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Economy

GOP Rep. Brady Isn’t Convinced That His $80 Billion Corporate Tax Giveaway Is Actually A Tax Break

Rep. Kevin Brady (R-TX)

Several multinational corporations, under the banner of a campaign known as “WinAmerica” having been pushing Congress to enact a tax repatriation holiday, which would allow corporations to bring money that they have stashed offshore back to the U.S. at a dramatically lower tax rate than the 35 percent that they would usually pay. Rep. Kevin Brady (R-TX) has obliged these companies by crafting a bill that would grant corporations a 5.25 percent tax rate on repatriated money.

However, Brady doesn’t necessarily see this as a tax break, according to a statement he gave to Reuters:

“As this economy continues to struggle, I think our case gets stronger every day,” said Republican Representative Kevin Brady, author of a repatriation tax holiday bill backed by 15 Republicans and eight Democrats in the House of Representatives.

“Lowering that tax rate for a year to bring those dollars home, people don’t understand why we’re not doing that. Some may view it as a tax break, but others just see these stranded profits that could do a lot of good things,” Brady said.

The rationale behind this particular policy is that corporations will use the money that they repatriate to invest domestically and create jobs. However, as we’ve noted time and again, a repatriation holiday in 2004 was a complete flop on that front: the companies who benefited most from the tax break wound up cutting jobs, and corporations began parking more money offshore in anticipation of future tax holidays.

The corporations pushing for a repatriation holiday already pay extremely low taxes. Adding insult to injury, the companies lobbying hardest for the holiday won’t even disclose how many jobs that have overseas.

According to the Joint Economic Committee, another repatriation holiday would cost about $80 billion. But to Brady, only “some” people think that’s a tax break. Well, count us amongst them.

False Choice: Preserving Corporate Tax Cuts, Arizona Gov. Brewer Plans To Slash Higher Education

It is becoming a well-worn tradition among Republican governors to use state budget woes to pursue lopsided budget priorities. Dedicated to preserving $538 million in corporate tax cuts, Arizona Gov. Jan Brewer (R) willingly sacrificed transplant patients, low-income families, the “mentally ill,” children’s health programs, and arts programs in the name of a balanced budget. Now — despite once abhorring the idea — Brewer is taking her knife to another one of her low priorities: higher education.

Having already cut state funding for public universities from $1.2 billion in FY2008 to $682 million this year, Brewer is prepping to gouge out higher education in order to pay for an expected 40 percent growth in Medicaid and other health-care expenses by 2015. To accommodate the cost, Brewer is interpreting Arizona’s constitution’s requirement that the state provide higher education “as nearly as free as possible” to mean that higher education is “a large bucket” of money to redistribute:

A spokesman for Gov. Jan Brewer said it is “simply a fact that higher education is a large bucket when it comes to state funding.”

“It’s something where the state has discretion in terms of cuts,” said Matthew Benson, the spokesman.

Higher education officials say Arizona schools are already at a “breaking point.” According to the Arizona Board of Regents spokeswoman Katie Paquet, schools will significantly hurt enrollment if they keep raising tuition. “We’re going to start to have an access issue if state budgets continue to decline and we’re forced to continue to raise tuition,” said Paquet.

Even Republican state Rep. Tom Forese is uneasy with the prospect of higher education cuts. “We’re really putting ourselves in a position where we’re not going to be able to meet these unfunded federal mandates without taking part in several very bad positions,” he said. Regents Chairman Fred DuVal, meanwhile, blasted Brewer for putting tax cuts ahead of education spending. “Pitting Medicaid against education is not a full disclosure of the choices,” he stated. “If education is their fourth priority — they should just say so.”

Politics

VIDEO: The Mess In Texas — Debunking Rick Perry’s ‘Texas Miracle’

Having only entered the race last week, Texas Gov. Rick Perry (R) has already jumped to the top of the GOP presidential field. Fueling his momentum is the so-called “Texas miracle” — the myth that Perry’s governorship has led Texas to weather the recession better than other states, maintaining a healthy economy and brisk job creation. Unfortunately for Perry, these claims are often built on incomplete analysis, or by cherry picking statistics while overlooking other relevant factors that fill in the full picture, which is a much more mixed and middling economic performance than he and his supporters would like you to believe.

ThinkProgress produced a video report. Watch it:

Justice

Judge Suspends All Federal Court Foreclosures In Rhode Island

Judge John McConnell

Last week, a federal judge in Rhode Island issued an order that temporarily halts all foreclosures in that state’s federal court district — and order that will give the court time to sort through the chaos created by a privatized real estate registry known as the Mortgage Electronic Registration Systems:

At issue in many cases in Rhode Island and elsewhere is the privately held MERS’ right to foreclose on property owners or assign the mortgage to another company so it can, in turn, foreclose. Shoddy paperwork in which the transfer of mortgage ownership from one holder to the next is a central issue. In many cases, the property owner admittedly is in default but is challenging the paper trail. [...]

[L]awyers Todd S. Dion and Babcock argue that cities and towns are losing millions in recording fees as a result of the process, and that MERS is allowing mortgages to be sold without complying with state law.

The backbone of American real estate law is a network of state-run registries, which track who owns what properties and whether the property is subject to any encumberances such as a mortgage. In the 1990s, however, the banking industry created MERS as an alternative, privatized registry that would allow banks to transfer mortgages more quickly in order to facilitate the creation of the kind of mortgage-backed securities that were a centerpiece of the recent economic crisis.

The result has been a disaster. One study found that “[f]ewer than 30 percent of the mortgages had an accurate record in MERS.” To make matters even worse, MERS functions based on a legal slight of hand that treats it as the technical owner of roughly half of all home mortgages in the country. As a result, approximately one-third of all home mortgages are caught in a vortex of uncertainty. The homeowner doesn’t know who owns their debt obligation, and the courts have no idea who actually has the legal right to foreclose.

MERS’ attorneys essentially argue that it should be above legal scrutiny because it is too big to enjoin. Shutting down MERS’ ability to foreclose on properties could throw half of the nation’s foreclosures into legal limbo, and there’s no telling what impact this could have on the nation’s housing market. Several judges, however, have ignored MERS’ scare tactics. The Arkansas Supreme Court held last year that MERS can no longer bring foreclosure proceedings in that state. A federal bankruptcy judge in New York held that “This court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.” Last week’s Rhode Island decision is only the latest warning shot over the banking industry’s bow.

As a final note, it will be interesting to see whether the banking industry attempts to discredit last week’s decision by noting that it was handed down by newly-confirmed Judge John McConnell. The Chamber of Commerce led a blistering campaign of obstruction against McConnell’s nomination because he committed the unforgivable sin of trying to hold lead paint companies and the tobacco industry accountable to their consumers. McConnell’s assignment to a high-profile foreclosure case is no doubt exciting the banking industry’s PR department, even if they have no one to blame for MERS’ problems but themselves.

Unemployed Man Pickets Pat Toomey Events To Ask The Senator To Meet With Jobless Pennsylvanians

Will Toomey meet with unemployed constituents?

Pennsylvania resident Dan Haney has been unemployed since February when his job at Express Scripts was outsourced. Although he has found some comfort in the fact that his wife is still employed and has health insurance, his family is still struggling.

So Haney decided to seek out one of his U.S. senators, Pat Toomey (R), to talk to him about how to get people back to work. Haney has been protesting outside of events Toomey is holding during the August recess, asking him to host a meeting with jobless Pennsylvanians:

The unemployed Haney lost his job at Express Scripts in February, when he said the company outsourced several hundred jobs. He’s since been picketing outside various Toomey events, asking the senator to hold a town hall meeting with unemployed state residents. Haney said Toomey has agreed to the meeting, but has not responded with a date and place.

“He gives tax breaks to corporations, but I’m on unemployment and I’m still paying my taxes,” Haney said. “These corporations have to step up to the plate and pay their taxes as well and stop jobs from going overseas.”

Haney has uploaded a YouTube testimony for a group called Toomey Watch where he formally requests a meeting with the unemployed and under-employed. Watch it:

Haney says Toomey has agreed to a meeting, but has yet to specify a time and place. Responding to an inquiry from ThinkProgress, Toomey’s staff said he will announce a slew of new constituent meetings on his website by Friday.

NEWS FLASH

CBO: Unemployment Will Be Above 8 Percent Through 2012 | According to the latest budget outlook released today by the Congressional Budget Office (CBO), the national unemployment rate will still be 8.5 percent at the end of next year. “Weakness in the demand for goods and services is the principal restraint on hiring, but structural impediments in the labor market — such as a mismatch between the requirements of existing job openings and the characteristics of job seekers (including their skills and geographic location) — appear to be hindering hiring as well,” CBO said.

Chabot Refuses To Consider Any Revenue Increases Because He ‘Doesn’t Really Buy’ That Taxes Are At Historical Lows

ThinkProgress filed this report from a town hall in Cincinnati, Ohio.

Over the next three months, the fiscal super committee created by the debt ceiling deal will meet to craft a $1.5 trillion deficit reduction package that Congress will vote on by Dec. 23. As progressives advocate a balanced approach that includes revenue increases as well as spending cuts, Republicans have refused to consider any revenue increases, no matter how small. This was evident in the August Republican presidential debate, where every single candidate refused to support a deal that would have included $10 in spending cuts for every $1 in revenue increases.

During a town hall meeting earlier this week, an Ohio constituent posed the same hypothetical to Rep. Steve Chabot (R-OH). Chabot was initially hesitant to answer because “we’re never going to get that deal,” but then went on to express his opposition to raising revenues at all, saying, “I’m not for raising taxes.” When a constituent correctly noted that taxes are at their lowest level in more than 50 years, Chabot was skeptical, declaring, “I don’t really buy that that’s the case”:

CONSTITUENT: My question is, would you support a bill that would increase the tax revenues by $1 and got $10 in cuts?

CHABOT: [...] We’re never going to get that deal. I’d have to look at it at that time. I’m not going to answer a hypothetical question with a set of facts that are not going to happen. And I’m not for raising taxes.

CONSTITUENT: Why?

CHABOT: Because I think taxes are plenty high as they are right now.

CONSTITUENT: But again, they’re at the lowest…

CHABOT: I’ve heard that quote thrown around and I don’t really buy that that’s the case, that they’re the lowest. I know there’s some groups that have said there are. I’m not really convinced that’s the case. There may be some people that have it, but I don’t think that’s the case.

In fact, a recent USA Today analysis shows precisely that. In the beginning of 2011, the total tax burden dropped to 23.6 percent of all income, well below the 27 percent that individuals typically paid during preceding decades. If that average taxation burden still stood, there would be $500 billion in additional revenue, cutting the budget deficit by one-third.

With the United States facing a $14 trillion deficit and millions of Americans out of work, it’s clear that Congress needs to use every tool it can to address the problem, including raising revenue. But with congressmen like Chabot casting doubt on the fact that the current tax burden is at a historical low and using that doubt to justify why we can’t have any revenue increase at all, it’s difficult to imagine that Congress will be able to overcome Republican intransigence.

Sen. Ayotte: Calling For Higher Taxes On The Rich And Corporations Is Just ‘A Discussion Of Class Warfare’

ThinkProgress filed this report from Newport, New Hampshire.

Sen. Kelly Ayotte (R-NH)

Throughout their fight to maintain corporate tax breaks and preserve the Bush tax cuts for the wealthy, Republicans have continually blamed their opponents of attempting to wage “class warfare” against the rich. Most recently, former Massachusetts Gov. Mitt Romney (R) — himself worth more than $200 million — blasted questioners at the Iowa State Fair, saying, “There was a time in this country when we didn’t celebrate attacking people based on their success and when we didn’t go after people because they were successful.”

Sen. Kelly Ayotte (R-NH), who received Romney’s endorsement during her 2010 campaign, took up that mantle at a recent town hall. She told a questioner who asked why corporations and the wealthy were being spared while government programs that largely benefit the middle- and lower-classes were facing cuts that there are ways to balance the budget without waging “class warfare”:

AYOTTE: My point is, we can do tax reform, I think, in a way that it’s not a discussion about class warfare or this or, I think we can do it in a productive way where we look at simplifying our tax code, and we do it in a way that would actually lower rates for everyone and be fair.

Watch it:

Ayotte stuck to the GOP talking points of increasing revenues without raising tax rates, bolstering her position on the intransigence that played a major role in Standard & Poor’s downgrade of the nation’s credit rating earlier this month.

But if there is indeed a class war taking place, it looks much different than the one Ayotte described. As ThinkProgress has noted, the income gap between the richest and poorest Americans has exploded to unprecedented levels as the richest Americans have seen their income quadruple even as their tax rates halved. Corporations are also paying some of their lowest taxes in history, with many of America’s largest companies paying little-to-nothing at all. Tax dodging by corporations cost the average U.S. taxpayer $434 in 2010.

Meanwhile, 23 consecutive polls show that Americans continue to support using tax increases on the wealthy to help pay down the nation’s debt.

Bank Of America Forecloses On Man Two Days After Approving His Mortgage Modification

America’s biggest banks have produced a litany of foreclosure horror stories recently, from Chase bank selling a off a soldier’s home on the very same day that he returned from Iraq to a women losing her home to foreclosure even after scrounging together $50,000 in back mortgage-payments that the bank said she owed. Wells Fargo foreclosed on one borrower for missing a few payments…after Wells Fargo specifically the borrower to miss a few payments.

Bank of America also has a deep list of mortgage misdeeds, from improperly foreclosing on a family and stealing its pet parrot to blatantly violating its contract with Treasury after joining one of the administration’s anti-foreclosure programs. And BofA has been arguably the least capable bank when it comes to getting borrowers into sustainable mortgage modifications, due to its inability to keep paperwork straight or review cases in a timely manner.

Epitomizing this problem, Bank of America foreclosed on one New Jersey resident who not only was current on his mortgage payments, but had been approved for a modification by the bank just two days before. The Newark Star-Ledger has the details:

He finished the application process [for a mortgage modification] and continued making his payments, knowing lenders were backed up with modification requests. [...] Finally, on April 10, a letter. But not the one he was expecting. “According to our records, payment for your home loan is past due,” it said. Conca finally called a lawyer for help, and the lawyer corresponded with the lender, but got nowhere.

Then on July 19, Conca received a letter saying he was approved for a rate reduction on a modified mortgage and he’d receive the paperwork in 10 days.

Relief, but it was only temporary.

Two days later he received a different kind of letter from Bank of America: a notice of intention to foreclose.

Bank of America didn’t admit to the error — and rescind its foreclosure notice — until contacted by the Star-Ledger. In the meantime, the borrower’s credit score has been reduced.

This week, BofA was forced to apologize to an elderly couple who it had foreclosed upon after they paid their mortgage too early. That it takes media attention to get BofA to acknowledge these sorts of egregious errors is a testament to how poorly its mortgage modification programs are functioning.

Econ 101: August 24, 2011

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • Federal Reserve Chairman Ben Bernanke is unlikely to unveil any new measures aimed at boosting the economy when he gives an address at Jackson Hole on Friday. [Washington Post]
  • According to analysts at Wells Fargo, a dozen state economies likely contracted in July: Michigan, Nevada, Alabama, Montana, Illinois, Indiana, Vermont, Virginia, North Carolina, South Carolina, Georgia and Alaska. [Politico]
  • Mortgage giants Fannie Mae and Freddie Mac “are selling hundreds — perhaps thousands — of foreclosed properties in metro Detroit for far less than they appear to be worth, a practice that leaders say is driving down local property values and weakening neighborhoods.” [McClatchy]
  • U.S. mortgage applications “fell to a nearly 15-year low last week as resurgent worries about the strength of the economy kept buyers at bay.” [CNBC]
  • Under the Dodd-Frank financial reform law, before mega-bank Capital One can complete its purchase of ING Direct, the Federal Reserve must examine the systemic risk of the combined company, and “if the risk outweighs the benefits of the transaction, the deal must be blocked.” [New York Times]
  • Iowa Attorney General Tom Miller (D), “who is leading foreclosure settlement negotiations with the nation’s largest banks on behalf of all 50 states, abruptly removed New York Attorney General Eric Schneiderman from the coalition’s executive committee Tuesday, saying he had ‘actively worked to undermine’ the group’s efforts in recent months.” [Washington Post]
  • Mega-banks State Street and JPMorgan Chase “profited during the financial crisis by borrowing $200 billion almost risk-free from the Federal Reserve under a program intended to rescue money-market mutual funds.” [Bloomberg]
  • The White House said yesterday that regulatory cuts it has proposed “would save Washington more than $10 billion over five years.” [Reuters]
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