A14 V
DOW11,359.16 DOWN3.03,0.03%
U
deserves credit for cutting a tax- cum-stimulus deal with Republican leaders that involved distasteful concessions on both sides. That’s the difference between “finding common ground,” which is easy, and real “compromise,” which is harder and had fallen out of fashion. Now that the ice has been broken, maybe the next one will come a little easier. It’s also a good sign that the president has finally realized that the only way he is going to succeed is to force congressional Democrats to follow his lead rather than the other way around. If he’d done that earlier in his presidency, he wouldn’t have found himself with his back against the wall after last month’s drubbing at the polls. It’s not just okay if some liberal Democrats in Congress feel they have to vote against a deal that requires many Republican votes for passage—it’s actually a good thing. It means the president finally understands the difference between leading the country and leading his party. What I do have a serious problem with, however, is the substance of the deal and the political trap he fell into before negotiating it. First, the politics. A lot of
W
politics is theater, and the expiration of the Bush tax cuts offered the president and his party a perfect venue for exposing Republican hypocrisy when it comes to creating jobs and reducing the deficit and the GOP’s utter determination to deliver tax cuts to millionaires. In Act One of such a drama,
the DemocraticHouse passes a bill extending tax cuts for the working and middle classes. The money that would have otherwise gone to upper-income tax breaks would be used instead to extend jobless benefits for 6 million workers who have been unemployed for more than a year while providing tax breaks for businesses that hire workers or invest in equipment. In Act Two, the Democratic
Senate tries to take up theHouse bill, only to be thwarted by Republican objections under Senate rules. In response, Senate Democrats force Republicans to mount a real-life filibuster, running round-the-clock sessions that require senators to remain at the Capitol through the holidays, sleeping on cots arrayed outside the Senate chamber. As the debate drags on and the deadline approaches on the expiration of the tax cuts, the president sets himself up in a
ell, it’s not exactly how I would have done it. President Obama
NASDAQ2598.49 UP3.57,0.1%
U
EZ SU
KLMNO ECONOMY & BUSINESS
S&P5001223.75 UP0.63,0.1%
V
GOLD$1,408.30 DOWN$7.00,0.5%
V
CRUDEOIL$88.69 DOWN$0.69,0.8%
A deal for Obama, but the wrong sort of drama ECONOMY
Consumer borrowing up sharply in October Consumer borrowing rose in
October by the largest amount in more than two years, led by a big rise in the category that includes student loans. The Federal Reserve said Tues-
day that consumer credit rose at an annual rate of $3.4 billion in October, the largest increase since a $5.7 billion gain in July 2008. Consumer credit was also up in September. But the strength in both Sep-
tember andOctober isbeingheav- ily influenced as the result of a recently enacted law that makes the government the primary lend-
LEGAL SUSAN WALSH/ASSOCIATED PRESS Now that President Obama cut a deal with Republicans leaders,maybe the next one will come easier.
share this skepticism. The bigger problem with the
STEVEN PEARLSTEIN
room at the Capitol, ready to sign a tax cut for the middle class and veto any tax cuts for millionaires. As the clock strikes midnight on Dec. 31, the curtain falls as the president is photographed either signing the legislation surrounded by tired but smiling colleagues or sitting glumly at an empty table with no bill to sign. Nobody really knows how the American people would have responded to such a drama or how exactly it would have ended. What I can assure you is that nobody would have any doubt about whom to blame for any failure to extend middle-class tax cuts. And if the tax cuts did expire, there would still have been an opportunity to strike a retroactive deal with the new Congress just like the one agreed to this week, with little lasting damage to the economy or incomes of American households. This is not simply a matter of symbolism, as the president suggested this week. It’s a matter of signaling to the country and the GOP leadership that the president will not bow to political hostage
taking.Now that he has blinked, you can be sure that Sen. Jim DeMint and the Tea Party zealots are already plotting how to block legislation to raise the debt limit or appropriate funds to keep the
government running in order to force repeal of health reform. Given the inevitability of such a showdown, the president would have been better to orchestrate it early, on his own terms and over an issue on which the public is clearly on his side. Of course, a variation of this
drama could have played out last summer if congressional Democrats had been willing and unified enough to make it a cornerstone of the fall campaign. Their complaints now about presidential cowardice sound a bit hypocritical. As for the substance of this
deal, economists generally agree that extending unemployment insurance and providing tax breaks for business investment are fair and cost-effective ways to add juice to a lackluster economy. But I’mless convinced about the wisdom of additional payroll tax cuts to stimulate spending by American households that, after decades of over-consumption, are finally beginning to save again. Democrats rightfully complained that the tax cuts were the least- effective parts of the original stimulus package, and there is no reason to expect they will work any better this time. The fact that the stock market could not sustain a rally Tuesday suggests there are others who
tax deal is that it represents a big step backward on the road to getting deficits under control. Given the choice between the Republicans’ high-end tax cuts and Democratic stimulus, the “compromise” is to do both now. It would be one thing if the president and Republican leaders who agreed to this short- term spending spree had embraced the long-term plan proposed last week by a majority of the members of the deficit- reduction commission. Unfortunately, neither did. In that regard, the most encouraging aspect of the tax deal is that none of the tax cuts would last more than two years. Should the economy revive
and unemployment fall, however, don’t look for Republican leaders to agree that it’s time to raise taxes as part of a debt-reduction strategy. For them, the weak economy is mere pretext for tax cutting, not an underlying rationale. Given the choice between raising taxes or lowering the deficit, there’s no doubt where their priority lies. For his part, the president
hinted in his news conference Tuesday that he’s eager to grab the mantle on deficit-cutting by following on the deficit commission’s call for tax reform that reduces rates and eliminates most tax breaks while raising additional revenue. That, too, should offer the opportunity for winning political theater. Let’s hope that on that occasion he decides to show up for the performance.
pearlstein@washpost.com Bank of America settles municipal bond inquiry
Payment of $137 million will end bid-rigging investigation
BY ZACHARY A. GOLDFARB Bank of America will pay
$137.3million to settle allegations that it defrauded schools, hospi- tals and dozens of other state and local government organizations, federal officials said Tuesday. The settlement stems froma long-run- ning investigation into miscon- duct in the municipal bond busi- ness that raises money for locali- ties to pay for public services. Bank of America is accused of
depriving local organizations of millions of dollars by engaging in illegal behavior when investing the proceeds of municipal bond sales. The bank is paying $107.8 mil-
lion to these organizations in res- titution, $25 million to the Inter- nal Revenue Service for abuses
related to the tax-free status of municipalbonds and$4.5million to state attorneys general for costs related to their investigations. The government showed Bank
of America leniency in the settle- ment because the bank first dis- closed the illegal conduct that launched the investigation. As a result, the bankmust pay restitu- tion but does not have to pay an additional financial penalty. Anumber of bankers and other
professionals from a variety of financial firms have pleaded guilty in the probe, which cen- tered on companies conspiring to winmunicipal securities business in violation of statutes requiring fair competition. The investiga- tionwas conducted by the Justice Department and the Securities and Exchange Commission, among other agencies. “Bank of America’s disclosure
of wrongdoing and cooperation has led to an aggressive, ongoing investigation by the Department of Justice into anticompetitive ac- tivity inthemunicipalbondderiv-
World’sFinest Executive Suites
• A cost effective Executive Suites Office solution • Best address, best receptionist, best IT and support • Flexible lease terms starting from one month • For less than the cost of a secretary • We will help your business succeed
Call to arrange a personal tour today!
atives industry,” said Christine Varney, the department’s anti- trust chief. “TheDivision’s investi- gation of this matter continues, and the prosecution of anticom- petitive conduct in the financial markets remains our highest pri- ority.” In a statement, Bank of Ameri-
ca said it was pleased to put the matter behind it. “Bank ofAmeri- ca is one of a number of financial institutionsthatareunder investi- gation, but Bank of America was the first and only company to self- report, and it was our company that the Justice Department has cited as being particularly helpful inits investigation.” The banking giant is accused of
taking part in a conspiracy in which it and other banks paid kickbacks to win the business of municipalities seeking to invest the proceeds of bond sales before themoney is ready to be spent. The municipalities hired com-
panies tohelpthemfindattractive investments. Under federal rules, these companies are required to
use a bidding process allowing banks and investment firms to of- fercompetingproposalsforhowto invest themunicipalities’money. The companies are accused of
directing the business to particu- lar banks that paid them kick- backs. Bank of America was one such bank, according to federal officials. “Thisongoinginvestigationhas
helped to expose widespread cor- ruptioninthemunicipal reinvest- ment industry,” said SEC enforce- ment director Robert Khuzami. “The conduct was egregious: In return for business, the company repeatedly paid undisclosed gra- tuitous payments and kickbacks and affirmatively misrepresented that thebiddingprocesswasprop- er.”
The alleged misconduct dated
from the late 1990s to the early 2000s. It affectedmunicipal bond sales related to health-care facili- ties in Minnesota and utilities in Guam to universities in Califor- nia.
goldfarbz@washpost.com MARCIO JOSE SANCHEZ/ASSOCIATED PRESS
GoogleCEOEric Schmidt discusses Chrome OS at an event Tuesday. Closer to rolling out its long-
awaited operating system,Google on Tuesday said notebook com- puters runningChromeOSwillbe readyforconsumersbythemiddle ofnext year. “We finally have a viable third
choice for an operating system” in addition to Microsoft’s Windows and Apple’s Mac operating sys- tems, Google chief executive Eric Schmidt saidatanannouncement inSanFrancisco. Aiming to make a laptop feel
more like a smartphone, Google on Tuesday opened an online ap- plication store within its Chrome
ALSOINBUSINESS l Russia closer to joining
WTO: Russia moved a step closer tomembershipintheWorldTrade Organization on Tuesday by sign- ing an agreement with the Euro- pean Union settling “key ques- tions” that have hampered its ac- cessionbidfor years. Russian Economy Minister El-
vira Nabiullina and E.U. Trade Commissioner Karel De Gucht signed a memorandum of under- standing that sets the terms to resolve all E.U.-Russia bilateral is- sues. Russia, the largest economy outside the WTO, applied for membership in the Geneva-based trade arbiter inJune 1993.
AmongthebiggerE.U.concerns
that have been settled areRussia’s pricing policies for lumber ex- ports and railway fees. Russia has agreed to cut the timber export duty to about 15 percent of cus-
Madoff trustee pursues forfeitures
U.S.prosecutorsandacourt-ap-
pointed trustee ramped up efforts to recoup money from friends of Bernard L. Madoff believed to have profited from his fraud, reaching one forfeiture deal of $625million and suing the owner of theNewYorkMets. Prosecutors and trustee Irving
Picard said the forfeiture Tuesday from accounts at J.P. Morgan Chase were traceable to Carl Sha- piro, 97, a clothing entrepreneur who had invested with Madoff since 1961. They said the agree- ment was made “to resolve any
TECHNOLOGY Google promises laptops using ChromeOS
potential civil claims by the gov- ernment against Shapiro and his family.” Itdidnot releaseanyparty fromcriminal liability, theofficeof theManhattanU.S. attorney said. Separately Tuesday, the trustee
suedMets owner FredWilpon, his firm Sterling Equities and other defendants. The specifics of the claims were filed under seal and notmade public. Sterling said in a statement that, regardless of the outcomeof the litigation, theMets have “necessary financial and op- erational resources to compete.” —Reuters
V
10-YEARTREASURY DOWN$16.90PER$1,000,3.12%YIELD
CURRENCIES $1=83.49 YEN; EURO=$1.326
DIGEST
er to students. The increase of $3.4 billion in
overall credit surpassed the flat reading that economists had ex- pected. The gain translated into a 1.7 percent rise and followed a 0.6 percent increase in September. Those were the first back-to-back monthly gains since mid-2008. Consumer credit had fallen for 19 straightmonths before the rise in September. Americans have reduced their
borrowing since 2008 as they struggletocopewithasteepreces- sionandhighunemployment. —AssociatedPress
WEDNESDAY, DECEMBER 8, 2010
browser featuring a wide variety of games,media andother apps. The Google ChromeWeb Store
opened Tuesday with about 500 applications, including publica- tions, an
Amazon.com app that will allow shoppers to browse items, and a large suite of games from Electronic Arts and other gamedevelopers. Google also said its first note-
books with Chrome OS will be built by Acer and Samsung and powered by Intel chips. Google said no pricing information is available at this time. —SanJoseMercuryNews
toms value from 25 percent, though the lower levy won’t be applieduntil it joins theWTO. l Retiring Massey CEO to get
$12 million: Massey Energy chief executiveDon Blankenship is get- ting at least $12 million as he retires fromthe coalmining com- pany, according to a regulatory filingTuesday. According to the filing, Blan-
kenship will receive $2 million Dec. 31 and $10million July 1. He also gets health insurance and a $5,000-a-month consulting job for twoyears,aswellasasecretary and use of his office in eastern Kentucky for up to five years. In exchange,Blankenship can’t com- pete with Massey or hire away employees for two years. Massey announced Blanken-
ship’s retirementFriday. —Fromnews services
Servcorp Virtual Offices
The most professional image from $95 per month • Full business and IT solutions without the physical space • Best address, dedicated receptionist, global network of meeting rooms and value-added IT solutions
• The most professional image $95 per month
• No deposit, no long term commitment required Phone number instantly, sign up online NOW!
www.servcorp.com or google “Servcorp”
Three Area Locations: F Street 202-559-8700 | Pennsylvania Ave. 202-559-9100 | Tysons Corner 703-663-7200 PREMIUM LOCATIONS IN NEW ZEALAND | AUSTRALIA | INDIA | SOUTH EAST ASIA | CHINA | JAPAN | EUROPE | MIDDLE EAST | USA | UK
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64