If you can't say anything nice .....

[beachmom]

Just post the articles without comment.

http://www.boston.com/bostonglobe/editorial_opinion/editorials/articles/2010/06/24/abolish_unfair_tax_break_for_investment_managers/

Abolish unfair tax break for investment managers

June 24, 2010

LETTING WEALTHY investors game the tax code does not promote a dynamic economy. Yet Massachusetts Senators John Kerry and Scott Brown have both accepted the dubious premise that future growth will suffer if managers of investment partnerships, including hedge funds, private equity, and venture-capital firms, have to pay taxes at the same rates as everyone else.

While the top federal income tax rate is 35 percent, capital gains — the money generated from successful longer-term investments — are generally taxed at only 15 percent. Lead partners in investment funds typically receive a management fee, which is taxed as ordinary income, but also take a portion of any increase in the value of the money they invest for other people. This cut is just another form of payment for the professional services managers provide to investors, but it’s still taxed at the lower capital gains rate. The benefit to some of the nation’s wealthiest taxpayers is enormous; the tax break costs the US Treasury $25 billion a year.

The loophole is an obvious target as Congress looks for ways to pay for the extension of unemployment benefits amid a continuing downturn. But investment partnerships have used that dynamic to their advantage, implying that Congress is arbitrarily sticking them up for money to fund its own priorities — and doing so in a way that will discourage investment in high-tech startups.

Kerry and Brown have both proved receptive to this argument. While Kerry has backed a compromise that would eventually subject most of the money in question to income-tax rates, he also helped weaken an effort simply to abolish the loophole. Brown has generally opposed higher taxation and expressed particular concern that venture-capital firms would suffer if the loophole disappears.

http://www.nytimes.com/2010/06/23/opinion/23wed2.html

Cutting Off the Unemployed

Published: June 22, 2010

It was bad enough when the Senate left town for a long Memorial Day break without passing a bill to extend expiring unemployment benefits. It’s worse now.

Back in session for nearly three weeks, the Senate still has not acted. That means that 900,000 jobless workers have already lost their benefits, a number that will swell to an estimated 1.6 million people if an extension is not passed by the July Fourth holiday. Lost benefits — the average check is $309 a week — deprives struggling Americans of cash they need for buying food, paying the rent or mortgage and other essentials.

All indications are that when the Senate finally does pass a bill, it will be stingy and cynical — hacking away at jobless benefits and fiscal aid to cash-strapped states, while preserving tax breaks for the wealthy and other well-connected political donors.

The problem, as always, is getting 60 votes to overcome hurdles imposed by the Republican minority. But Republicans aren’t the only culprits here.

Passage was delayed last week as several Democratic senators — including John Kerry of Massachusetts, Mark Warner of Virginia and Maria Cantwell of Washington — worked to water down a provision in the bill that would have largely closed an unfair loophole that benefits rich fund managers in investment partnerships. Unfortunately, the senators seem to have won that fight.

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/23/AR2010062305827_pf.html

Unemployment-benefits bill stalls in Senate as GOP rejects revised plan

Thursday, June 24, 2010; A12



Senate Democrats were ready to throw in the towel late Wednesday on a months-long effort to deliver fresh aid to states and extend benefits to unemployed workers, saying Republicans had rejected their latest offer to pare down the size and cost of the package.

Senate Majority Leader Harry M. Reid (D-Nev.) set the procedural wheels in motion for a climactic vote on the legislation as soon as Thursday. Despite days of talks, a senior Democratic aide said Reid had been unable to persuade any Republicans to support the measure, leaving him at least two votes short of the 60 needed to overcome a GOP filibuster.

Democrats control 59 seats in the Senate but expect to lose the vote of Sen. Ben Nelson (D-Neb.), meaning they would need the votes of at least two Republicans to cross the 60-vote threshold.

The package includes tax breaks for businesses and individuals, as well as emergency support for millions of jobless workers who have exhausted their regular 26-week state benefits. Unless Congress acts, an estimated 900,000 people will have their checks cut off by the end of the month.

Democrats were prepared to slash another provision, reducing proposed aid to state governments and covering the cost of the aid with unexpended funds from last year's $862 billion stimulus package, aides said. But those negotiations produced no consensus and appeared to collapse amid concerns that the package would add to already record budget deficits.

http://www.dailykos.com/storyonly/2010/6/24/878851/-Senate-ready-to-hang-states,-the-unemployed,-the-economy-out-to-dry

Governors and state legislatures in some 30 states have already budgeted for this funding, a huge portion of most states' budgets. A KFF report last year found that "Medicaid is the second largest line item in state budgets following elementary and secondary education. Presently, 17 percent of state funds are allocated to Medicaid on average and it is the largest source of revenue in the form of federal grant support to each state."

It also found that decreases in funding "reduce the flow of dollars to hospitals, nursing homes, home health agencies and pharmacies, and reduce the amount of money circulating through the economy, affecting employment, income, state tax revenue and economic output." When you hear that as many as 200,000 jobs (the CBPP says it's up to 900,000) could be lost if this funding is not passed, these are the jobs in question.

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/18/AR2010061803289.html

You've seen the stimulus. Now, meet the anti-stimulus.

By Ezra Klein
Washington Post Staff Writer
Sunday, June 20, 2010

A multiple choice question for you: Did the stimulus a) work; b) fail; c) end up locked in an unexpected battle with the massive anti-stimulus that's ripped through the states?

Most people would choose "a" or "b" (though I'd say "a" has the better of it). They probably haven't heard of "c." But ask Bruce Bartlett, a conservative economist who worked for Ronald Reagan, George H.W. Bush and Jack Kemp, and you'll hear all about it. "When the history of the current crisis is written, much of the blame will be placed on the sharp fiscal contraction of state and local governments," he says. "I think economists will view this as a preventable error equivalent to the Fed's passive shrinkage of the money supply in the early 1930s."

...

Unlike the federal government, 49 of 50 states must balance their budgets (the exception is Vermont). So when the economy crashed in 2007, they went down with it. First, tax revenue dried up because residents lost jobs. Second, expenses went up as more unemployed people needed help. The states with the most responsible budget practices had reserve funds and tricks to hold them over for a year, and maybe even two. Three years in, they're all up against the wall. And because they cannot run deficits to hold them over until their economies improve, they're cutting services and raising taxes. Using the data for 2009 and 2010, and then projecting for 2011 and 2012, the Center on Budget and Policy Priorities expects the total state shortfall will reach $610 billion.

Because some of the federal stimulus dollars were saved rather than spent, the effective stimulus we've had has been less than the $789 billion that's often touted. It might even be less than $610 billion shortfall in the states. Which would mean the anti-stimulus overwhelmed the stimulus. Or, you could look at it in reverse: Nick Johnson, who directs the State Fiscal Project at CBPP, says that "the effect of the federal stimulus was to wipe out the negative effect of the state contraction."

Either way, the assumption that total government spending has leapt up to counter the recession might be wrong. Worse, the federal stimulus money is going to thin dramatically this year, but the state budget problems could grow. And with unemployment sitting stubbornly at 9.7 percent, we're not in any shape to let the federal stimulus peter out and leave the state anti-stimulus to drag us down.

That means that the federal government has to step in with aid for the states.

#SenateHate

[karynnj]

1. This is something that I think all of us are uncomfortable on, but the BG did give Kerry credit

for his compromise - though taking him to task for not just erasing it. As a MA Senator with MA companies disproportionately being helped by this, it seems that in a very tough economic times, there is something to be said for phasing it out - rather than having an immediate big hit.

I was surprised that there was some support for his position on Blue Mass (!). I don't know if I agree, or even understand all of that thread, but there was at least two seemingly knowledgeable person who did speak of how it did help capital formation that was helping the economy recover. If there is any chance of this the idea of phasing it out is a good one - as now is likely not the time to do anything that could impair that.

The first basically summed it up as a vote that was good for MA - and he represents MA

The annualized dollar amount and number of IPOs generated in a given state is an accepted metric for measuring the relative economic competitiveness of a state. The carried interest tax break available to VCs and hedge fund principals is an incentive for the formation of new investment capital via these forms of private equity.

A healthy venture capital sector in Massachusetts equals jobs for Massachusetts. Remember jobs, those societal good things that we Democrats believe in creating?

Do you like the fact that our Governor can, rightfully so, point to the fact Massachusetts is today producing far more private sector jobs than many states with far larger populations? You can in large measure thank the relatively robust (relative to even Silicon Valley today) venture capital sector in the Commonwealth for that good news.

Did you like reading that national business story of last week that IBM will be opening its largest single software development lab in Massachusetts (Littleton - Westford), a story also rightfully pointed to by our Governor? Did you catch the line in the IBM story to the effect that the new software development lab will be located here so that its developers can access "more than 100 Venture Capital backed small technology companies in Massachusetts."

http://www.bluemassgroup.com/showComment.do?commentId=247052


I never saw this poster before and I have checked out Blue Mass regularly, but not frequently.

The second was from Petr, whose posts I always looked for because he is very well spoken and smart. He generally liked Senator Kerry, but he was never looked at like we were as "Kerry supporters". He responded to a response to Pratt's post

Zipcar is a Boston based company that has existed off of VC money for much of its existence (aggressive growth and acquisition strategy have eroded any profits to date...). It has filed for an IPO just this month and hopes to start standing on it's own within a year or so. VC's could have pulled the plug on it years ago... But, similar to Amazon, a decision to run deficits while chomping up market share has kept jobs from being lost, if not actually gained. This is not, actually, unusual. A lot of VCs are carrying companies that they hope will someday be ludicrously valued but have, as yet, to show dollar one in profit. That represents a lot of people who, otherwise, would be unemployed. An accelerating economy means that these companies can move from holding their breath to more aggressive growth strategies.

It's true that VC is a relatively new, and increasing, slice of the economy (past 30 years or so...) but that's due in no small part to retrenchment in defense department spending in that same time period. Companies like Millipore, Raytheon, Analog Devices and BBN Technologies (which is now owned by a VC...) were once some of the biggest employers in the state and were heavily dependent upon defense capital for much of their early existence. Military efforts at COTS integration, bad press surrounding military contracts/spending and a clear eyed view of market forces led these companies to diversify away from defense capital (though, to be sure, not wholly away...)

A 10,000 foot view of the Massachusetts economy shows a great deal of diversity: industrial, technology, pharma/bio-tech (and life sciences), retail and financial. Not one of these sectors is untouched by VC involvement...

(his subject line referred to "vulture" capitalists - so he is likely not an apologist for them.

[beachmom]

2. Well, if you look at my whole post, it may have started about carried interest

but mostly my #SenateHate is about Republicans. This bill is close to failing which means states and the unemployed are in BIG trouble. Which means we are all in big trouble. I am a bit fearful for the future honestly. Between this and Germany's "austerity measures", I am extremely worried. I fear our economy is going to take yet another dive if these governments decide contraction is a good idea (which it looks like they have).

[karynnj]

3. I should have said that I was responding just to the first

I did go back to read the others and they are disheartening. I had read many of the excellent Senate articles on DSaily Kos by David Waldman.

Well, let's start with the reason it didn't pass before Memorial Day as originally planned. The House took care of its part just before the holiday, and sent it on to the Senate. And as I said, you'd normally see a bill like this pass pretty quickly. But the political calculus of the Republicans is that any legislation passed by a Democratic Congress and signed by a Democratic President is a "win" for the Ds, and in their zero-sum world, therefore a "loss" for the Rs. And they can't have that. Or at least won't allow it without a fight. So they fight tooth and nail to delay and derail everything they can. Even if they can't ultimately kill a bill, delaying it gives them a chance to snipe at it, and as a consolation prize, deride the Democratic Congress as dithering and indecisive. How's that strike you, by the way? Criticizing Dems in Congress as slow to act... for having had to wade through the procedural slog of shutting down Republican filibusters, of all things!

So when this bill made its way to the Senate just ahead of the scheduled Memorial Day recess, the Republicans needed only to find some sort of excuse for throwing the roadblock of the filibuster up in its path. So they went with the old standby of being "deficit hawks" (despite having been noticeably AWOL on that score with regards to, oh, say... eight continuous years of off-budget war). Truthfully, it hardly matters whether there's an actual reason behind a filibuster. After all, it's been ages since a filibuster was actually about the thing which is supposed to literally define what a filibuster is -- that is, "extended debate." When was the last time you saw any of the people who insisted on voting against cloture actually show up to listen to and participate in extended debate?

At any rate, the fact is that the mere threat of a filibuster -- especially when the Senate is heading into a holiday recess -- is often enough to derail a bill temporarily. That's because even a bill that has overwhelming support in the Senate, and has more than enough Senators willing to vote for cloture, still has to actually go through the torturous and time-wasting process of invoking cloture. These days, Republican obstructionists are routinely filibustering even the motion to proceed to consideration of a bill, meaning they're filibustering the question of whether or not the Senate should even begin debate!

That means that getting to a vote on the tax extenders bill, even if you have 60+ votes ready to go, means filing a cloture motion (along with a petition signed by 16 Senators, which is never a problem), but then waiting for a full calendar day to pass after the day on which you filed the motion. Then, after one hour of session has elapsed on the second calendar day following the filing, your cloture motion is "ripe" for consideration. But remember, even if you trounce the opposition, all cloture gets you is the right to end debate... after another 30 hours of it! So now you've spent about a day and a half to get to your cloture vote, won the vote, but may have to sit by for another 30 hours before you ever get to actually vote on whether or not -- get this -- to begin debate on the bill!

( This one of his seems to me to spell out what is really happening - and they are now getting more lock step adherence from their people - including Snowe, Collins and Brown - while some on our side (Ben Nelson) are taking this moment to become deficit hawks. There is a real cost to losing the MA seat.

The scary thing about the tax extenders bill is that the health care plan will be blamed for the completely unrelated fact that the doc fix was not done, the loss of money to states will have economy and quality of life impact and most importantly, the longest term unemployed will have no money. All these things, in the Republicans' minds likely will "help" them as they will make more peopel think Obama failed.

[MH1]

23. what I don't understand is why closing the tax loophole would dampen investment

(yeah I know this is an old thread ... but it is still interesting)

I see all this stuff about how important VC investment is, and I probably agree ... but I don't understand why increasing the tax rate on the portion of investment gains paid to fund managers (now taxing that portion as regular income) would dampen one type of investment over another. Unless of course only one type of investment is targeted. And that seems like an intentional bill-crippler!

[wisteria]

4. I am one of these un-employed. I live in fear that before I find a job

the Republicans and some Democrats will cut my unemployment off. I went back to college to update my skills and learn a new trade and I am getting ready to graduate in July. I have been applying for work and I am currently working in an internship (no pay), but the business is so slow, my hopes of being hired are very diminished. I hate living like this. I have bills to pay and I have depleted what I had in retirement and some CD's a while back. Some went to school, but a lot went to keeping us above water. If I lose my unemployment before I find work, I will have to start making choices as to what gets paid and what does not.

I held a position for 11 years until they relocated.I took my last position because of this relocation. I worked there for two years before I was laid off. I was the last person they hired in my department before the economy started tanking, so, I was the one they let go.


Frankly, all I want is to be employed in a reasonable position again. I am tired of being a political pawn and being jerked around. This latest round of will I continue to get unemployment,or not,is really taking a toll on me as I am sure on so many others too. Now we not only have to worry about paying bills, and stay afloat, and finding work, but we have to contend with people suggesting we are lazy and are milking the system-even though when I worked, I paid into the unemployment system, as did many others who now have to rely on it. Why the Republicans think removing many people from unemployment rolls is a good thing is beyond me. Instead of belittling and trying to hurting the unemployed, you would think they would be working with President Obama in an effort to create more jobs.

Thank you for letting me vent.

[karynnj]

5. That is a powerful statement - good luck finding a good job

There are people in every community caught in similar conditions - the Republicans are playing politics with this. GD-P has a very good speech by Stabenow - she is speaking of how the Republicans WANT the economy to fail - it's better for their election prospects. She especially calls on the MA and Maine people to call their Republican. Senators We have 58 Senators willing to vote on this bill. This is immoral. They absolutely do not care for people - though Brown is working hard for the bankers.

[wisteria]

6. Thanks. n/t

[MBS]

13. wisteria, I'm in a similar situation. As for @#$% pseudo-senator Brown. . .

an experienced, knowledgeable MA Democratic activist told me of his own loathing for Brown ...how Brown is having his fun with his own smiling, personal PR agenda by playing games with people's lives.
Seeing this morning's headlines (where the Repubs have remained steadfastly united in their opposition to extension of unemployment benefits, and, at least as of now, seemed to have "won" ), my thoughts are the same as karynnj. It's one of those moments that reminds me exactly why I'm a Democrat. To the core of my being, I'm appalled by everything the contemporary Republican party stands for.

[wisteria]

22. I am sorry about your situation and I hope it improves soon.

As for the Republicans, I couldn't agree more with you. Unfortunately,it seems many American's buy into what they are saying.

[beachmom]

7. Son of a .....

http://senatus.wordpress.com/2010/06/24/senate-defeats-cloture-motion-on-third-version-of-extenders-bill/

Snowe wouldn't vote for it because some S corporations were going to have to pay some taxes. Plus it failed 57 - 41. Geez.

I'm so sorry, Wisteria.

[karynnj]

8. Same here, Wisteria

Snowe really has been a disappointment. It really does seem that they are willing to hurt people and pull down the economy because it makes them look better.

I was watching CNN and their lead in was "The Democrats failed to pass ..." Well 57 Democrats voted for it - and one against it (Byrd didn't vote - likely because they knew there was not one Republican willing to vote for this.) The lead should have been the Republicans as a unified blocked killed it or blocked it.

[wisteria]

10. They should throw this back at the Republicans and make them squirm

and try to explain themselves about hurting so many Americans for political gains.

[MBS]

14. YES!!!!

Please, Dems, make people see the consequences of the antics of the Party of No.

[Inuca]

16. I think they are trying

not very successfully though... The whole thing is beyond sickening.

[MBS]

20. yes, absolutely.

I'm struck by how a story lead can warp the real message of political events.
The vote was along STARKLY R vs D lines. Even Lieberman (slippery in so many other ways) voted with the Dems.

[wisteria]

9. Thank you, but I am just one person. I was going to school with others who are in the same

situation and many do not have anyone to help them out-young mothers, and older women like myself who lost their jobs and would give anything to be working right now.In many situations, unemployment is the only income they have. This situation makes me grateful for what I do have, and I am still better off then many, but it is such a sad situation in America today, and it is becoming more and more difficult to hold on to the hope that things will get better soon.

[MH1]

24. Oh, this is rich, isn't it: "Republicans are opposing any deficit spending."

I know, old news, but where the F*** was this compunction when Bush was starting wars we couldn't afford and cutting taxes for the rich so we could afford his wars even less?

F****ing a$$holes.

And I am sorry too for everyone who is being hurt by these jerkwads.

[sandnsea]

11. I am so sorry to hear that

I did not know you were going through such tough times, or maybe I just missed it. It is a lot more frustrating when these political decisions are very real to you and not just theories on a piece of paper. They have whittled this bill down to $3 Billion a year. That's it. They're all in a fiscal tizzy over $3 billion for regular people, and fight tooth and nail for billions for the c-17 and f-35 engine that the Pentagon doesn't even want. How can they say we can afford $700 billion for defense, but not $3 billion to help people in an economic crisis that they made in part because they didn't pay for all that "defense" to begin with. I just don't understand how they think.

What are you studying? I hope you hear of some work soon.

[wisteria]

12. I appreciate your good wishes. I will receive my degree in medical coding and administration.n/t

[Inuca]

17. Actually I think it is 30 billion

unpaid and another 100+ billin paid for. Or at least that's what Rachel M said last night, she had a good segment about this, with the proper amount (i.e., huge) of outrage. Also smart and factual, not just rant.

[sandnsea]

19. $30 billion over ten years

$3 billion a year. They reduced it down to the $30 billion from the original request.

I will check out the $100 billion unpaid part.

[sandnsea]

21. I see, it's all over 10 years

But the $30 billion is the unpaid portion. And that's after they cut the $25 weekly addition, which is going to cost me $100 a month this winter when I can really use it. In the 80s they required the county to have 10% unemployment before they kicked in the extensions. Do they still do that? I wish they would have created some kind of balance between 99 weeks and nothing.

http://www.thesunnews.com/2010/06/25/1552523_bill-to-extend-benefits-fails.html

[Inuca]

15. Big (no, HUGE)

:hug:

[wisteria]

18. Thank you. n/t