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Wonkbook: Obama talks corporate taxes; IMF frets over international FinReg; foreclosure cases clog markets


President Obama made his administration's openness to a corporate tax overhaul clear in some strong comments yesterday. Like a lot of tax wonks, he'd like to see lower rates paid for by fewer loopholes. The corporate world would also like to see those lower rates -- but they're not as interested in closing the loopholes. So negotiations will be needed. But it's a subject well worth pursuing: You only need two graphs to show how broken our corporate tax system is.

Broaching corporate tax reform at all, however, sounds a bit like preparation for 2011, when Obama will be facing either an empowered Republican minority or, in one chamber or the other, a Republican majority. At that point, he'll need a few issue areas that both Democrats and Republicans are capable of supporting, and tax reform, at least in theory, could be it.

You can't make 500 million friends without making a few enemies. But then, I don't have 500 million friends. Welcome to Wonkbook.

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Obama wants a corporate tax overhaul, reports John McKinnon: "But Obama also suggested that a corporate rate cut should be paid for by closing tax “loopholes” - a prospect that could prove unpopular with many companies that have resisted the administration’s efforts to tighten tax rules...Obama said the administration would like to 'collaborate' on a tax rewrite that would be 'revenue-neutral'--that is, it would not represent a net tax increase or decrease."

The IMF is concerned that global financial regulations are not sufficiently coordinated, reports Howard Schneider: "[They're] worried that if national policies are not coordinated, capital will gravitate to where it is most loosely regulated and the risk of another crisis will increase. Underscoring the concerns, Switzerland announced Monday it would enact capital rules far beyond those expected in other countries, while Brazil said it would double the tax imposed on some forms of foreign investment."

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Revisited foreclosure cases could clog the housing market, report Ariana Eunjung Cha and Brady Dennis: "The collective decisions of judges across the country could turn a foreclosure slowdown into a far larger mess if they determine that homes were wrongly seized and resold by lenders. Foreclosed homes accounted for nearly one-fourth of all residential sales in the second quarter, according to a report by RealtyTrac released last week. That possibility already is driving away potential buyers of bank-owned properties who don't want to get caught in legal battles between banks and borrowers. At least one company that provides title insurance, Old Republic Title, has refused to work on homes foreclosed by Ally's GMAC mortgage unit."

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Indie video interlude: Wolf Parade's "Yulia".

Still to come: Ben Bernanke hinted at support for new bond purchases; state-level high-speed rail projects are in danger; a new report says America's transportation infrastructure is in dire need of a revamping; and two bunny rabbits hang out in paper cups.


Ben Bernanke suggested that he might support bond purchases and urged Congress to cut the deficit, reports Neil Irwin: "Bernanke said Congress should seriously consider "fiscal rules" that could make it easier to rein in the deficit over time, such as a stronger version of "PAYGO" pay-as-you-go rules now in place...Bernanke told a group of college students in a town hall meeting that additional purchases of bonds by the Fed, an action the central bank will consider at its next policy meeting, could benefit the economy. 'I do think that additional purchases - although we don't have precise numbers for how big the effects are - I think they have the ability to ease financial conditions,' Bernanke said at the event. Several of Bernanke's Fed colleagues have shown an inclination toward such steps in recent days."

Elizabeth Warren warns that TARP has not yet worked:

The Justice Department has reached a deal with Visa and Mastercard on swipe fees, reports Ylan Mui: "The issue of 'swipe fees' has long been a thorn in the side of the retailing industry, which complained that it has little power to inform customers of the differences in card costs. In its complaint, the Justice Department estimated that the fees cost merchants $35 billion each year - resulting in higher prices for shoppers. The card networks 'put customers and consumers in a no-win situation,' Attorney General Eric H. Holder Jr. said in a news conference. 'We are sending a very clear message: We will not tolerate anti-competitive policies and practices.'"

Members of Congress in both parties are embracing a two-year budget process:

Janet Yellen and Sarah Bloom Raskin have been sworn in as Fed governors:

Wall Street firms are shifting to safer activities because of new regulations, report Carrick Mollenkamp, Liz Rappaport, and Aaron Lucchetti: "Tighter regulatory requirements are compelling giant investment banks in the U.S. and Europe to tone down their risk-taking and shift to more staid strategies. Now hot on Wall Street: trading securities for clients, processing trades, exchanging currency, managing assets and advising clients on deals and financing...Adding to the urgency to adopt plain-vanilla strategies: a recent slowdown in the volume of U.S. stock trading, traditionally a big source of revenue."

Obama had to choose between being popular and saving the economy, writes Noam Scheiber:

Adorable animals in containers interlude: Two bunnies in paper cups.

Domestic Policy

State-level high speed rail programs are facing opposition, reports Michael Cooper: "In Ohio, the Republican candidate for governor, John Kasich, is vowing to kill a $400 million federal stimulus project to link Cleveland, Columbus and Cincinnati by rail. In Florida, Rick Scott, the Republican candidate for governor, has questioned whether the state should invest in the planned rail line from Orlando to Tampa. The state got $1.25 billion in federal stimulus money for the project, but it will cost at least twice that much to complete. And the nation’s most ambitious high-speed rail project, California’s $45 billion plan to link Los Angeles and San Francisco with trains that would go up to 220 miles per hour, could be delayed if Meg Whitman, a Republican, is elected governor."

A new report indicts America's transportation infrastructure, reports Ashley Halsey: "Co-chaired by two former secretaries of transportation - Norman Y. Mineta and Samuel K. Skinner - the group estimated that an additional $134 billion to $262 billion must be spent per year through 2035 to rebuild and improve roads, rail systems and air transportation...The key to salvation is developing new long-term funding sources to replace the waning revenue from federal and state gas taxes that largely paid for the construction and expansion of the highway system in the 1950s and 1960s, the report said."

Career colleges argue new for-profit college regulations are discriminatory, reports Kendra Marr: "Career colleges and some minority lawmakers are charging that a proposal by Education Secretary Arne Duncan to restrict federal aid to for-profit career schools amounts to discrimination, harming blacks and Latinos who disproportionately use those schools to get ahead...Consumer advocates and education groups say that the rule would protect students - and taxpayers - from programs that prey on students to get government money."

Republicans will seek to defund specific parts of health care reform:

The Roberts Court is hiding its conservatism, write Barry Friedman and Dahlia Lithwick: "So, what's a conservative justice to do? Whittle and chip away at the rule any way he can, all the while denying that the rule itself is in jeopardy. But to do their whittling without getting caught, the Roberts Court has been brilliant at stacking the deck--choosing to hear only Miranda cases in which what the police did is so sympathetic, or what the suspect did so awful, it's impossible to side with the suspect. Then, while you're rooting against the suspect, they're getting rid of the rule that you thought you liked."

The health sector is giving more to Republicans:

Voters have a right to know who's funding elections, writes Eugene Robinson: "The result is a system in which oil companies opposed to an energy bill that would begin to steer the country away from fossil fuels, or Wall Street firms that want to undo financial regulatory reform and return to the days of the Big Casino, or gazillionaires who want to keep George W. Bush's tax breaks, can all spend as much as they like to try to buy Congress for the Republican Party. And they can do it secretly, in the dark, without anyone knowing. It's bad enough that public offices can be purchased. It's unconscionable that we can't even know who the buyers are."

Coen Brothers interlude: The trailer for True Grit.


Environmentalists are pushing a tougher, 350 parts per million goal for greenhouse emissions reductions:

EPA regulations could be a political winner, reports Darren Samuelsohn: "A survey by Democratic pollster Joel Benenson and the Natural Resources Defense Council in late summer found that 60 percent of respondents supported government regulating greenhouse gases, with 34 percent opposed. As for the EPA, respondents gave a 51 percent favorable rating to the agency, compared with 40 percent opposed. And 54 percent said they are 'confident' that the EPA is up to the job of regulating greenhouse gases, with 42 percent 'not confident.'"

The Senate as an institution is to blame for cap and trade's failure, writes David Roberts:

The US military is reducing fossil fuel usage, reports Elizabeth Rosenthal: "After a decade of waging wars in remote corners of the globe where fuel is not readily available, senior commanders have come to see overdependence on fossil fuel as a big liability, and renewable technologies -- which have become more reliable and less expensive over the past few years -- as providing a potential answer. These new types of renewable energy now account for only a small percentage of the power used by the armed forces, but military leaders plan to rapidly expand their use over the next decade."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: White House.

By Ezra Klein  | October 5, 2010; 6:29 AM ET
Categories:  Wonkbook  
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Obama should issue an executive order declaring that anonymous campaign donations are illegal.

The FEC should do something similar.

And at the same time the AG office should declare it will investigate anonymous campaign donations, and subpoenas should be issued to identify all campaign donations by all anonymous sources.

Screw the US Supreme Court. Roberts et al should be impeached for Citizens United, which amounts to nothing short of a coup from big business, and no doubt some of those anonymous funds are from foreign sources.

By the time the legal challenges to the above proposal are considered or resolved, the 2010 elections will be over.

Dems need to start fighting back or they will soon become extinct.

Posted by: Lomillialor | October 5, 2010 7:21 AM | Report abuse

If the GOP were trying to fight anonymous campaign donations, they would embrace my earlier proposals, as well as do the following:

- claim Bin Laden is donating anonymous cash to help elect Democrats.

- claim France is donating anonymous cash to help elect Democrats who support a carbon tax so American wealth could be transferred to foreign countries.

- claim abortion clinics are donating anonymous cash to help elect Democrats.

- claim Muslims are donating anonymous cash to elect Democrats who will support Sharia law.


Posted by: Lomillialor | October 5, 2010 7:27 AM | Report abuse

Man, that True Grit trailer looks awesome!

Also, I'm telling you, closing tax loopholes and allowing companies to opt to pay a carbon tax lower than the corporate tax (which itself would be lowered to closer to the global norm) is a good way to get some carbon pricing in the door.

Posted by: MosBen | October 5, 2010 7:35 AM | Report abuse

So, if you want lower taxes and fewer loopholes, and you're negotiating with people who want lower taxes and more loopholes, wouldn't it make sense to start the negotiations fighting for higher taxes and fewer loopholes?

But I forgot -- the President starts by putting forth the least effective policy centrists would support, then negotiates that down so conservadems will support it.

Posted by: stonedone | October 5, 2010 8:20 AM | Report abuse

"The Justice Department has reached a deal with Visa and Mastercard on swipe fees, reports Ylan Mui:"

"Retailers must pay a fee of about 2 percent of the purchase price each time a customer swipes a card. That money is an important source of revenue for the banks that issue cards as well as the networks, such as Visa and Mastercard, that process the transactions. Though card companies argue that consumers spend more when they use plastic - a boon to retailers - merchants say they have little control over the fees they must pay."

Merchants have a lot of control - if they don't like the fees, then they don't have to accept plastic. If they accept plastic anyway, then the merchants must benefit from doing so.

Why, then, should the government artificially adjust the terms of a mutually beneficial deal in the favor of one particular party?

As an aside, whenever I earn another dollar, the government manages to take roughly 40 cents of it away (more still if you includes the employer portion of FICA, sales taxes and higher prices on goods I buy with that dollar), and I have no control over that particular fee. And the government is concerned that a 2% fee charged by the financial companies is unjust?

""There is no reason for these prohibitions," said Christine A. Varney, assistant U.S. attorney general for the antitrust division. "They stifle competition.""

If these prohibitions were so burdensome, why didn't the merchants simply drop AmEx?

"In its complaint, the Justice Department estimated that the fees cost merchants $35 billion each year - resulting in higher prices for shoppers."

A good portion of that $35 billion is sent back to shoppers as rewards or as some other benefit.

Posted by: justin84 | October 5, 2010 9:07 AM | Report abuse

Good roundup this morning. Most interesting news about the military pushing the use of alternative energy. Now that's an infrastructure program I can believe in!

Posted by: bgmma50 | October 5, 2010 10:21 AM | Report abuse

I've been following the defective foreclosure story with great interest. This affects not only pending foreclosures, but also calls into question the validity of past foreclosures. Look for title companies to take huge hits on recently issued titles on foreclosed properties, and also to stop issuing insuring title on foreclosed properties altogether.

There are two separate problems. The easiest to resolve is the process problem...some sort of defect in the foreclosure process. Since the homeowner is likely to remain in default and be unable to cure the past due payments, the lender can redo the foreclosure. But the larger problem is the defective paperwork problem. A lot of crooks and fools were creating mortgages in the heyday, and they didn't do it right. Plus, the slicing and dicing of mortgages has led to lack of clarity on who, exactly, has the authority to pursue foreclosure. Absent state by state legislation to cure this problem, I don't know of any way to fix it. Sure puts defaulting homeowners in the catbird seat, though.

Posted by: bgmma50 | October 5, 2010 10:31 AM | Report abuse

"Career colleges argue new for-profit college regulations are discriminatory, reports Kendra Marr: "Career colleges and some minority lawmakers are charging that a proposal by Education Secretary Arne Duncan to restrict federal aid to for-profit career schools amounts to discrimination, harming blacks and Latinos who disproportionately use those schools to get ahead...Consumer advocates and education groups say that the rule would protect students - and taxpayers - from programs that prey on students to get government money."

Get rid of the government money.

If the for profit career schools don't provide value, they'll go under sooner or later.

Posted by: justin84 | October 5, 2010 10:47 AM | Report abuse

Foreclosure Stoppage Trouble for Property Market! Plus Obama admin does not support a moratorium on Foreclosures...

Posted by: foreclosure_help | October 12, 2010 3:16 PM | Report abuse

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