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DealBook: Indian Tire Maker to Buy Cooper Tire for $2.5 Billion

June 12, 2013 by Leave a Comment

One of India’s largest tire makers, Apollo Tyres, announced a deal on Wednesday to acquire the Cooper Tire and Rubber Company for $2.5 billion in cash.

The acquisition would give Apollo a major foothold in the United States, the world’s second-largest auto market after China. Cooper, which focuses on passenger and light- and medium-truck replacement tires, is the fourth-largest tire maker in North America. Its brands include Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.

Under the terms of the deal, Cooper shareholders will receive $35 a share in cash – a 42.5 percent premium to its closing stock price on Tuesday and a 40 percent premium to Cooper’s 30-day volume-weighted average price. The Economic Times of India reported in October that the two companies were near a deal.

In premarket trading, shares of Cooper were up more than 40 percent.

The combined company will be the seventh-largest tire company in the world, with $6.6 billion in total sales.

“This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world,” Onkar S. Kanwar, chairman of Apollo, said in a statement.

Cooper, based in Findlay, Ohio, has its origins in a business founded in 1914. As of the end of last year, it employed 13,550 worldwide. The company said it would continue to recognize its labor unions and honor the terms of collective bargaining agreements.

Apollo, based in Gurgaon, India, near Delhi, was founded in 1972. It has plants in India, the Netherlands and South Africa.

Morgan Stanley and Deutsche Bank and the law firms Sullivan Cromwell and Amarchand Mangaldas Suresh A. Shroff Company advised Apollo. The investment firm Greater Pacific Capital acted as strategic and financial adviser to Apollo.

Bank of America Merrill Lynch and the law firm Jones Day advised Cooper.

Article source: http://dealbook.nytimes.com/2013/06/12/indian-tire-maker-to-buy-cooper-tire-for-2-5-billion/?partner=rss&emc=rss

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Economix Blog: Labor Sees Bright Spots in Membership Trends

January 28, 2013 by Leave a Comment

The American labor movement received some bitter news last week when the Bureau of Labor Statistics released its annual report on union membership – it showed a 398,000 overall decline in union membership, with the percentage of workers in unions dropping to 11.3 percent, the lowest rate in nearly a century.

But some union leaders saw some important silver linings in the gloomy report — especially the surprisingly strong growth in labor’s ranks in California. The bureau reported a jump of 110,000 in the number of union members in California, to 2.49 million (meaning that in the 49 other states, the overall loss was 508,000 members).

“There is a significant organizing consciousness among unions in California that I haven’t seen in other parts of the country,” said Kent Wong, director of the Labor Center at the University of California, Los Angeles. “And a major factor in California’s success is there has been a very aggressive attempt on the part of many unions to organizing immigrant workers.”

The jump in union membership in California is tied to the one other bright spot for unions in the bureau’s report. While union membership among whites fell by 547,000 last year (to 11.3 million), union membership among Latinos jumped by 156,000 last year (to 1.98 million) while increasing for Asian-Americans by 45,000 (to 668,000) — although the percentage of Asian-American workers in unions actually dropped, to 9.6 percent, as the overall number of Asian-Americans employed jumped sharply.

In California, there are vigorous campaigns to unionize car-wash workers, recycling workers and the truck drivers who transport freight to and from the ports of Long Beach and Los Angeles. And in recent years, labor unions have organized about 200,000 home care aides in California.

Immigrants account for a high percentage of workers in those groups.

“The Latino population is growing in California,” said Art Pulaski, executive secretary-treasurer of the California Labor Federation, the federation of the state’s unions. “Latinos and other immigrants are more prone to join unions. A lot of Latinos developed a historic sense of economic and social justice in their home countries.”

Mr. Pulaski said a big reason that unions in California are doing better than those in other states is that California’s unions have built impressive political power, helping the Democrats clinch a two-thirds supermajority in both houses of the state legislature. Thanks to their political power, California unions have, for instance, persuaded lawmakers in much of the state to make it easy for unions to organize the 200,000 home care aides.

And Mr. Pulaski said the organizing victories and progressive politics in California create a hospitable hothouse atmosphere for organizing, encouraging other workers to unionize.

Professor Wong said, “The unionization victories at four car washes in Los Angeles have gotten a lot of attention among Latinos. They have really resonated.”

(Union membership did rise in a handful of other states, but more modestly than in California. Those states included Georgia, Nevada, North Carolina, Oklahoma and Texas.)

All this is far different from what has happened in the Midwest over the last two years. Republicans in Wisconsin enacted a far-reaching law that curbed the collective bargaining rights of most of the government employees in that state – making many government workers conclude that there was little reason to remain in their union. Ohio Republicans enacted a similar law in 2011, but Ohioans repealed that anti-union law in a referendum in November of that year.

Indiana’s Republican-dominated legislature enacted a “right to work” law last February that is likely to reduce union membership, and in Michigan, the Republican-dominated legislature and the Republican governor also enacted a “right to work” law last month. “Right to work” laws bar any requirement that workers at a unionized workplace pay any dues or fees to the union. Such laws often encourage workers to quit their unions, because by quitting they no longer have to pay union dues or fees.

Barry T. Hirsch, a labor economist at Georgia State University, said the anti-labor offensive in the Midwest had taken a heavy toll on union membership there. In just five Midwestern states — Illinois, Indiana, Michigan, Ohio and Wisconsin – union membership fell by 252,000 last year, according to the bureau’s report.

Professor Hirsch suggested that the reported drop-off in union members in the Midwest might be exaggerated because when questioners doing the household survey that was crucial to last week’s report went to workers‘ homes to interview them, some union members might have grown reluctant to acknowledge to the questioners that they belonged to a union because unions had taken such a public relations beating from government officials.

But Professor Wong of U.C.L.A. said he doubted that any union members questioned in the household survey would be too scared to acknowledge belonging to a union.

Mr. Pulaski, head of the California Labor Federation, foresees more unionization gains in California this year – including among port truck drivers and car washes and from the continued efforts by two of the nation’s most aggressive organizing unions, the Service Employees International Union and the California Nurses Association.

“I think we’re on the cutting edge of what unions are doing in the United States,” Mr. Pulaski said. In other words, he says, California unions have put together a silver linings playbook that unions in other states can learn from.

Article source: http://economix.blogs.nytimes.com/2013/01/28/labor-sees-bright-spots-in-membership-trends/?partner=rss&emc=rss

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Showdown at Italian Steel Plant Is Test of Monti and Economy

November 27, 2012 by Leave a Comment

The developments at the Ilva plant, in the southern city of Taranto, came after a court on Monday ordered the plant’s steel seized, claiming that pollutants resulting from production have driven up cancer rates in the area.

The crisis raised questions about whether the year-old government of Prime Minister Mario Monti was able to protect the environment while creating industrial growth in a worsening economic climate, especially in Italy’s less-developed south. At least 20,000 jobs are at stake.

The government, which faces national elections early next year, called for an emergency meeting with the plant’s management, local authorities and labor unions in Rome on Thursday, and said it would discuss the issue at a cabinet meeting on Friday.

“We’re working to address and resolve this situation,” Environment Minister Corrado Clini said in televised remarks on Tuesday. He said the government was working to find ways for the company to invest in improving its infrastructure without stopping production, “and to clean up the environment and protect workers’ health.”

In a statement, Ilva said the seizure violated the government’s authorization to allow it to continue production while it tries to address the health and environmental concerns. It said stopping production would cause the “immediate and unavoidable” closing of its plant in Taranto, in the heel of Italy’s boot, and its other facilities.

Metalworker unions called a strike to coincide with the meeting in Rome.

“Some have worked here for 30 years who would never have imagined such a dramatic evolution of the situation,” Rocco Palombella, the secretary of Uilm, the metalworkers union, said in a statement. “There is anarchy in Taranto.”

More than 1,000 workers demonstrated at an Ilva processing plant outside Genoa, in northern Italy, on Tuesday, and said they would be forced to stop work in four days without steel supplied from Taranto.

In 2011, Ilva produced 8.5 million tons of steel, or 30 percent of Italy’s steel output, and experts warned that the plant closure would have a ripple effect throughout Italian industry.

“If it closed, it would have roughly the same impact on employment and the Italian economy as if Fiat closed,” said Gianni Dragoni, a reporter with Il Sole 24 Ore, a financial newspaper, and the author of a book on Ilva.

The crisis first erupted in July, when magistrates ordered the closure of blast furnaces at the Taranto plant. That process has not been completed.

Analysts noted that Ilva’s parent company, Riva Group, had lost some of the political support it had during the government of Prime Minister Silvio Berlusconi, when Riva was one of the largest investors in a deal to buy Italy’s ailing flagship airline, Alitalia. Today, “It’s a showdown between the company and the magistrates,” Mr. Dragoni said. Rather than investing to make the plant’s infrastructure more environmentally friendly, “The message seems to be, ‘Either I’m going to pollute, or I’m going to close.’ ”

Last month, courts ruled that Ilva could continue cold-rolling production if it cut down emissions and cleaned the plant. Judges have said the emissions are a factor in the area’s cancer rates and other health woes. Some studies have shown that rates of certain cancers are significantly higher around Taranto than in surrounding areas. Ilva denies any connection between its plant and the region’s cancer rates.

On Monday, magistrates ordered the arrest of seven people, including the founder and president of Riva, on charges of bribing officials to cover up the environmental hazards at the plant. On Tuesday, five more people were placed under investigation.

Gaia Pianigiani contributed reporting.

Article source: http://www.nytimes.com/2012/11/28/world/europe/showdown-at-italian-steel-plant-is-test-of-monti-and-economy.html?partner=rss&emc=rss

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Italy Plans New Measures to Liberalize Economy

January 21, 2012 by Leave a Comment

The measures come as Mr. Monti, a technocrat who assumed power in November, races to prevent Italy from falling into an “austerity trap,” in which the $40 billion package of tax increases and spending cuts passed in December to trim the budget deficit would cause a further contraction. The Bank of Italy has said that the country’s economy is expected to shrink 1.5 percent this year, while the International Monetary Fund forecast that it would contract 2.2 percent.

The changes, which are expected to be submitted to Parliament for approval soon, include allowing gas stations to choose their providers, speeding up the pace of the legal system, adding 5,000 more pharmacy licenses and accelerating the liberalization of local services. They would also add 500 slots for notaries.

“Italy’s economy has for decades been hindered in its economic and social growth by three big problems: insufficient competition, inadequate infrastructure and too much red tape,” Mr. Monti said at a news conference in Rome after an eight-hour cabinet meeting.

He said that his government, which in December raised the retirement age and re-introduced an unpopular property tax, had asked Italians for “many sacrifices.” But he said the new measures would help protect them from hidden costs that increase the cost of living.

Mr. Monti said that next week, his cabinet would approve a package of measures aimed at cutting bureaucracy and would continue work to loosen the country’s rigid labor laws in consultation with labor unions.

At the news conference, Industry Minister Corrado Passera said the cabinet had voted to release 5.5 billion euros, $7.1 billion, to finance or speed up infrastructure projects.

Economists said the new package of measures was the best Mr. Monti could do, as he struggled to encourage growth and cut spending at the same time.

“This was one of the only ways to jump-start the economy at zero cost because the government can’t give people money, tourism is no longer a draw and Italy has lost its attractiveness to foreign investors,” said Roberto Ravazzoni at Bocconi University in Milan.

Opening up the economy to greater competition was “the only way to go, if you want to give citizens some breathing room,” Mr. Ravazzoni said.

While it remains to be seen how much effect opening the so-called closed professions will have on growth, it is an important symbolic measure aimed at weakening the guilds and professional networks that inhibit competition and protect insiders, keeping prices high and making it difficult for young people to enter the labor market.

“More competition also means more opening, more space for the young,” Mr. Monti said, adding that the changes would create less space for “privilege and more recognition for merit.” The measures were “not only a big economic operation, but also a big social action,” he added

Such antiprotectionist measures have foundered in Greece, where guilds have powerful political connections that have helped block change. Mr. Monti faces much the same pressures as he tries to encourage growth and investment in Italy, which with a debt equivalent to 120 percent of its gross domestic product is the most indebted of the euro zone nations after Greece.

In the coming days, Italian lawyers are planning to go on strike to protest measures to reduce their minimum fees, and gas stations and other businesses are planning strikes or sit-ins. Pharmacies are upset at plans to allow more licenses. Prescription medications can be sold only in pharmacies.

After days of wildcat taxi strikes that have paralyzed Rome and other cities, the government backed down on its pledge to increase the number of taxi licenses.

The government said it would set up a new transport authority to discuss new licenses with local mayors. The taxi drivers are important supporters of Rome’s mayor, Gianni Alemanno, a player with the center-right People of Liberties party led by former Prime Minister Silvio Berlusconi, which is supporting Mr. Monti’s government.

At a hearing in Milan on Friday in one of his continuing corruption trials, Mr. Berlusconi, who left office in November, said that the austerity recipe in Italy had “not borne fruit,” the news agency ANSA reported. “We’re waiting to be called back,” he added.

Elisabetta Povoledo reported from Rome, and Rachel Donadio from Athens. Gaia Pianigiani contributed reporting from Giglio, Italy.

Article source: http://feeds.nytimes.com/click.phdo?i=14e6f39bb07c39795c56853a3d738822

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Italian Premier, Monti, Presents Plan for Economic Growth

December 30, 2011 by Leave a Comment

Devised to spur growth in a country that has seen little of it in the past 15 years, the proposals would include liberalizing Italy’s closed professions and guilds, encouraging competitiveness and modernizing the nation’s outdated infrastructure.

The government will also tackle labor reform, a thorny issue for labor unions as well as for some political parties that support Mr. Monti’s government. To offset the criticism that such measures will undoubtedly spur, the prime minister said those changes would be matched by bolstering support to welfare services for the unemployed and for Italian youths.

“Italy is making a great effort,” Mr. Monti said. “It is looking to build a better future on less ephemeral foundations, to safeguard future generations.”

Mr. Monti pitched the master plan as the follow-up to changes, nicknamed “Save Italy,” that were passed this month by Parliament, and were heavily tilted toward raising revenues through taxes. He had wanted to include some of the proposed new measures in that plan, but backed down after opposition from the political right and powerful guilds.

It is unclear if Mr. Monti will have any better chance of winning approval for such fundamental changes next year, but he has one thing working in his favor: None of the country’s main political parties want to topple his government of technocrats yet because none feel they could do well enough in elections.

For now, Mr. Monti’s package was more a wish list than a specific plan he could present to Parliament, but he said that some of the measures would be drafted in time to present to euro zone finance ministers who will meet in Brussels on Jan. 23.

The broad outlines of change won plaudits on Thursday from two of the main political parties — the two that are the most important to Mr. Monti’s effort to win passage — though their enthusiasm may wane as the specifics become clearer.

Pier Luigi Bersani, the leader of the center-left Democratic Party, said Mr. Monti’s analysis of the Italian situation was a “dose of reality after years of fables.” And lawmakers with the party of former Prime Minister Silvio Berlusconi, who was ousted over the country’s economic troubles, said Mr. Monti had touched the right chords for growth. The lawmakers, however, also said they would need to see the content of the proposals before giving the plan their full support.

In a hopeful sign, Italy sold another bundle of government debt on Thursday at levels well below the last bond auction, suggesting more confidence in Italy’s economic future, at least in the short term. But the continuing high yields on the benchmark 10-year bonds — just shy of the 7 percent rate at which other euro zone governments were forced to seek bailouts — pointed to continuing challenges ahead.

Italy, the euro zone’s third-largest economy, must refinance almost 200 billion euros in government debt (about $260 billion) by April, and if borrowing rates remain high, the country could face a solvency crisis that could threaten the stability of the euro.

At the Thursday sale, the 10-year bond was priced to yield 6.98 percent, down from a euro-era record high for Italy of 7.56 at the previous sale in late November. The Italian Treasury also sold bonds due in 2014 to yield 5.62 percent, down from 7.89 percent.

Despite the encouraging news, Italy was unable to sell all the bonds it wanted to on Thursday, selling 7 billion euros’ worth (about $9 billion), rather than the target of 8.5 billion euros (about $11 billion).

In an auction of 9 billion euros (about $11.6 billion) in short-term Treasury bills on Wednesday, rates fell by half from previous levels. But the sale on Thursday was seen as a more significant signal of market sentiment about the longer-term outlook of Italy’s struggling economy.

Analysts had said that much of the buying on Wednesday came from European banks that had just loaded up on cheap, three-year loans from the European Central Bank, and were looking for easy profit.

Bloomberg News and Reuters reported that the European Central Bank had bought small quantities of Italian bonds on Thursday on the open market after the closely watched auction showed 10-year yields still close to 7 percent.

Mr. Monti said Thursday that he was encouraged by the bond auctions, but he warned that rough times were ahead. “We absolutely don’t consider the market turbulence to be over,” he said. “There is much more to do,” he added, but said a long-term solution required that “work must be done in Europe” within a more integrated framework.

President Giorgio Napolitano was more blunt, chiding European leaders on Thursday for not being up to the challenges of economic globalization. In a letter published in the Rome daily newspaper La Repubblica, Mr. Napolitano said European leaders seemed to be having trouble finding a “new balance between economic and social policies,” and called on them to overcome “dogmas and national limits” and act with more courage to bolster troubled economies.

Some analysts remain skeptical that Mr. Monti’s new proposals can do enough to spur growth while Italy is under so much pressure by Germany and other European countries to cut spending.

If Italy is forced to pursue policies that bind it to reducing its debt and balancing its budget by 2013, then “welcome to a future of stagnation and recession,” said Gustavo Piga, an economist at the University of Rome, Tor Vergata. Italy need look no further than Greece to see the effects of too much cost-cutting, he said, and he noted that debt over gross domestic product was still rising in Greece because gross domestic product was collapsing.

Mr. Piga said that the proposals Mr. Monti presented Thursday were too vague to comment on, but that reforms generally take a long time to generate growth, particularly in a recession. “Do you think that if you liberalize Roman taxi drivers you’ll generate growth tomorrow?” he asked. “It’s important to start reforms, but you also need to stimulate demand, which will raise G.D.P.”

Article source: http://feeds.nytimes.com/click.phdo?i=15a2360354a73d346c9caf8458b80d28

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Italy’s Leader, Monti, Offers Tax Increases, Not Deep Reform

December 16, 2011 by Leave a Comment

Mr. Monti’s difficulty in carrying out economic reforms could weaken the underpinnings of the accord reached in Brussels last week in which European leaders agreed to greater political coordination to support the euro, combined with pressure to bring Europe’s debt-ridden southern fringe back to growth.

In addition to austerity measures, heavily indebted countries like Italy and Greece are expected to carry out structural reforms that experts say may eventually make their economies competitive with those in northern Europe, particularly Germany’s. That lack of competitiveness has produced a chronic balance of payments deficit in the southern countries that economists say lies at the heart of the euro zone’s troubles.

It was hoped that Italian lawmakers would rally around Mr. Monti’s government of technocrats and make the tough decisions they have avoided in the past. But if his experience with this week’s measures is any guide, his government is bound to hit strong headwinds from vested interests that grip every corner of Italy’s complex, neofeudal economy.

After days of political wrangling in Parliament, the Monti government bowed to pressure from the right — most notably from the party of the former prime minister, Silvio Berlusconi — and dropped some elements of the $40 billion package of spending cuts and revenue increases, including a wealth tax and the speedy liberalization of closed professions like taxi drivers and pharmacists, a plan that drew protests from their powerful guilds. It also scaled back a newly reinstated property tax on primary residences.

After protests from the left and labor unions, some counting more pensioners than workers among their members, Mr. Monti reinstated inflation increases on low-level pensions that he said would make the measures more equitable.

Mr. Monti has said he wants to make Italy more equitable — especially for young people and women, whom he has called a “wasted resource” — and to help the economy grow. But even as he pledged on Thursday to address labor reform and other structural changes in the coming weeks, he has run up against a wall of vested interests.

“In Italian society, there is no division between left and right; there’s a division between those who are inside or outside some organized groups,” said Sergio Fabbrini, the director of the School of Government at Luiss Guido Carli University in Rome. “All the main political parties from left to right represent the insiders. The left represents the pensioners, the trade unions. The right represent various insiders: the lawyers’ organizations, notaries.”

The only way for young people and women to be represented “is to have a technical government,” he added, “but of course a technical government will have to pass through the approval of the Parliament. And here again the insiders are well organized.”

For Friday, when the lower house is expected to approve the somewhat watered-down package in a confidence vote, labor unions have called a nationwide transport strike and have vowed more demonstrations. This week, Susanna Camusso, the leader of the largest labor union, C.G.I.L., said the country risked a “social explosion” over pension reform.

But for the most part, the new austerity package is based on tax increases. It would reinstate a property tax on first homes, which Mr. Berlusconi had eliminated as an election promise in 2008. It would also impose a 1.5 percent tax on revenues brought into Italy under an earlier tax amnesty, and add taxes on cigarettes and gas, which is close to 1.70 euros per liter, or more than $8 a gallon.

The governor of the Bank of Italy, Ignazio Visco, said last week that the measures would increase Italy’s tax burden to 45 percent, a level that businesses say is unsustainable.

Article source: http://www.nytimes.com/2011/12/16/world/europe/italys-leader-monti-offers-tax-increases-not-deep-reform.html?partner=rss&emc=rss

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Emergency Decree Puts in Place More Cuts in Italy

December 5, 2011 by Leave a Comment

The measures are meant to slash the cost of government, combat tax evasion and step up economic growth, so the country can eliminate its budget deficit by 2013. Mr. Monti took the steps in an emergency decree, which means they will take effect before he presents them to Parliament for formal approval.

Delivered ahead of a crucial summit meeting of European leaders this week, the new measures are aimed at showing that Italy — which is seen as both too big to fail and too big to bail out should it default on its immense debts — is committed to getting its finances in order.

The hope is that they will take some of the market pressure off Italy, whose borrowing costs have been pushed up in recent weeks to levels that have led other European countries to seek bailouts; once Italy has shown it is committed to austerity, the European Union can move ahead with broader plans to shore up the euro.

“If you want, call these the ‘Save Italy’ measures,” Mr. Monti said in a news conference after a cabinet meeting on Sunday, less than three weeks after taking office. “I wanted to give you a message of grave concern but also of great hope,” he told Italians, adding that he would work to spread the sacrifices with “equity” across the society.

A former European commissioner with no experience in the trenches of the Italian Parliament, Mr. Monti is expected to present the measures to both houses on Monday. Though the Parliament voted confidence in his government of technocrats by a wide margin last month, many legislators are reluctant to push through measures that might hinder their chances for re-election.

There are other hurdles as well. Labor unions are opposed to raising the retirement age, and industrialists say the measures are weighted too heavily toward tax increases that could stifle growth.

Mr. Monti, who is both prime minister and finance minister, faces the challenge of satisfying the demands of European leaders while making clear to Italians that they must take responsibility for solving the country’s longstanding structural problems.

“The huge public debt of Italy isn’t the fault of Europe; it’s the fault of Italians, because in the past we didn’t pay enough attention to the well-being of the young and the future adults of Italy,” Mr. Monti said. Speaking of his proposals, he said, “We have had to share the sacrifices, but we have made great efforts to share them fairly.”

Among the new measures announced Sunday are sharp cuts to regional governments that could significantly change Italian politics by crimping the flow of patronage spending.

There appears to be little room now for traditional Italian political maneuvering. Though Italy’s economy is the third-largest in the euro zone, it has no forward momentum; economists expect it to contract in 2012 and stay flat in 2013. Meanwhile, the cost of servicing the country’s debts is claiming an ever larger share of its budget.

Mr. Monti must also convince risk-averse Italians that there is much at stake. Silvio Berlusconi, who was prime minister until a few weeks ago, repeatedly told his countrymen that the economy was fine, even though youth unemployment was high and rising, growth was flat and prices were outstripping wages.

“You will never hear me ask for a sacrifice because Europe asks for it, just as you will never hear me blame Europe for things that we should do and that are unpopular,” Mr. Monti said. “I would rather be considered unpopular, rather than Europe, because you can do without me, but not without Europe.”

Mr. Monti’s proposals include reintroducing an unpopular property tax that Mr. Berlusconi abolished in 2008 to fulfill a campaign promise. The new measures would also prohibit cash transactions above 1,000 euros ($1,340), in the hope of making tax evasion harder; raise the country’s value-added tax by two points to 23 percent starting in September; and give incentives to businesses to hire new workers.

The country’s new welfare minister, Elsa Fornero, a pension expert, choked with emotion at the news conference as she explained how Italians would be asked to sacrifice today in order to make the pension system less “arbitrary” and “more equitable” for future generations.

The standard retirement age, now 60 for many women and 65 for most men, would quickly rise to 62 and 66, with incentives to keep working until age 70; the standard age for women would eventually rise to match that for men. Pensions would be based on the number of years of contributions, not on the worker’s salary at the time of retirement, as is common now.

Before the cabinet meeting, Emma Marcegaglia, the president of the business organization Confindustria, called the austerity measures “heavy but indispensable,” adding that “the next 10 days will decide whether the euro will survive or not.”

But Ms. Marcegaglia added that her group had asked the government to recalibrate the mixture of tax increases and spending cuts once the measures have been passed.

The leader of the center-left Democratic Party, which supports the Monti government, called for more measures to fight tax evasion, a very widespread problem in Italy.

Susanna Camusso, the president of CGIL, Italy’s largest labor union, said the austerity measures “deal a very harsh blow to the incomes of pensioners.” Raising the retirement age would be “unsustainable for so many workers who would see their retirement prospects shaken and delayed by many years of work.”

Article source: http://feeds.nytimes.com/click.phdo?i=9685640bc33d70d60a7e3b73ce681cce

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In California, a Push for Tax Increases on the 2012 Ballot

December 1, 2011 by Leave a Comment

But faced with the prospect of withering budget cuts and deficits that stretch through at least the middle of the decade, that may be about to change.

A near glut of initiatives that would raise taxes are being aimed at the November 2012 ballot. A group of Republican and Democratic business leaders and former state officials calling itself the Think Long Committee for California is drafting an initiative to raise $10 billion by expanding the sales tax to services, while reducing personal and corporate taxes. Gov. Jerry Brown, a Democrat, and legislators are negotiating the details of an income tax surcharge on the state’s top earners and for a sales tax increase that in its latest form would raise $6 billion.

In addition, labor unions want voters to approve even bigger sales and income tax increases, and environmental groups last week proposed an initiative to close a business tax loophole that they said would produce $1.2 billion for education and energy projects.

There are so many plans out there that some Democrats are warning about tax initiative gridlock on the ballot.

It is highly unlikely that all these initiatives will qualify for the ballot, and Democrats say they are working to make sure that not all of them do. Not incidentally, California’s formidable network of antitax groups is not about to be caught off guard and is confident about beating back the efforts at the polls.

Yet the sheer abundance of undisguised tax-increase proposals is the latest evidence that spending cuts in California, arguably deeper and further along than almost anywhere in the country, may be producing a reconsideration among voters about taxes and the value of government. Democratic leaders said the tax campaign marks the start of the backlash that many of them, starting with Mr. Brown, had predicted would set in as budget cuts turned into the reality of closed parks, shortened school years, a reduced number of police officers on the streets and, in the case of California, the early release of felons from overcrowded jails and prisons.

A survey of California voters conducted from Oct. 30 through Nov. 9 by The Los Angeles Times and the University of Southern California found that 64 percent of all respondents said they would pay more taxes if the money went to public schools, with support for taxes high among Democrats and independent voters. And voters in local elections across the state approved a variety of bond and tax measures last month, raising taxes on businesses, hotels and property owners to pay for schools and to offset reductions in services that communities and the state have imposed during these difficult years. Those results are now being seen as a harbinger of next year’s election.

“You get a sense among people that enough is enough,” said Darrell Steinberg, a Democrat who is the president pro tem of the Senate. “And frankly, there’s no choice. These cuts have done real damage. I know that, as one leader, I am not interested in making any more cuts.”

Dan Schnur, the director of the Jesse M. Unruh Institute of Politics at the University of Southern California, which oversaw the poll, said the findings suggested that voters were open to a tax increase.

“The poll results largely reinforce the local election results we saw,” he said, adding that “voters are a lot less reluctant to raise taxes when they are convinced that the money is going to be spent in their local community.”

Leaders of the state’s antitax coalition said they were confident that voters would continue to oppose any increases, no matter the severity of the cuts being imposed. “It looks like a $10 billion tax increase, and I don’t think there’s any way on God’s green earth that voters will approve that,” Jon Coupal, the president of the Howard Jarvis Taxpayers Association, said of the Think Long Committee. (Mr. Jarvis, who was a leader of the Proposition 13 campaign in 1978, died in 1986.)

Still, the backers of the Think Long plan said they have $20 million to run a campaign for their initiative. The committee is a powerful assembly of California figures, which could give it extra credibility in the fight. The members include Eric E. Schmidt, the chairman of Google; Gray Davis, a former Democratic governor; Eli Broad, a prominent philanthropist; and two former United States secretaries of state, Condoleezza Rice and George P. Shultz, both Republicans.

The committee’s tax overhaul proposal, one of a series of reforms it is hoping to put before voters, is intended to produce about $10 billion annually to eliminate the state’s debt and return money to the publicly financed school and university systems. It would reduce personal and corporate tax rates, but expand the sales tax to services like those provided by lawyers and accountants.

The plan currently being discussed by Mr. Brown and Democratic legislators would raise about $6 billion with a temporary surcharge on the top 1 percent of wage earners and a sales tax extension, with the money directed to state prisons.

Some union leaders are pushing a similar plan that would raise closer to $13 billion. And a group of environmentalists, led by Thomas F. Steyer, the founder of Farallon Capital Management in San Francisco, has proposed an initiative to close a loophole that has allowed out-of-state companies to avoid paying an estimated $1.1 billion in taxes to California. That money would go to education and to make buildings more energy efficient, which backers say would create thousands of jobs.

Mr. Steinberg says his main challenge is to avoid overloading voters. “Our goal is to pull all these disparate efforts together into a solid, passable initiative,” he said. “Do I think the mood is right? I do. When you look at how the middle class has been squeezed — and you see it mostly around the higher education campuses — there is a recognition that you can only cut important investments so much.”

The pro-tax activity comes as an independent legislative budget analyst announced on Nov. 16 that revenues were falling dramatically below state leaders’ projections in passing a budget in June. Under the terms of that spending plan, if revenues fall short by at least $1 billion, up to $2 billion in spending cuts will take effect, including trimming the school year by a week. That report projected the state would face a $13 billion budget shortfall next year.

Proponents of tax increases here have been forced to use the initiative process because California law requires a tax increase to be approved by two-thirds of the Legislature, a legacy of Proposition 13, and Republicans have made clear they will not give Democrats the votes to cross that threshold. “The initiative process is one of the reasons California has issues, but it also allows changes to happen if the Legislature has difficulty acting,” said Nicolas Berggruen, a billionaire investor who is the head of the Think Long Committee.

Under a measure approved this year, all initiatives must appear on a general election ballot. Tax increase proponents have concluded that November 2012, with a high Democratic turnout expected in a presidential election, would be more favorable for these initiatives than in a nonpresidential year, when opponents of tax increases are considered more likely to vote.

“The November 2012 ballot is going to be the political equivalent of bumper cars,” Mr. Schnur said. “What we have seen historically is that voters who are overwhelmed or overloaded with things tend to vote ‘no’ on everything.”

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Congress Passes Trade Deals, Ending 5-Year Standoff

October 13, 2011 by Leave a Comment

The approval of the deals with South Korea, Colombia and Panama is a victory for President Obama and proponents of the view that foreign trade can drive America’s economic growth in the face of rising protectionist sentiment in both political parties. They are the first trade agreements to pass Congress since Democrats broke a decade of Republican control in 2007.

All three agreements cleared both chambers with overwhelming Republican support just one day after Senate Republicans prevented action on Mr. Obama’s jobs bill.

The passage of the trade deals is important primarily as a political achievement, and for its foreign policy value in solidifying relationships with strategic allies. The economic benefits are projected to be small. A federal agency estimated in 2007 that the impact on employment would be “negligible” and that the deals would increase gross domestic product by about $14.4 billion, or roughly 0.1 percent.

The House voted to pass the Colombia measure, the most controversial of the three deals because of concerns about the treatment of unions in that country, 262 to 167; the Panama measure passed 300 to 129, and the agreement concerning South Korea passed 278 to 151. The votes reflected a clear partisan divide, with many Democrats voting against the president. In the Senate, the Colombia measure passed 66 to 33, the Panama bill succeeded 77 to 22 and the South Korea measure passed 83 to 15. Senator Harry Reid of Nevada, the majority leader, voted against all three measures.

The House also passed a measure to expand a benefits program for workers who lose jobs to foreign competition by a vote of 307 to 122. The benefits program, a must-have for labor unions, passed with strong Democratic support. The Senate previously approved the measure.

Proponents of the trade deals, including Mr. Obama, Republican leaders and centrist Democrats, predict that they will reduce prices for American consumers and increase foreign sales of American goods and services, providing a much-needed jolt to the sluggish economy.

“At long last, we are going to do something important for the country on a bipartisan basis,” said Senator Mitch McConnell of Kentucky, the minority leader.

However, Mr. Obama’s support for the measures has angered important parts of his political base, including trade unions, which fear job losses to foreign competition. Many Democrats took to the House floor Wednesday to speak in opposition to the deals.

“What I am seeing firsthand is devastation that these free trade agreements can do to our communities,” said Representative Mike Michaud, a Maine Democrat who once worked in a paper mill.

Both chambers raced to approve the deals before a joint Congressional session Thursday with the South Korean president, Lee Myung-bak.

The revival of support for the deals, originally negotiated by the Bush administration five years ago, comes at a paradoxical political moment, when both conservative Republicans and the Occupy Wall Street protesters have taken antitrade positions, albeit for different reasons. In a debate among Republican presidential candidates Tuesday night, Mitt Romney, the former governor of Massachusetts, accused China of manipulating the value of its currency to flood the United states with cheap goods, while populist sentiment on the left opposes the trade agreements because of the potential for American job losses.

Mr. Obama cited similar concerns in criticizing the agreements during the 2008 presidential campaign, but he later embraced the deals as a key part of his agenda to revive the economy. To win Democratic support, the White House reopened negotiations with the three countries to make changes demanded by industry groups and unions, and insisted that the expansion of benefits for displaced workers be tied to passage of the trade agreements.

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I.R.S. Ends Exemptions For 275,000 Nonprofits

June 9, 2011 by Leave a Comment

The I.R.S. announced on Wednesday that it had revoked the tax exemptions of 275,000 nonprofit organizations after they did not meet legal requirements to file annual tax forms.

The action shrinks the nation’s growing nonprofit sector by roughly 17 percent, to about 1.3 million charities, trade associations, membership groups and labor unions.

Lois Lerner, director of the division of the Internal Revenue Service that oversees tax-exempt groups, said the agency believed most of the organizations on the list were defunct, though there was really no way to know because so many of them simply could not be reached.

“In many cases, we didn’t have a good address because the last one was many years old and they hadn’t had to file since then because they weren’t big enough,” Ms. Lerner said.

Leaders of several nonprofit groups predicted disruptions and nasty surprises as a result of the I.R.S. action, but most said it was necessary.

“In the long run, it is going to be a good thing because academics, researchers, policy makers and others will have more accurate data on the nonprofit sector,” said Tim Delaney, chief executive of the National Council of Nonprofits, a trade association.

Until a change in federal law in 2006, only organizations with annual revenue of $25,000 or more — roughly one-third of the 1.6 million nonprofit groups — were required to file.

That law, the Pension Protection Act, required all organizations to file returns, but because it was embedded in 393 pages of a law that otherwise dealt with pension issues, many nonprofit groups did not know that.

When the deadline for complying with the law came last year, the I.R.S. realized as many as one-quarter of all nonprofit groups on the rolls, including charities as well as labor unions, membership organizations, trade associations and others, stood to lose their exemptions.

The agency issued a reprieve and redoubled its efforts to alert nonprofit groups of the responsibility to file. It reached out to state nonprofit associations and umbrella groups, asking for their help in getting out the word about the new requirement, and made a big push to get local news media to report on it. “I spoke to a different TV station every 15 minutes for an entire day,” Ms. Lerner said. She said the impact of that effort and others was “quite big,” with many groups taking advantage of a program that helped them avoid revocation if they complied by Oct. 15, 2010.

The Urban Institute’s National Center for Charitable Statistics analyzed the list of delinquent nonprofit filers that the I.R.S. released last year. Roughly 90 percent of them had never filed a tax return, said Katie L. Roeger, assistant program director at the center, suggesting that they had never raised $25,000 in a year.

About one-quarter of them got tax exemptions before 1980, she said, and may have gone out of business without telling the I.R.S.

“A lot of these organizations are in human services or community improvement,” Ms. Roeger said. “Things like local sports and recreation clubs, country clubs, amateur sports.”

Most of a dozen calls made to groups on the list ended at disconnection recordings. Gary Spiers, president of the Pasadena Roving Archers, a group in Pasadena, Calif., that is on the list, said in an e-mail that it had filed a tax form reflecting the year that ended in July 2010.

No one answered at the Alliance of Polish Clubs in the U.S.A. in Chicago, another group on the list, but its Web site carries a news release for the 13th Annual Queen of the Polish Constitution Day Parade on April 15.

“We know there will be some that still didn’t get the message that they needed to file,” Ms. Lerner said.

The I.R.S. has created a process for nonprofit groups with annual revenue less than $25,000 that find themselves on the list and wish to reapply for tax exemption, including a reduced fee of $100.

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