The reason? Same ol’, same ol’.

With just 28 days left before the current two-month Band-Aid version expires, the sticking point for lawmakers is how to pay for an extension — the very same reason that tripped them up when they tried to negotiate a full-year extension in December.

Douglas Elmendorf, director of the Congressional Budget Office, told the House Budget Committee on Wednesday that he estimates that extending the payroll tax cut for another 10 months will cost $100 billion.

The measure is expected to be part of a larger package that also extends emergency federal unemployment benefits and prevents a scheduled pay cut to Medicare physicians.

Bush tax cuts: The real endgame

The payroll tax cut, if extended, would affect 160 million U.S. workers. It would reduce how much they pay into Social Security, thereby increasing their take-home pay. While normally they would have to pay 6.2% on the first $110,100 of their income for this year, the measure would reduce that to 4.2%. So a person making $50,000 would pocket an extra $1,000 a year — or $83 a month — as a result.

That reduced 4.2% rate was in effect for all of 2011 but is set to expire by March 1, barring any action by lawmakers.

Not everyone in Congress is in love with the idea of extending the measure. But there seems to be less argument about how doing so could help the economy in the short run.

"Extending the payroll tax cut through the end of the year will increase output and increase employment," Elmendorf told lawmakers payday loans.

Congress = Uncertainty, Inc.

He didn’t offer specific numbers during the hearing. But in a briefing on Tuesday, he estimated that extending the payroll tax cut for 2012 could add 0.25% to the gross domestic product by the end of the year and reduce the unemployment rate by one- to two-tenths of a percent..

A similar economic effect could result from extending the unemployment benefits. Doing so could boost economic growth this year by 0.25% and create 250,000 jobs by the end of 2012, Elmendorf said.

That’s because in both cases the money would go largely to people who are likely to spend most if not all of it. That, in turn, can spur demand for products and help bolster employment.

The select group of lawmakers designated to negotiate a final payroll tax cut deal will meet for the third time on Wednesday. There’s no telling when they may conclude a deal but one constituency is hoping for some clarity soon.

As they were last year, payroll tax administrators are hoping Congress resolves the issue once and for all, according to Michael O’Toole, senior director of government relations of the American Payroll Association.

"Payroll systems and the federal payroll tax reporting scheme are not set up to accommodate more than one employee Social Security tax rate in a calendar year, let alone within the same quarter," he said. 

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Quarterly premiums rose 13 percent, to $2 billion.

For all of 2011, the company earned $599.6 million, or $8.09 per share, compared with $574.4 million, or $7.69 per share, the previous year. The company, based in Chesterfield, is a large global provider of life reinsurance with offices in America, Europe, Asia, Australia, South Africa and Mexico, Barbados and Bermuda.

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]]> http://fundscons.com/harvards-feldstein-sees-slow-growth-while-doubting-effects-of-fed-easing-bloomberg/feed/ http://fundscons.com/ford-posts-big-profits-but-misses-wall-street/ http://fundscons.com/ford-posts-big-profits-but-misses-wall-street/#comments Fri, 27 Jan 2012 18:04:04 +0000 Snowman http://fundscons.com/ford-posts-big-profits-but-misses-wall-street/ An accounting change boosted Ford’s fourth-quarter net income, but without the gain the company fell short of Wall Street’s expectations.

Weak sales in Europe and lower production in Thailand eroded Ford’s profits.

Investors punished the stock in pre-market trading, where shares fell nearly 5 percent to $12.14.

Ford earned $13.6 billion in the fourth quarter, due to a decision to move deferred tax assets back onto its books. Without that change, the company’s pre-tax operating profit totaled $1.1 billion, or 20 cents per share, missing analysts’ forecasts of 25 cents.

The company lost money in Europe and Asia in the fourth quarter. But its North American operating profit rose 33 percent to $889 million.

“The quarter was really driven by North America,” Chief Financial Officer Lewis Booth said.

Booth also said November flooding in Thailand, which affected its parts suppliers, had a greater impact than the company expected. Ford lost 34,000 units of production in Thailand and in South Africa, which relies on Thai-made parts. He said the company also saw higher costs for steel and other commodities. Ford spent $2.3 billion more on commodities in 2011 than the prior year, or $100 million more than it had forecast.

Europe’s debt crisis weighed on car sales in that region.

For the full year, the Dearborn-based company made $20.2 billion, or $4.94 per share. Without the accounting gain, it earned $8.76 billion, or $1.51 per share, its highest operating profit since 1999. Full year revenue rose 13 percent to $136.3 billion.

Analysts had forecast full-year earnings of $1.86 per share on revenue of $127.31 billion.

Based on its full-year North American results, Ford said it will make profit-sharing payments of around $6,200 each to its 41,600 U short term personal loans.S. hourly employees. Employees will get their checks in March.

Ford moved $15.7 billion worth of tax credits and other assets off its books starting in 2006 because it wasn’t making money so it couldn’t take advantage of them. The company moved most of them back onto its books in the fourth quarter because it anticipates using them now that it’s profitable.

The change will affect Ford’s tax rates going forward. Ford’s tax rate was 9 percent in 2010 because of the assets that were being held in the valuation allowance account. Ford’s new rate will be closer to 30 percent.

Booth said the change is a strong indication that the company expects to remain profitable. Another is Ford’s decision last month to reinstate a 5-cent quarterly dividend starting in March.

But Booth said the international climate remains turbulent. Ford is trying to hold the line on incentive spending in Europe, but that could cost some sales. He doesn’t expect Asia to be a solid contributor to profits for several more years, as the company tries to expand there. The South American market is also getting more competitive, he said, and Ford’s products there are older than some new entries.

Ford is cutting European production in the first quarter by 36,000 vehicles because of weak sales. It’s also making smaller production cuts in Asia and South America, but is increasing production in North America by 18,000 vehicles.

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The bailout launched at the height of the financial crisis in September 2008 will continue to exist for years, says a report issued Thursday by Christy Romero, the acting special inspector general for the $700 billion bailout. Some bailout programs, such as the effort to help homeowners avoid foreclosure by reducing mortgage payments, will last as late as 2017, costing the government an additional $51 billion or so.

The gyrating stock market has slowed the Treasury Department’s efforts to sell off its stakes in 458 bailed-out companies, the report says. They include insurer American International Group Inc., General Motors Co. and Ally Financial Inc.

If Treasury plans to sell its stock in the three companies at or above the price where taxpayers would break even on their investment _ $28.73 a share for AIG, $53.98 for GM _ it may take a long time for the market to rebound to that level, the report says. AIG’s shares closed Wednesday at $25.31, while GM ended at $24.92. Ally isn’t publicly traded.

It will also be challenging for the government to get out of the 458 companies as the market remains volatile and banks struggle keep afloat in the tough economy, it says.

Congress authorized $700 billion for the bailout of financial companies and automakers, and $413.4 billion was paid out. So far the government has recovered about $318 billion. The bailout is called the Troubled Asset Relief Program, or TARP.

“TARP is not over,” Romero said in a statement. She said her office will maintain its commitment to protect taxpayers for the duration of the program.

Treasury spokesman Matt Anderson said the department “has made substantial progress winding down TARP and has already recovered more than 77 percent of the funds disbursed for the program, through repayments and other income.”

“We’ll continue to balance the important goals of exiting our investments as soon as practicable and maximizing value for taxpayers,” Anderson said.

The government has unwound its investments in four of the companies that received the most aid: Bank of America Corp., Citigroup Inc., Chrysler Group LLC and Chrysler Financial, the automaker’s old lending arm.

On Wednesday, Treasury announced that it had sold the final batch of securities under its $368 million Small Business Administration loan program under TARP.

In Romero’s quarterly report to Congress, she said her office has uncovered and prevented fraud related to TARP. Investigations by her office have resulted in criminal charges against 10 people and three convictions, the report notes.

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Now in power and closer than ever to a referendum on whether to break from the U.K. after more than 300 years, the SNP government in Edinburgh led by Scottish First Minister Alex Salmond is counting on tax revenue from the oil industry as a key pillar of the economy along with financial services.

]]> http://fundscons.com/scots-independence-cost-may-beat-oil-cash-nationalists-seek-bloomberg/feed/ http://fundscons.com/yemens-president-leaves-for-us-hands-over-power/ http://fundscons.com/yemens-president-leaves-for-us-hands-over-power/#comments Sun, 22 Jan 2012 23:52:03 +0000 Snowman http://fundscons.com/yemens-president-leaves-for-us-hands-over-power/ Yemeni President Ali Abdullah Saleh left his battered nation Sunday on his way to the U.S. for medical treatment after passing power to his deputy and asking for forgiveness for any “shortcomings” during his 33-year rein.

But in a sign that Saleh’s role as Yemen’s top power broker is likely far from over, he said he would return to Yemen before the official power transfer next month to serve as the head of his ruling party.

Saleh’s departure marks a small achievement in the months of diplomatic efforts by the U.S. and Yemen’s powerful Gulf neighbors to ease the nearly year-old political crisis in the Arab world’s poorest country. An active al-Qaida branch there has taken advantage of the turmoil, stepping up operations and seizing territory.

After months of diplomatic pressure and mass protests calling for his ouster, Saleh signed a deal in November to transfer authority to his vice president in exchange for immunity from prosecution. Still, Saleh continued to exercise power behind the scenes, sparking accusations he sought to scuttle the deal and cling to power.

His departure could help the deal go forward.

Presidential spokesman Ahmed al-Soufi told The Associated Press that Saleh left Yemen’s capital Sanaa late Sunday on a plane headed for the Gulf sultanate of Oman. He did not say how long Saleh would remain there, but added that he would make “another stop before heading to the United States of America.”

A senior administration official said Ali Abdullah Saleh would travel to New York this week, and probably stay in the U.S. until no later than the end of February. U.S. officials believe Saleh’s exit from Yemen could lower the risk of disruptions in the lead-up to presidential elections planned there on Feb. 21.

The Obama administration faced a dilemma in deciding whether to let Saleh enter the U.S. after he requested a visa last month. It has long seen getting Saleh out of Yemen as an important step in ensuring the power transfer goes forward.

But some in the administration worried that welcoming Saleh would spark charges from the Arab world that the U.S. was harboring an autocrat responsible for deadly crackdowns on protesters.

To protect against this, the administration has sought assurances that Saleh will not seek to remain in the U.S.

An official close to Saleh said Sunday the president would undergo medical exams in Oman before heading to the U.S. The U.S. has forbidden him from any political activity in the U.S., the official said, speaking on condition of anonymity because he was not authorize to disclose diplomatic talks.

Saleh is likely seeking treatment for injuries sustained in a blast in his palace mosque last June 3 that left him badly burned. After the attack, Saleh traveled to Saudi Arabia for treatment, leaving many to suspect his power was waning. A few months later, however, he made a surprise return to Yemen and resumed his post.

Under the power transfer deal signed in November, Vice President Abed Rabbo Mansour Hadi is to be rubber-stamped as the country’s new leader in presidential elections. The political parties that signed the deal agreed not to nominate any other candidates.

In a farewell speech Friday reported by Yemeni state media, Saleh said he was passing his powers to Hadi, whom he promoted to the rank of marshal.

Saleh portrayed himself as a patriot who “gave his life in the service of the nation,” called for reconciliation and apologized for any mistakes.

“I ask for forgiveness from all sons of the nation, women and men, for any shortcomings during my 33 years in office,” Saleh said according to Yemen’s state news agency.

He also called on Yemen’s youth, who have spearheaded the mass protests calling for his ouster and often faced deadly crackdowns by Saleh’s security forces, to go home.

“I feel for you and call on you to return to your homes and turn a new page with a new leadership,” he said.

Yemen expert Gregory Johnsen of Princeton University said Saleh’s departure could help the power transfer deal progress, though it will do little to address protesters’ demands for a fundamental change of how politics in Yemen works.

Throughout his rule, Saleh has put close members of his family and tribe in charge of key state institutions and security forces, Johnsen said. Leaving that network intact could allow Saleh to continue to shape events in Yemen, even without the title of president.

“I don’t think we have seen the last of President Saleh,” Johnsen said.

Inspired by popular uprisings elsewhere in the Arab world, Yemenis took to the streets nearly a year ago to demand Saleh’s ouster and call for democratic reforms. Saleh’s security forces have met them with often deadly crackdowns, killing more than 200 protesters. Many others have been killed in violent clashes between armed groups that support the protesters and security forces.

Al-Qaida’s active Yemeni branch has also taken advantage of the security collapse to seize territory in the country’s south, even taking control of a town 100 miles from the capital Sanaa earlier this month.

The protests have continued despite the power transfer deal, which many say falls far short of their demands. They also reject the immunity clause, saying they want to see Saleh tried for his alleged role in the protester deaths.

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U.S. State Department spokeswoman Victoria Nuland said in comments broadcast Friday by Romanian media that Washington supported people’s right to protest and express their views “peacefully.”

“But we call on both protesters and authorities to refrain from any violence,” she added.

A majority of the protests have been peaceful, but riot police official Aurel Moise said 100 protesters had been questioned Thursday on suspicion of throwing stones and using iron fences to break through police lines.

Police used tear gas after protesters started a fire and set up a barricade. Five people were injured.

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