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Obama Focuses on Economy, Vowing to Help Middle Class

July 24, 2013 by Leave a Comment

Returning to the site of his first major economic speech as a young senator eight years ago, Mr. Obama lamented that typical Americans had been left behind by globalization, Wall Street irresponsibility and Washington policies, while the richest Americans had accumulated more wealth. He declared it “my highest priority” to reverse those trends, while accusing other politicians of not only ignoring the problem but also making it worse.

“With this endless parade of distractions and political posturing and phony scandals, Washington’s taken its eye off the ball,” Mr. Obama told an audience at Knox College. “And I am here to say this needs to stop. This needs to stop. This moment does not require short-term thinking. It does not require having the same old stale debates. Our focus has to be on the basic economic issues that matter most to you — the people we represent.”

The hourlong speech, one of the longest of his presidency, resembled a State of the Union address at times. The president mainly offered revived elements of his largely stalled economic program, like developing new energy, rebuilding manufacturing, spending more on roads, bridges and ports, expanding preschool to every 4-year-old in the country and raising the minimum wage.

But he and his aides hoped to use the speech both to claim credit for the progress made since the recession of 2008-9 and to position himself as the champion of a disaffected middle class that has yet to recover fully.

He chastised Republicans in Congress for not focusing on economic priorities and obstructing his initiatives. “Over the last six months, this gridlock has gotten worse,” he said.

And he challenged them to come up with their own plans. “I’m laying out my ideas to give the middle class a better shot,” he said, addressing himself to Republican leaders. “So now it’s time for you to lay out your ideas.”

Republican leaders were not impressed by Mr. Obama’s renewed push on the economy. Speaker John A. Boehner said beforehand that a speech would not make a difference. “What’s it going to accomplish?” he asked on the House floor. “You’ve probably got the answer: nothing. It’s a hollow shell. It’s an Easter egg with no candy in it.”

Senator Mitch McConnell of Kentucky, the Republican minority leader, said Mr. Obama’s speech would just be partisan rhetoric. “With all the buildup, you’d think the president was unveiling the next Bond film or something,” he said before the speech. “But in all likelihood it will be more like a midday rerun of some ‘70s B-movie. Because we’ve heard it all before. It’s old.”

Republicans said they had in fact advanced ideas for improving the economy, particularly in education, energy, tax changes and regulation. They noted that a House panel was taking up bills intended to relieve businesses of what Republicans consider burdensome regulation by the Environmental Protection Agency. “Mr. President, just get the federal government out of the way,” said Representative Kevin Brady, Republican of Texas, the chairman of the Joint Economic Committee. “Instead of putting handcuffs on job creators, try shaking their hand for a change.”

Mr. Obama acknowledged before the speech that it would not “change any minds,” nor would it outline new proposals. Any new ideas will come in a series of other speeches in the weeks to come.

But Mr. Obama and his aides billed his second Knox College speech as an important milestone in the president’s tenure on the national political stage. They said they hoped it would reset a national economic debate that had become too mired in the bitter clashes between the parties in Congress.

The Knox College speech was the president’s first stop on Wednesday. Afterward, he was to travel to the University of Central Missouri in Warrensburg for a second speech that afternoon before returning to the White House in the evening. As part of his pitch, he promised to develop in the next few months “an aggressive strategy” to tackle rising college costs.

Michael D. Shear reported from Galesburg, and Peter Baker from Washington.

Article source: http://www.nytimes.com/2013/07/25/us/politics/obama-to-restate-economic-vision-at-knox-college.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

It’s the Economy: The Perverse Effects of Rent Regulation

July 23, 2013 by Leave a Comment

The East Village and the broader Lower East Side make up one of the most economically integrated parts of the city. It is one of the last places where the fairly rich and the very poor live on the same blocks and shop in the same bodegas. But the area is steadily becoming more like most of Manhattan: dominated by those with high incomes paying seemingly absurd rents, while the poor either leave or stay in government housing on the periphery. While older affordable housing is reaching the end of its life cycle, new affordable housing’s major source of public funding — Congress — is planning comprehensive tax-and-spending reform. This could pose an existential threat to New York’s regulatory efforts to keep Manhattan affordable for the poor.

So what would happen if Manhattan were completely free of rent regulations and other forms of housing subsidies? According to several housing analysts, it would quickly become an island occupied solely by middle class and rich people. Christopher Mayer, a housing economist at Columbia Business School, imagines tens of thousands of professionals, currently scared away by insane rents, moving in from Brooklyn, Queens and Hoboken — even Philadelphia and Chicago. “Poor people would be priced out of Manhattan,” he says. “Period.” But an East Village where nobody makes less than $90,000 a year might actually damage the city’s long-term prospects.

Manhattan has had an outsize impact on the world’s culture and economy in large part because of its economic diversity. Home to broke writers and wealthy publishers, starving painters and well-heeled collectors, unproven fashion newcomers and the established houses, and countless other symbiotic pairings, Manhattan has been a place where unlikely ideas can build an audience and, sometimes, dominate the mainstream. For 200 years, the East Village has served as an initial toehold into this chaotic mess. But rent regulation may not be helping keep it diverse.

Rent control first appeared in the 1940s, when soldiers returned to the city seeking apartments for their new families, causing rents to rise drastically. Since then, countless housing programs have been created at local, state and federal levels, but the biggest housing intervention in New York today is rent stabilization: a slightly more flexible version of rent control, in which a city board of experts annually determines how much more landlords can charge their tenants.

The problem, though, is that these programs actually make the city much less affordable for those unlucky enough not to live in a rent-regulated apartment, Mayer says. The absurdity of New York City’s housing market has become a standard part of many Econ 101 courses, because it is such a clear example of public policy that achieves the near opposite of its goals. There are, effectively, two rental markets in Manhattan. Roughly half the apartments are under rent regulation, public housing or some other government program. That leaves everyone else to compete for the half with rents determined by the market. Mayer points out that most housing programs tie government support to an apartment unit, not a person. “That is completely nuts,” he says. It creates enormous incentive for people to stay in apartments that no longer fit their needs, because they have had kids or their kids have left or their job has moved farther away. This inertia is a key factor in New York’s housing shortage. One East Village real estate agent told me that only 20 to 30 units are available in the entire area any given month.

Article source: http://www.nytimes.com/2013/07/28/magazine/the-perverse-effects-of-rent-regulation.html?partner=rss&emc=rss

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Economix Blog: On Working for Yourself, for More Flexible Hours

July 9, 2013 by Leave a Comment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

I’ve gotten a lot of e-mails in response to my article about how middle-class mothers balance work and family, raising many interesting and important issues: What about the challenges for working fathers? What about single parents who don’t have much of a support network? Are companies demanding more from childless employees to accommodate employees with children? Should men be encouraged to be more active co-parents so it’s not so challenging for women to remain in the work force?

There’s only so much I could squeeze into one article about a complicated topic, but I’ll address some of these issues in blog posts and follow-up articles.(I’d also direct readers to some of our past coverage of these topics, as linked above and covered on the Motherlode blog.)

One interesting point that came up repeatedly was the attraction of self-employment, which some readers mentioned in Facebook comments and on the article itself. For example, a reader named Suzanne in New Jersey writes:

I am a lawyer. After many years of working for others, a few years I went to work for myself. My kids are teens now, but I have probably tried every permutation to juggle family and job demands. I had a live-in nanny, a live-out nanny, used an after school program. I have worked full-time and part-time for others. Not only do I have a demanding job, but both my husband and I commute over an hour to work each day. That being said, besides full-time care, we have been dependent on carpools and friends to get our kids to their after school activities. Now that my high school aged child is driving, it is definitely easier as she is able to drive the younger one. The flexibility of working for myself, however, drove the decision to do so. If I want to leave the office early so that I can watch my kids’ sports games, I can. I may have to make up the time somewhere else, but I feel like I control things, not someone else.

This resonated with some of the interviews I did while reporting for my article.

I spoke with a lot of middle-class working mothers around the country about the challenges in managing their work and family responsibilities before deciding to focus on the desire for flexible hours or remote work (and on Sara Uttech of Fall River, Wis., as someone who ultimately received more flexible hours). Several of these women made a deliberate decision to work for themselves to have more control over their schedules, like Jordan Sellergren, who does freelance graphic design and marketing in Iowa City. Another mother I spoke with, Leah Dugan, was working at a telehealth start-up in Chicago, where she helped manage a call center. She said her dream job was to become a freelance yoga instructor, partly because of the flexible hours she said she believed such a career would allow her.

What’s surprising, then, is the gulf between such sentiments and the actual self-employment data. As of 2009, 7.9 percent of women were self-employed (including incorporated and unincorporated self-employed workers) compared with about 13.7 percent of men.

One drawback of self-employment, of course, is that it’s more difficult to get health insurance, and there is evidence that women, particularly mothers of younger children, have a strong preference for receiving such benefits. According to Paul Fronstin’s analysis of survey data he wrote up for the Employee Benefit Research Institute, women were more likely than men (78 percent to 61 percent) to report that health benefits were very important when choosing a job. With the creation of the insurance exchanges next year under the Affordable Care Act, perhaps we’ll see more women deciding to work for themselves.

As an aside, other career paths that have been described to me as particularly family-friendly include certain medical specialties (which of course require a long and expensive upfront investment) and computer programming. Computer programming could be conducive to more flexible, family-friendly scheduling partly because of the nature of the work itself, and partly because many companies have such a hard time finding highly skilled programmers that such workers have more bargaining power.

But as you probably know, there are relatively few women in computer programming or related fields: Women represent just 22.5 percent of computer programmers and 25.6 percent of workers in all computer and mathematical occupations (which includes Web developers, information security analysts, etc.). Presumably there are other forces at work discouraging women from going into these fields, but that’s a topic for another day.

Article source: http://economix.blogs.nytimes.com/2013/07/09/on-working-for-yourself-for-more-flexible-hours/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Economix Blog: Office Advancement vs. Home Duties

July 8, 2013 by Leave a Comment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

In an article on Monday, I wrote about the choices faced by middle-class working mothers, who typically don’t have the resources to hire nannies and other support to help them “lean in” at the office. But one of the striking things I came across in my reporting was that a majority of working parents, men as well as women, don’t actually want more responsibilities at the office.

About every five years the Families and Work Institute conducts its National Study of the Changing Workforce, which surveys employed men and women about work and family roles. One of the questions is, “Thinking about your plans for the future, do you want to move to a job with less responsibility, stay at your current level of responsibility, or move to a job with more responsibility?”

Here are numbers that they pulled from their data set at my request:

Source: Families and Work Institute, National Study of the Changing Workforce. Source: Families and Work Institute, National Study of the Changing Workforce.

As you can see, in 2008, 39 percent of mothers of children under 18 said they wanted jobs with greater responsibility. The share was 44 percent for fathers. For whatever reason, the share has been falling steadily for fathers, down from 64 percent in 1992. For women the share dipped between 1992 and 2003 and then barely edged back up in 2008, but it is still well below its level in 1992. Maybe this reflects a generational value shift. Maybe advances in telecommunications (e-mail, smartphones) mean people are already working during non-traditional work hours more than they would like to.

But perhaps one of the reasons why men in particular are not itching for more responsibility at work is that gender roles have been changing, and men have been taking on more duties at home.

The National Study of the Changing Workforce, in fact, found that a higher share of fathers in 2008 said they took on at least equal responsibilities for child care than did so in 1992. (Taking responsibility for child care was defined as providing one-on-one care as well as managing child care arrangements.)

Women affirm that men are taking on more child care today than in the past, but there seems to be some quibbling between the genders about what exactly constitutes “equally” shared responsibilities. The survey found that there were many more fathers who said they were handling most of the child care or sharing the duties equally than there were mothers who said their spouses or partners were handling most or equal shares of child care.

There was a similar discrepancy between men’s and women’s responses about cooking. About 67 percent of women say they do “most” of the cooking, while 55 percent of men say they take at least an equal share.

The difference in opinion was even bigger when it comes to cleaning. A significantly larger share of men say take on at least an equal share of housecleaning duties in 2008 than in 1992, but women do not report any change over that period.

The Families and Work Institute report containing these survey findings concludes: “Whatever the precise objective degree of responsibility men are assuming for various aspects of family work, it has clearly become more socially acceptable for men to be and to say they are involved in child care, cooking and cleaning over the past three decades than it was in the past!”

Article source: http://economix.blogs.nytimes.com/2013/07/08/office-advancement-vs-home-duties/?partner=rss&emc=rss

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I.H.T. Special Report: The Syria Report Survives as Independent Publication

December 20, 2012 by Leave a Comment

“My business thrived because there was an opening and I have to give Bashar credit,” Mr. Yazigi said during a recent conference in Istanbul, when asked to reflect upon the changes that awakened the Syrian middle class even as they enriched the elite. “The problem is he didn’t go deep or fast enough to head off the unrest. He didn’t reform the judicial system or encourage a free press, for example. These were red lines that could not be crossed.”

Mr. Yazigi, the son of an exiled Syrian dissident, publicly called for democratic reform as early as 2004, most notably in a column headlined “The D Word.”

At the same time, he applauded the government for stimulating free trade and foreign investment, liberalizing its currency, reforming its financial sector and removing subsidies on everything from cooking oil to farm equipment.

Largely as a result, the country’s gross domestic product rose steadily; between 2005 and 2010 it achieved an annualized growth rate of about 5 percent, among the highest for developing countries at the time.

Syria was not the only Arab country that aggressively deregulated its economy. Egypt, Tunisia, Jordan and Saudi Arabia all embraced similar changes which, by the end of the decade, had produced impressive growth but also high inflation, stubborn unemployment and yawning rates of income disparity.

Was it free-market reforms that triggered the convulsions that continue to destabilize the region? Or regime kleptocrats who hijacked a badly needed reform process?

“It makes it a lot more difficult for people to sacrifice for the sake of change when elites are profiting,” Mr. Yazigi said. “That said, there were more problems than just corruption.”

In promoting service sectors like hotel construction and management over labor-intensive ones like manufacturing, Mr. Yazigi added, the government neglected a fertile source of jobs. It also exposed its industries to high quality, affordable imported goods when it signed a free trade deal with Turkey.

The government withdrew price supports on farm equipment and produce too quickly, he said, sparking an exodus of laborers from an agriculture sector that once accounted for a quarter of total employment.

“Many farmers ended up moving into urban slums,” Mr. Yazigi said, “and that led to a lot of stress and resentment in the cities.”

Mr. Yazigi, a French citizen and Greek Orthodox Christian, is, like Mr. Assad, an outsider whose destiny lured him back to Syria. Both men are sons of plotters — though unlike Mr. Assad’s father, Hafez, an air force general who ruled Syria from 1970 until his death in 2000, Raja Yazigi was on the losing end of a 1961 coup he helped lead in Lebanon.

After fleeing via Jordan, he settled in Ghana, where he established a carpentry business and started a family. At the age of eight, Mr. Yazigi was sent to France for his education. Like Bashar, who studied ophthalmology in Britain before he was fated by his elder brother’s death to lead the Assad ruling dynasty, Mr. Yazigi was obliged to interrupt his studies at the American University in Paris and run the family business when his father passed away in 1995.

The building trade could never compete with Mr. Yazigi’s love of politics, and with the arrival of Bashar as president he sensed an opportunity to indulge a passion inspired by his father, who sent his children to Damascus every summer to improve their Arabic and learn the city’s political terrain.

In October 2001, from Paris, Mr. Yazigi distributed an online translation of Syria’s then-fledgling financial press. He knew he was onto something just a few weeks later when The World Bank contacted him and asked for more.

“The Internet had just started,” he said. “I felt like this was something I could do that I really loved and give something back to the country.”

The Syria Report comes out each week with data and news gathered from a variety of sources, including Mr. Yazigi’s own reporting. Among his most precious resources is a database of hundreds of Syrian companies he compiled by soliciting such details as contact coordinates, names of board directors, financial returns and shareholder information.

Article source: http://www.nytimes.com/2012/12/20/world/middleeast/the-syria-report-survives-as-independent-publication.html?partner=rss&emc=rss

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Boehner Invokes ‘Plan B,’ Dismissing Obama’s Offer

December 18, 2012 by Leave a Comment

The move came less than 24 hours after President Obama offered a more comprehensive deal that would raise tax rates on income over $400,000, raise $1.2 trillion in new revenue and cut $930 billion in spending over 10 years. Mr. Boehner declared that unbalanced and insufficient.

“What we’ve offered meets the definition of a balanced approach, but the president is not there yet,” Mr. Boehner said Tuesday.

The speaker made it clear he would continue negotiating with the president, and some House Republicans emerged from a closed-door meeting with Mr. Boehner confident that a deal was now in reach.

“We’re getting there,” said Representative James B. Renacci, Republican of Ohio.

But to raise the pressure, House leaders will proceed with what they are calling “Plan B,” which could come to a vote as early as Thursday. Under that plan, the House would take up tax legislation and consider two amendments. The first would mirror a bill passed by the Senate that would extend expiring Bush-era tax cuts for income below $250,000. That would be expected to fail, showing the president that his initial offer could not pass. A second amendment would raise that threshold to income below $1 million. The House may also vote on some middle ground, like the president’s $400,000 threshold.

Mr. Boehner told his conference that he would also like the bill to include provisions preventing the existing alternative minimum tax from expanding more to affect the middle class and extending existing tax rates on inherited estates.

But he said the bill would not cancel across-the-board spending cuts, known as sequestration, that would total $110 billion in 2013 and more than $1 trillion over 10 years.

Republicans would then resume the fight over broad spending cuts — especially to entitlement programs like Medicare — in late January or February, when the government must raise its borrowing limit, which many Republicans believe will give them much more leverage than they have now.

Mr. Boehner told Republicans on Tuesday: “Taxes are going up on everyone on Jan. 1. They’re baked into current law. And we have to stop whatever tax rate increases we can. In the absence of an alternative, as of this morning, a ‘modified Plan B’ is the plan.”

Representative Kevin McCarthy of California, the Republican whip, said his operation would be checking whether the party had the votes to pass any tax legislation. If Democrats stay united against the $1 million threshold, it could fail because some Republicans are unlikely to ever vote for a tax increase. Representative Nancy Pelosi of California, the Democratic leader, met with House Democrats on Tuesday and urged unity against the speaker’s plan.

The White House came out strongly against the speaker’s move. The White House press secretary, Jay Carney, said “Plan B” could not pass the Senate and “therefore will not protect middle-class families” from large tax increases beginning Jan. 1.

“The president has put a balanced, reasonable proposal on the table that achieves significant deficit reduction and reflects real compromise by meeting the Republicans halfway on revenue and more than halfway on spending from where each side started,” he said. “That is the essence of compromise.”

It is not clear how much this alternative plan is real or a bargaining tactic to extract more concessions from Mr. Obama. Rob Nabors, the president’s chief liaison to Congress, met with House Democrats on Tuesday and said talks were moving forward. But privately, he expressed pessimism that Mr. Boehner could sign on to any deal, according to people familiar with those conversations.

In spite of statements to the contrary just a week ago, House Republicans on Tuesday seemed almost uniformly resigned to some sort of tax rate increases on the nation’s highest earners, though they remained committed to keeping that group as small as possible. “The principle of trying to limit the increases is a good one,” said Representative Jason Chaffetz of Utah. “But now we’ve got to see more spending cuts.”

Jennifer Steinhauer contributed reporting.

Article source: http://www.nytimes.com/2012/12/19/us/politics/backing-off-deal-boehner-invokes-plan-b-on-taxes.html?partner=rss&emc=rss

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With Gap Wide and Time Short, Obama and Boehner Meet

December 13, 2012 by Leave a Comment

The meeting broke up after about an hour with no immediate sign from either side that there had been a breakthrough.

Earlier Thursday, Mr. Boehner dug in on demands that Mr. Obama lay out more concrete cuts to Medicare and other entitlements as the price for tax increases on the rich.

The speaker’s tone — and a hostile White House response — raised the level of pessimism that a wide-ranging agreement could be reached quickly to head off hundreds of billions of dollars in automatic tax increases and spending cuts beginning next month. Adding to the growing sense that the two sides might not come together, rank-and-file Republicans said the leadership had not begun laying the groundwork for a major concession on taxes.

But Mr. Boehner pointedly did not rule out a vote on legislation before the end of the year to extend Bush-era tax cuts for the middle class — and in so doing allow tax cuts on incomes over $250,000 to expire.

“The law of the land today is that everyone’s income taxes are going to go up Jan. 1,” Mr. Boehner said. “I’ve made it clear that I think that’s unacceptable, but until we get this issue resolved, that risk remains.”

Little more than two weeks are left before the nation heads over the so-called fiscal cliff, and neither Mr. Boehner nor Mr. Obama has budged from his core demands.

The president continues to insist on an immediate increase in the top two income tax rates as a condition for further negotiations on spending and entitlement changes. If the speaker insists on further spending cuts, White House officials say, he must lay out his specific demands, something Mr. Boehner has so far declined to do.

Mr. Boehner has offered to raise his opening bid of $800 billion in increased tax revenue over 10 years, but only if the president makes a significant commitment to overhaul entitlements and slow their growth. The White House’s opening bid committed to pressing changes next year to federal health care programs that would save $400 billion over 10 years. The speaker wants a far larger pledge and a firm commitment that the president will put his political weight behind substantive changes to Medicare and the tax code.

The president, Mr. Boehner said, appears intent on squandering “a golden opportunity to make 2013 the year that we enact fundamental tax reform and entitlement reform to begin to solve our country’s debt problem and, frankly, revenue problem.”

Washington now faces three potential outcomes to the fiscal impasse, lawmakers from both parties say. A broad deal could be reached in which some taxes go up immediately and some cuts are secured to stop the broader tax increases and halt the across-the-board tax cuts — and to lock in targets for entitlement savings and revenue produced by changes in tax policy to be worked out next year.

If no deal is reached, Republicans are increasingly talking about a more hostile outcome in which the House passes legislation that extends tax cuts for the middle class, sets relatively low tax rates on dividends, capital gains and inherited estates, and cancels the across-the-board defense cuts, but leaves in place across-the-board domestic cuts. Then House Republicans would engage in what Mr. Boehner, in a private meeting with them last week, called “trench warfare,” a running battle with the president on spending, first as the government approaches its statutory borrowing limit early next year, then in late March, when a stopgap government spending bill runs out.

Finally, many Republicans say it is now possible that the government will plunge into the fiscal unknown. Representative Patrick T. McHenry, Republican of North Carolina, said Mr. Boehner had given Republicans no indication “that he’s going to budge.”

“He’s not going to raise rates in any way, shape or form,” he said. “That has not changed.”

Republicans who have advocated giving in on rate increases now say their party appears to be preparing for the worst. Representative Charles Bass, a New Hampshire Republican who was defeated for re-election last month, said the pain for Republicans would not be immediate because the tax increases would not be apparent to most Americans that quickly. But “by the third or fourth week of January, their life will be so miserable,” he said, “their life will be so unbearable, they’ll just want to get done with it.”

Even as Mr. Boehner intensified his public campaign to pressure Mr. Obama to specify reductions in spending for Medicare and other entitlement benefit programs, the Republicans continued to be mute on what reductions they favor.

They are not proposing the sort of program overhauls — making Medicare a voucherlike system, and turning Medicaid into a lower-cost block grant to the states — that have been part of their House budgets for the past two years, sponsored by Representative Paul D. Ryan, the House Budget Committee chairman and Mitt Romney’s running mate in the presidential race. In any case, the Ryan budgets delayed the changes so they would not save much in the next 10 years.

And as many Democrats now recall, Republicans attacked Mr. Obama and Congressional Democrats throughout the recent campaign for having approved Medicare reductions of $716 billion over a decade as part of the 2010 health care law.

The only alternative proposals called for by Republicans would slowly raise the eligibility age for Medicare, and mandate a new formula for cost-of-living adjustments that would have the effect of reducing Social Security payments. Mr. Obama indicated reluctant, tentative support for both ideas in his private, failed debt-reduction talks last year with Mr. Boehner if Republicans accepted higher taxes on wealthy taxpayers. But in the face of building opposition from labor and liberal groups, he has backed off that stance, especially the higher Medicare age.

Mr. Obama has proposed specific ideas for cutting Medicare spending, but Republicans do not like most of them, in particular one that would force drugmakers to pay higher rebates for Medicare beneficiaries’ drug purchases, just as they long have for Medicaid. Also, Republicans say Mr. Obama’s roughly $400 billion, 10-year total for savings is about $200 billion too little.

Article source: http://www.nytimes.com/2012/12/14/us/politics/obama-and-boehner-to-meet-again-on-fiscal-talks.html?partner=rss&emc=rss

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Obama Tells G.O.P. Not to Tie Debt Ceiling to Fiscal Debate

December 5, 2012 by Leave a Comment

In a speech to the Business Roundtable, Mr. Obama called that irresponsible. “That is a bad strategy for America, it’s a bad strategy for your businesses and it is not a game that I will play,” he said. “Everybody here is concerned about uncertainty. There’s no uncertainty like the prospect that the United States of America, the largest economy, that holds the world’s reserve currency, potentially defaults on its debts.”

While saying he would not “play that game,” a phrase he repeated, Mr. Obama did not say what he would do in response, but some Democrats have urged him in the past to simply raise the borrowing limit using his own executive authority and let the courts determine if he overstepped his constitutional bounds.

He seemed to embrace a suggestion by John Engler, the Business Roundtable president, to raise the debt ceiling enough to last five years. “John is exactly right when he says that the only thing that the debt ceiling is good for as a weapon is just to destroy your credit rating,” Mr. Obama said.

Mr. Obama was reacting to reports that Republican leadership officials were looking for a fallback in the current debate to avert an end-of-the-year fiscal crisis. Some Republicans foresee accepting Mr. Obama’s call to extend Bush-era tax cuts for the middle class while allowing them to expire for the wealthiest Americans, and then taking up the fight again when the nation’s debt rises to the point that the statutory borrowing limit needs to be raised again, which could be in late January or February.

Republicans view any vote to raise the debt ceiling as a chance to enforce more fiscal discipline on Mr. Obama. Speaker John A. Boehner has said any increase in borrowing capacity should be offset by spending cuts that exceed the increased debt. Mr. Obama has responded by proposing to take away the Congressional power to approve increases in the debt ceiling, but Mr. Boehner said last weekend that “Congress is never going to give up this power.”

Appearing before reporters on Wednesday, Mr. Boehner and other House Republican leaders implored Mr. Obama to sit down with them and begin negotiating in earnest to head off the looming fiscal crisis, but with flattery and aggravation, they made it clear that they were now playing on his turf.

Mr. Boehner and his leadership team did not give an inch on their opposition to raising tax rates on the wealthy or their insistence that any deficit-reduction plan emphasize spending cuts. But the speaker sounded exasperated as he insisted that he had moved toward the president’s position by agreeing to $800 billion in higher tax revenue over 10 years.

“The revenues we’re putting on the table will come from guess who? The rich,” he said, his voice rising. “There are ways to limit deductions, close loopholes and have the same people pay more of their money to the federal government without raising tax rates.”

Representative Peter Roskam of Illinois, a member of the Republican leadership, appealed to Mr. Obama’s own view of himself as a politician able to rise above partisanship, a characterization Republicans have rarely, if ever, agreed with.

“I’ve seen an attribute in President Obama when we served together in the Illinois State Senate, where he was able to rise above donkeys and elephants and transform some very controversial issues in a way that was powerful,” Mr. Roskam said, imploring the president to eschew the politics of the victor and seize “an unbelievable opportunity to be a transformational president, that is to bring the country together.”

The dueling public appearances underscored how far apart the two sides were, at least as a matter of principle. Mr. Obama’s plan calls for $1.6 trillion in new taxes over 10 years, mainly through allowing rates to rise on income above $200,000 a year for individuals or $250,000 for families. He has also revived a year-old plan to trim health care and other mandatory spending by $600 billion over 10 years, but he also wants to spend $50 billion in the short term to help the economy.

Article source: http://www.nytimes.com/2012/12/06/us/politics/obama-tells-gop-not-to-tie-debt-ceiling-to-fiscal-debate.html?partner=rss&emc=rss

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Obama Meets C.E.O.’s as Fiscal Reckoning Nears

November 15, 2012 by Leave a Comment

If Congress and the president cannot reach a deal to reduce the deficit by January, more than $600 billion in tax increases and spending cuts will go into effect immediately — a prospect many chief executives and others warn could tip the economy back into recession.

Even so, Mr. Obama has some fence-mending to do before he can count on any serious backing from the business community.

“The president brought up that he hadn’t always had the best relationship with business, and he didn’t think he deserved that, but he understood that’s where things were and wanted it to be better,” said David M. Cote, chief executive of Honeywell. He was one of a dozen corporate leaders invited to meet Mr. Obama at the White House for 90 minutes Wednesday afternoon, after the president’s first news conference since the election.

While Mr. Obama did not present a detailed plan at Wednesday’s meeting or reveal what he would propose in terms of new corporate taxes, he strongly reiterated that he would not allow tax cuts for the middle class to expire. The president, according to attendees and aides, said he was committed to a balanced approach of reductions in entitlements and other government spending and increases in revenue.

With time running out, many people expect the president and Republican leaders in Congress to come up with a short-term compromise that prevents the full slate of tax increases and spending cuts from hitting in January. That would give both sides more time to come up with a far-reaching deal on entitlement spending, even as they work on a broad tax overhaul later next year.

One corporate official briefed on the meeting said that the chief executives came away with a sense that Mr. Obama was poised to present a more formal proposal in the next few days, but that he did not press them for support on particular policies. “It was more of a back and forth,” he said.

The chief executives from some of the country’s biggest and best-known companies, including Procter Gamble and I.B.M., were not unified on everything, according to one who was interviewed after the meeting.

Many of the executives who described the meeting would speak only on condition of anonymity.

The outreach to business comes as both the White House and corporate America maneuver ahead of the year-end deadline, as well as the beginning of Mr. Obama’s second term. Many executives were put off by what they saw as antibusiness rhetoric coming from the White House in his first term, and many also oppose tax increases on the rich that Mr. Obama favors but would hit them personally.

Both sides have plenty to gain from a better relationship. Business leaders want to buffer their image after the recession and the financial crisis, while Mr. Obama would gain valuable leverage if he could persuade even a few chief executives to come out in favor of higher taxes on people with incomes over $250,000.

Lloyd C. Blankfein, chief executive of Goldman Sachs, publicly endorsed higher tax rates in an opinion article published in The Wall Street Journal on Wednesday.

“I believe that tax increases, especially for the wealthiest, are appropriate, but only if they are joined by serious cuts in discretionary spending and entitlements,” he wrote.

While Mr. Blankfein and other Wall Street leaders have been speaking out about the dangers of the fiscal impasse, only one executive from the financial services industry, Kenneth I. Chenault of American Express, was at Wednesday’s meeting.

Afterward, the corporate leaders seemed pleased with the tone of the meeting but cautious about the prospect of finding common ground with the White House on the budget choices facing Congress and the president.

“I’d say everybody came away feeling pretty good about the whole discussion,” Mr. Cote said. “Now, all of us are C.E.O.’s, so we’ve learned not to confuse words with results. And that’s what we still need to see.”

Ursula M. Burns, chief executive of Xerox, who was also at the meeting, said afterward that it was clear that “we’re going to have to work through some sticking points.” But while “we didn’t get into too many specifics,” she said, it was also made clear that “we cannot go over the fiscal cliff.”

Ms. Burns’s comments about the potentially dire consequences of the fiscal impasse echoed those of other chief executives, including many in the Business Roundtable, which began an ad campaign Tuesday calling on lawmakers to resolve the issue quickly. The Campaign to Fix the Debt, a new group with a $40 million budget and the support of many Fortune 500 chiefs, began its own ad campaign on Monday.

Michael T. Duke, chief executive of Wal-Mart Stores, warned in a statement after the meeting that “before the end of the year, Washington needs to find an agreement to avoid the fiscal cliff.” He said Walmart customers “are working hard to adapt to the ‘new normal,’ but their confidence is still very fragile. They are shopping for Christmas now, and they don’t need uncertainty over a tax increase.”

 

Helene Cooper reported from Washington and Nelson D. Schwartz from New York. Jackie Calmes contributed reporting from Washington.

Article source: http://www.nytimes.com/2012/11/15/business/obama-seeks-new-start-with-executives.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Bucks Blog: The Best 401(k) Plans

December 20, 2011 by Leave a Comment

Retirement would be a lot easier if all companies were as generous as Southwest Airlines is to its pilots.

The airline recently took the top spot on a list of the 30 highest-rated 401(k) plans, a report created by BrightScope, a company that analyzes the plans. Southwest, known more for its quirky corporate culture than its generous 401(k) plan, matches 100 percent of the money its pilots set aside, up to 9.3 percent of their income.

Over all, BrightScope found that companies — at least the giant ones that made the list — were significantly more generous with their employees than last year. The average company provided an average of $11,000 per plan participant in 2011, up from $8,000 last year.

BrightScope analyzed more than 200 data points across about 350 plans with more than $1 billion in assets, factoring in categories like the total plan cost, company generosity and the quality of the investment menu.

Once it feeds all of that information into its algorithm, it comes up with a score for each plan. But the overriding factor that drives results is how quickly the plan will help employees reach retirement: the faster they can get there, the higher the BrightScope rating.  (Retirement, in this case, is achieved when employees can stop working with an income that is equivalent to 75 percent of their earnings during their working years — and is estimated to last for their remaining life expectancy).

The overall rating this year increased .75 percentage points from 2010, largely because more companies are putting more money into the plans and total plan costs have decreased. “Let’s face it, the companies on this list are incredibly profitable,” said Mike Alfred, chief executive of BrightScope. “The average middle-class worker is not benefiting from that, but the corporations are sitting on a ton of cash and they are being a bit more generous.”

But there’s something else prodding companies to improve their plans. Starting next year, the Labor Department, which oversees 401(k) plans, will make investment companies itemize all of the expenses that employers and employees are paying and make the underlying mutual fund costs distinct from administrative expenses. “Fees have been falling for some time, but going into next year that process has accelerated as more plan sponsors expect more pushback from their participants,” Mr. Alfred added.

This year, the average total plan cost for companies in the top 30 has dropped by 0.05 percentage points to 0.61 percent from the year before. That compares with an average total plan cost for all BrightScope-rated plans of 1.55 percent and 0.87 percent for all plans with assets over $100 million.

And some companies, believe it or not, are afraid of ranking too high on this list —if they appear too generous, their chief financial officers might want to make some cuts, Mr. Alfred added. “There is a fundamental conflict between the focus on corporate profitability and managing the company for shareholders, and managing the company for the benefit of your employees,” he said, adding that he recalled having a conversation with the Saudi Arabian oil company about their concerns of ranking too high.

The top 15 plans are listed below, along with some information on the generosity of the company match, among other factors. The top 30 can be found here.

The BrightScope 401(k) Rankings

Article source: http://feeds.nytimes.com/click.phdo?i=0d343a017bd08ac2f6e58264411beccd

Filed Under: Your Money Tagged With: , ,
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