Gulf Coast. Print Comment Just a few weeks ago analysts thought the jobs and economic benefits would easily outweigh environmental concerns and push the Obama administration to approve the $7 billion project. But now Nebraska is balking at the pipeline's route, and rumblings of discontent are being heard from South Dakota as well. The public pressure is being turned up too. Protestors, concerned about green house gas emissions associated with Canada's oil sands and doubtful of its promised benefits, have been rallying against the project all summer. On Sunday, thousands joined hands and literally encircled the White House. "Once thought to be a shoo-in, a near-term presidential approval of the pipeline looks less secure as opposition and headlines mount," Whitney Stanco, an energy analyst at the Washington Research Group, wrote in a note Monday. "We continue to believe the odds favor approval, but an extended delay is looking more and more possible." Last week the state of Nebraska, through which the pipeline would pass, convened a special legislation to address the issue. Keystone pipeline: Why the oil sands conduit will get built This week several bills are expected out of the state legislature. Those bills could require stricter construction standards where the pipeline would pass close to water resources. They could also attempt to alter the course of the pipeline, directing it away from the Sand Hills region. The Sand Hills sit atop the massive Ogallala Aquifer, sacred to farming interests in the state. "Nebraskans are concerned, and so am I, on why would you put a pipeline over the Ogallala Aquifer and risk an oil spill or leak," Nebraska Gov. Dave Heineman, a Republican, recently told a local paper. The concern from Nebraska is causing analysts to rethink their position on the pipeline. "Risks for Keystone XL at the US federal level remain low, but are rising at the state level in Nebraska," Robert Johnston, director of energy and natural resources at the political risk consultancy Eurasia Group wrote in a recent research note. TransCanada ( TRP ), the company that wants to build the pipeline, maintains that pipelines are the safest way to carry crude oil. 0:00 / 2:15 Small town, big oil: The heart of a boom The company has already agreed to install extra protections around the pipeline when it passes near water resources, and has put up a multi-million dollar bond to cover expenses should a spill occur. But TransCanda is opposed to any rerouting of the pipeline, saying it would take years to obtain the new permits and cost million of dollars. Last week the company posted a detailed legal analysis saying the federal government has sole authority over the pipeline's route now, and any attempt by the states to change it would be unconstitutional. "If individual states could make these decisions, the decisions would be based on the limited interests of those states, potentially defeating broader national interests," the analysis said. Because the pipeline crosses international borders its approval rests with the State Department. Pipeline critics were heartened last week when President Obama indicated he'd take a direct role in the approval process. Obama had previously maintained a low profile on the issue. Critics say building the pipeline not only risks spills but would lock the U.S. into dependency on a particularly dirty form of oil. Oil sands are just that -- oil mixed with sand. To get a useful type of crude, heat is used to separate the oil from the sand. The process results in anywhere from 5% to 30% more greenhouse gas emissions than conventional oil would generate. There are additional concerns over the effects on the land. Oil sands are often mined like coal, in huge open pits that destroy the forest and can contaminate the nearby rivers. The companies that operate in the region, including the world's largest oil companies like ExxonMobil ( XOM , Fortune 500), Royal Dutch Shell ( RDSA ) and BP ( BP ), have gotten better at mitigating the impacts, but concerns remain. Pipeline opponents also allege the approval process at the Sate Department has been tainted by lobbyists for TransCanada that have close ties to the administration. On Monday the State Department's inspector general's office said it is conducting a review of the process. Critics also dispute the benefits the pipeline would bring, pointing to a study from Cornell that said the pipeline could actually cost jobs by hurting the development of alternative energy and allowing for the export of oil from the Midwest and driving up the cost of gasoline in that region.
Tuesday, November 8, 2011
Keystone oil sands pipeline construction in doubt
Concerns over the water and air could derail the $7 billion Keystone pipeline project that promises thousands of jobs, millions of barrels of oil and billions in tax revenue. NEW YORK (CNNMoney) -- Twenty thousand construction jobs. $5 billion in tax revenue. 700,000 barrels of additional oil a day. All these things are now in doubt as opposition mounts to the expansion of the Keystone pipeline, a 1,700-mile long conduit that would carry crude from Canada's Alberta oil sands region to the U.S.
Gulf Coast. Print Comment Just a few weeks ago analysts thought the jobs and economic benefits would easily outweigh environmental concerns and push the Obama administration to approve the $7 billion project. But now Nebraska is balking at the pipeline's route, and rumblings of discontent are being heard from South Dakota as well. The public pressure is being turned up too. Protestors, concerned about green house gas emissions associated with Canada's oil sands and doubtful of its promised benefits, have been rallying against the project all summer. On Sunday, thousands joined hands and literally encircled the White House. "Once thought to be a shoo-in, a near-term presidential approval of the pipeline looks less secure as opposition and headlines mount," Whitney Stanco, an energy analyst at the Washington Research Group, wrote in a note Monday. "We continue to believe the odds favor approval, but an extended delay is looking more and more possible." Last week the state of Nebraska, through which the pipeline would pass, convened a special legislation to address the issue. Keystone pipeline: Why the oil sands conduit will get built This week several bills are expected out of the state legislature. Those bills could require stricter construction standards where the pipeline would pass close to water resources. They could also attempt to alter the course of the pipeline, directing it away from the Sand Hills region. The Sand Hills sit atop the massive Ogallala Aquifer, sacred to farming interests in the state. "Nebraskans are concerned, and so am I, on why would you put a pipeline over the Ogallala Aquifer and risk an oil spill or leak," Nebraska Gov. Dave Heineman, a Republican, recently told a local paper. The concern from Nebraska is causing analysts to rethink their position on the pipeline. "Risks for Keystone XL at the US federal level remain low, but are rising at the state level in Nebraska," Robert Johnston, director of energy and natural resources at the political risk consultancy Eurasia Group wrote in a recent research note. TransCanada ( TRP ), the company that wants to build the pipeline, maintains that pipelines are the safest way to carry crude oil. 0:00 / 2:15 Small town, big oil: The heart of a boom The company has already agreed to install extra protections around the pipeline when it passes near water resources, and has put up a multi-million dollar bond to cover expenses should a spill occur. But TransCanda is opposed to any rerouting of the pipeline, saying it would take years to obtain the new permits and cost million of dollars. Last week the company posted a detailed legal analysis saying the federal government has sole authority over the pipeline's route now, and any attempt by the states to change it would be unconstitutional. "If individual states could make these decisions, the decisions would be based on the limited interests of those states, potentially defeating broader national interests," the analysis said. Because the pipeline crosses international borders its approval rests with the State Department. Pipeline critics were heartened last week when President Obama indicated he'd take a direct role in the approval process. Obama had previously maintained a low profile on the issue. Critics say building the pipeline not only risks spills but would lock the U.S. into dependency on a particularly dirty form of oil. Oil sands are just that -- oil mixed with sand. To get a useful type of crude, heat is used to separate the oil from the sand. The process results in anywhere from 5% to 30% more greenhouse gas emissions than conventional oil would generate. There are additional concerns over the effects on the land. Oil sands are often mined like coal, in huge open pits that destroy the forest and can contaminate the nearby rivers. The companies that operate in the region, including the world's largest oil companies like ExxonMobil ( XOM , Fortune 500), Royal Dutch Shell ( RDSA ) and BP ( BP ), have gotten better at mitigating the impacts, but concerns remain. Pipeline opponents also allege the approval process at the Sate Department has been tainted by lobbyists for TransCanada that have close ties to the administration. On Monday the State Department's inspector general's office said it is conducting a review of the process. Critics also dispute the benefits the pipeline would bring, pointing to a study from Cornell that said the pipeline could actually cost jobs by hurting the development of alternative energy and allowing for the export of oil from the Midwest and driving up the cost of gasoline in that region.
Gulf Coast. Print Comment Just a few weeks ago analysts thought the jobs and economic benefits would easily outweigh environmental concerns and push the Obama administration to approve the $7 billion project. But now Nebraska is balking at the pipeline's route, and rumblings of discontent are being heard from South Dakota as well. The public pressure is being turned up too. Protestors, concerned about green house gas emissions associated with Canada's oil sands and doubtful of its promised benefits, have been rallying against the project all summer. On Sunday, thousands joined hands and literally encircled the White House. "Once thought to be a shoo-in, a near-term presidential approval of the pipeline looks less secure as opposition and headlines mount," Whitney Stanco, an energy analyst at the Washington Research Group, wrote in a note Monday. "We continue to believe the odds favor approval, but an extended delay is looking more and more possible." Last week the state of Nebraska, through which the pipeline would pass, convened a special legislation to address the issue. Keystone pipeline: Why the oil sands conduit will get built This week several bills are expected out of the state legislature. Those bills could require stricter construction standards where the pipeline would pass close to water resources. They could also attempt to alter the course of the pipeline, directing it away from the Sand Hills region. The Sand Hills sit atop the massive Ogallala Aquifer, sacred to farming interests in the state. "Nebraskans are concerned, and so am I, on why would you put a pipeline over the Ogallala Aquifer and risk an oil spill or leak," Nebraska Gov. Dave Heineman, a Republican, recently told a local paper. The concern from Nebraska is causing analysts to rethink their position on the pipeline. "Risks for Keystone XL at the US federal level remain low, but are rising at the state level in Nebraska," Robert Johnston, director of energy and natural resources at the political risk consultancy Eurasia Group wrote in a recent research note. TransCanada ( TRP ), the company that wants to build the pipeline, maintains that pipelines are the safest way to carry crude oil. 0:00 / 2:15 Small town, big oil: The heart of a boom The company has already agreed to install extra protections around the pipeline when it passes near water resources, and has put up a multi-million dollar bond to cover expenses should a spill occur. But TransCanda is opposed to any rerouting of the pipeline, saying it would take years to obtain the new permits and cost million of dollars. Last week the company posted a detailed legal analysis saying the federal government has sole authority over the pipeline's route now, and any attempt by the states to change it would be unconstitutional. "If individual states could make these decisions, the decisions would be based on the limited interests of those states, potentially defeating broader national interests," the analysis said. Because the pipeline crosses international borders its approval rests with the State Department. Pipeline critics were heartened last week when President Obama indicated he'd take a direct role in the approval process. Obama had previously maintained a low profile on the issue. Critics say building the pipeline not only risks spills but would lock the U.S. into dependency on a particularly dirty form of oil. Oil sands are just that -- oil mixed with sand. To get a useful type of crude, heat is used to separate the oil from the sand. The process results in anywhere from 5% to 30% more greenhouse gas emissions than conventional oil would generate. There are additional concerns over the effects on the land. Oil sands are often mined like coal, in huge open pits that destroy the forest and can contaminate the nearby rivers. The companies that operate in the region, including the world's largest oil companies like ExxonMobil ( XOM , Fortune 500), Royal Dutch Shell ( RDSA ) and BP ( BP ), have gotten better at mitigating the impacts, but concerns remain. Pipeline opponents also allege the approval process at the Sate Department has been tainted by lobbyists for TransCanada that have close ties to the administration. On Monday the State Department's inspector general's office said it is conducting a review of the process. Critics also dispute the benefits the pipeline would bring, pointing to a study from Cornell that said the pipeline could actually cost jobs by hurting the development of alternative energy and allowing for the export of oil from the Midwest and driving up the cost of gasoline in that region.
Monday, November 7, 2011
Obama budget aide doesn't see shutdown
Budget chief Jack Lew says he's optimistic Congress will say no to federal shutdowns. WASHINGTON (CNNMoney) -- White House budget director Jacob Lew said Thursday he's optimistic that Congress will avoid any more threats of federal shutdowns later this month over a 2012 budget. "After living through April and July, any reasonable person would have to say there's risk" of a shutdown crisis, said Lew, director of the White House Office of Management and Budget in a forum sponsored by Politico. "(But) I generally don't believe that Congress wants to be in that kind of a showdown. I'm optimistic they'll work through these issues and make the right choice." Print Comment Congress came the closest to shutting down federal government due to political gridlock over passing a stop-gap budget measure in April, and then again in August over a measure to give the government more room to borrow to keep paying bills.
Lew said those episodes taught Congress that Americans want both parties to work together. "The American people have told Congress it's unacceptable," Lew said. But he tempered his predictions with a warning to Republicans against using the budget to debate "ideology." Lew said that the White House opposes any effort to use the budget bill to debate repeals of current laws such as financial or health care reform. He pointed to a letter he sent lawmakers in October that said if the president gets a bill that "undermines critical domestic priorities or national security," he will veto the bill. "We don't take those words lightly," Lew said. 0:00 / 1:48 Who is getting squeezed by the debt deal? The federal government is running on a stop-gap budget that expires Nov. 18, while Congress works on the 2012 budget, which officially started Oct. 1. Most congressional veterans expect Congress will pass another stop-gap measure to give them more time to get a 2012 budget in place. The Senate made progress on that front Tuesday, when it passed a smaller $182 billion budget package that funds housing, transportation, NASA, FBI as well as the departments of Agriculture and Commerce. That bill is among a dozen that need to be passed by both chambers. Lawmakers need to make some smaller cuts from this year's budget while bigger, longer-term cuts are being debated by a so-called super committee. That committee has until Nov. 23 to make at least $1.2 trillion in cuts to annual deficits.
Lew said those episodes taught Congress that Americans want both parties to work together. "The American people have told Congress it's unacceptable," Lew said. But he tempered his predictions with a warning to Republicans against using the budget to debate "ideology." Lew said that the White House opposes any effort to use the budget bill to debate repeals of current laws such as financial or health care reform. He pointed to a letter he sent lawmakers in October that said if the president gets a bill that "undermines critical domestic priorities or national security," he will veto the bill. "We don't take those words lightly," Lew said. 0:00 / 1:48 Who is getting squeezed by the debt deal? The federal government is running on a stop-gap budget that expires Nov. 18, while Congress works on the 2012 budget, which officially started Oct. 1. Most congressional veterans expect Congress will pass another stop-gap measure to give them more time to get a 2012 budget in place. The Senate made progress on that front Tuesday, when it passed a smaller $182 billion budget package that funds housing, transportation, NASA, FBI as well as the departments of Agriculture and Commerce. That bill is among a dozen that need to be passed by both chambers. Lawmakers need to make some smaller cuts from this year's budget while bigger, longer-term cuts are being debated by a so-called super committee. That committee has until Nov. 23 to make at least $1.2 trillion in cuts to annual deficits.
Sunday, November 6, 2011
Fed perks up (a bit) on economy
0:00 / 01:55 Bernanke's mixed outlook in 2 min NEW YORK (CNNMoney) -- The Federal Reserve issued a slightly better outlook on the economy Wednesday, but cut its economic growth forecast for the year overall. Following a two-day policy meeting, the central bank voted 9-to-1 to make no changes to the Fed's ongoing stimulus program, and maintain its pledge to keep interest rates at record lows "at least through mid-2013." The Fed has held rates near zero since December 2008. Print Comment "Economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year," the Fed said in its statement. Because of weak growth in the first half of the year, the central bank chopped its forecasts for 2011 as a whole. The Fed expects the country's gross domestic product to grow between 1.6% and 1.7% for the year, down from its earlier estimates of 2.7% to 2.9%.
Meanwhile, the Fed expects the unemployment rate to stay around its current level of 9.1% through the end of the year, and not fall below 8% until at least 2013. The Fed also noted in its statement that household spending has increased at a faster pace recently, as business investment has also expanded. The housing market continues to be a drag though, and risks to economic growth, including strains in global financial markets, still persist. Read the Fed statement At its last meeting in September, the Fed launched a program known as Operation Twist, swapping $400 billion in short-term bonds for longer term securities. The program was intended to bring down long-term interest rates, making it cheaper for businesses, consumers and potential homebuyers to secure cheap loans. By coupling that plan with investments in mortgage-backed securities, the Fed has also been targeting the housing market specifically, by trying to bring down record-low mortgage rates even further and giving homeowners an incentive to refinance their existing mortgages. The effects of those ongoing programs have yet to be fully realized, but already some Federal Reserve officials have been making a case for more stimulus. Last month, Fed Governor Daniel Tarullo and New York Fed President William Dudley both called for more efforts to prop up the housing market. Janet Yellen, second in command to Fed chairman Ben Bernanke, said another round of asset purchases could be necessary to boost U.S. economic growth. And Chicago Fed President Charles Evans has been pushing for the central bank to do more to fix the jobs crisis. While the Fed decided not to act on any of those ideas in their latest meeting, all that campaigning has outsiders wondering if the central bank could be preparing to act at its upcoming meeting in December. Evans dissented against the Fed's decision Wednesday, because he would have preferred the central bank take additional action. He was the only Fed member to formally dissent. Speaking to reporters Wednesday, Bernanke acknowledged that the Fed has discussed various options for further stimulus, but he fell short of endorsing any particular plan. "We are prepared to take further action," he said. "We have the tools to do more, if that's appropriate." One example Bernanke gave was the "communications tool," which refers to the Fed attempting to influence the economy merely by being more transparent about its targets for inflation or economic growth. But Bernanke said the committee had not reached a decision on such a policy yet. Bernanke also addressed the Occupy Wall Street protests, which in many parts of the country have included backlash against the Fed. "I fully sympathize with the notion that the economy is not performing as we would like it to be," he said. But Bernanke pushed back against the idea that the Fed is part of the problem. "I think that the concerns about the Fed are based on misconceptions," he said. "Certainly, we are doing our part to try to create more jobs and create more opportunities in America."
Meanwhile, the Fed expects the unemployment rate to stay around its current level of 9.1% through the end of the year, and not fall below 8% until at least 2013. The Fed also noted in its statement that household spending has increased at a faster pace recently, as business investment has also expanded. The housing market continues to be a drag though, and risks to economic growth, including strains in global financial markets, still persist. Read the Fed statement At its last meeting in September, the Fed launched a program known as Operation Twist, swapping $400 billion in short-term bonds for longer term securities. The program was intended to bring down long-term interest rates, making it cheaper for businesses, consumers and potential homebuyers to secure cheap loans. By coupling that plan with investments in mortgage-backed securities, the Fed has also been targeting the housing market specifically, by trying to bring down record-low mortgage rates even further and giving homeowners an incentive to refinance their existing mortgages. The effects of those ongoing programs have yet to be fully realized, but already some Federal Reserve officials have been making a case for more stimulus. Last month, Fed Governor Daniel Tarullo and New York Fed President William Dudley both called for more efforts to prop up the housing market. Janet Yellen, second in command to Fed chairman Ben Bernanke, said another round of asset purchases could be necessary to boost U.S. economic growth. And Chicago Fed President Charles Evans has been pushing for the central bank to do more to fix the jobs crisis. While the Fed decided not to act on any of those ideas in their latest meeting, all that campaigning has outsiders wondering if the central bank could be preparing to act at its upcoming meeting in December. Evans dissented against the Fed's decision Wednesday, because he would have preferred the central bank take additional action. He was the only Fed member to formally dissent. Speaking to reporters Wednesday, Bernanke acknowledged that the Fed has discussed various options for further stimulus, but he fell short of endorsing any particular plan. "We are prepared to take further action," he said. "We have the tools to do more, if that's appropriate." One example Bernanke gave was the "communications tool," which refers to the Fed attempting to influence the economy merely by being more transparent about its targets for inflation or economic growth. But Bernanke said the committee had not reached a decision on such a policy yet. Bernanke also addressed the Occupy Wall Street protests, which in many parts of the country have included backlash against the Fed. "I fully sympathize with the notion that the economy is not performing as we would like it to be," he said. But Bernanke pushed back against the idea that the Fed is part of the problem. "I think that the concerns about the Fed are based on misconceptions," he said. "Certainly, we are doing our part to try to create more jobs and create more opportunities in America."
Saturday, November 5, 2011
GOP and taxes: Mixed message
A lot of work but not a lot of time left: Debt committee leaders Jeb Hensarling and Patty Murray and member Jon Kyl. NEW YORK (CNNMoney) -- Republicans on Capitol Hill gave conflicting messages to the debt committee this week. Yes, we will accept increases in tax revenue as part of a debt reduction plan. Print Comment Um, no, we won't. Yes: On Wednesday, 40 House Republicans -- along with 60 Democrats -- signed a letter urging the committee to "go big" by crafting a $4 trillion deficit reduction plan that includes spending cuts and tax revenue.
A day later, House Speaker John Boehner, who has publicly told the so-called super committee that tax increases should be "off the table," nevertheless said he appreciated the signers' efforts to deal with the debt problem. And he seemed to dismiss Grover Norquist, calling him "a random person in America" -- even though Norquist created the anti-tax pledge signed by virtually every sitting Republican lawmaker, including Boehner. No: In the same breath, Boehner reiterated that Republicans are "opposed to tax hikes because we believe that tax hikes will hurt our economy and put Americans out of work." Also on Thursday, 33 Republican senators sent a letter to the super committee, asking that anything the panel proposes include "comprehensive tax reform that lowers rates and promotes economic growth, with no net tax increase." So which is it? The House letter and some of Boehner's remarks seemed to open the door to a super committee deal that Democrats could sign on to. And the Senate letter seemed to shut that door. But longtime observers of the Washington budget game aren't so sure the GOP letter signals that. Rather, they say, it's more a statement of preference than an absolutist demand that revenue increases are out of the question. The letter says "we ask" not "we won't vote for any deal unless," said Joe Minarik, a former chief economist of the House Budget Committee and the White House budget office. Indeed, it's more like "they're saying, 'This is what we'd like but it's not necessarily the only thing we can accept,' " said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. (Watch: Debt committee under pressure) What's more, the letter's message isn't necessarily incompatible with a go-big strategy like the kind some of the signers -- notably Sens. Tom Coburn, Mike Crapo and Saxby Chambliss -- have publicly supported in the past. That's because they believe pro-growth tax reform can generate an increase in tax revenue, as can the elimination of tax breaks such as lobbyist-won loopholes for special interests. And that increased revenue can be used to pay for lower tax rates. Because if anything is crystal clear about the GOP position on taxes these days, it's that raising tax rates is a no-can-do.
A day later, House Speaker John Boehner, who has publicly told the so-called super committee that tax increases should be "off the table," nevertheless said he appreciated the signers' efforts to deal with the debt problem. And he seemed to dismiss Grover Norquist, calling him "a random person in America" -- even though Norquist created the anti-tax pledge signed by virtually every sitting Republican lawmaker, including Boehner. No: In the same breath, Boehner reiterated that Republicans are "opposed to tax hikes because we believe that tax hikes will hurt our economy and put Americans out of work." Also on Thursday, 33 Republican senators sent a letter to the super committee, asking that anything the panel proposes include "comprehensive tax reform that lowers rates and promotes economic growth, with no net tax increase." So which is it? The House letter and some of Boehner's remarks seemed to open the door to a super committee deal that Democrats could sign on to. And the Senate letter seemed to shut that door. But longtime observers of the Washington budget game aren't so sure the GOP letter signals that. Rather, they say, it's more a statement of preference than an absolutist demand that revenue increases are out of the question. The letter says "we ask" not "we won't vote for any deal unless," said Joe Minarik, a former chief economist of the House Budget Committee and the White House budget office. Indeed, it's more like "they're saying, 'This is what we'd like but it's not necessarily the only thing we can accept,' " said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. (Watch: Debt committee under pressure) What's more, the letter's message isn't necessarily incompatible with a go-big strategy like the kind some of the signers -- notably Sens. Tom Coburn, Mike Crapo and Saxby Chambliss -- have publicly supported in the past. That's because they believe pro-growth tax reform can generate an increase in tax revenue, as can the elimination of tax breaks such as lobbyist-won loopholes for special interests. And that increased revenue can be used to pay for lower tax rates. Because if anything is crystal clear about the GOP position on taxes these days, it's that raising tax rates is a no-can-do.
Friday, November 4, 2011
G20 agree to 'action plan' for global economy
World's top economic leaders stand together for a 'family portrait' at the G20 summit in Cannes. CANNES, France (CNNMoney) -- After a summit dominated by concerns about Europe, the world's most powerful political leaders produced a two-page "action plan" for the global economy that builds largely on existing policies previously stated goals. The Group of 20 Summit in Cannes, France, ended on a rainy Friday with broad promises from leaders to work together on economic challenges that must be addressed in different ways by different countries. Print Comment In their official communiqué, the G20 leaders welcomed the plan European leaders agreed on last month to address the debt crisis in the eurozone. They also praised Italy for agreeing to have the International Monetary Fund oversee the nation's progress on fiscal reforms.
But the official statement made only passing mention of Greece, which has dominated behind-the-scenes talks here over the last few days. Greece caused a stir before the summit even started by announcing a controversial referendum, only to reverse course a few days later. The government of Prime Minister George Papandreou faces a confidence vote Friday. President Obama acknowledged the political drama in Greece, but sounded optimistic about the ability of European leaders to get the crisis under control. "I think that there are going to be some ups and downs along the way," he said. "But I am confident that the key players in Europe -- the European political leadership -- understand how much of a stake they have in making sure this crisis is resolved." Italian bonds at 'scary' levels Italy has also been the source of much hand-wringing here. The nation has seen its borrowing costs rise to unaffordable levels recently amid concerns in the global financial markets about the government's ability to get out of debt. The G20 urged "rapid elaboration and implementation" of the so-called comprehensive plan to address the debt and banking crisis threatening the euro currency and global economy. "We welcome the euro area's determination to bring its full resources and entire institutional capacity to bear in restoring confidence and financial stability, and in ensuring the proper functioning of money and financial markets," the communiqué states. European leaders were expected to unveil details of the plan, agreed to after an all-night meeting that ended Oct. 27, at this week's summit. But key aspects of the agreement remain unresolved and there are concerns about policymakers' ability to follow through. Europe: So many ways for things to go wrong The G20 also pledged to ensure that the IMF has sufficient resources to support economies that get into financial trouble. U.S. officials have repeatedly said that the IMF has sufficient resources to achieve its objectives. But the increasing threat of a government default in Europe has raised calls to beef up its capacity. The leaders tasked their finance ministers to explore "various options" to increase the fund's flexibility, including bilateral contributions, the use of Special Drawing Rights -- a currency like instrument administered by the IMF -- and creation of a trust fund for voluntary contributions. Meanwhile, the action plan is made up of broad policy prescriptions for the global economy, many of which have already been discussed by G20 members. It starts with Europe implementing the Oct. 27 plan, including debt relief for Greece, new capital requirements for banks and a stronger "firewall" to protect vulnerable euro area economies. 0:00 / 2:20 Should China bail out Europe? To ensure a "balanced" global recovery, the G20 called for advanced economies to continue with "appropriate" fiscal consolidation programs. The United States agreed to support its economy through government investments, tax reforms and job creation programs. At the same time, the U.S. government will continue to take steps to cut deficits and reduce debt under its "medium term fiscal consolidation" program. G20 nations that have large budget surpluses, such as China, "will take steps to support domestic demand," according to the action plan. China also agreed to move towards "gradual convertibility" of its currency, the yuan, and will slow the rate at which it accumulates reserves.
But the official statement made only passing mention of Greece, which has dominated behind-the-scenes talks here over the last few days. Greece caused a stir before the summit even started by announcing a controversial referendum, only to reverse course a few days later. The government of Prime Minister George Papandreou faces a confidence vote Friday. President Obama acknowledged the political drama in Greece, but sounded optimistic about the ability of European leaders to get the crisis under control. "I think that there are going to be some ups and downs along the way," he said. "But I am confident that the key players in Europe -- the European political leadership -- understand how much of a stake they have in making sure this crisis is resolved." Italian bonds at 'scary' levels Italy has also been the source of much hand-wringing here. The nation has seen its borrowing costs rise to unaffordable levels recently amid concerns in the global financial markets about the government's ability to get out of debt. The G20 urged "rapid elaboration and implementation" of the so-called comprehensive plan to address the debt and banking crisis threatening the euro currency and global economy. "We welcome the euro area's determination to bring its full resources and entire institutional capacity to bear in restoring confidence and financial stability, and in ensuring the proper functioning of money and financial markets," the communiqué states. European leaders were expected to unveil details of the plan, agreed to after an all-night meeting that ended Oct. 27, at this week's summit. But key aspects of the agreement remain unresolved and there are concerns about policymakers' ability to follow through. Europe: So many ways for things to go wrong The G20 also pledged to ensure that the IMF has sufficient resources to support economies that get into financial trouble. U.S. officials have repeatedly said that the IMF has sufficient resources to achieve its objectives. But the increasing threat of a government default in Europe has raised calls to beef up its capacity. The leaders tasked their finance ministers to explore "various options" to increase the fund's flexibility, including bilateral contributions, the use of Special Drawing Rights -- a currency like instrument administered by the IMF -- and creation of a trust fund for voluntary contributions. Meanwhile, the action plan is made up of broad policy prescriptions for the global economy, many of which have already been discussed by G20 members. It starts with Europe implementing the Oct. 27 plan, including debt relief for Greece, new capital requirements for banks and a stronger "firewall" to protect vulnerable euro area economies. 0:00 / 2:20 Should China bail out Europe? To ensure a "balanced" global recovery, the G20 called for advanced economies to continue with "appropriate" fiscal consolidation programs. The United States agreed to support its economy through government investments, tax reforms and job creation programs. At the same time, the U.S. government will continue to take steps to cut deficits and reduce debt under its "medium term fiscal consolidation" program. G20 nations that have large budget surpluses, such as China, "will take steps to support domestic demand," according to the action plan. China also agreed to move towards "gradual convertibility" of its currency, the yuan, and will slow the rate at which it accumulates reserves.
Thursday, November 3, 2011
Many companies pay no income tax
NEW YORK (CNNMoney) -- The corporate tax rate is 35%. But an examination of 280 of the nation's largest corporations suggests that many aren't paying anything close to that. The real tax rate paid by a slew of major corporations averages closer to 18.5%, according to a study released Thursday by two liberal tax research groups. Print Comment The report issued by Citizens for Tax Justice and the Institute on Taxation and Economic Policy paints the corporate tax code as wildly inefficient, filled with loopholes and subject to the influence of lobbyists who carve out special provisions for the companies they represent. The study looked at 280 companies in the Fortune 500 that were profitable for all three years between 2008 and 2010.
The results: 111 companies paid effective tax rates of less than 17.5% over the three-year period; 98 paid a rate between 17.5% and 30%; and 71 paid more than 30%. The average rate? 18.5%. Some companies paid zero. And 30 actually owed less than nothing in income taxes over the three years. How does that happen? At the root of the problem is a system of inverted incentives that encourages corporations to lobby for special tax breaks -- and politicians to insert them into the tax code. Corporations pay lobbyists. Lobbyists convince lawmakers to add tax breaks. Lawmakers modify the tax code. 0:00 / 5:10 Southwest CEO to Obama: Don't tax us more It wasn't always like this. The corporate tax code was cleaned of special tax breaks during the Reagan administration. The clean slate didn't last long, and over time, special provisions have been added back in. NASCAR racetrack owners are allowed to write off the costs of their racetracks. There's the sweet deal for companies that make Puerto Rican rum. Some of the biggest breaks go to companies that are allowed to write off investments in equipment more quickly than they actually depreciate. The American tax machine And certain companies enjoy incentives geared specifically at their businesses. The oil and gas industry, for example, is allowed to write off some drilling and exploration expenses. All the breaks add up -- sometimes eliminating a company's tax burden altogether. Other companies reported so many "excess tax breaks" that their tax burden went "negative," the study said. According to the study, utility Pepco Holdings and conglomerate General Electric have the highest negative income tax rates. Pepco's profits totaled $882 million over the three-year period, while the company had a negative tax rate of 57.6%. GE earned $10.5 billion, with a negative rate of 45.3%, according to the study. Pepco ( POM , Fortune 500) said Thursday that it always operates within the law, and that the IRS audits every income tax return filed by the company. "Pepco Holdings pays all its required taxes, including but not limited to income, sales, use, property, and gross receipts taxes, in all the taxing jurisdictions within which it operates," the company said in a statement. The truth about GE's tax bill GE ( GE , Fortune 500), which runs an extremely complicated multi-national operation, took issue with the study, calling it "inaccurate and distorted." "GE paid billions of dollars in taxes in the United States over the last decade, and we expect our overall tax rate will be approximately 30% in 2011," the company said in a statement. "We believe the U.S. tax system needs to be reformed to close all loopholes, to lower the corporate rate and to provide a territorial system like every other major country in the world." GE is not alone in calling for reform. Most lawmakers acknowledge the system is broken. President Obama called for corporate tax reform in his State of the Union address and the concept has support among lawmakers on both sides of the aisle. 0:00 / 2:58 Why tax repatriation is a bad idea The idea of reform is to lower the corporate tax rate while greatly scaling back tax breaks, loopholes and other provisions of the tax code that allow most corporate income to avoid taxation. Despite the general consensus that something must be done, lawmakers are not likely to tackle the issue anytime soon. It's possible that the congressional super committee, now trying to find a way to cut the deficit, will make reform recommendations. But don't count on too much action. The political atmosphere on Capitol Hill has prevented movement on many fiscal and tax issues in recent months. Daniel Shaviro, a tax professor at New York University School of Law, said he doesn't anticipate big changes in the corporate tax code, at least in the near term. "There is widespread sympathy for lowering the corporate rates," Shaviro said. "But I I tend to doubt it happens anytime soon."
The results: 111 companies paid effective tax rates of less than 17.5% over the three-year period; 98 paid a rate between 17.5% and 30%; and 71 paid more than 30%. The average rate? 18.5%. Some companies paid zero. And 30 actually owed less than nothing in income taxes over the three years. How does that happen? At the root of the problem is a system of inverted incentives that encourages corporations to lobby for special tax breaks -- and politicians to insert them into the tax code. Corporations pay lobbyists. Lobbyists convince lawmakers to add tax breaks. Lawmakers modify the tax code. 0:00 / 5:10 Southwest CEO to Obama: Don't tax us more It wasn't always like this. The corporate tax code was cleaned of special tax breaks during the Reagan administration. The clean slate didn't last long, and over time, special provisions have been added back in. NASCAR racetrack owners are allowed to write off the costs of their racetracks. There's the sweet deal for companies that make Puerto Rican rum. Some of the biggest breaks go to companies that are allowed to write off investments in equipment more quickly than they actually depreciate. The American tax machine And certain companies enjoy incentives geared specifically at their businesses. The oil and gas industry, for example, is allowed to write off some drilling and exploration expenses. All the breaks add up -- sometimes eliminating a company's tax burden altogether. Other companies reported so many "excess tax breaks" that their tax burden went "negative," the study said. According to the study, utility Pepco Holdings and conglomerate General Electric have the highest negative income tax rates. Pepco's profits totaled $882 million over the three-year period, while the company had a negative tax rate of 57.6%. GE earned $10.5 billion, with a negative rate of 45.3%, according to the study. Pepco ( POM , Fortune 500) said Thursday that it always operates within the law, and that the IRS audits every income tax return filed by the company. "Pepco Holdings pays all its required taxes, including but not limited to income, sales, use, property, and gross receipts taxes, in all the taxing jurisdictions within which it operates," the company said in a statement. The truth about GE's tax bill GE ( GE , Fortune 500), which runs an extremely complicated multi-national operation, took issue with the study, calling it "inaccurate and distorted." "GE paid billions of dollars in taxes in the United States over the last decade, and we expect our overall tax rate will be approximately 30% in 2011," the company said in a statement. "We believe the U.S. tax system needs to be reformed to close all loopholes, to lower the corporate rate and to provide a territorial system like every other major country in the world." GE is not alone in calling for reform. Most lawmakers acknowledge the system is broken. President Obama called for corporate tax reform in his State of the Union address and the concept has support among lawmakers on both sides of the aisle. 0:00 / 2:58 Why tax repatriation is a bad idea The idea of reform is to lower the corporate tax rate while greatly scaling back tax breaks, loopholes and other provisions of the tax code that allow most corporate income to avoid taxation. Despite the general consensus that something must be done, lawmakers are not likely to tackle the issue anytime soon. It's possible that the congressional super committee, now trying to find a way to cut the deficit, will make reform recommendations. But don't count on too much action. The political atmosphere on Capitol Hill has prevented movement on many fiscal and tax issues in recent months. Daniel Shaviro, a tax professor at New York University School of Law, said he doesn't anticipate big changes in the corporate tax code, at least in the near term. "There is widespread sympathy for lowering the corporate rates," Shaviro said. "But I I tend to doubt it happens anytime soon."
Wednesday, November 2, 2011
Occupy Oakland's general strike call: 'Shut down the 1%'
The Occupy Wall Street movement in Oakland, Calif., plans a citywide general strike Wednesday. NEW YORK (CNNMoney) -- The Occupy Wall Street movement is about to enter new territory: The strike zone. By a vote of 1,484 to 46, the General Assembly of Occupy Oakland voted last week to call a citywide general strike for Wednesday. Print Comment "[W]e invite all students to walk out of school. Instead of workers going to work and students going to school, the people will converge on downtown Oakland to shut down the city," the group's manifesto read.
"We liberate Oakland and shut down the 1%." After striking, demonstrators plan to converge Wednesday evening on Oakland's port, one of the country's largest and the city's most visible symbol of commerce. (Read: Occupy Wall Street applies for trademark) Occupy Oakland's call to strike follows a crackdown on protesters last Tuesday. Police loosed smoke grenades and rubber bullets, and Iraq war veteran Scott Olsen suffered a fractured skull after being struck by what protesters say was a tear gas canister. "Tens of thousands" will turn out for Wednesday's general strike, Occupy Oakland organizer Tim Simons predicted. Top 1% are getting even richer Virtually all prominent local labor unions have issued statements of support, Simons said, and "we have confirmations of student walkouts throughout the city." "We even know of some motorcycle gangs that will participate." Though a mix of contracts and laws forbid major unions from officially joining the strike, determined rank-and-file will probably take part through vacation days, sick days or other furloughs, union officials speculated. "We're calling it a day of action, so we're encouraging people to participate," said Roxanne Sanchez, the president of SEIU 1021, one of the largest unions in the area. Should any employer in Oakland punish an employee for striking, they'll hear from Occupy Oakland. The group's Strike Assembly has voted to "picket and/or occupy" any companies that sanction employees for participating in the strike. 0:00 / 2:29 Occupy Wall Street's money man Strikes by individual unions or staffs are familiar, though uncommon, in the United States, but general strikes are rare. The last true general strike occurred in 1946, according to Georgetown University labor historian Joe McCartin, and also occurred in Oakland -- a fact not lost on Occupy Oakland. About 100,000 workers walked off the job in solidarity with employees of two department stores, whose bid to unionize had been put down. The Oakland strike call shows the "historic levels of anger and frustration among lots of people," McCartin said. Various Occupy satellites will hold solidarity actions to coincide with Oakland's strike. Occupy Philadelphia is planning a 99-minute strike from noon to 1:39 p.m. on Wednesday, the duration a play on demonstrators chants that they represent "the 99%." Occupy Wall Street ... mansions Occupy Oakland organizers say their strike is as much about trying to take the Occupy movement to the next level as responding to recent police overzealousness. The Occupy movement has "sort of reached the limits of only sitting in squares and parks and we need to start showing the real potential of these people who are mobilizing now," Simons said. Other Occupy satellites have reached a similar conclusion. In Cincinnati, Occupy-ers have mulled striking to draw attention to their dissatisfaction with Cincinnati-headquartered bank Fifth Third, spokeswoman Kristin Brand said. While the general strike is without recent precedent in America, it has been in vogue globally of late. General strikes over austerity measures have sporadically paralyzed sections of the Greek, Spanish and Italian economies this year. European general strikers have had significantly more practice than Occupy Oakland. "Those countries all have traditions of general strikes that are more lively and up to the recent time, whereas in the United States general strikes were always more rare," McCartin said.
"We liberate Oakland and shut down the 1%." After striking, demonstrators plan to converge Wednesday evening on Oakland's port, one of the country's largest and the city's most visible symbol of commerce. (Read: Occupy Wall Street applies for trademark) Occupy Oakland's call to strike follows a crackdown on protesters last Tuesday. Police loosed smoke grenades and rubber bullets, and Iraq war veteran Scott Olsen suffered a fractured skull after being struck by what protesters say was a tear gas canister. "Tens of thousands" will turn out for Wednesday's general strike, Occupy Oakland organizer Tim Simons predicted. Top 1% are getting even richer Virtually all prominent local labor unions have issued statements of support, Simons said, and "we have confirmations of student walkouts throughout the city." "We even know of some motorcycle gangs that will participate." Though a mix of contracts and laws forbid major unions from officially joining the strike, determined rank-and-file will probably take part through vacation days, sick days or other furloughs, union officials speculated. "We're calling it a day of action, so we're encouraging people to participate," said Roxanne Sanchez, the president of SEIU 1021, one of the largest unions in the area. Should any employer in Oakland punish an employee for striking, they'll hear from Occupy Oakland. The group's Strike Assembly has voted to "picket and/or occupy" any companies that sanction employees for participating in the strike. 0:00 / 2:29 Occupy Wall Street's money man Strikes by individual unions or staffs are familiar, though uncommon, in the United States, but general strikes are rare. The last true general strike occurred in 1946, according to Georgetown University labor historian Joe McCartin, and also occurred in Oakland -- a fact not lost on Occupy Oakland. About 100,000 workers walked off the job in solidarity with employees of two department stores, whose bid to unionize had been put down. The Oakland strike call shows the "historic levels of anger and frustration among lots of people," McCartin said. Various Occupy satellites will hold solidarity actions to coincide with Oakland's strike. Occupy Philadelphia is planning a 99-minute strike from noon to 1:39 p.m. on Wednesday, the duration a play on demonstrators chants that they represent "the 99%." Occupy Wall Street ... mansions Occupy Oakland organizers say their strike is as much about trying to take the Occupy movement to the next level as responding to recent police overzealousness. The Occupy movement has "sort of reached the limits of only sitting in squares and parks and we need to start showing the real potential of these people who are mobilizing now," Simons said. Other Occupy satellites have reached a similar conclusion. In Cincinnati, Occupy-ers have mulled striking to draw attention to their dissatisfaction with Cincinnati-headquartered bank Fifth Third, spokeswoman Kristin Brand said. While the general strike is without recent precedent in America, it has been in vogue globally of late. General strikes over austerity measures have sporadically paralyzed sections of the Greek, Spanish and Italian economies this year. European general strikers have had significantly more practice than Occupy Oakland. "Those countries all have traditions of general strikes that are more lively and up to the recent time, whereas in the United States general strikes were always more rare," McCartin said.
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