Let’s Be CLEAR. Obama is NOT Increasing taxes On the Wealthy 1%

The Truth About Obama’s Tax Proposal (and the Lies the Regressives  (AKA republicans) Are Telling About It)

Why the Fk Do those in MY REPUBLICAN PARTY have to F’n LIE so much!!!

To hear the media report it, President Obama is proposing a tax increase on wealthy Americans. That’s misleading at best. He’s proposing that everyone receive a continuation of the Bush tax cuts on the first $250,000 of their incomes. Any dollars they earn in excess of $250,000 will be taxed at the old Clinton-era rates.

Get it? Everyone is treated exactly the same. Everyone gets a one-year extension of the Bush tax cut on the first $250,000 of income. No “class warfare.”

Yet regressive Republicans want Americans to believe differently. The editorial writers of the Wall Street Journal say the president wants to extend the Bush tax cuts only “for some taxpayers.” They urge House Republicans to extend the Bush tax cuts for “everyone” and thereby put Senate Democrats on the spot by “forcing them to choose between extending rates for everyone and accepting Mr. Obama’s tax increase.”

Pure demagoguery.

Regressives also want Americans to think the president’s proposal would hurt “tens of thousands of job-creating businesses,” as the Journal puts it.

More baloney.

A small business owner earning $251,000 would pay the Bush rate on the first $250,000 and the old Clinton rate on just $1,000.

Congress’s Joint Tax Committee estimates that in 2013 about 940,000 taxpayers would have enough business income to break through the $250,000 ceiling — and, again, they’d pay additional taxes only on dollars earned above $250,000.

All told, less than 3 percent of small business owners would even reach the $250,000 threshold.

A third lie is Obama’s proposal will “increase uncertainly and further retard investment and job creation,” as the Journal puts it.

Don’t believe it.

The real reason businesses aren’t creating more jobs is American consumers — whose purchases constitute 70 percent of U.S. economic activity — don’t have the money to buy more, and they can no longer borrow as before. Businesses won’t invest and hire without consumers. Even as executive pay keeps rising, the median wage keeps dropping — largely because businesses keep whacking payrolls.

The only people who’d have to pay substantially more taxes under Obama’s proposal are those earning far in excess of $250,000 — and they aren’t small businesses. They’re the fattest of corpulent felines. Their spending will not be affected if their official tax rate rises from the Bush 35 percent to the Bill Clinton 39.6 percent.

In fact, most of these people’s income is unearned — capital gains and dividends that are now taxed at only 15 percent. If the Bush tax cuts expire on schedule, the capital gains rate would return to the same 20 percent it was under Bill Clinton (the Affordable Care Act would add a 3.8 percent surcharge).

Funny, I don’t remember the economy suffering under Bill Clinton’s taxes. I was in Clinton’s cabinet, so perhaps my memory is self-serving. But I seem to recall that the economy generated 22 million net new jobs during those years, unemployment fell dramatically, almost everyone’s income grew, poverty dropped, and the economy soared. In fact, it was the strongest and best economy we’ve had in anyone’s memory.

In sum: Don’t fall for these big lies — Obama wants to extend the Bush tax cut “only for some people,” small businesses will be badly hit, businesses won’t hire because of uncertainty this proposal would create, or the Clinton-era tax levels crippled the economy,

A ton of corporate and billionaire money is behind these lies and others like them, as well as formidable mouthpieces of the regressive right such as Rupert Murdoch’s Wall Street Journal editorial page.

The truth is already a casualty of this election year. That’s why it’s so important for you to spread it.

Another Stupid Republican Comment on Affordable Heath Care… DENY THE SICK BENEFITS!!

Rep. David Dreier (R-Calif.) said on Monday evening that he didn’t believe highly expensive health care should be provided to uninsured patients with pre-existing conditions. He allowed, however, that there should be “a structure to deal with the issue of pre-existing conditions.” His comments came during a House Rules Committee meeting to set terms of debate for the “Repeal Obamacare Act,” which will be brought to a vote on Wednesday. It is expected to pass, as have more than 30 attempts to repeal it previously.

“While I don’t think that someone who is diagnosed with a massive tumor should the next day be able to have millions and millions and millions of dollars of health care provided, I do believe there can be a structure to deal with the issue of pre-existing conditions,” Dreier said.

President Barack Obama’s Affordable Care Act, which was recently upheld by the United States Supreme Court, contains a provision banning discrimination for pre-existing conditions. Beginning on Jan. 1, 2014, insurers will not be allowed to reject people with pre-existing conditions or charge them higher rates.

Dreier’s suggestion? Instead of insurance, patients should enter a high-risk insurance pool, which provides coverage to people who were rejected by insurance companies. “My state of California has a structure in place to deal with pre-existing conditions,” he said. “It’s a pooling process which I think is one that is worthy of consideration.”

Thirty-five states now have high-risk pools, covering about 208,000 people. Those policies are open to individuals with pre-existing health issues but often come with high premiums, waiting periods and coverage exclusions for certain conditions.

The Affordable Care Act included a new federal high-risk pool (modeled on the state plans) called the Pre-Existing Condition Insurance Plan. So far, only 67,000 Americans have enrolled. The program will be phased out in 2014 when the law’s broader provisions kick in.

Following the Supreme Court decision to uphold Obama’s signature health care law, Dreier vowed to continue the fight to kill it. “We must redouble our efforts to repeal and replace this law with patient-centered reforms that will reduce costs and help the American people meet their healthcare needs,” he said in a statement.

Dreier, who is Chairman of the House Rules Committee, announced in February he is retiring after serving in the House since since 1981.

Romney to NAACP: I am Better for Black Families Than Obama

Republican presidential candidate Mitt Romney told black voters Wednesday that backing him over the Democratic incumbent, who won their overwhelming support in 2008, is in the best interest of their families.

“I believe that if you understood who I truly am in my heart, and if it were possible to fully communicate what I believe is in the real, enduring best interest of African-American families, you would vote for me for president,” Romney will tell the NAACP’s annual meeting, according to excerpts of his speech that were released early by his campaign.

“I want you to know that if I did not believe that my policies and my leadership would help families of color – and families of any color – more than the policies and leadership of President Obama, I would not be running for president,” he says.

Romney, running against the nation’s first black president, isn’t going to win the African American vote. But he’s making the pitch and giving a major speech that’s also aimed at showing independent and swing voters that he’s willing to reach out to diverse audiences – and demonstrating that his campaign and the Republican Party he leads are inclusive.

“If equal opportunity in America were an accomplished fact, then a chronically bad economy would be equally bad for everyone,” Romney says. “Instead, it’s worse for African Americans in almost every way.”

The 14.4 percent unemployment rate among blacks is much higher than the 8.2 percent national average. Blacks tend to be unemployed longer, and black families have a lower median income, Romney says.

Romney will also highlight his education plans. He has called education the “civil rights issue of our era.”

If equal opportunity were “an accomplished fact,” Romney says “black families could send their sons and daughters to public schools that truly offer the hope of a better life. Instead, for generations, the African-American community has been waiting and waiting for that promise to be kept.”

All told, it’s a difficult sell – 95 percent of blacks backed Obama in 2008. But Romney’s speech aside, Republicans and Democrats say he’s making a statement just by speaking to the nation’s oldest and largest civil rights group.

“The first thing you need to do is show up, so I ultimately think he’s doing the right thing,” said Rep. Tim Scott, R-S.C., one of two black Republicans in Congress. “What he’s saying to everyone is that he’s (running to become) America’s president and not just those folks he thinks he can get votes from right now. I think that’s a very important statement.” Most people hearing that statement thought the Congressman was just another foolish  republican Statement along party lines and not serious. 

“You’ve got to get credit for showing up – for being willing to go – no question,” said Karen Finney, a Democratic consultant who worked in the Clinton White House. “It’s more about your actions than it is about what you say.”

Obama spoke to the group during the 2008 campaign, as did his Republican opponent, Sen. John McCain. Obama doesn’t plan to speak this year. Instead, Vice President Joe Biden will address the National Association for the Advancement of Colored People on Thursday. Obama is scheduled to address the National Urban League later this month.

Romney rarely speaks to predominantly black audiences at political events. One exception was a May visit to a charter school in Philadelphia, where he cast fixing the education system as a way to help blacks and other minorities. Most people thought Romney Showed he was out of touch with reality at that event. 

In framing education as a civil rights issue, Romney is following in George W. Bush’s footsteps. At a sweeping address to the NAACP in 2000, Bush, then the Republican presidential nominee, said the education system should “leave no child behind” and labeled the “soft bigotry of low expectations” as part of the problem facing black students.

Romney has a personal history with civil rights issues. His father, George, spoke out against segregation in the 1960s and, as governor of Michigan, toured the state’s inner cities as race riots wracked Detroit and other urban areas across the country. He went on to lead the Department of Housing and Urban Development, where he pushed for housing reforms to help blacks.

Mitt Romney invoked that legacy during a 2007 interview on NBC’s “Meet the Press.” “My dad’s reputation … and my own has always been one of reaching out to people and not discriminating based upon race or anything else.”

In recent months, Obama has approached race from an intensely personal perspective. After the shooting of unarmed black teen Trayvon Martin in a Florida neighborhood – an act many blacks saw as racially motivated – Obama spoke directly to Martin’s parents from the Rose Garden. “If I had a son, he’d look like Trayvon,” Obama said.

Diminished enthusiasm for the president following the economic downturn could dampen black turnout, and that could make the difference in Southern states Obama won in 2008, particularly North Carolina and Virginia.

Other factors could keep blacks away from voting booths. Romney’s address to the NAACP comes as Democrats and minority communities are expressing concern over a series of tough voter identification laws in a handful of states. Critics say the laws could make it harder for blacks and Hispanics to vote.

“He’ll be standing in that room asking people for their votes at the same time that Republican legislators are trying to disenfranchise minority communities,” said Finney, the Democratic consultant.

Romney expressed support for such laws during a late April visit to Pennsylvania, which now has one of the toughest voter identification statutes in the nation. “We ought to have voter identification so we know who’s voting and we have a record of that,” Romney said then.

Romney Proves His Ignorance At Speech To NAACP and Insistence He’d Repeal Obama Heath Care law

Mitt Romney was booed Wednesday at the NAACP conference for promising to repeal the president’s signature health care reform law, bringing him to an awkward halt in the middle of an otherwise civilly-received pitch for black voters.

It was an awkward moment that forced him to go off script, after giving a somewhat pained smile as the booing continued.

“I’m going to eliminate every non-essential, expensive program I can find, that includes Obamacare, and I’m going to work to reform and save –” Romney said before being interrupted for about 15 seconds.

“You know, there was a survey of the Chamber of Commerce — they carried out a survey of their members, about 1,500 surveyed, and uh, they asked them what effect Obamacare would have on their plans, and three-quarters of them said it made them less likely to hire people,” he said when the booing stopped. “So I say, again, that if our priority is jobs, and that’s my priority, that’s something I’d change and replace.”

Romney wasn’t entering a crowd that was likely to be convinced: a vast majority of black voters went for President Barack Obama in 2008. Still, Romney made an attempt at the Houston conference to tout his policies and say they would better serve the black community on education, unemployment and traditional marriage.

For the most part, the audience was quiet and polite, applausing at points and listening to his pitch. He explained why he made the appearance by saying he understands the importance of all Americans.

“With 90 percent of African-Americans voting for Democrats, some of you may wonder why a Republican would bother to campaign in the African American community, and to address the NAACP,” Romney said. “Of course, one reason is that I hope to represent all Americans, of every race, creed or sexual orientation, from the poorest to the richest and everyone in between.”

ONE MILLION NEW JOBS Bill Introduced By US Senate for Small Businesses

The small business tax cut bill that the Senate is rolling out Tuesday would spark the creation of nearly 1 million jobs, according to an economic analysis provided to The Huffington Post.

The Small Business Jobs and Tax Relief Act would grant small businesses 10 percent tax breaks for expanding payrolls either through hiring or raises, and would extend for another year the 100 percent bonus depreciation that businesses can take on assets. The bill, which also contains a break on the alternative minimum tax for corporate taxpayers, would cost about $28 billion overall.

The private group Regional Economic Models, Inc., estimates the combined impacts of the cuts would be worth about $87 billion added to the GDP and 990,592 jobs. The bill would also boost personal incomes by about $73 billion, according to REMI’s analysis.

REMI explained that it did the study using preliminary estimates from Congress’ Joint Tax Committee and information from the Small Business Administration to estimate impacts across states and industries.

The bill represents Senate Democrats’ efforts to both spur the economy and put Republicans on the defensive by forcing them to choose whether or not to back the sorts of tax cuts that they normally would in the past. Republicans were still mulling their options Tuesday morning, and waiting to see whether they would be allowed to have amendments.

But for Democrats, the measure is a no-brainer.

“Creating close to one million jobs would put a meaningful dent in the unemployment problem,” said Sen. Chuck Schumer (D-N.Y.), the head of the Senate Democrats’ policy and messaging efforts. “This tax cut is not a cure-all, but it could be a difference-maker for small firms on the fence about adding payroll. After last month’s sluggish jobs numbers, we may be on the verge of a rare moment of agreement on how to help the economy.”

The bill is also meant as an answer to a $46 billion small business tax cut proposed by House Majority Leader Eric Cantor (R-Va.), which Democrats and outside analysts estimate would disproportionately help the wealthy – business owners such as doctors, finance firms and even sports teams — while including no requirement for businesses to hire.

Is the Photo ID Requirement Actually an ILLEGAL “POLL TAX” by States?

758,000

Of registered voters in Pennsylvania ALONE do not have photo identification cards from the state Transportation Department, putting their voting rights at risk in the November election,” the Philadelphia Inquirer reports. The figures represent 9.2% of the state’s 8.2 million voters. 10′s of Millions could be affected by the Photo ID requirements being imposed.

HOUSTON — Attorney General Eric Holder said Tuesday he opposes a new photo ID requirement in Texas elections because it would be harmful to minority voters.

In remarks to the NAACP in Houston, the attorney general said the Justice Department “will not allow political pretexts to disenfranchise American citizens of their most precious right.”

Under the law passed in Texas, Holder said that “many of those without IDs would have to travel great distances to get them – and some would struggle to pay for the documents they might need to obtain them.”

“We call those poll taxes,” Holder added spontaneously, drawing applause as he moved away from the original text of his speech with a reference to a fee used in some Southern states after slavery’s abolition to disenfranchise black people.

The 24th amendment to the constitution made that type of tax illegal.

Holder spoke a day after a trial started in federal court in Washington over the 2011 law passed by Texas’ GOP-dominated Legislature that requires voters to show photo identification when they get to the polls.

Under Texas’ law, Holder noted, a concealed handgun license would serve as acceptable ID to vote, but a student ID would not. He went on to say that while only 8 percent of white people do not have government-issued photo IDs, about 25 percent of black people lack such identification.

“I don’t know what will happen as this case moves forward, but I can assure you that the Justice Department’s efforts to uphold and enforce voting rights will remain aggressive,” the attorney general said.

Holder said the arc of American history has always moved toward expanding the electorate and that “we will simply not allow this era to be the beginning of the reversal of that historic progress.”

“I will not allow that to happen,” he added.

The attorney general spoke at the 103rd convention of the National Association for the Advancement of Colored People, which is launching a battle against new state voter ID laws. NAACP President Benjamin Todd Jealous has likened the fight against conservative-backed voter ID laws passed in several states to “Selma and Montgomery times,” referring to historic Alabama civil rights confrontations of the mid-1960s.

Holder, the first black man named U.S. Attorney General, was received with resounding applause, a standing ovation and chants of “Holder, Holder, Holder” at the convention.

Those chants quickly changed to “stand your ground, stand your ground,” a reference to a Florida law that neighborhood watch volunteer George Zimmerman is using to defend fatally shooting Trayvon Martin, an unarmed black teenager he encountered while patrolling his community in February. Police did not initially arrest or charge Zimmerman, saying the “stand your ground” law allowed self-defense. He was later charged with second-degree murder.

Holder said the Justice Department under his leadership has taken unprecedented steps to study and prevent violence against youth and address the high homicide rate among young black men.

Finally, the attorney general noted with pride that the U.S. Supreme Court in two recent rulings regarding President Barack Obama’s health care law and immigration laws passed in Arizona, largely supported the federal government and the Department of Justice. However, he said, he remained concerned that Arizona law enforcement, under the portion of the law upheld by the court, would be able to check the immigration status of any person suspected of being in the United States illegally.

“No American should ever live under a cloud of suspicion just because of what they look like,” Holder said.

Romney the Prophesied White Horse Rider and Savior of the United States ???

Mormons Resurrecting ‘White Horse Prophecy’ Around Romney’s Campaign

 Mitt to the rescue: It was a prophecy allegedly uttered by Joseph Smith himself, but one the modern Church of Latter Day Saints dismisses. It predicts that in some future end time, with the U.S. Constitution hanging by a mere thread, a Mormon will ride in on a white horse to save it and, by extension, the United States.

While presidential candidate Mitt Romney denies giving the prophecy any credence, it has come up each time a Mormon has run for president: in 1968 when George Romney ran, and in 2000 when Orrin Hatch ran.

‘Power will be given to the White Horse to rebuke the nations afar off, and you obey it, for the laws go forth from Zion.’
— Joseph Smith

The disputed prophecy was recorded in a diary entry of a Mormon who had heard the tale from two men who were with Joseph Smith in Nauvoo, Ill., when he supposedly declared the prophecy.

“You will see the Constitution of the United States almost destroyed,” the diary entry quotes Smith as saying. “It will hang like a thread as fine as a silk fiber.”

Not only will the Mormons save the Constitution, under the prediction, but the prophecy goes further, insinuating that Mormons will control the government.

“Power will be given to the White Horse to rebuke the nations afar off, and you obey it, for the laws go forth from Zion,” the prophecy says.

Mormons believe that Smith found ancient gold plates and transcribed them into the Book of Mormon. In 1844, a year after he supposedly told of the White Horse Prophecy, Smith ran for president, but was murdered by a mob. Given the entire premise of the LDS and the fact that the church has posthumously baptised thousands of non-Mormons, including Adolf Hitler and Elie Weisel, it’s curious why it is so quick to deny this particular crackpot prophecy.

The LDS Church denounces the premonition, which was recorded 10 years after Smith’s death. A church spokesman pointed to a quote from the faith’s sixth president, Joseph F. Smith, who called the prophecy “ridiculous.”

“It is simply false; that is all there is to it,” the church prophet was quoted saying.

Mitt Romney claims not to believe in the prophecy, and maintains his daddy didn’t believe in it, either:

“I haven’t heard my name associated with it or anything of that nature,” Mitt Romney told The Salt Lake Tribune during an interview earlier this year. “That’s not official church doctrine. There are a lot of things that are speculation and discussion by church members and even church leaders that aren’t official church doctrine. I don’t put that at the heart of my religious belief.”

But George Romney wasn’t so absolute when he offered an interpretation of the prophecy to “Dialogue: A Journal of Mormon Thought” in 1967:

“I have always felt that they meant that sometime the question of whether we are going to proceed on the basis of the Constitution would arise and at this point government leaders who were Mormons would be involved in answering that question.”

Frankly, given the six years of abuse perpetrated by the Bush administration on the Constitution, any savior on a white horse  Mormon, Jewish, Presbyterian or Scientologist  would be welcome.

A side note as to the amount of “CHARITY that the Mormon Church Spends around the world: 

$1.3 billion

Amount of charitable money the Mormon Church distributed in 178 countries over the past 25 years, equivalent to $52 million per year, or 0.7 percent  of its annual income

(roughly ONE TENTH of most state sales taxes)

 according to Bloomberg Businessweek.

By contrast, the Methodist Church gives approximately 29 percent of its annual income to humanitarian causes.

Own Spanish Debt ??….. SELL NOW as only BANKS will get help.

The pain in Spain

If German citizens are wary about the Spanish bank bail-out, we can only imagine how some Spanish are going to feel about it.

As Joseph wrote yesterday (via El Pais) the draft memorandum of understanding for the bail-out includes provision to force any bank seeking aid to compulsorily write-off their preferred shares and subordinated bonds.

Which, in the case of Spain, includes a lot of what you might call ordinary people, asthe FT reports:

Spanish banks have €67bn of subordinated and hybrid debt outstanding, according to Bank of Spain, much of which was sold to retail investors as savings products.

“The difference between Spain and other European countries is that these instruments are held mainly by retail investors,” said Daragh Quinn, a banking analyst at Nomura. “People who bought them might not have known exactly what they were investing in”.

What’s interesting is that several of the reader comments at the end of that story (and no doubt we’ll see the same here) have argued that this is well and good: one wrote:

Governments should only “rescue” depositors in insured accounts. Any other type of bank bailout perpetuates the crisis and hobbles the process of creative destruction.

Untile we have the possibility of failure where will be no chance of long term success.

Now, we don’t know the vagaries of Spain’s system. But it sounds like at least some of these “savers” might have got a raw deal. From the same FT story:

Luis de Guindos, Spain’s finance minister, has admitted that investors should not have been sold the savings products and he had sought to minimise their potential losses under a eurozone rescue. “It was an error to sell the the preference shares, and we will have to look for solutions,” he said in May.

Because this kind of thing has already been an issue via with the likes of Banca Cívica.

So, how will these investors react? Yesterday’s El Pais story reporting details of the MoU has 2,338 comments at pixel time. Also at pixel time, Spanish prime minister Mariano Rajoy was due to address parliament to detail more austerity measures, while hundreds of Spanish coal miners protest subsidy cuts.

This is a country with unemployment at 24 per cent. And as financial pundits are becoming increasingly aware, social stability is important and political risk is, well, risk.

Campaign $$ Influences GOP To DUMP Bio Fuels Support and Keep OIL

GOP puts biofuels on the chopping block

The biofuels industry is at loggerheads with House Republicans, who are eyeing its funding for elimination in the farm bill.

Biomass and biofuels groups warn that the loss of $800 million in guaranteed federal support would stall progress in developing the fuel source and cause job losses in rural communities that can least afford it.

The industry claims interest groups such as fossil fuel producers and livestock owners have hijacked the process as the House Agriculture Committee begins a markup of the bill this week.

“What is probably more broadly at play is a concerted effort by livestock groups, oil groups and some in the environmental community to denigrate biofuel production,” said Matt Hartwig, a spokesman for the Renewable Fuels Association. “They spend more money. They have a big microphone.”

While the Senate farm bill included mandatory funding of $800 million over five years for energy programs, the House bill offers only discretionary spending on energy programs, while cutting $500 million from the funding level in the 2008 farm bill.

House Republicans say the plans to choke off funding for biofuels and biomass projects reflect the basic fiscal reality that cuts have to come from somewhere.

“I think the bottom line is that we had more money when the ’08 farm bill was written than we have today,” said Rep. Glenn Thompson (R-Pa.), the chairman of the House Agriculture subcommittee on Conservation, Energy and Forestry. “Under the House Agriculture Committee’s discussion draft, every program that is eliminated, aside from Repowering Assistance, were one-time studies or programs that were never funded and received no mandatory baseline.”

Biofuel groups are lobbying the committee to restore the funding, but might have a tough time making the case to the GOP members of the House Agriculture Committee. Of the 23 Republicans on the panel, 16 are freshman members who are eager to prove their fiscal bona fides by slashing from the big-spending farm bill.

The funding goes toward a variety of loans and grants for bio-refineries and renewable-energy programs, as well as subsidies for dedicated energy crops.

When the Senate Agriculture panel first rolled out its draft farm bill, it did not contain mandatory funding for the energy programs. A bipartisan group of 11 senators pushed successfully to restore the guaranteed funding stream.

Leaders on the Senate Agriculture Committee argue they’re looking out for the nation’s long-term energy needs by reauthorizing the biofuel funding.

“To abruptly reduce research, financing options and investment in renewable energy would pull the rug out from burgeoning industries that can drive economic growth and job creation in rural America for decades to come,” said Sen. Sherrod Brown (D-Ohio), the chairman of a Senate Agriculture subcommittee.

But Thompson said it’s time for the industry to stand on its own two feet. He said the funding in the 2008 farm bill should have been sufficient to drive biofuel and biomass production forward.

Bruce Dale, a Michigan State University professor who advises on a biomass research program created by the 2008 farm bill, said the House bill “is merely reflecting budget realities.”

“I don’t think that there’s really any reason to think that overall the biofuels, bio-refineries are going to be any less important,” Dale said. “I suppose these are practical and political calculations of what needs to end.”

The Energy Information Administration (EIA) has predicted strong growth for biofuels and biomass companies even without targeted tax incentives.

Between 2010 and 2035, biofuels will expand at an annual 4.6 percent clip, making it the second-fastest-growing energy source in the nation, the EIA projected in its “Annual Energy Outlook 2012” report released last month. Similarly, biomass production will yield the nation’s fastest production increase, at 3.3 percent annual growth.

But that study assumes the continuation of policies that would face an uncertain future under the House farm bill, according to Matt Carr, a managing director at the Biotechnology Industry Organization.

“The House bill contains no mandatory funding for programs, and if history is any guide, we’re not likely to get a lot of appropriations through the appropriations process,” Carr said. “The House bill as it now stands is a serious risk to energy title programs.”

Hartwig of the Renewable Fuels Association said oil and natural-gas interests have waged a “multiyear, multimillion-dollar campaign” against the renewable fuel standard that tipped the scale against biofuels in the House.

The charge against oil, coal and gas interests is familiar, but proponents for biofuels and biomass have faced another unusual roadblock — a coalition of fiscal conservatives and environmentalists who have rallied to stop the funding.

Michal Rosenoer, an advocate with Friends of the Earth, said biofuels such as corn-based ethanol have been linked to rising food prices, and argued there’s no guarantee that a shift to more advanced cellulosic-based sources would be better for the environment.

“The Obama administration is obviously very interested in propping up the industry,” Rosenoer said. “But the question is: Do we want an alternative to oil, or do we want a sustainable alternative to oil?”

The Two Headed Dragon Called China

There are two ways that China’s economic future is viewed today.

First, there’s the China which is going to move coherently towards a more consumption-heavy economic mix — the oft-mentioned “rebalancing” that is needed to address its unusually capital-intensive economy. An oped by GK Dragonomics’ Andrew Batson says this means the China naysayers, focusing on the woes of Sany or growing coal stockpiles, are misguided:

While construction equipment, coal and chemicals have been important to China’s economic growth up to now, the economy is hardly so narrow today. Consumer spending is growing steadily. Car sales have picked up. Wages are rising. Even exports to some markets, outside struggling Europe, are not doing so badly. Companies are adapting to the end of China’s investment boom and its transition to slower overall growth.

This structural change will be stressful for many companies. Both the World Bank and Chinese government scholars estimate that China’s potential economic growth rate will be closer to 7% over the next several years than the 10% of recent years.

Well, 7 per cent is not so bad. And the rebalancing, says Batson, is already proceeding:

Moreover, China will not grow in the same way over the next decade as it has over the past decade. Growth in fixed capital formation, the broadest measure of investment, averaged 16% a year over the past decade, after accounting for inflation. In 2011, real growth in fixed capital formation dropped to 10% and will likely slow further this year.

The other view is that this won’t be so simple.

This is not intended to pick on Batson; our own A-List recently featured a more bullish piece by Yao Yang arguing that China’s annual GDP growth may well remain at 8 per cent or higher and that consumption’s share of GDP is already growing.

But assuming that consumption hasn’t yet started taking a bigger share of output (and we haven’t seen much compelling evidence of this) we have two problems with the argument that this will happen smoothly and calmly, taking China’s economy to the inevitable next phase. Both problems are highlighted in two reports today. One, coincidentally, is in the same edition of the Journal (with our emphasis):

Premier Wen Jiabao said Tuesday the government’s primary task is to promote investment. Although policies to stabilize growth “include stimulating consumption and diversifying exports,” he said in a statement posted on the government website, “currently the main task is to promote reasonable investment growth.”

To do that, Beijing is turning to giant state-owned companies that hold monopolies in energy, construction, steel and banking.

See what he did there?

That possibly-already rising consumption ratio does not seem to have the full support of the central government. The focus is again on capital investment and supporting the state-owned companies — which by definition will hinder rebalancing and real economic progress. As Minxin Pei of Claremont McKenna college wrote in March, the political reality in China mitigates against attempts to rein in the state-owned enterprises which dominate upstream industries:

China’s giant SOEs may have some economic usefulness, but their existential value is political. The CCP uses the SOEs to provide good jobs and perks for its members. Of the CCP’s roughly 80 million members, more than five million hold executive positions in state-owned or affiliated firms. Factoring in the regulators and local administrators whose jobs similarly depend on maintaining the current level of state intervention in the economy, World Bank-style reforms would jeopardize probably close to ten million official sinecures.

Which brings us to the second problem with  the smooth transition argument: that China’s power is overly concentrated among the princelings. This is not just its political power, but economic power too. This is deep and specialised Sinophilia territory, but John Garnaut’s epic Foreign Policy report gives a taste of the vast influence these key families have in business dealings:

As the lure of the market grows ever greater and the Communist Party refuses to fetter its enormous administrative powers or subject itself to law, ambitious officials and entrepreneurs are increasingly forced to seek the favor of the politically well-connected in order to accumulate and protect their wealth. When contained, the greed this engenders can bind officials together and foster loyalty to the central party apparatus, the ultimate source of wealth and power. But many now believe that the restraint is gone: Corruption increasingly distorts policymaking, sabotages policy implementation, diminishes the leadership talent pool, and taints the party’s legitimacy.

And, again coincidentally, the FT has an analysis piece today looking at the influence of the princelings throughout the whole economy:

However, the chief executives of three multinationals with decades of experience operating in China told the Financial Times that engaging relatives of senior officials as consultants or as joint venture partners was standard practice – and, in fact, vital in many industries. They said these princelings usually preferred to hold stakes in joint ventures through a holding company in Hong Kong or the Caribbean, where Chinese anti-corruption investigators cannot find them.

That’s not to say that the well-connected and powerful can’t come undone, at least individually. There is of course the notorious example of Bo Xilai, whose extended family is believed to control companies worth at least $100m.  The FT’s princelings report begins by looking at Mao Xinyu, a direct descendent of Mao Zedong who falls short of owning a fortune, despite being given a high rank in the People’s Liberation Army. But how likely is it that the incumbent powers will willingly relinquish their hold on the economy for the greater good?

Is Monetary Policy Only for the Very Rich?

A monetary policy for the 1%

THE proper role of a central bank has been under much discussion lately. In its recentannual report, the Bank for International Settlements lamented central banks being forced into loosen monetary policy as politicians fail to take steps to restructure their economies for growth. In the developed world most central banks have had a clear target—to achieve price stability—and independence in how they hit it, with the aim of avoiding political entanglement. However, even such technocratic work can easily become political, as demonstrated by a new paper on monetary policy and inequality by a team of American academics.

Arguments abound for how loose money can benefit or harm different groups in society. The wealthy hold more assets, the value of which is eroded by high inflation; but the few assets held by the poor tend to be in cash rather than more inflation-resistant choices such as stocks or commodities. Low-wage labour income (which is almost all income for the less wealthy) is more affected by economic boom and bust, although not as much as the business and financial income that fills the coffers of the super-rich. Unemployment in busts also tends to fall more heavily on low-income jobs, but during booms, support for those on low incomes through benefits dries up. The authors used US Consumer Expenditure Survey data from 1980 to 2008 to try and tease out which effects are the most important.

In terms of labour income, tighter monetary policy boosts inequality, mostly through further increases in already-high incomes. The total incomes of poorer groups (the bottom 20%) are cushioned as around half their income comes from various government programs, allowing them to keep pace with median earners even as their labour income falls. Changes in monetary policy can account for up to 20% of fluctuations in American inequality since 1980, although changes in monetary policy regimes can be much more important; in Ireland changes in inflation targets explain almost all the rise in inequality during the 1980s.

As expected “rich, old” households suffered more from looser policy (and the resulting higher inflation) than their younger indebted counterparts. This argues against previous studies, which have found that inflation hurts the cash-holding poor at the expense of the asset-rich, although the authors point out that this may be unique to America and its sophisticated financial system where even low net-worth households tend not to hold all their assets in cash. Given the intensely political nature of the debate over inequality, the research reveals just one more way in which the central bank ideal—to avoid political entanglements entirely—is increasingly unattainable.