UBS and Barclays have both been fined more than $1 billion by regulators for manipulating the LIBOR interest rate, a key global benchmark. UBS bankers were caught in emails bragging about the “fu*king humongous deals” they were arranging by gaming LIBOR.

LIBOR rigging could have affected Americans of all stripes, sucking funds from the cities they live in and hurting the pension funds that hold their retirement savings. And as the Wall Street Journal reported, American taxpayers may lose up to $3 billion due to LIBOR rate rigging:

Fannie Mae and Freddie Mac may have lost more than $3 billion as a result of banks’ alleged manipulation of a key interest rate, according to an internal report by a federal watchdog sent to the mortgage companies’ regulator and reviewed by The Wall Street Journal.

The unpublished report urges Fannie and Freddie to consider suing the banks involved in setting the London interbank offered rate, which would add to the mounting legal headaches financial firms such as UBS and Barclays face from cities, insurers, investors and lenders over claims tied to the benchmark rate. [...]

Analysts from the inspector general’s office said in the internal report, dated Oct. 26, that Fannie and Freddie likely lost more than $3 billion on their holdings of more than $1 trillion in mortgage-linked securities, interest-rate swaps, floating-rate bonds and other assets tied to Libor from September 2008 through the second quarter of 2010, which the report says was the height of banks’ alleged false reporting of the interest rate.

As Reuters’ Alison Frankel wrote, “The drive for profits in people like the UBS traders and their brokerage conspirators, as described in the FSA filing, is obviously more powerful than any qualms about morality or fear of being found out. That’s why moaning about Dodd-Frank whistle-blowers or duplicative actions against the banks rings hollow.” Federal regulators, including Treasury Secretary Tim Geithner (then president of the Federal Reserve Bank of New York), reportedly knew about LIBOR rate rigging as far back as 2008.

Evidence that the global corporate tax rate has dropped significantly in the past decade counters a conservative myth that corporations suffer from too-high taxes. As several countries — most prominently the UK — renew scrutiny over tax dodging, a Deutsche Bank report illustrates how the global effective corporate tax rate has dropped significantly in the past decade:

Corporations avoid paying taxes on billions in earnings by registering profits to low-tax havens. Recently, Amazon, and Starbucks, among others, have faced fire in the UK for “immoral” tax dodging. Starbucks pays an overseas tax rate of 13 percent, “one of the lowest in the consumers goods sector,” while Apple and Amazon have paid single-digit global tax rates and just 3.2 percent and 5.3 percent on overseas profit.

In the U.S., corporate profits are at an all-time high, while revenue from the corporate income tax has plummeted. (HT: Business Insider)

Grover Norquist’s Americans for Tax Reform announced Wednesday that Speaker John Boehner’s (R-OH) proposed “Plan B” to extend expiring tax cuts on the first $1 million in annual income would not really be a “tax increase,” and thus would not violate the ironclad oath nearly all Congressional Republicans have taken to never vote to raise taxes. In so doing, the group effectively also conceded that President Obama’s proposed extension of tax cuts for the first $250,000 of income would also not violate the Norquist pledge.

Throughout the presidential campaign and the recent fiscal negotiations, President Obama’s proposal has been clear: extend tax cuts on the first $250,000 in annual income and allow the rates on income above that amount to be taxed at the Clinton-era rates. While a few Republican lawmakers have embraced a plan that passed the Senate and has strong Democratic support in the House to do just that, many have been reluctant.

A key reason was their fealty to Norquist and the pledge; in an interview with ThinkProgress on Tuesday, Rep. Phil Gingrey (R-GA) demonstrated in 67 seconds how that pledge outweighs other considerations.

In the past, ATR has attacked the Obama’s tax cut proposal as a “small business tax hike..” In July 2011, it warned “ATR opposes all tax increases on the American people. Any failure to extend or make permanent the tax cuts of 2001 and 2003, in whole or in part, would clearly increase taxes on the American people.” Norquist attacked pledge-signers who expressed a willingness to let rates go up as having “impure thoughts” and suggested that extending only some of the tax cuts would not pass the “laugh test.”

But today, the group conceded that Boehner’s approach — and therefore Obama’s — would not really violate his pledge. They said:

This legislation—popularly known as “Plan B”–permanently prevents a tax increase on families making less than $1 million per year. Republicans supporting this bill are this week affirming to their constituents in writing that this bill—the sole purpose of which is to prevent tax increases—is consistent with the pledge they made to them. In ATR’s analysis, it is extremely difficult—if not impossible—to fault these Republicans’ assertion.

In particular, in this Congress the House has already voted twice to prevent any tax increases on any American. When viewed with this in mind, and considering this tax bill contains no tax increases of any kind — in fact, it permanently prevents them — matters become more clear. Having finally seen actual legislation in writing, ATR is now able to make its determination about a legislative proposal related to the fiscal cliff. ATR will not consider a vote for this measure a violation of the Taxpayer Protection Pledge.

But while the amounts in the Boehner proposal and the Democratic plan differ, if the Boehner proposal is neither a “tax increase” nor a violation of the anti-tax oath, the same would have to be true of the Obama plan.

Speaker of the House John Boehner (R-OH) yesterday released the Republican “Plan B” for averting the so-called “fiscal cliff”: a bill to allow the Bush tax cuts on income in excess of $1 million to expire. The White House has already said that President Obama would veto the bill if it ever reaches his desk, but House Republicans are forging ahead with a vote, claiming that their bill is a “net tax cut.”

Boehner’s website lays out the plan here, but leaves out some crucial details, which ThinkProgress provides below:

House GOP Claim	Reality
Does not raise taxes. It is a net tax cut that prevents a $4.6 trillion tax hike on January 1	In fact, by allowing several key tax credits to expire –including the expanded Child Tax Credit and a credit that helps with higher education tuition — Plan B would raise taxes on 20 million families. Also, allowing the current payroll tax cut to expire will affect every working American. As the Tax Policy Center noted, “Most low income and middle income families with children will see their taxes rise.”
Permanently extends income tax rate cuts for Americans making less than $1 million, which protects 99.81 percent of all taxpayers	This plan would raise just 15 percent of the revenue of Obama’s campaign proposal to allow the Bush tax cuts to expire on income in excess of $250,000. As Citizens for Tax Justice noted, “millionaires get 50 percent of the additional tax breaks from moving the threshold to $1 million.”
Permanently extends the current estate and gift tax ($5 million at 35 percent and indexed for inflation)	Keeping the estate tax at this level means that a miniscule 0.2 percent of estates will face the tax, costing the government billions in revenue every year. All of the benefit goes to the very wealthiest Americans.
Permanently extends parity for capital gains and dividend taxes, preventing dividend taxes from being taxed at the highest rates	Similar to the voter-rejected Romney tax plan, this would be another handout to the wealthy. President Obama has proposed allowing the Bush tax cut on dividends to expire for high-income earners.
Does not include anything on the debt limit or other non-tax policy items	This means that federal unemployment benefits will expire for two million workers, and gives the Republicans the opportunity to hold the debt limit hostage when it needs to be raised in a few months.

The history of the Republican Party’s relationship with the Simpson-Bowles debt reduction plan is a bit puzzling. Rep. Paul Ryan (R-WI) helped derail it in committee, then the RNC was outraged when President Obama did not embrace it. Now, the Republicans are rejecting the president’s most recent offer to avoid the so-called fiscal cliff, which is remarkably similar to the original Simpson-Bowles plan.

As Michael Linden at the Center for American Progress points out, President Obama’s plan contains “90 percent of Simpson-Bowles spending cuts and 60 percent of the plan’s revenue.”

However, though Republicans voiced support for Simpson-Bowles, there has been no such endorsements of the President’s latest plan, which a spokesman for House Speaker John Boehner (R-OH) called “unrealistic.” Sen. Minority Leader Mitch McConnell (R-KY) said the President’s plan does not meet his “own test of ‘balance.’” This is a departure from other — and older — Republican stances on the commission:

– Sen. Lamar Alexander (R-TN) hoped to vote on Simpson-Bowles in April 2012.

– Sen. John McCain (R-AZ) called Simpson-Bowles “an excellent blueprint.”

– Sen. Lindsey Graham (R-SC) said there was “no time to wait” to vote on Simpson-Bowles.

– Fred Barnes, writing in the Weekly Standard, said Republicans should stress Simpson-Bowles and said, “Republicans agree [with commission's recommendations] and should say so loudly.”

Though Republicans support Simpson-Bowles, which calls for more revenue increases than President Obama, there is no support for a similar plan when it comes from the White House.

– Greg Noth

On Wednesday, ThinkProgress exclusively reported that Senator-Designate Tim Scott (R-SC) used a controversial method of securing federal contracts and grants for his district known as “lettermarking,” despite his supposed opposition to earmarks. A ThinkProgress review of newly obtained documents reveals that Scott also used the process to request stimulus funds for a pet South Carolina project — despite his public opposition to the American Recovery and Reinvestment Act and federal stimulus in general.

During his first campaign, he said that the 2009 stimulus had “failed Americans.”
Shortly after becoming a Congressman in 2011, he endorsed “elimination of any unobligated ‘stimulus’ funding.” And in a September 2012 statement, Scott said, “It is clear that the current path is unsustainable – stimulus spending doesn’t work and will not work.”

But, while he publicly attacked the stimulus, he wrote a May 2012 letter to Secretary of Transportation Ray LaHood requesting almost $22 million in stimulus funding for renovation of railroad tracks in North and South Carolina:

It is my understanding that you will soon be making decisions on the Transportation Investment Generating Economic Recovery (TIGER IV) grant program. I am writing in support of a joint application submitted by Horry County, South Carolina, Carolina Southern Railroad (CSR) and Columbus County, North Carolina. The funding provided through this grant will be used to rehabilitate 89 miles of railroad tracks used by CSR that are in dire need of repair and/or replacement. Currently, these tracks are shut down because they do not meet the new Federal Railroad Authority bridge requirement.

Read the letter:

The TIGER IV grants were funded by the 2012 continuing resolution, but are effectively an extension a program created by the 2009 stimulus.

On his campaign website, Scott wrote, “The biggest challenge facing our nation today is the culture of spending that has taken over Washington, D.C. I have fought hard to change the conversation from ‘how much can we spend’ to ‘how much can we save’, and we have succeeded in beginning to change that mindset. However, there is still a lot of work left to be done.” “The time for pet projects and special favors,” he added, “is over.”

The Swiss bank UBS will pay $1.5 billion in fines to international regulators for manipulating the LIBOR interest rate, which helps set rates on financial products across the world. UBS is the second bank, after Barclays, to pay fines for messing with LIBOR.

According to emails released by the British Financial Services Authority, UBS traders bragged over email about their work rigging the interest rate, promising to do “fu*king humongous deal[s]” with each other if the rates were rigged a certain way:

The trader, described in Financial Services Authority documents as Trader A, wrote on instant message exchanges: “3m libor is too high cause I have kept it artificially high.” This single employee appears to have made hundreds of requests to brokers to help manipulate the rate, according to the FSA. At least 45 UBS employees in total knew of, or were involved in, the rigging of the rate, the UK regulator said.

The FSA documents suggest a macho trading culture on the UBS trading floor. Trader A also said: “if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today … I will ****ing do one humongous deal with you … Like a 50,000 buck deal.”

As Reuters’ Felix Salmon put it, “The $1.5 billion that UBS is paying in fines here is enormous, but it’s not remotely enough.” The emails read much like those circulated by Goldman Sachs when it was busy ripping off customers with self-described “shi*ty deals.”

Without an extension, two million workers will lose their federal unemployment benefits in 2013, despite long-term unemployment still hovering at record highs. President Obama’s offers to avert the so-called “fiscal cliff” have included a new extension of federal benefits, but Republican proposals have not done the same.

According to The Hill, House Democrats are starting to agitate for an full extension:

Senior House Democrats insist they won’t leave Washington until Congress extends jobless benefits for the long-term unemployed.

Rep. Sandy Levin (D-Mich.), the House Ways and Means Committee ranking member, said Tuesday that he is determined to see a yearlong extension passed before the benefits expire on Dec. 29.

Levin said he would refuse to accept a reduction in the number of weeks or any other trade-off as part of an extension.

“I think it’s heartless to talk about a further reduction,” he said.

A majority of Senate Democrats have also signaled support for an extension. Without an extension, only one quarter of the unemployed will have access to unemployment insurance next year, as Sarah Ayres showed:

As Ayres noted, “Congress has never allowed emergency unemployment benefits to expire when the unemployment rate was above 7.2 percent. The unemployment rate today is 7.7 percent.”