Lots of Tax Talk

Sarkozy Tackles Wall Street Tax - On Monday, French President Nicolas Sarkozy took a large step towards implementing a financial transactions tax, a tax largely supported by many world leaders, and publicly backed by German Chancellor Angela Merkel.  Sarkozy, a conservative up for re-election, has been pushing for the tax for some time, but the tax has not received the backing of all the European Union, most notably UK Prime Minister David Cameron, who does disagree with the measure, but would veto the bill in the UK unless the tax is implemented worldwide. Now, feeling the pressure of his campaign and what looks like an attempt to take a more populist stance prior to the election, Sarkozy is saying that even without the full consent of the EU, France is willing to go it alone.

Citing deregulation of the financial markets and rampant, unhindered speculation as some primary causes of the global economic downturn, Sarkozy is arguing that traders “repay” their country for the damage that was done. Sarkozy says there is an inherent “moral issue” with the tax, a levy on financial trading transactions that he claims will generate billions of dollars for France, as well as many other countries still reeling from the global recession, and effectively cut down on the sheer number of trades, which many analysts cite as endemic to the market insecurities and directly caused the May 2010 “flash crash” on Wall Street. The EU finance ministers are set to discuss how effect the tax could be at a summit in March, however, Sarkozy’s administration is planning to introduce a bill as early as February. The US opposes taxes on financial transactions between banks, despite wide public support for them.

Obama Strengthens Jobs Agenda - Speaking of taxes and morality, stateside, President Obama met with business leaders yesterday in the White House to discuss the “moral” case for American companies to keep, or bring jobs back to American workers. “So my message to business leaders today is simple: ask yourselves what you can do to bring jobs back to the country that made our success possible,” in a statement that seemed to paraphrase just slightly JFK’s “Ask Not…” speech. The President is proposing $12 million in his 2013 budget as incentives to companies who invest in America from overseas. For companies that don’t, the President wants to end tax breaks and cut off the corporate welfare so many businesses receive from the federal government. With the economy as the number one issue on voters’ minds as the 2012 election gears up, President Obama is looking to show the public that he is still very much focused on jobs and the economy right now.

Warren Buffett Challenges Congress - And Warren Buffett is talking taxes again as tax season looms. Last August, Mr. Buffett wrote in an op-ed to the New York Times lampooning the disproportionate tax structure in the US. Buffett, with a net worth of $45 billion, says he effectively pays a lower tax rate than his secretary. In response, Senate minority leader Mitch McConnell (R-KY) quipped that if Buffett were feeling “guilty,” he should “send in a check” to the IRS. There was even a “Buffett Rule Act” introduced in the Senate to add a line on tax forms for the rich to donate extra in order to pay down the national debt. Buffett’s response: he’s offering a 1-to-1 match on all voluntary contributions from Congress (3-to-1 for Sen. McConnell’s case). In TIME magazine’s cover story this week, Mr. Buffett waxes benevolent, “It restores my faith in human nature to think that there are people who have been around Washington all this time and are not yet so cynical as to think that [the deficit] can’t be solved by voluntary contributions.” You can read the full article and more about Buffett’s wager in this week’s issue of TIME on newsstands Friday.

Mitt Romney Wins New Hampshire

Former Massachusetts Governor Mitt Romney won a decisive victory in the New Hampshire primary tonight. The numbers as of press time show Romney with about 36% of the vote, about 11% more than his closest rival, Ron Paul. While that is a large margin, and CNN was able to call the primary just after 8 pm eastern time for the former governor when the polls were officially closed, it was not necessarily a decisive one. The Huffington Post splashed as their headline tonight, “5 Years Campaigning, Less Than 40%?” Romney has ostensibly never quit his 2008 presidential bid in New Hampshire, keeping offices open, continuing to build support over the last 4 years, much like what Congressman Paul had done down in Iowa (yet it still couldn’t get him a win). Romney did win, but he was only able to garner roughly 36% of the primary voters. With a lasting campaign as he had had, one might have thought New Hampshire would be a runaway victory for Governor Romney.

In all likelihood, Romney will win the nomination. There really is nobody in the field who can match his campaign when it comes to spending and donations. Through his own resources and the capital of the Pro-Romney Super PACS, he can fend off any surge by the other candidates in the race. Michelle Bachmann, Herman Cain, Rick Perry, they all rose and fell without Romney needing to do much. They had no chance when it came to Iowa, or New Hampshire. They beat themselves. Newt Gingrich, however, was a different story. With less than a month to go before the Iowa caucuses, Gingrich saw a huge shift in support from likely voters. And with the holidays coming up, and the focus shifting off Iowa for a hot-minute, Gingrich looked poised to roll into the final week with a commanding lead. Sensing a shift in momentum, Romney (and his Super PACS) stepped in. They blanketed the airwaves with attack ads on the former House Speaker calling into question his integrity, his record, his marital strife. And it worked. Gingrich’s popularity plummeted and Romney went “all-in” in Iowa hoping to shut down this roulette wheel of Republican flavors-of-the-month. It didn’t quite work. Former Sen. Rick Santorum played well with Iowa voters with his social conservative issues and nearly pulled off an upset. Without a decisive victory, Romney would still have a large field of contenders to bat off in New Hampshire.

It’s a week later, and I don’t see that much has changed. Sure Romney won by more than 10% (with a field of five), but it’s not a knockout punch. Rick Perry, after tonight, should really drop out. But he was never focused on New Hampshire and has instead been looking to South Carolina’s primary on Jan. 21. But his showing was so bad tonight, and his campaign has been running on life-support for weeks, that he should just give up while still ahead. Of course, I probably could say the same thing about Jon Huntsman, but he never even bothered with Iowa. His focus was New Hampshire and it worked – to an extent. Huntsman will likely finish a strong 3^rd in New Hampshire, but with no base whatsoever in South Carolina to speak of it’s difficult to say how he can press on from here. Huntsman really did need a 1^st or 2^nd place tonight to get the momentum he needed in the coming weeks. With only about 15-18% of the vote in New Hampshire, and a significant distance to catch Ron Paul, this does not bode well for his campaign in the coming weeks. But then this all comes back around to Romney and how poor his numbers were for the evening.

Without breaking the 40% margin, Romney has to be wondering what is missing from his campaign to draw in new voters. There must be some consternation on his part that the anti-Romney popularity has not yet finished weaving its way through the field of contenders. About 30% of voters this past weekend were still undecided going to the voting booth and Romney's final tally were fairly consistent with his polling numbers, meaning he still has not done what's needed to sway the undecided to his camp. If given a few more days, or another week, might Huntsman turned more support his way? We can't say for sure now. South Carolina might still have something to say for Jon Huntsman. It may have something to say for all the other candidates as well. Rick Santorum's social issues might play better in SC. Newt Gingrich is from neighboring Georgia. Ron Paul's libertarian base seems to be holding steady between 20-25% of republican voters. If New Hampshire is indicative of South Carolina in its population of undecided voters, we might not be any closer to solidifying a republican nominee for the White House in 11 more days. And the longer this strings along, the worse it will be for Romney.

A Rebounding Economy

The new jobs report released by the Labor Department today shows the economy is on the mend, creating 200,000 jobs in December and dipping the unemployment rate down to 8.5% from November’s revised 8.7%. This is positive news for Americans and reason for the unemployed to keep hopes up and keep looking for opportunities.

Over the last six months, the economy has added over 100,000 jobs a month, a far cry from the number actually needed to significantly reduce unemployment. Most economists say the economy needs about 300,000-400,000 jobs added per month in order to significantly reduce the unemployment rate and get the economy back to pre-Recession levels by the end of the year, but as Moody’s Analytics Chief Economist, Mark Zandi says of today’s Labor Department report, “I think it’s a very positive report, unambiguously.” As CNN reported, the 200,000 jobs added in December boosted 2010's total to 1.6 million jobs added for the year. Most economists agree that number would have been higher if not for numerous factors dragging down the economy in the 2^nd quarter last year and the recent turbulence in Europe.

Last spring the devastating earthquake and subsequent tsunami in Japan, the world’s 3^rd largest economy, reverberated through the global markets. In the summer, the Debt-Ceiling standoff here in the United States created much uncertainty and stalled positive growth up to that point for 2010 as recalcitrant Republicans threatened to allow the country to default on its debts for the first time in our nation’s history. And then most recently, the Euro-Zone crisis once again put investors and the markets on shaky ground. Accordingto John Canally, economic strategist at LPL Financial, “The Europe situation created uncertainty, and uncertainty was used as a reason not to hire until now.”

Even that, however, belies a troubling fact. Consumer confidence was up in November and December and people were spending for the holidays in record numbers. Black Friday sales soared and as a result, retail saw heavy gains in employment as well as restaurants and food services. The biggest gains were in transportation, especially courier services hiring for the holidays. With the holidays now over and people reassessing their bank accounts, January could see a flurry of layoffs again and a rise in unemployment. Plus, jobs in retail and the food services industry are generally low or minimum wage jobs. If the unemployed are taking drastic pay cuts just to find temporary work, that may not necessarily improve their living standard or take them off the job market. Not all the data suggests this is the case, though. Some believe there are signs of real economic life budding here.

"It's one of those things where you look at that and say, 'That would be really cool if that continues,' " says Diane Swonk, an economist with Mesirow Financial, speaking of a recent ADP report, a payroll processing company. The report showed an estimated 325,000 jobs gained in the private-sector in December. In a statement to The New York Times, Ms. Swonk said most of the new jobs in the ADP report were with small businesses since, generally, only small companies use payroll companies, and small business is the job growth engine. If it's revving, there's good reason to believe that hog will be hitting the road in no time.

Huntsman Lands Big Endorsement

Today, Republican presidential candidate Jon Huntsman received a major boost to his campaign just five days before the New Hampshire primary next Tuesday night. The Boston Globe, Massachusetts’ most influential newspaper, endorsed the former Utah Governor as their pick for the Republican nominee for 2012. This is big news for the Huntsman campaign, which has seen anemic support so far throughout the Republican race and it may also come as a surprise to some since Mitt Romney, current frontrunner for the nomination, was once the paper’s state governor. It may come as a surprise to everyone, except Romney himself. The Globe in the 2008 campaign endorsed Sen. John McCain, who eventually won the nomination. With the primary so close, it’s difficult to say if this endorsement is too little, too late for the Huntsman campaign, or if it will provide a flurry of media attention and support in the waning days before the primary, similar to former Sen. Rick Santorum before the Iowa caucus Tuesday night. With the top-tier of candidates so tight and many republicans still undecided, this endorsement could be just what Huntsman needs to finally make a move towards the top.

Republican voters seem, at least before Romney’s narrow Iowa caucus victory earlier this week, reluctant to pick and stay with a candidate. The field has seen Michelle Bachmann (dropped out of the race after finishing last in Iowa), Herman Cain (dropped out), Rick Perry (back in Texas to reassess his campaign after a 5^th place Iowa finish), and Newt Gingrich all at one time taking the top spot in polling. Ron Paul has seen steadily increasing numbers and has the most ardent supporters. Paul feels so strongly about the loyalty of his base he has not yet ruled out running as a Third-Party candidate in the general election. And there’s Huntsman, who has run a steady campaign in New Hampshire (he did not participate in the Iowa caucuses), but has seen very little support come his way. The Globe’s endorsement may help change all that. Romney leads comfortably in New Hampshire, but a strong surge from Huntsman, possibly moving him into 2^nd or 3^rd in the Republican race could upend the field and bring many of these candidates back down to earth. Just look at the end to the Globe piece:

                “But even if Romney emerges as the nominee, it matters how he gets there. Already, the religious Right, represented by Rick Santorum, and Tea Party activists, represented by Ron Paul, have pushed Romney in unwanted directions. In New Hampshire, Republican and independent voters have a chance, through Huntsman, to show [Romney] a sturdier model. Jon Huntsman would be a better president. But if he fails, he could still make Romney a better candidate.”

Romney is, in view of many analysts, a moderate pandering to the far Right in order to secure the nomination, and that should he win the presidency, he’ll be much less conservative than the party wants (probably the reason voters are reluctant to pick him and constantly looking elsewhere for a viable conservative they can support). And as the Globe points out, “Huntsman has been bold” when it comes to his beliefs and values, and contrary to Romney’s denunciation of all-things-Obama, his unsubstantive vision of repeal, repeal, repeal while speaking little of what he would replace it with, Huntsman has consistently laid out his goals for the future.

A link from Huntsman's campaign website provides a detailed overview of some of Huntsman’s signature goals if elected president. But there are a few items that I have been watching with Huntsman for several months now.

Huntsman opposes the notion that ‘corporations are people’ and the controversial decision of the Supreme Court in early 2010 in the Citizens United case. The entire Republican field has endorsed the decision of the court and none find it controversial nor view it as a threat to our democracy. It is, and Huntsman is the only candidate who rightfully believes so. Mitt Romney on the other hand was against the idea of granting “personhood” to corporations until, or course, he needed to raise cash for his campaign and very publically proclaimed to a worried gathering of supporters when questioned on the decision, “Corporations are people, my friend,” then dismissively went on to another topic.

Jon Huntsman refuses to accept that global warming is a natural trend and wants to reduce our carbon footprint, reduce our emissions, and strongly supports turning our economy off foreign oil, as well as fossil fuels all-together, and move the country towards a green economy so that we can compete with the $5 Trillion alternative fuel industry emerging in China, India, and the rest of the world.

And finally, Governor Huntsman has been advocating the break-up of “Too Big to Fail” banks, recognizing their involvement, deceit, negligence, and criminal activity that lead to the housing crash and ultimately the Great Recession. Rightfully, Mr. Huntsman has bemoaned the Obama Administration and Congress for failing to address and change the systemic issues of the financial services industry with the Dodd-Frank Act that was passed into law in 2011. He believes lawmakers failed to pass meaningful reform.

I do not necessarily agree with Mr. Huntsman on everything. I do not like that he is basing his plans for entitlement reform on Paul Ryan’s deficit reduction plan, which essentially ends Social Security as we know it. Huntsman seems willing to expand domestic oil production, which I think could pave the way for approval of the Keystone oil pipeline, the benefits of which are considered by many wildly over exaggerated, and threatens vulnerable environmental areas throughout the country. But what I do not want to happen is come November, I’m casting my vote to re-elect President Obama simply because the guy standing at the other podium is so dangerous to human rights, so neoconservative in their views on tax cuts and military spending, so disastrously unqualified, that I have no choice. If Jon Huntsman wins the GOP nomination, he will also force President Obama to become a better candidate.

New York City Council Rules Against Citizens United

The New York City Council today voted against corporate personhood and the Citizens United decision set down by the Supreme Court in January of 2010. Expressing concern that granting corporations the same rights as individuals, the ruling will create an imbalance in the election of lawmakers and city officials by allowing unfettered and unchecked contributions into campaigns threatening our very democracy. There is a growing movement across the country to pass a Constitutional amendment to disavow the notion that corporations are people and thus not granted the same rights as individuals. Seven other city councils across the country have passed similar measures, Los Angeles being the most notable prior to today, and four amendments were introduced in Congress in 2011 for just such a thing. For an amendment to be ratified, both houses of Congress must pass the law with two-thirds vote.