulatory reform of the financial system.

Of course, they're more popularly known as the "too big to fail" banks that are a focus of the Occupy Wall Street protests. Under Dodd-Frank, the FDIC will be responsible for unwinding failing big banks. In a June speech, Hoenig -- who headed the Federal Reserve Bank of Kansas City -- called those institutions "fundamentally inconsistent with capitalism." "They are inherently destabilizing to global markets and detrimental to world growth," he said. "So long as the concept of a SIFI exists, and there are institutions so powerful and considered so important that they require special support and different rules, the future of capitalism is at risk and our market economy is in peril." There is a debate going on right now as to what trading of financial assets banks will be allowed to do under Dodd-Frank. Advocates of the so-called Volcker rule, named after former Fed Chairman Paul Volcker, want to allow banks to conduct trading for customers but prohibit them from trading on their own behalf, a practice known as proprietary trading. The FDIC board voted for a draft of the Volcker rule earlier this month, starting a process of public comment on the regulation. In his June speech, Hoenig advocated even tighter prohibitions on bank trading. In fact, he thinks they should not be allowed to conduct any trades at all. "Allowing customer but not proprietary trading would make it easy to game the system by 'concealing' proprietary trading as part of the inventory necessary to conduct customer trading," he argued. If Hoenig is confirmed by the Senate to the new post, it could be bad news for big banks, but good news for smaller banks, said Jaret Seiberg, research analyst with MF Global's Washington Research Group. "It is hard to find a government official who spoke out more forcefully for breaking up the biggest banks than Hoenig during his tenure as Kansas City Federal Reserve president," said Seiberg. "As FDIC vice chairman, he will have an even bigger platform for this message." Besides his views on banks, Hoenig was probably best known as the sole dissenting vote against the Fed decision last November to buy an additional $600 billion in Treasuries in an effort to boost the sluggish U.S. economy, a policy known as quantitative easing, or QE2 for short. He also opposed language in which the Fed promised to keep its key interest rate exceptionally low for an extended period. He said in a speech a year ago that QE2 would be a "bargain with the devil," fearing new asset bubbles that could distort markets, and arguing that it could feed inflation down the road. Hoenig's criticism of Fed policy made him a favorite among Congressional Republicans. Last fall, as Republicans prepared to assume control of the House after their midterm win, Hoenig was invited to speak to Republican members of Congress behind closed doors. He also testified earlier this year before the House subcommittee on monetary policy chaired by Ron Paul, a noted Fed critic and presidential candidate, who would like to abolish the central bank altogether. Republicans' previous praise for Hoenig may make it difficult for them to block his confirmation, even if they oppose his views on the Volcker rule and bank regulation, said Boston University law professor Cornelius Hurley, a former counsel to the Fed Board of Governors. "A brilliant political step, Hoenig's nomination puts Senate Republicans in a very difficult spot in voting on his vice-chairmanship," said Hurley. "His experience and point of view on systemic risk may foretell a pivot away from the failing policies of (Treasury Secretary)Timothy Geithner and (and former Obama adviser) Larry Summers toward more meaningful structural reform of our financial system." The FDIC is the government agency that insures bank deposits for customers, and oversees the takeover of banks deemed to be insolvent. After taking over relatively few banks in the years leading up to the 2008 financial crisis, it has become very active since the financial meltdown, taking over 402 banks since 2008. Martin Gruenberg is technically still the vice chairman of the agency but he has been acting chairman since the resignation of the previous chairman, Sheila Bair, in July. President Obama nominated Gruenberg in June to become the new chairman.  

After Gadhafi, N.J. may be Libyans' welcome home

Libyan mansion is home to Libya's U.N. ambasador and long a sore spot for Englewood, N.J. WASHINGTON (CNNMoney) -- When Libya first bought a 25-room, 1906 mansion in suburban New Jersey, the community was in an uproar. Now, for the first time in nearly 30 years, the mansion known as Thunder Rock may get a little more love -- if it's used to help usher in a new era of what many hope to be peaceful relations between the United States and Libya. Print Comment Valued at $5.6 million by the county tax assessor's office, the mansion was not among assets frozen by the U.S.

Treasury Department earlier this year. The mansion has been granted embassy-like status, serving as a New York-area home to the Libyan ambassador to the United Nations. But the statuesque house, which could pass for a stone castle or a manor, has long been a sore spot in Englewood, N.J. -- especially after the bombing of Pan American flight 103 over Lockerbie, Scotland, in 1988. "I was afraid Gadhafi was going to motorcade up Palisade Avenue and we were going to have armed conflict in Englewood, with the blood of Americans being on his hands," said Rep. Steve Rothman, a New Jersey Democrat who was mayor when Libya bought the 4.7 acre property in 1982. At several points during the last 30 years, Rothman has worked on deals with the Reagan and Obama administrations, and with the United Nations to prevent Gadhafi from stepping foot in Englewood. The most recent deal may have prevented Gadhafi from sleeping in a Bedouin tent on the mansion's lawn during his 2009 visit to address the United Nations. Gadhafi ended up in a Manhattan U.N. apartment. The mansion is currently serving as a second, quasi-summer home to Abdurrahman Mohamed Shalgham, Libya's ambassador to the United Nations. Shalgham was Gadhafi's U.N. ambassador and was among the first to defect to the opposition movement, publicly denouncing the "brutality" of Gadhafi back in February. United Nations ambassadors are allowed to have homes within 25 miles of New York City, which is why the mansion has been given embassy-like status. 0:00 / 1:36 The road to recovery for Libyan oil But that didn't stop the city of Englewood from going to court to try to force the Libyan government to pay property taxes, a battle it won in the lower courts but lost in federal appeals court in 1985. When Treasury announced sanctions and freezing assets, Englewood Mayor Frank Huttle told the Bergen Record he wanted to look into pursuing legal action against the Libyans again. "I continue to explore all options on the property tax status. I look forward to working with a new Libyan government," Huttle said. But now, with the Transitional National Council taking over Libya, anything could happen. The mansion could get more use. Or the new Libyan government could decide to sell it. Rothman said he expects it will continue as a residence and he welcomes the change for the Libyan people. "Our 28-year-old agreement between the U.S. and Libya that kept Gadhafi out of the Englewood mansion for all that time was quite effective," Rothman said. "I expect that unless the Libyans change their minds and wish to relocate, the ambassador will continue to occupy that home." 

Brazil cuts rates. Is China next?

Brazil just cut interest rates for the second time in less than two months. Some think China, as well as Russia and India, may follow suit to try and help the U.S. and global economy. NEW YORK (CNNMoney) -- Brazil is one of the world's hottest economies. But even it is feeling a need to cut interest rates in response to a slowdown in the developed world.

Despite the fact that inflation is still a major concern in the land of Carnival, Brazil's central bank cut its benchmark Selic rate late Wednesday by half a percentage point. Print Comment Rates in Brazil are still a whopping 11.5%, a reflection of the strength of the oil-rich Brazilian economy. But the latest cut comes on the heels of another half-point cut back on August 31. And here's what is most telling. The decision to lower rates was unanimous. Brazil's Comitê de Política Monetária, or Copom, said in a statement that the move was necessary to promptly mitigate "the effects stemming from a more restrictive global environment." That's a big change from less than two months ago. The rate cut in August was met with some resistance. Two of the seven Copom members voted against lowering rates. (Richard Fisher and Charles Plosser apparently have friends in Brasilia. How do you say inflation hawk in Portuguese?) The Greek debt crisis has only gotten worse in the past few months, leading to more calls for quick action in Europe to prevent contagion. And the economic data in the United States, while maybe not hinting at another downturn, is hardly encouraging either. With that in mind, it makes sense for Brazil to cut rates. Yes, it has to worry about inflation at home. But it would be foolish to ignore the problems facing some of its key trading partners. "It is very important to the Brazilian economy that the U.S. and Europe do not slip into another recession," said Otavio Aidar, an economist for Mirae Asset Global Investments in Sao Paulo, Brazil. Can the BRIC nations save Europe? However, more rate cuts in Brazil could also help to weaken its currency, the real. That could lead to increased exports from Brazil and more foreign investment there. So it's not as if Brazil is altruistically lowering rates as a way of doing a solid for the U.S. and Europe. That leads us to China. The People's Bank of China (PBOC) has hiked interest rates five times since last October. The most recent increase was in July. Some experts fear that China has a real estate bubble brewing that's just like the one that spectacularly popped in the United States. But China may finally be done raising rates. That's because its economy is starting to lose some steam too. Sure, China's gross domestic product is still the envy of the planet, rising at an annualized rate of 9.1% in the third quarter. Still, that pace is down from 9.5% in the second quarter and 9.7% in the first. The inflation rate in China remains an incredibly high 6.1%. But the pace of price hikes are also moderating. At the very least, it seems that future rate hikes from China are unlikely anytime soon -- even if the possibility of a rate cut is open for debate. 0:00 / 2:36 Riding Brazil's wave of prosperity That's important to keep in mind considering all the heated rhetoric in Washington about China manipulating its currency and the need for possible trade sanctions. If China were to lower interest rates, it may not thrill the lawmakers who have been talking tough about China. It could weaken the yuan, which actually has appreciated against the dollar this year because China has raised interest rates while the Federal Reserve has been QE-ing and Twisting to keep rates low. So big rate cuts in China and Brazil could actually hurt the U.S. and Europe since it could add to the trade tensions. Then again, you could also argue that anything that might actually lift the value of the dollar wouldn't be a bad thing for the long-term health of the U.S. economy. As I wrote in a column about the Fed and global interest rates a few weeks ago, "a global coordinated easing effort could be just what the economy needs." But there's also the issue of commodities. If China, and to a lesser extent Brazil, merely stand pat, that could drive oil, copper and other commodity prices higher again. Economists at Brockhouse Cooper, a brokerage firm in Montreal, pointed out in a note Thursday that there has been a direct correlation between China rate hikes and commodity prices going down this year. G20 finance chiefs back Europe rescue The reason is simple. The rate increases worked. They helped slow demand. China, because of its heft and ambitious growth plans, has been a voracious consumer of commodities. "Since China accounts for about 40-50% of the consumption of all base metals, actions by the PBOC do matter for commodity prices," the Brockhouse Cooper economists wrote. So there's the problem. Rate cuts by China and Brazil do make sense. I think we've all learned that the notion of decoupling, i.e. that the emerging markets can thrive indefinitely as the developed world languishes, is a myth. If the U.S., Europe and Japan remain in a rut, that's going to hurt the likes of Brazil, Russia, India and China and other developing countries -- especially if they keep rates too high for too long. China's benchmark rate is nearly 6.6%. Rates in India and Russia are 8.25% "We expect other emerging market central banks to follow Brazil's rate cuts too. Already, almost all emerging market central banks have stopped hiking rates," Aidar said. But if those nations cut rates to try and stimulate global demand, there will be some consequences. At the end of the day, rate cuts by Brazil and China may help somewhat, but they are not a magical elixir for the many problems facing the developed world. "If you are looking for looser monetary policy in China and Brazil to save the U.S. and Europe, it's not going to happen," said Brett Hammond, senior economist with TIAA-CREF in New York. The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.  

Strike at Ford plants less likely after vote

The rank-and-file UAW members at Ford Motor are now voting in favor of a tentative labor deal there. NEW YORK (CNNMoney) -- The possibility of a strike at the nation's No. 2 automaker seems to have been averted over the weekend as the tentative agreement between Ford Motor and the United Auto Workers now appears likely to pass a ratification vote of rank-and-file union members. Going into the weekend, the risk of a strike was growing. Print Comment On Friday, the overall vote was only 47% in favor of the deal after union locals, including those representing employees at some large Ford plants, voted against the deal.

While a rejection of the deal would not have mandated a strike, a work stoppage was one possible outcome of a no vote. But the locals that voted over the weekend, including Local 600 which represents the largest number of Ford workers in the union, went strongly for the deal. As of 8:30 p.m. Sunday, 62% of the overall union was in favor of the deal with a total of 24,000 members having cast their vote, according to results posted on the Facebook page of the union's Ford negotiating team. It's unlikely the remaining locals will be able to scuttle the four-year deal unless they overwhelmingly vote against it, according to Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research. The deal would cover 41,000 Ford members and would give veteran workers larger bonuses than workers at General Motors ( GM , Fortune 500) and Chrysler. It also raises the wages for entry-level workers, but veteran workers don't get an increase in their hourly wage level. The deal includes Ford guarantees to invest an additional $4.8 billion in new products and equipment at U.S. plants. Those promises should add almost 6,000 additional jobs at UAW-represented plants in addition to about 7,000 jobs that the company was already planning on adding. The voting concludes Tuesday. Shares of Ford ( F , Fortune 500) were higher in early trading but turned lower as they followed broader markets down on Monday. Dziczek said she had gone into the weekend with serious doubts about the pact's chance for passage. "I thought this was going to be a nail-biter," she said. But the longer the rank and file members had to consider the deal, she said, the more they realized that it was probably the best deal they were going to get, especially after the union agreed to a less lucrative deal at Chrysler Group last week. The worsening economic environment added pressure on the union to vote in favor of the deal. Last week UAW President Bob King was quoted in the Detroit News as saying that a better deal with Ford was unlikely, especially if the economy worsened. 0:00 / 2:31 Car parts made from food Ford was the only major U.S. automaker not to need a federal bailout and a bankruptcy reorganization in 2009, and it is the most profitable of the Detroit automakers today. 

Time for Congress to do right

Former Sens. Byron Dorgan, a Democrat, and Judd Gregg, a Republican, come together to urge the debt committee to have the "courage" to really tackle the debt. Former Sen. Byron Dorgan, a Democrat from North Dakota, served in Congress for 30 years. Former Sen.

Judd Gregg, a Republican from New Hampshire, served in Congress for more than 20 years and was his state's governor for two terms. Both retired earlier this year. There's an old saying: "When all is said and done, more is usually said than done." Print Comment That is especially true in Congress, where robust debate usually far exceeds real progress on things that matter. It's not all that surprising. The very structure of our government -- with all of the checks and balances --inhibits rather than encourages bold and decisive action. But for over two centuries, when faced with crisis, we have somehow always managed to find a way to fix some of the big and difficult problems confronting our country.. Now we face another crisis. This one is bigger and more difficult than many of the others. Our crushing debt that continues to grow threatens to ruin our economy. Blinder and Hubbard: Left and right agree Moreover we have to try to fix it even as we are trying to recover from the worst economic downturn since the Great Depression. It's hard to do, and it will require smart, tough decisions. If we succeed we will put our economy back on track to expand and create new jobs and new opportunity. If we do not, we face the potential of a future economic collapse. Fortunately, something has happened in the Congress that could offer hope for real progress. One of the positive things to come out of this summer's debacle in the showdown about extending the debt ceiling was the creation of a congressional, bicameral super committee with extraordinary powers. The super committee is unprecedented, unusual and in some ways troublesome. But if it exercises its power in bold and decisive ways, it could be the way this ship of state rights itself. The so-called regular order in Congress has demonstrated no ability to solve this crisis. The super committee throws the idea of checks and balances out the window and sets up the Congress to act with parliamentary dispatch. 0:00 / 8:38 Buffett: Tax my $62.9 M more! This panel of 12 can by majority vote propose just about anything they want to in the area of deficit reduction. Its bill will go to both houses of Congress and must be voted on without amendments and requires only a majority vote to pass. That is extraordinary power. The real question is how will the super committee use this unprecedented power? We say be bold! Think big! If we don't tame these deficits that exceed $1 trillion a year and stretch as far as the eye can see, we will have a massive economic meltdown. It will happen when the American people and the others around the world realize we can no longer pay off our debts and the dollar collapses. The question isn't whether this happens, but when. National debt: What you need to know To get our debt under control, we need to reduce our deficits over the next ten years by nearly $5 trillion dollars. Doing that requires: --cutting excess spending; --reducing duplication of federal programs; --reforming entitlements (especially tackling the increasing costs in Medicare); --and raising some additional revenue with a new tax code that is simple and fair with lower rates and fewer deductions. We know that the super committee can't do all of this in just a matter of weeks. But it has the power to set goals for the overall size of the government relative to our GDP. Further, we believe the super committee should use its power to direct and require the regular congressional committees to meet the prescribed spending and revenue targets in an expedited fashion. The super committee can also include specific requirements for how and when they will be considered and met by the entire Congress. If the super committee only reaches the stated goal of reducing by debt by $1.2 trillion to $1.5 trillion over ten years (or if it fails to reach any agreement), it will have done a great disservice to the American people. It is far short of what is needed to address this debt crisis, and we will continue to lurch toward fiscal chaos, recession and chronic unemployment. That is a future we can avoid if we have the courage to act now. This is a rare opportunity. We say to the super committee: This is one of those rare moments where you have the opportunity to change the course of history. For the sake of our country's economic future, you need to think big and bold. When all is said and done, we want this to be one of those cases where more was done than said. Editor's Note: This is part of CNNMoney's Project Compromise -- commentaries that bring together leading thinkers from the left and right to find common ground on how to address the national debt.  

Postal union hires big guns to save service

The letter carriers' union has hired a former Obama administration official and an investment adviser to help preserve the Postal Service. WASHINGTON (CNNMoney) -- One of the big postal worker unions has hired new help to save the U.S. Postal Service -- Ron Bloom, one of the advisors who helped steer the U.S. automakers out of bankruptcy. The National Association of Letter Carriers said Sunday that it had hired former Obama administration official Ron Bloom as well as Wall Street bank Lazard Group to help come up with ideas to help save the service and, with it, members' jobs.

Print Comment The Postal Service has until Nov. 18 to make a $5.5 billion payment that's due to its retiree health care fund. But the independent agency doesn't have that kind of money, especially given the drop off in mail volume and foot traffic in recent years. The letter carrier union said they hired Bloom and the Lazard Group to help them come up with a "pro-growth" business plan that saves the postal service while avoiding drastic cuts. The postal service predicament is familiar to Bloom, who is largely credited for his role in helping bringing General Motors ( GM , Fortune 500) and Chrysler out of bankruptcy and back to solid ground. Bloom most recently served as a White House adviser on manufacturing policy, a post he stepped away from in late August. "We are confident that Lazard and Mr. Bloom -- both of whom have extensive experience helping to revitalize numerous large and complex business enterprises around the world --can provide valuable assistance to all stakeholders who share our commitment to maintaining and growing this vital national resource," said Fredric V. Rolando, president of the National Association of Letter Carriers, which represents 280,000 postal workers. The Postal Service's potential default has spurred the White House and lawmakers to draft competing bills to revamp the postal service. The proposals run the gamut from ending Saturday service to hiking stamp prices and even laying off or buying out postal workers. They've also spawned a big public reaction -- neighbors packing public hearings to oppose closure of local post offices and union rallies of lawmakers' offices to protest layoffs. 0:00 / 2:26 USPS Postmaster: We will survive The hiring of Bloom came days after unions were dealt a blow in their effort to protect workers. A watchdog agency, the Government Accounting Office, released a report last week that disagreed with two other agencies who say the postal workers' pension fund is vastly overfunded and can be tapped to make the health care retiree fund payment and pull the postal service out of its financial troubles. The unions want to dip into the pension fund. They also want to get rid of the mandate that the postal service prefund all future health care retiree benefits -- scrubbing the $5.5 billion payment due in November. But, the watchdog report warned that dipping into the pension fund could put future taxpayers on the hook for anywhere between $56 billion to $85 billion. Republicans pounced on the watchdog report last week, using it as fodder to gain support for their own legislation. "To save the Postal Service, we must enact meaningful and immediate reform so we can maintain service to the American people and return it to financial solvency," said Rep. Darrell Issa, a California Republican who chairs the House Oversight panel. That committee approved Issa's bill to save the Postal Service. The bill would end Saturday service, ban the post office from promising no layoffs to new employees, and create panels -- resembling the ones convened to close military bases -- to study and recommend which post offices should be closed. 

Oil speculation seen adding $600 to your gas bill

Because of ramapant oil speculation. Americans will spend $600 more on gasoline in 2011, hitting a record $2,900 per household, according to the Consumer Federation of America. NEW YORK (CNN) -- Oil market speculation will cost U.S. households more than ever in 2011, a consumer group predicts, and the drain on household incomes will increase unless government rules to curb it are imposed. "Speculation will add $600 to the average household expenditures on gasoline in 2011," a report released Thursday by the Consumer Federation of America said, "resulting in the highest level of spending ever of almost $2,900.

Print Comment Consumer spending is the main driver of the U.S. economy and in the current weak economic environment, the consequences of rising oil prices are alarming, the CFA said. Spending on gasoline accounts for less than half of all U.S. oil product consumption, so when higher oil prices get factored into all the other oil-based products households buy, the overall problem becomes much greater, the report says. "When speculators, oil companies and OPEC rob consumers of that much spending power, the inevitable result is a dramatic reduction of economic activity and employment," said CFA Director of Research Mark Cooper. Speculation has been an integral part of the oil market for some time, but it alone may not be to blame for the recent volatility and price spikes. The report says market deregulation has a lot to do with it. 0:00 / 3:37 Gas pipeline CEO backs more regulation The oil market was deregulated in December of 2000, creating opportunities for excessive speculation and a massive increase in the market's size, the report states. Prior to this change in policy, speculation didn't have a heavy impact on oil prices, nor was it so widespread. "This report provides a timely reminder that it was weak regulation that landed us in our current economic mess," CFA Director of Investor Protection Barb Roper said, "and it will take a strong policy response to restore the economy to health." The CFA said deregulation added about $30 per barrel to the cost of oil in 2011, draining more than $200 billion -- 1% of gross domestic product and 2% of consumer spending -- from the economy. Keystone pipeline: Why the oil sands conduit will get built A 2% reduction in consumer spending on goods and services translates into the loss of hundreds of thousands of jobs, according to the CFA. In 2011 oil prices traded in a range between about $80 and $100 a barrel. Without speculation, the price of crude oil would instead fall somewhere between $60 and $75 per barrel, according to the CFA. 

Bring profits home and create jobs? Maybe not

Will a foreign profits tax break help the economy? NEW YORK (CNNMoney) -- In a time of high unemployment, slow growth and record debt, there's been a renewed push by many on Capitol Hill to give companies a tax break if they bring their foreign profits home. The problem is there is very little agreement on whether a foreign profits tax break would help the economy. Print Comment Proponents from the left and right say it could create jobs and boost revenue. Critics -- also from the left and right -- say it would do just the opposite, costing the economy jobs and the government revenue.

Just this week, a group of fiscally conservative House Democrats sent a letter to the congressional debt committee endorsing the idea, while Senate Democrats Carl Levin and Kent Conrad sent a letter urging the panel to reject it. And both sides are pointing to various studies of a repatriation tax holiday in 2004 to bolster their case. What the debate's all about: Bipartisan bills in the House and Senate would coax U.S.-based companies to bring home profits they made abroad by offering them a lower tax rate on those earnings than the 35% imposed on profits made on U.S. soil. Right now, earnings made abroad aren't subject to U.S. tax until they're "repatriated" through the distribution of dividends from the company's foreign subsidiary to the parent corporation. Hiring gains momentum As a result, proponents of the tax break say, companies have more than $1 trillion "trapped" abroad in low-tax countries. That money, they argue, could be put to much better use in the U.S. economy. It sounds logical. But the truth is that the money is not really locked out of the United States at all, said corporate tax expert Edward Kleinbard, a former chief of staff for the Joint Committee on Taxation. "A large portion of these earnings is kept in liquid investments, and those in turn invariably are in U.S. dollar liabilities of U.S. borrowers, like U.S. bank deposits, commercial paper, and Treasuries. All those investments already are fully at work somewhere in the U.S. economy," Kleinbard said. What's more, Kleinbard said, the large multinational corporations that would benefit most from a repatriation holiday are not exactly hard up for cash. On the contrary, they have a lot of money sitting on the sidelines and have access to low-cost debt financing. So if they wanted to make more of an investment on U.S. soil they could, Kleinbard notes. 0:00 / 2:58 Why tax repatriation is a bad idea The Joint Committee on Taxation estimates that a repatriation "holiday" could boost revenue by about $26 billion over the first three years -- but lose as much as $80 billion over the next decade. And the Senate's permanent subcommittee on investigations, which Sen. Levin chairs, released a report this week that said the 2004 tax holiday resulted in a loss of nearly 21,000 jobs among the top 15 repatriating corporations, and cited other studies which found no evidence that the holiday increased overall employment. Proponents of the holiday challenge JCT's assumptions and assert that Levin's report is "one-sided." They point instead to a study done by economist Douglas Holtz-Eakin for the U.S. Chamber of Commerce. Holtz-Eakin, a former director of the Congressional Budget Office, estimates that a repatriation holiday could result in the creation of roughly 2.9 million jobs and a $360 billion boost to GDP. 

Inflation (CPI)

NEW YORK (CNNMoney) -- The highest inflation rate in three years put a squeeze on consumers' wallets in August, according to the government's key price measure. The Consumer Price Index rose 3.8% in the month compared to a year earlier. That's up from 3.6% in July and is the highest reading since September 2008. Print On a month-to-month basis, prices rose 0.4% in August, twice the rate of increase forecast by economists surveyed by Briefing.com. Consumers have been paying more for a lot of key goods and services.

Clothing prices in August were up 4.2% over the year, while new car prices rose 3.8%. Used car prices were up even more, rising 5.4%. And medical care was 3.2% more expensive than a year ago. Gas prices rose at a slower pace in August than the previous month, but were still 1.9% higher than the July reading. Over the last 12 months, overall energy prices are up 18.1%, while food prices have risen 4.6%. Stripping out volatile food and energy prices, the so-called core CPI rose 2.0% annually, at the high end of the range viewed as acceptable by many economists, including those at the Federal Reserve. But not everyone thinks higher inflation is necessarily a bad thing. Some leading economists believe the Fed should accept and even encourage a higher level of inflation as a possible solution to prolonged economic weakness. 0:00 / 4:01 Harvard economist: 'We never left the recession' Higher inflation would help reduce the value of debt weighing down spending, according to Harvard University Professor Kenneth Rogoff. He said the need to cut debt levels is the biggest problem facing the economy today. "The only practical way to shorten the coming period of painful deleveraging and slow growth would be a sustained burst of moderate inflation, say, 4-6% for several years," Rogoff wrote in a recent article. His ideas have received some support from other economists across the political spectrum, including some within the Federal Reserve. But they are still a minority view seen to be at odds with the Fed's dual mandate to promote stable prices and full employment. Fed Chairman Ben Bernanke has repeatedly said that the central bank believes inflation isn't a significant threat at the moment. But higher prices can be a drag on economic growth as consumers and employers struggle with having less money to spend. Wednesday the Commerce Department reported disappointing retail sales figures. The higher-than-expected inflation reading could dash some hopes that the Fed was preparing to buy more assets in an attempt to jumpstart the struggling U.S. economy. "The continued rise in inflation in August is another reason to suspect that the Fed will shy away from a further round of quantitative easing for the time being, even though the incoming data on the real economy continues to disappoint," said Paul Ashworth, chief U.S. economist for Capital Economics. Some Fed members are believed to favor a third round of purchases, a policy known as quantitative easing, or QE3. But other so-called inflation hawks, are worried that pushing more money into the economy would have limited benefit and risk higher prices down the road. Another widely-anticipated possibility -- a shift of assets from short-term Treasuries to long-term bonds in an effort to lower long-term interest rates -- could still be on the table when the Fed meets next week.  

House Democrats call for bank fee probe

Washington (CNN) -- A member of Congress and other House Democrats are asking the U.S. Attorney General to investigate whether American banks have illegally gotten together to raise fees charged to consumers for banking services. Rep. Peter Welch of Vermont, the Democratic Chief Deputy Whip in the House of Representatives, told reporters Thursday he has sent a letter to Attorney General Eric Holder urging him to explore whether banks have engaged in what's called "price signaling," a tacit agreement not to compete on matters such as the strategy and implementation of what consumers must pay for services. Print Comment Welch's letter was co-signed by Reps.

John Conyers (D-Mich.), Raul Grijalva (D-Ariz.), Keith Ellison (D-Minn.) and Michael Honda (D-Calif.). Ellison said Bank of America's ( BAC , Fortune 500) recent announcement to raise the monthly fee for using a debit card to $5 "may be a signal to others that, 'hey, lift up your prices and we'll all just do it,' but I think that's why we need the AG to inspect and investigate to find out whether the consumer's interest is being served." At a news conference on Capitol Hill, Welch declined to illustrate how to distinguish between the normal business practice of charging what the market will bear and illegal collusion, which he says could be a violation of federal antitrust laws. Durbin to customers: Dump Bank of America But Welch did say big banks have reacted poorly to lawmakers' efforts to control bank fees, and he suggested the industry is trying to make up for lost profits by coordinating price strategies in other areas. He said "we have very serious questions as to whether or not there has been an antitrust violation, and we call upon the Attorney General to do a full and compete investigation to get to the bottom of this." Welch said the inquiry should center on the swipe-fee practices of Bank of America, JPMorgan Chase ( JPM , Fortune 500), Citigroup ( C , Fortune 500) and Wells Fargo ( WFC , Fortune 500), which together control a substantial share of the consumer banking market. The banks charge retailers a swipe fee every time a customer slides, or "swipes," a debit card through the store's card reader when making a purchase. BofA chief: We have a 'right to make a profit' Welch said Americans pay the highest swipe fees in the world and that could represent "the big bank model that is all too much now a fee-driven shakedown of consumers." He stood alongside a chart that represented the dwindling number of banks left today, thanks to mergers and consolidations over the past 20 years. "There are enormous questions that are being raised as to whether or not they're crossing a line into anticompetitive practices," Welch said, "and the Attorney General has the responsibility to be protecting us." Ellison told reporters an investigation, regardless of its outcome, could discourage banks from trying to take advantage of customers. Comparing the call for a probe to a cop walking a street patrol, Ellison said "I think the AG, investigating and making sure the industry knows the Attorney General is watching the market carefully, will encourage better behavior" Later Thursday, another member of Congress, North Carolina Democrat Brad Miller, met with Molly Katchpole, who has organized a petition drive against Bank of America aimed at trying to persuade the bank to cancel its new $5 debit card fee. Miller is considering legislation to make it easier for people to switch banks. I ditched my big bank! Miller told CNN after the meeting that more and more people have reason to leave one bank and find a better deal for their banking elsewhere, including as a protest against Bank of America's new charge. "But the banks have deliberately make it sticky to leave," he explained, because of sometimes burdensome procedures to discontinue direct-deposit paychecks and automated bill paying. That's where Miller's legislation comes in. Among the provisions, it would address whether banks can require a departing customer to visit a branch, instead of allowing them to close their accounts online. "It's a nuisance," he told Katchpole during their meeting, praising the young woman's signature drive as a way to draw attention to problems with retail banking. Republicans: Repeal rule that spurred bank fees Katchpole says her petition, now with 200,000 signatures, prompted Bank of America to say that it is responsive to customer feedback, but the bank added that it would be premature to roll back the new charge. Miller said he does find it curious that banks began raising their fees all at the same time -- right after the passage of legislation restricting other bank charges. And while he said he supports his colleague's call for an investigation by the Attorney General, Miller said "I do not see any evidence of collusion" to suggest the law has been broken.  

Wall Street to lose 10,000 finance jobs

New York City could lose 10,000 financial securities jobs by the end of 2012, according to the state comptroller. NEW YORK (CNNMoney) -- The New York state comptroller expects Wall Street to lose 10,000 jobs by the end of 2012. The job losses are projected to occur in New York City's securities industry from now through December, 2012, according to Eric Sumberg, press spokesman for state comptroller Thomas DiNapoli. Print Comment "It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year," DiNapoli said in a press release. "These developments will have a rippling effect through the economy and adversely impact state and city tax collections." The comptroller blamed the dismal outlook on "uncertainty due to the European sovereign debt crisis, a sluggish domestic economy, volatile stock markets and regulatory changes." The comptroller's office highlighted Wall Street's strong start for 2011, noting that the securities industry has weakened considerably through the rest of the year.

Wall Street added 9,900 jobs from January 2010 and April 2011, but then lost 4,100 jobs through August. 0:00 / 5:08 Whitney: More Wall St. jobs at risk The comptroller's report said that "job losses are likely to continue given declines in profitability and recent layoff announcements," projecting that Wall Street job cuts could total 32,000 for the period from January 2008 to the end of next year. The member firms of the New York Stock Exchange earned $9.3 billion in the first quarter, but profits "declined sharply" in the second quarter and are expected to fall short of $18 billion for the entire year. Millions could lose unemployment benefits Stock prices for Wall Street banks fell in Tuesday trading, in a seesaw reaction to Monday's rally and nervousness ahead of corporate earnings from the second quarter. Shares of JPMorgan Chase ( JPM , Fortune 500), Goldman Sachs ( GS , Fortune 500), Bank of America ( BAC , Fortune 500), Wells Fargo ( WFC , Fortune 500) and Morgan Stanley ( MS , Fortune 500) all fell by about 1%, and Citibank ( C , Fortune 500) dropped 2%. Nationwide, the U.S. added 103,000 jobs in September, which was stronger than expected, the federal government reported earlier this month. But the economy has recovered only 2.1 million of the 8.6 million jobs lost since the recession began, keeping the unemployment rate frozen at 9.1%. 

Sizing up the millionaire tax

President Obama said Thursday that he's "comfortable" with Senate Democrats' millionaire tax proposal. NEW YORK (CNNMoney) -- If Senate Democrats have their way, millionaires and billionaires will pay more in taxes for President Obama's jobs bill. How much? Answer: $110,467 a year. Print Comment That's the average additional amount they would owe in federal taxes starting in 2013, according to estimates released Thursday by the nonpartisan Tax Policy Center.

How many households would be on the hook? 392,000, or 0.2%. The proposal - which seems very unlikely to pass into law -- would add a 5.6% surtax on modified adjusted gross income over $1 million. The surtax is different than an ordinary income tax rate. First, it would be assessed on a larger amount of income. That's because modified AGI includes gross income minus so-called above-the-line deductions. By contrast, taxable income -- on which ordinary income tax rates are imposed -- is gross income minus above-the-line deductions plus a host of other items, such as personal exemptions and tax credits. Second, the surtax would apply to more types of income -- not only salaries, but also investment income such as capital gains and dividends. Currently investment income is taxed at lower rates than those imposed on wages. Buffett Rule: Not so simple Senate Democrats have said the surtax proposal could raise about $450 billion over 10 years. The Congressional Budget Office, working in conjunction with the congressional Joint Committee on Taxation, has yet to put out the official score to confirm that. Surtaxes, generally speaking, are not considered great tax policy. "We're putting in more chutes and ladders into an already overly complex code," said tax expert Len Burman, a public policy professor at Syracuse University. What's more, "most tax economists would say the best way to raise revenue is to broaden the base rather than raise rates," said Jim Nunns, a senior fellow at the Tax Policy Center. Broadening the base can be achieved by reducing the number of tax breaks in the tax code -- in essence, increasing the number of activities subject to regular taxation. That, in turn, could mean people start to put their money into activities and investments where it makes the best economic sense rather than where they get the best tax break. 0:00 / 2:50 Obama: 'This is not class warfare!' Broadening the base, of course, is a main element of comprehensive tax reform, which is getting a lot of attention these days as Congress seeks ways to reduce long-term deficits. But reform is rarely something that happens overnight. And debating how best to reform the code can be a highly partisan affair. Democrats want tax reform to raise more revenue than the current system. And Republicans want it to be revenue neutral. In their view, the act of tax reform can help spur economic growth and thereby generate more revenue that way. The jobs bill doesn't offer a sunset date for the surtax. So it essentially would create a permanent tax increase on millionaires to pay for a short-term jobs bill. The revenue raised in the first 10 years would be enough to pay for the cost of the bill. But beyond the 10-year window -- in theory anyway -- the revenue raised from the surtax could be used for deficit reduction. And since it would increase the amount of revenue the current code generates, reforming the code after the surtax is added would raise the baseline for what's considered "revenue-neutral." Given, however, that Republicans favor no tax increases whatsoever and they're not keen on the president's jobs bill, the surtax as currently proposed isn't likely to win the day. But discussion of it does touch on an always hot-button political issue: Should the rich pay more? "It's a fair question to say if we have to raise revenue for deficit reduction, should distribution change relative to where it is now," Nunns said. - CNN's Ted Barrett and Kate Bolduan contributed to this report.  

China isn't the only currency 'manipulator'

Some U.S. politicians are complaining that China has kept its currency artificially low. But the yuan is actually up against the dollar and euro in 2011. Click chart for more on currencies. NEW YORK (CNNMoney) -- A newsflash to the legislators in Washington who suddenly want to act tough against China for currency manipulation: Have you looked in the mirror lately?

How can anyone with a straight face declare that China needs to be punished for keeping the yuan artificially low when the United States is also aggressively trying to devalue the dollar with its monetary and fiscal policies? Print Comment The righteous indignation and holier-than-thou attitude is comical at best. The Federal Reserve, through two rounds of quantitative easing and now Operation Twist, has helped push the dollar lower. Simply put, buying up U.S. Treasuries as if they were Missoni apparel at Target leads to lower interest rates and a weaker currency. The do-nothing Congress hasn't made matters any better. The debt ceiling debacle this summer didn't help the dollar either. The short-term economic outlook is dismal. Focusing solely on longer-term deficit reduction at the expense of the current health of the cash-strapped/underwater on their house/nervous about their job American consumer also makes the U.S. dollar less attractive. You may not agree with President Obama's latest jobs plan. But this economy needs some form of targeted and immediate stimulus to get it back on solid footing. Austerity isn't the answer. Just ask Greece. Now don't get me wrong. I'm not endorsing China's policies per se. As much as China has opened itself up to the West and capitalist ideas, the government does not let the yuan trade as freely as it should. That's a huge problem. GE: Partnering with China is better than being left out However, the U.S. does need to concede that China has taken baby steps to let the yuan appreciate. After all, it is up against both the dollar and the euro this year. Should the yuan be even higher? Probably. But provoking China into a possible trade war is not the answer. Are U.S. manufacturers hurt by the fact that an artificially low yuan makes Chinese exports cheaper? Of course. Funk metal band Primus (at least I think they're funk metal?) wryly comments on this in a song called "Eternal Consumption Engine" on their new album. Lyric: "Every time I get a little bit bored. Head to the Wally-Mart store. Livin' high on the greasy hog. As long as they don't deport my job. Cause everything's made in China." Still, we need to ask ourselves this. While trying to protect manufacturing jobs in the U.S., do we risk damaging the broader economy even more by antagonizing China? Like it or not, China holds nearly $1.2 trillion in U.S. Treasury debt. The Chinese are already not thrilled that the same dollar-damaging policies I've written about have also withered away the yields on long-term bonds. 0:00 / 1:33 China spanks U.S. over downgrade "A currency war would be very bad for the entire economy. China has an increasingly important pull," said Ashraf Laidi, chief executive officer of Intermarket Strategy Ltd, a London-based research firm. "Its bargaining power has increased. If the U.S. points fingers, it will be even worse for the dollar." Also, isn't the U.S. more of a services-led economy these days anyway? Aren't "we" trying to export more to "them?" Fast food chain Yum Brands ( YUM , Fortune 500), for example, now generates more revenue from China than in the U.S. Luxury good retailer Coach ( COH ) is rapidly expanding its presence in China as well. Starbucks ( SBUX , Fortune 500) also has aggressive plans to open more stores in China. Do we really want to open up the door for China to retaliate and slap tariffs or more onerous restrictions on American companies? "To change the trade dynamics between the U.S. and China is a tricky, delicate manner. You can't use a sledgehammer," said Andrew Busch, global currency and public policy strategist with BMO Capital Markets in Chicago. "The repercussions will be swift and negative. There are other ways to address the issue that could be more productive," he added. Can China save Europe? It would be one thing if China could truly be singled out as the only major nation on the planet that manages its currency. But as I've pointed out, the U.S. does it too. And one man's currency "manipulation" is another's currency "intervention." Many countries play funny games to move the value of their paper up or down. The central banks of both Japan and Switzerland have taken steps this year to rein in the surging yen and franc. Both currencies have been bid up in speculative "safe haven" trades this year due to the deteriorating outlook for the dollar and euro. Each country, but especially Japan, felt it necessary to act to protect their own economic interests. A runaway yen could be disastrous for Japan since it would make goods sold by companies ranging from Toyota ( TM ) and Honda ( HMC ) to Sony ( SNE ) and Panasonic more expensive overseas. Sure, there is a difference between stepping in to stop the free markets from running amok and letting the free markets do their job in the first place. But make no mistake. Everybody "manipulates" their currency in some fashion. The U.S. needs to recognize that and move on. Working with China, as opposed to more heated rhetoric, can help solve some of the world's economic problems. "The party that loses the most in a trade war is the one that has a big deficit. We have a big dependency on China," said Axel Merk, president of Merk Mutual Funds, a Palo Alto, Calif.-based money manager specializing in currency investments. "If you are always complaining about your lawn, you should cement it over and not have grass. It's always easier to blame somebody else for your own problems," Merk added. The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.  

Local government jobs evaporate

Teachers are losing their positions as local government jobs disappear. NEW YORK (CNNMoney) -- The kids are back in school, but the teachers aren't. Educators and other local government workers are not celebrating the rosier-than-expected jobs report released Friday. While the nation added 103,000 jobs last month, public schools lost 24,400 positions -- the most of any category. Local government in total shed 35,000 jobs.

Print Comment Teachers continue to get pummeled as state and local governments digest budget cuts for fiscal 2012, which began in July in most states. School districts didn't have the funds to hire back as many employees as in past years. The loss of government jobs continues to weigh heavily on the nation's economy. While the private sector has gained 1.3 million positions this year, the public has lost 267,000. State governments, which had been downsizing most of the year, added 2,000 jobs in September. But state education workers did not fare as well, losing 1,400 positions. 0:00 / 3:47 The great government job purge State and local governments shed 90,000 jobs in the most recent quarter, the third largest loss on record. The sector has downsized for 27 of the past 33 months, according to IHS Global Insight. However, it had been looking even more bleak, but Friday's report showed that July and and August weren't as dire as originally thought. The sector only lost 23,000 jobs those months, not 81,000. The quarter had been on track to be the worst job loss ever for state and local government workers. In September, the federal government lost 1,000 jobs, brought down by a loss of 5,300 postal service slots. The weakness in the public sector is putting increased pressure on President Obama and Congress to funnel more aid to states. One reason job losses are mounting is because the 2009 stimulus funds to states has essentially dried up. This money kept many teachers and public workers on the payroll during the depths of the Great Recession. All that's left now are some funds from last summer's $10 billion in funding to keep teachers and first responders off the unemployment lines. That money, which was estimated to have saved 100,000 positions, will be gone by the end of the fiscal year. U.S. manufacturing slowdown: 4 cities at most risk Obama is looking to send more assistance to cash-strapped states. In his jobs proposal, unveiled last month, he included $30 million to stem the crush of teacher layoffs. The White House estimates its current proposal will prevent up to 280,000 educators from being downsized. But even if Congress sends more money to the states -- which isn't looking likely at this point -- the bleeding isn't expected to stop. The weakening national economy has prompted several states to lower their revenue forecasts, which means more budget reductions could be on the way. Education will likely continue to bear the brunt of the cuts, especially since school districts make up 60% of local payrolls. "That's the sector where there's the most meat to cut," said Greg Daco, principal U.S. economist for IHS Global Insight. "It's at all levels, from kindergarten to university." 

Not a recession. But who cares?

Even though the economy is growing again, the percentage of people out of work or without a full-time job is only slightly below the peak levels from the recession. NEW YORK (CNNMoney) -- Summer may be over but it's still time to fire up the grill. I've been referring to the tepid state of the economy as the barbecue recovery for more than a year now. It's going to be low and slow. (Should have trademarked it!) Friday's jobs report did nothing to change that outlook.

Print Comment Yes, the good news from Friday's jobs report is that more jobs were added than expected in September. In addition, jobs growth figures for July and August were revised higher. Some feared that there could be a loss of jobs after the government originally reported that no jobs were added in August. "Hopeful means not horrible," said Bill Seyfried, professor of economics at Rollins College in Winter Park, Fla.."We've lowered our expectations. The good news is simply that we're not losing jobs." But the addition of 103,000 jobs in September is meager. It wasn't enough to make a dent in the unemployment rate, which remained 9.1%. That's not a good number. What's more, the percentage of so-called "underemployed" workers rose from 16.2% in August to 16.5% last month. That's the highest it's been this year. Then there's the issue of stagnant wages. The government said Friday that hourly earnings were up just 1.9% over the past 12 months. But according to the government's most recent readings on inflation, overall consumer prices were up 3.8% over the past year. Even if you want to play the silly economist game of pretending that people are robots who don't need to eat or drive and strip out "volatile" food and energy costs, the so-called core inflation rate was still 2%. That means that people are not making enough to keep up with rising prices. Unemployed risk a permanent pay cut And as long as the unemployment and underemployment rates remain as high as they are, wages are unlikely to move up. Hirers hold all the cards in the job market right now. If you have a job, you are likely to cling to it for dear life even if you're not happy about your salary. And if you're looking for work -- and have been for some time -- you're more likely to take a job that comes with a smaller paycheck. "Salaries are flat at best. That's not indicative of a strong recovery," said Cam Albright, director of economic research with Wilmington Trust in Wilmington. Del. "With high employment, there is no pressure for companies to increase wages and that's very much a problem. I think that's going to continue," Albright added. 0:00 / 3:47 The great government job purge That's what is so troublesome. Even if the economy doesn't technically double dip and head back into recession, it still feels as if the last recession never really ended. "Some people are referring to this as a 'growth recession.' But if you are unemployed, it doesn't make a difference what this is being called," Rollins said. Albright said he expects the economy to grow at a less-than-2% annualized pace in the second half of this year and only in the mid-2% range in 2012. That's just not enough to make Americans feel better about the economy. Nobody may like to hear this. But no matter what the White House, Congress and regulators do or don't do about taxes, stimulus, the deficit, interest rates or what have you, the sad reality is that the only real solution for this economic malaise is time. The bad news in the good jobs numbers It took decades of wanton spending by consumers and governments and reckless risk-taking by banks and other corporations before the economy finally seized up and stopped functioning normally. It will take years to get back to anything resembling a real recovery. The consumer is still slowly "deleveraging" and the federal government is attempting to do the same. And while the only major bright spot in this economy is that many large corporations have repaired their balance sheets and are now reporting healthy profits, the notable laggard is the financial sector. If banks continue to languish, they are not going to lend as much to small businesses that may be deemed risky borrowers. And that's going to mean more months of low and slow jobs gains. "Growth is elusive. We are still dealing with the residual effects of the financial crisis. That will stay with us for awhile," Albright said. Reader comment of the week. The biggest story of the week was obviously about Jobs with a capital J. The death of Apple co-founder Steve Jobs affected us all. And at a time when most Americans are still worried about their own jobs, one reader said that more companies should follow the lead of Apple. "Let's focus on Jobs and learn from him maybe that's the solution to the jobs situation #learning," tweeted Ashley Garcia. Great point. Considering that Apple had only about 8,400 workers when Jobs was renamed CEO of Apple in 1997 and now employs more than 46,000 people worldwide, I do think many companies can learn a lot from Apple. The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.  

Holiday hiring expected to be ho-hum this year

NEW YORK (CNNMoney) -- The holiday season is barely underway, and retailers are already expressing a ho-hum attitude towards hiring. Retailers are expected to hire just 480,000 to 500,000 seasonal workers this year, according to a report released Thursday by the National Retail Federation. That's in line with the 495,000 seasonal employees they hired last year, but still far from pre-recession highs. Print Comment A separate report by outplacement firm Challenger, Gray & Christmas also predicted that seasonal hiring will be about the same or lower than a year ago, when employment grew by 627,600 from October through December. "It would be surprising if holiday hiring exceeded last year's level," said John Challenger, the firm's chief executive officer.

"Consumers are just tapped out." Toys R Us expands layaway program Holiday retail sales are expected to increase by 2.8% to $465.6 billion, the NRF also said. While it's a step in the right direction, that growth is far lower than the 5.2% increase retailers experienced last year. With consumers still reluctant to splurge -- even on gifts at the holidays --retailers will be playing it safe, added Robert Brusca, a chief economist at Fact and Opinion Economics. "They're keeping it pretty close to the vest," he said. 0:00 / 10:49 Bill Clinton: How to create jobs now During the 2007 holiday season -- right before the recession began -- retailers hired 720,000 workers. But just one year later, as the recession took hold, holiday hiring hit a 26-year low and only 324,000 temporary workers were hired. Double your salary in the middle of nowhere North Dakota Retailers seem split on bulking up their workforces this year. Last month, Best Buy ( BBY , Fortune 500) announced that it will only be hiring a fraction of the holiday workers that it took on last year and Toys "R" Us said that this year's holiday hiring will be in line with the previous year. Meanwhile, Macy's said it plans to hire even more temporary workers this holiday season. Although a majority of the retail hiring will take place in the weeks ahead, a portion of those positions have already been filled, the NRF said. Since August, the retail industry has added nearly 100,000 jobs. 

Bernanke: More sluggish growth ahead

NEW YORK (CNNMoney) -- Fed chief Ben Bernanke told a panel of Congress on Tuesday that the central bank expects growth in the second half of the year to be "more rapid" than the first half of the year, but says the economy still faces headwinds. During a hearing before the Joint Economic Committee, the Federal Reserve Board chairman also said that the Fed expects a slower pace of economic growth in coming quarters than it had previously forecast back in June, pointing out that sluggish job growth and dour consumer confidence continue to "restrain the pace of recovery." Print Comment "Overall, the recovery from the crisis has been much less robust than we had hoped," Bernanke said. Bernanke reiterated that the Fed is prepared to take action if necessary. However, when asked about the chances that the Federal Reserve would consider a third round of major stimulus, Bernanke said the Fed has "no immediate plans to do anything like that." Can the Fed really get banks to lend? At its most recent meeting in September, the Federal Reserve announced a plan to shift its balance sheet in an effort to lower long-tem interest rates.

Bernanke said he didn't think so-called "operation twist" would do much to stimulate the economy but added it should "help somewhat." The move, he said, should push interest rates down by 0.2 percentage points. Bernanke also gave recommendations to Congress' new super committee that's tasked with cutting $1.5 trillion from federal deficits by the end of next month, saying they need to consider long-term budget constraints but not at the detriment of short-term economic growth. Bernanke also warned policymakers that they need to step up, saying "fostering healthy growth and job creation is a shared responsibility of all economic policymakers." "Monetary policy can be a powerful tool, but it is not a panacea for the problems currently faced by the U.S. economy," Bernanke said. Bernanke: A Greek default could hurt us When asked about China's continued policy to hold down the value of the yuan, Bernanke acknowledged that the Chinese policy is hindering the global economic recovery. However, Bernanke stopped short of endorsing a Senate bill that would slap new tariffs on Chinese imports in retaliation for their policy of devaluing their currency. The Fed chairman also gave his thoughts on the spate of protests on Wall Street, saying he thinks the protests show that "people are quite unhappy with the state of the economy." "They blame, with some justification, the problems of the financial sector," he said. He added the protesters are "dissatisfied with the policy response here in Washington. On some level, I can't blame them."