The Obama administration is delaying implementation of its Christmas-tree tax following a tsunami of criticism and ridicule that erupted after news of the 15-cent “fee” broke on November 8. But while the plan is being reviewed, it is not dead yet.
The tax on fresh-cut Christmas trees was supposed to fund a new entity within the U.S. Department of Agriculture called the “Christmas Tree Promotion Board” (CTPB). Supported by some industry lobbyists, the estimated $2 million in revenue would have been used to help improve the image and marketing of American Christmas trees.
According to the notice published in the Federal Register earlier this week, the CTPB would be tasked with operating a “program of promotion, research, evaluation, and information designed to strengthen the Christmas tree industry’s position in the marketplace.”
The board, appointed by the Secretary of Agriculture, would also help to “maintain and expend [sic] existing markets for Christmas trees; and to carry out programs, plans, and projects designed to provide maximum benefits to the Christmas tree industry.” Only sellers of 500 trees or more would have been subject to the tax.
After three years of trying to solve their self-imposed debt crisis, the Jefferson County, Alabama, commissioners threw in the towel on Wednesday and declared bankruptcy. The bankruptcy, involving over $4 billion in debts owed by the county, will be costly to the banks who loaned the money, the private investors who participated in the bond offerings, the guarantors of the debt, and most especially, the taxpayers of Montgomery.
It’s already proven costly to Charles LeCroy, the JP Morgan broker who persuaded the county to refinance its debt in 2004, who was indicted by the SEC in 2009 for fraud in a separate case. And for Larry Langford, a county commissioner at the time, who was sentenced to 15 years in jail for fraud in the present case.
The seeds for the bankruptcy were planted back in 1994 when the Environmental Protection Agency demanded that Jefferson County build a new sewer system. The county complied and raised money through a bond offering that generated $3 billion which was used to build the new plant. LeCroy was the original broker involved in the deal and when he moved to JPMorgan, he used his position to persuade the county to refinance the bonds at lower cost, using something called derivatives. The refinance would lower the county’s interest payments and generate some cash for the county as well. It was that offer and acceptance of a deal that looked awfully good — too good — that set the stage for the bankruptcy filing on Wednesday.
Christine Lagarde, managing director for the International Monetary Fund (IMF), warned that the world faces the risk of a “lost decade” and that “there are dark clouds gathering in the global economy.”
Apple growers in Washington State — who produce about half of the country's apples, about 15 billion — have a bumper crop this year, among the best in the state's history. Yet many of these apples may never make it to market, because growers cannot find enough workers to pick them.
Boy, but it was a Red October! Polls conducted throughout the month just ended confirm that Karl Marx has won the hearts and minds of the American people. Two of his biggest fans, the New York Times and CBS News, collaborated to find 66% of Americans agreeing that “the money and wealth in this country should be more evenly distributed.”
With yields on Italy’s 10-year government debt rising sharply higher and beyond the seven-percent ceiling deemed unsustainable, Italy is running out of options in finding buyers for its debt. It is also running out of options as a sovereign nation. Jan Randolph, head of sovereign debt risk at IHS Global Insight, said, “Italy will not be out of the heat of bond markets until a solid and stable government actually implements austerity and undertakes reforms with strong credible leadership.” That may be asking the impossible.
As with the constitutional struggle that was stirred up by the passage of ObamaCare, the President’s latest pet proposal is brightening the battle lines between friends of federal power and those who advocate the protection of the sovereignty of states. The American Jobs Act contains several key provisions that apparently push the boundary between state and federal power back, expanding Washington’s sphere of authority.
Only days after Freddie Mac sought a $6-billion cash lifeline from the Treasury Department, Fannie Mae is now chasing a $7.8-billion check in federal aid. Attributing its steep $5.1-billion third-quarter deficit to losses on derivatives and the persistent failings of the housing market, the government-controlled firm is furthering its heedless course to fiscal Armageddon — while draining the bank accounts of American taxpayers all along the way.
Fannie Mae and its cohort Freddie Mac were seized by the federal government during the financial crisis as company executives pleaded that severe losses on subprime mortgages were foreboding their insolvency. Considering their vast presence in housing finance, owning or guaranteeing roughly half of all outstanding mortgages (including other federal agencies, they have backed about 90 percent of new mortgages over the past year), the government has pledged an endless stream of funds to the two government-sponsored enterprises through the end of 2012, which has left taxpayers on the hook for a combined total of $169 billion.
The general functions of Fannie and Freddie are to purchase home loans from banks and lenders, package the loans with bonds — while guaranteeing them against default — and sell them to investors inside and outside of the United States. But between 2005 and 2008, Fannie and Freddie carelessly purchased a heap of bad mortgages, which nearly buried the two companies into foreclosure themselves.
The downward spiral of the Greek economy — and now likely that of Italy — has led to calls for the European Union to step in and prevent a total collapse. Portugal, Ireland, and Spain — the other three of the so-called PIIGS EU member-states — are enduring their own woes, such as downgrades of sovereign debt and corresponding jumps in the interest rates on government bonds. The cumulative effect — particularly if Italy does suffer a crisis serious enough to reduce its national credit rating to junk-bond status — will ripple throughout Europe and across the Atlantic.
Analysts have noted that continental Europeans would do well to copy the example of tiny Iceland, in how it weathered a financial crisis three years ago which stunned the placid island nation. In October 2008, its binge of bank speculation had reached a point at which the assets of the three largest Icelandic banks — Kaupthing Bank, Landsbanki, and Glitnir Bank — were 11 times greater than the entire $14 billion GDP of the nation. All three big banks defaulted on $62 billion of foreign debt, and then went belly up, not bailed out by Icelanders. Today the country's economists view that bankruptcy as a blessing in disguise. Icelandic bank analyst Jon Bjarki Bentsson put it this way:
The lesson that could be learned from Iceland's way of handling its crisis is that it is important to shield taxpayers and government finances from bearing the cost of a financial crisis to the extent possible. Even if our way of dealing with the crisis was not by choice but due to the inability of the government to support the banks back in 2008 due to their size relative to the economy, this has turned out relatively well for us.
Voters in Ohio defeated a law on Tuesday that would have reined in the collective bargaining privileges of government employees, granting a rare victory to “Big Labor” after a series of set-backs in states across the nation.
Union bosses celebrated the news, claiming the win represented a resurgence of organized labor and an important indicator for the 2012 elections. And Democrats, whose campaigns receive significant funding and volunteers from public-worker unions, applauded the outcome as well.
"Hopefully, state legislators and governors across the country will look to Ohio and see that they have galvanized us and we're an organized force that has to be dealt with," said Secretary-Treasurer Lee Saunders of the American Federation of State, County and Municipal Employees union. Big Labor, he added, plans to use the Ohio win "as a springboard to continue into 2012."
The Democratic National Committee — campaign coffers stuffed with government-employee-union dues — issued a statement filled with class-warfare rhetoric. It applauded Ohio’s rejection of a "blatantly partisan attempt to lay the blame for our economy on middle class Americans, while letting the wealthiest and special interests off the hook and not asking them to pay their fair share."