Hope you have been enjoying the holidays and have a Happy New Year!
(Image via Econmatters)
For your reading pleasure…
Senate approves "fiscal cliff" deal, crisis eased
By David Lawder and Richard Cowan
(Reuters) – The Senate moved the U.S. economy back from the edge of a "fiscal cliff" on Tuesday, voting to avoid imminent tax hikes and spending cuts in a bipartisan deal that could still face stiff challenges in the House of Representatives.
In a rare New Year's session at around 2 a.m. EST (0700 GMT), senators voted 89-8 to raise some taxes on the wealthy while making permanent low tax rates on the middle class that have been in place for a decade.
But the measure did little to rein in huge annual budget deficits that have helped push the U.S. debt to $16.4 trillion.
The agreement came too late for Congress to meet its own deadline of New Year's Eve for passing laws to halt $600 billion in tax hikes and spending cuts which strictly speaking came into force on Tuesday.
But with the New Year's Day holiday, there was no real world impact and Congress still had time to draw up legislation, approve it and backdate it to avoid the harsh fiscal measures.
That will need the backing of the House where many of the Republicans who control the chamber complain that President Barack Obama has shown little interest in cutting government spending and is too concerned with raising taxes.
All eyes are now on the House which is to hold a session on Tuesday starting at noon (1700 GMT).
WASHINGTON CELEBRATES SOLVING TOTALLY UNNECESSARY CRISIS THEY CREATED
WASHINGTON (The Borowitz Report)—Official Washington was in celebration mode on New Year’s Day after kind of averting a completely unnecessary crisis that was entirely of its own creation.
“This deal proves that if we all procrastinate long and hard enough, we can semi-solve any self-inflicted problem at the very last minute in a way that satisfies no one,” said Senate Minority Leader Mitch McConnell (R-Kentucky).
Why the White House thinks it’s winning the ‘fiscal cliff’
Posted by Ezra Klein
Consider the ongoing fiscal cliff negotiations from the White House’s perspective.
The specifics of the potential McConnell-Biden deal are fluid, but the bottom line, at the moment, seems to be this: It raises taxes by $600 billion over 10 years, secures important Democratic priorities like unemployment insurance and the stimulus tax credits, and doesn’t include any spending cuts of note.
Here are the details, as multiple sources close to the talks have described them to me: The top tax rate rises to 39.6 percent for individuals making more than $400,000 and families making more than $450,000. Capital gains and dividends will be taxed at 20 percent with the same income thresholds. The Personal Exemption Phaseout (PEP) is set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000. The AMT is patched permanently. The estate tax would exempt estates up to $5 million and tax them at 40 percent above that.
The various business tax credits — R&D, wind, etc — would be extended through 2013, as would unemployment insurance. The stimulus tax credits — namely, the expansions of the Earned Income Tax Credit, the Child Tax Credit, and the college credit — would be extended for five years, which is hugely important to the White House. The scheduled cuts to doctors in Medicare would be averted for a year through spending offsets that neither side considers injurious. The treatment of the sequester is still up in the air, as the president is refusing to offset it unless revenues are part of the mix.
Not so good news for JP Morgan:
Court Rules Unrecorded Mortgages Received Through The FDIC Receivership Of WaMu Are Voidable
By Steve Dibert, MFI-Miami
On the Friday before Christmas, while the media was focused on the funerals of the victims of the Sandy Hook massacre and pre-Christmas retail sales figures, the Michigan Supreme Court quietly handed down a significant ruling that will affect nearly $3.75 billion worth of mortgages former Washington Mutual mortgages that JPMorgan Chase acquired from the FDIC after Washington Mutual went into FDIC receivership in 2008.
The Michigan Supreme Court upheld a Michigan Court of Appeals ruling from January that calls for a strict interpretation of a Michigan law that states that if a foreclosing party is not the originating note holder they must be able to show a record chain of the mortgage.
MCL 600.3204(3) states:
If the party foreclosing a mortgage by advertisement is not the original mortgagee, a record chain of title shall exist prior to the date of sale under section 3216 evidencing the assignment of the mortgage to the party foreclosing the mortgage.
Keep reading: MI Supreme Court Rules $3.75B Of JPMC Mortgages Are Voidable | MFI-Miami.
The middle class languishes as the super-rich thrive
Washington's proposed budget solutions are ever more irrelevant to the problems at hand while being more protective of the 1%.
By Michael Hiltzik
The good news for the U.S. economy as we enter 2013 is that the election's over. The bad news is that the election's over.
What's good about it is that both parties in Washington can shed their preoccupation with the campaign theatrics that dominated our long national voyage from pre-primary jockeying through election day.
Yet the most dispiriting thing about the campaign's end is that the economic challenges facing the majority of Americans remain unaddressed. As these words are being written, the end-of-year deficit debate in Washington remains largely unresolved.
UC Berkeley economist J. Bradford DeLong observed last week that we're not heading toward the fiscal cliff so much as waiting for the "austerity bomb" to detonate. The lighted fuse on that bomb, he computed, has already cut likely growth in real gross domestic product for 2013 to 2.5% from 3%.
By Lambert Strether. Originally published at Corrente.
Izvestia: “Tentative Accord Reached to Raise Taxes on Wealthy”. Pravda: “Obama, Republicans reach deal on fiscal cliff; Senate vote expected tonight”. Man, I’m experiencing this tremendous body hit, a huge relief from tension. Not. And maybe I’m too cynical…
… but when you compare the Eisenhower top rate (91%) with the piddling 39.6% in this “tentative accord,” it all seems less exciting.
Especially when you know that the next move is cuts. Ezra Klein lays out the next rounds of kabuki*:
It would be going too far to say White House officials are thrilled with this package. But it looks pretty good to them. As they see it, it sets up a three-part deficit reduction process. Part one came in 2011, when they agreed to the Budget Control Act, which included more than a trillion dollars in discretionary spending cuts. Part two will be this deal, which is $600 billion — and maybe a bit more — in revenue. And part three is still to come, but any entitlement cuts that Republicans want will have to be matched by revenues generated through tax reform. If Republicans want $700 billion in further spending cuts and the White House insists on $700 billion in tax reform, they’ll end up with more revenue than in Obama’s final offer to House Speaker John Boehner.
But again, again, again, entitlement cuts and tax increases (especially on the rich) are not commensurate:
A “sacrifice” where some give up luxuries and others give up necessities is in no way “shared.” A marginal sacrifice for the rich is not commensurate to core sacrifices for the rest of us. But the tropes of official Washington carefully brush this reality away.
Continue >Military Must Prep Now for ‘Mutant’ Future, Researchers Warn, Wired
BY DAVID AXE
The U.S. military is already using, or fast developing, a wide range of technologies meant to give troops what California Polytechnic State University researcher Patrick Lin calls “mutant powers.” Greater strength and endurance. Superior cognition. Better teamwork. Fearlessness.
But the risk, ethics and policy issues arising out of these so-called “military human enhancements” — including drugs, special nutrition, electroshock, gene therapy and robotic implants and prostheses — are poorly understood, Lin and his colleagues Maxwell Mehlman and Keith Abney posit in a new report for The Greenwall Foundation (.pdf), scheduled for wide release tomorrow. In other words, we better think long and hard before we unleash our army of super soldiers.
If we don’t, we could find ourselves in big trouble down the road. Among the nightmare scenarios: Botched enhancements could harm the very soldiers they’re meant to help and spawn pricey lawsuits. Tweaked troopers could run afoul of international law, potentially sparking a diplomatic crisis every time the U.S. deploys troops overseas. And poorly planned enhancements could provoke disproportionate responses by America’s enemies, resulting in a potentially devastating arms race.
“With military enhancements and other technologies, the genie’s already out of the bottle: the benefits are too irresistible, and the military-industrial complex still has too much momentum,” Lin says in an e-mail. “The best we can do now is to help develop policies in advance to prepare for these new technologies, not post hoc or after the fact (as we’re seeing with drones and cyberweapons).”
(Photo source: Lockheed Martin/Wired)
