The Senate voted Thursday to approve a package of $26 billion in aid for state and local governments, funded partly by an $11 billion tax increase on U.S. multinational corporations.
In what was one of the final moves by the Senate before lawmakers depart Washington for the summer recess, Democrats were able to score a significant victory for a core constituency of their party: labor unions and public-sector workers.
But at the same time, they handed a hefty tax bill to U.S. companies with units overseas that have been able to pay a lower corporate income tax rate on profits derived from their foreign businesses.
The Senate voted 61-39 to approve the measure, with just two Republicans joining with every single Democrat to vote in favor of the legislation.
House Democratic leadership indicated Wednesday they plan to bring back lawmakers in that chamber to give final approval to the legislation, likely Aug. 10.
[…]The majority of Republicans were critical of the legislation, arguing it was handing U.S. corporations—which they say are proven job creators—another reason to move more of their operations to other countries. At the same time, they said, it was essentially rewarding traditional Democratic supporters at the expense of large firms.
That’s 26 billion more dollars that are coming out of the productive private sector, to pay for people who are already overpaid compared to private sector producers.
Brian Riedl, lead budget analyst at The Heritage Foundation, agrees that unless the federal government radically curtails spending, a debt crisis as severe as or worse than that now happening in Greece will erupt in the United States in as soon as seven to 10 years.
“We can say that we will be at about the Greek level of debt probably in the next seven to 10 years,” Riedl told CNSNews.com. “There is no reason that with the same economic policies at the same level of debt, that the United States won’t face the same economic and financial crisis as Greece.”
But for Reidl, who recently issued his own report on federal spending, seven to 10 years may be too optimistic.
“It’s very tough to predict when a financial crisis will hit, because much of it depends on bond market psychology,” Reidl said. “As soon as the bond market decides the U.S. may not be able to fully service its debts, they will respond with a flight from our currency. When the bond market makes that decision is really anybody’s guess. It could be two to three years from now, it could be 10 years from now.”
[…]When Greece started to admit its debt problems last November, the government estimated its deficit last year was 12.7 percent of its GDP – a figure that Eurostat, the European Commission’s official statistics agency, said was too low and which it revised to upward 13.6 percent.
Meanwhile, the U.S. deficit is on track to become 10.3 percent of GDP in 2010 under President Obama’s budget.
In his report, “Federal Spending by the Numbers,” Reidl pointed out that the projected 2010 U.S. deficit would represent the biggest percentage of GDP the United States has seen since World War II.
That same report shows that average deficits over the next 10 years will be almost $1 trillion instead of returning to pre-recession levels of $100 billion to $400 billion. The projected deficits, Riedl pointed out, would double the current national debt.
However, spending — not shrinking revenue — is the principal cause, according to the report, which said “90 percent of the rising long-term budget deficits are driven by rising spending,” and just 10 percent of the rising deficits are caused by falling revenues.
“This is 100 percent a spending problem in the long term,” Reidl said.
The article also cites two budget experts Sen. Judd Gregg and Rep. Paul Ryan, who agree with Reidl that we will be where Greece is now in about 7 years. The IMF was there to bail out Greece with European and American money. But who will bail out the USA?
If you want to know what Obama is doing instead of minding the store, ECM sent me this article. And a few days ago there was this article. He’s having fun with famous people.
Canada will “resist” a bank tax, Industry Minister Tony Clement said Tuesday as ministers fanned out across the world to raise opposition to the proposal for avoiding another financial crisis.
“Canada is, and will remain, opposed to a tax that would penalize financial institutions that remained strong and prosperous while many of the world’s banks failed,” Clement told a press conference with Foreign Minister Lawrence Cannon.
“We will resist the bank tax here at home and we seek to convince other heads of government of the virtue of our position,” he said as senior ministers echoed his message in Mumbai, Beijing and Washington.
Attempts to reach international agreement on coordinated bank taxes at last month’s G20 and IMF meetings ran aground.
Nations including Canada and Brazil, whose banking sectors emerged largely unscathed from the financial crisis, objected to the plan, favoring higher capital reserve requirements instead.
[…]Clement said the bank tax would “encourage risky behavior” if it is used to create a bank bailout fund and “reward bad behavior” of those institutions responsible for the recent financial crisis in the first place.
As well, it would “unduly burden” Canadian banks and put them at a “competitive disadvantage” to other financial institutions.
“This tax would reach into consumers’ pockets and punish our financial institutions which have taken precautions to avoid the very turmoil that is afflicting other parts of the globe,” Clement lamented.
Stephen Harper is a fiscal conservative. He knows that low interest rates are bad, so he created tax-free savings accounts to get people to work and save their money. And he knows that people who buy houses need to be able to pay for them, and his banking policies reflect that. There is no Democrat-sponsored “Community Reinvestment Act” in Canada to allow the socialist mafia (ACORN) to pressure private banks into making risky loans. And there are no Democrats taking political contributions while blocking attempts to investigate Fannie Mae and Freddie Mac. And there are no bank bailouts!
The Conservative Party of Canada keeps its banking sector squeaky clean. They even plan to cut spending! And the Canadian people support fiscal conservatism. That’s why they aren’t facing the mess we are facing. And they have lower unemployment, too – 8.1% compared to our 9.9%. Canada is kicking our tails! How can this be? How did they manage to elect an economist, while we are stuck with this perpetually-bowing flibbertigibbet and his legions of bloviating boffins, each more corrupt and incompetent than the last? Democrats have no real-life experience! They just had rich parents!
“In Canada, there were no taxpayer bailouts of financial institutions, so we believe there is no justification for levies on banks and financial institutions,” Harper said at a news conference following meetings with European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy.
[…]Canada and the EU are in the midst of negotiating an ambitious trade deal. The Comprehensive Economic and Trade Agreement (CETA) was launched at the 2009 Canada-EU summit and to date, three rounds of negotiations have taken place. There are at least two more to go over the next year.
The deal will give Canada greater access to the markets of the EU’s member countries and will strengthen an economic relationship that is already worth $75-billion in trade. The EU is Canada’s second-largest trading partner after the United States and is also Canada’s second-largest source of direct foreign investment, putting $162-billion into Canada in 2009.
This is grown-up fiscal policy. Government should stay out of the mortgage-lending industry, and sign as many free-trade deals as possible. The exact opposite of what the Obama administration is doing.
WINTERY KNIGHT 