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Tony Snow, President Bush's new spokesman, reveals today that he's not quite on board with this whole ownership society thing.
Via Talkingpointsmemo:
TONY SNOW: No. As a matter of fact, I was even too dopey to get in on a 401(k). So there is actually no FOX pension. The only media pension I have is through AFTRA.
I'd bet my weekly wages against his that he hasn't opened a health savings account either.
Snow is 50, and worked at Fox since at least 1996. So in his prime years of earnings he didn't bother to start a 401(K), even though it was likely subsidized by his employer. Oh, and AFTRA, of course, is a union that runs one of those old-fashioned defined benefits plans that are slowly disappearing.
Of course, we should expect to hear lots from Snow in the coming months about how important it is for people to save for their own retirements via 401(Ks) and not to rely on old paternalistic solutions like defined-benefit pension plans or Social Security.
Oh, and I'd bet a week of my wages against a week of his that Snow hasn't opened a health savings account either.
Posted by dan at 01:43 PM
David Cay Johnston reports in the New York Times on how the alternative minimum tax raises taxes on capital gains.
Because of the alternative minimum tax, more than a third of investors last year paid taxes higher than the 15 percent rate sponsored by President Bush on their long-term capital gains, a new Congressional report shows.These investors paid more than $7 billion in higher federal and state taxes than they would have under the regular income tax system, according to calculations by The New York Times based on the new report. . .
Last year, some investors paid 31.3 percent of their gains in combined federal and state taxes, based on the report issued yesterday by the Joint Committee on Taxation, the official Congressional scorekeeper on the costs and benefits of tax law changes.
The report was requested by House Democrats, who say they believe that taxpayers making $75,000 to $500,000 would support them if the taxpayers understood how the alternative tax takes back a third or more of the Bush tax cuts. . . .
Of the more than $405 billion in long-term capital gains last year, 34.3 percent, or nearly $139 billion, was reported by people who are on the alternative tax system, according to the joint committee's estimate.
The report also estimated that 14.9 percent of the total gains were not taxed at the reduced 15 percent rate, but were instead taxed at 21.5 percent or 22 percent, rates higher than the 20 percent rate on capital gains enacted under President Bill Clinton.
These higher taxes apply to investors with incomes of $112,500 to $382,000.
Representative Charles B. Rangel of New York, the ranking Democrat on the House Ways and Means Committee, said it was unfair to burden merely affluent taxpayers with higher taxes, especially since most of the benefits of the reduced capital gains rates go to those with incomes of more than $1 million annually.
Just 400 taxpayers, out of 145 million, collected 7 percent of all reported capital gains in 2000. The administration has declined to make public data for years since then.
Posted by dan at 03:53 PM
From the Financial Times Observer column:
Al Gore, Clinton's vice-president, who does not appear to enjoy a "drop by anytime" relationship with Clinton, yesterday named Brent Scowcroft to the board of his new alliance to raise awareness on climate change.Scowcroft was a friend of the first President Bush and advised him during the 1991 Gulf war. His relationship with the family has been a subject of much speculation in Washington since Scowcroft publicly questioned the wisdom of invading Iraq in 2003. It would be interesting to know how Scowcroft's latest move is viewed by the Bush clan, which famously lampooned Gore's climate change warnings by calling him "ozone man".
At the moment, Gore's activities on global warming seem to be generating the best headlines he's seen in years. His new film on the subject, An Inconvenient Truth, has landed him on the cover of Vanity Fair and won glowing reviews.
Gore seems to have picked the board of his new climate group with an eye toward countering the inevitable tree-hugger accusations. Besides Scowcroft, it includes Lee Thomas, former president of Georgia Pacific and the former environment chief under President Reagan.
Posted by dan at 03:49 PM
From today's Financial Times:
"The US survival rate for newborn babies ranks near the bottom among developed nations.Among 33 industrialised nations examined in a new report, the US tied with Hungary, Malta, Poland and Slovakia with a death rate of nearly 5 per 1,000 babies. Only Latvia had higher mortality figures, with 6 per 1,000, according to the report the US-based Save teh Children.
Researchers noted that the US is more racially diverse and has a greater degree of economic disparity than many other developed countries. A lack of national health insurance adn short maternity leaves were also likely to have contributed to the poor US rankings."
Posted by dan at 03:46 PM
How do you say buy and hold in Arabic? William Wallis reports in the Financial Times that the Saudi Arabian stock market is doing a NASDAQ.
"The Arab world's largest stock exchange has lost nearly half its value -- more than $380 bn -- since the end of February in a crash that has stunned millions of ordinary Saudi investors, and contributed to bearish sentiment across the Gulf . . . .Some analysts believe the Saudi market will continue to fall, given how far it strayed upwards at its peak when the market capialisation of hte Tadawul All-Shares Index equalled 200 per cent of Saudi Arabia's gross domestic product."
Posted by dan at 03:36 PM
We're still #1. In competitiveness, that is, according to the IMD business school. But just barely.
Posted by dan at 03:35 PM
My latest in Slate: does the U.S. have a huge current account deficit because it is money manager to the world?
Posted by dan at 03:29 PM
Not necessarily. Stephen Cecchetti of Brandeis has a smart op-ed in the Financial Times on Ben Bernanke's predicament:
I have painted a bleak picture: rising inflation and falling growth. Stabilising one destabilises the other. How will Mr Bernanke and the rest of his Federal Open Market Committee react? In recent months, they have emphasised both the importance of anchoring long-term inflation expectations and how low inflation enhances the Fed's other statutory objectives of high employment and moderate long-term interest rates. The message is that policymakers are committed to keeping inflation low. That is their primary objective.As for the current circumstance, two forces will combine to slow everything down. The first is uncertainty. Second, there is the need to balance the competing goals of low inflation and stable growth. As I have argued, there are strong reasons to expect inflation to rise and growth to fall. On their own, these would require diametrically opposed interest rate policies. Put them together and the appropriate response is to bring inflation down slowly so as to keep growth as stable as possible.
At times like these a system where inflation is the sole (or even primary) objective of monetary policy can create difficulties. The problem is communicating why it is that inflation is going to be allowed to rise so that real growth does not deteriorate too badly. It is a difficult balancing act but there is little anyone can do about that.
By the end of 2006, rates will be still above 5 per cent. To figure out how much higher, we can use the following rule of thumb: for every percentage point inflation rise above 2 per cent, the federal funds rate target needs to rise by 1½ percentage points above the neutral level of 4½ per cent. So, if inflation were to go to 3 per cent, the federal funds rate would have to rise to 6 per cent. That is the maximum. If growth slows, then there will be no need to get quite that high.
When interest rates were 1 per cent in mid-2004, I calculated they needed to get to 4½ per cent. In mid-2005, when it became clear how long it would take to get there, I began thinking 5 per cent would be the peak. With interest rates so low for so long, housing price increases are now leading to higher rents, which feed directly into headline inflation. Controlling this means continuing to raise interest rates. Regardless, balancing the competing forces means going slowly.
Posted by dan at 02:24 PM
My latest in Slate, on immigration.
Posted by dan at 09:28 AM
Marc Champion writes in the Wall Street Journal about Eastern Europe's belated interest in energy efficiency.
In a cavernous warehouse along the Dnieper River, four giant open-hearth furnaces rage at 1,500 degrees Celsius day and night, making steel the same way they have since they were installed in 1931.Furnaces like these haven't been used in the U.S. for 20 years. They guzzle more than twice as much energy as their modern replacements. But until this year, Ukraine paid just one-fifth of the average world price for natural gas from Russia, so there was little urgency to replace these museum pieces.
That has changed. In January, the Russian gas monopoly OAO Gazprom doubled prices to Ukraine overnight, and warned of more rises to come. Alexander Kirichko, who runs the steel plant, saw the move coming and fast-tracked plans to replace the old furnaces. "We have no choice," he says.
Russia's price shock -- which included a brief interruption of gas to Ukraine -- sent shudders of concern across Europe about access to Russian gas, much of which arrives in a pipeline through Ukraine. But the price jolt is also having an unexpected benefit: It's starting to force fundamental change on some of the most energy-wasteful economies in the world, those of former Soviet republics.
Ukraine, with its obsolete industrial plants and leaky urban heating systems, last year consumed almost as much natural gas as Germany, a country with a gross domestic product 10 times as large. Now, Ukrainian companies that relied on cheap gas to export low-cost metals and chemical products are scrambling to cut back or find other energy sources.
Rising oil and gas prices are forcing governments around the world to rethink energy policies, including looking for ways to curb demand growth. . .
The savings potential is large. If all former Communist-bloc nations in Eastern Europe and Central Asia could reach West European levels of energy use per GDP unit, world energy consumption could fall 7.2%, says the European Bank for Reconstruction and Development.
In addition, a fall in consumption of gas from Russia by Ukraine and its neighbors might make supplies more secure for countries such as Germany and Italy. Eighty per cent of gas Russia sells to the European Union passes by pipeline through Ukraine and the rest through Belarus. When Russia cut off gas supplies during a price showdown with Ukraine early this year, the Ukrainians tapped the pipelines for gas meant for elsewhere in Europe.
Posted by dan at 10:33 AM
Howard Gleckman writes in Business Week on how the Alternative Minimum Tax is effectively increasing taxes on capital gains. ($ required)
Money graf:
"Not only are millions of investors paying higher taxes today than they expected, but many are also paying more than they did in 2002, when gains were taxed at 20%."
Get that? For a chunk of the investor class, capital gains taxes are higher than they were before Bush & Co. cut them in 2003.
Posted by dan at 10:28 AM
Business Week offers a bleak prospectus for former NBC News wunderkind Jeff Zucker's future.
Posted by dan at 10:27 AM
Treasury Secretary John Snow reacted to last week's unemployment data by noting that "We are approaching the tipping point where we will see wages pick up," according to the Financial Times. Funny, that's exactly what he said in January.
Posted by dan at 10:11 AM
Some higly paid American service workers are taking advantage of the global market for labor. Susan Carey, Bruce Stanley, and John Larkin report in the Wall Street Journal.
In a new twist on global outsourcing, a flock of U.S. pilots is fleeing the depressed North American airline industry to work in far reaches of the world where aviation is booming. After the 2001 terrorist attacks stifled air travel and sent the U.S. industry into its deepest decline ever, more than 10,000 U.S. pilots were laid off, and many more took early retirement. Despite subsequent hiring by a few healthy carriers, including Southwest Airlines, thousands haven't been able to find new flying jobs at their old pay grades.At the same time, the industry is expanding rapidly in China, India, Southeast Asia and the Middle East. As these regions have grown more affluent and loosened aviation restrictions, travel demand has soared. New airlines have started up, existing carriers are adding routes, and hundreds of new jets are on order.
So, like British and Australian pilots who long have plied their trade wherever they find work, more Yanks are taking their skills offshore. They are doing so despite trepidations about moving families, flying on short-term contracts, and sometimes giving up union rights to be called back to work by U.S. carriers according to seniority.
U.S. pilots are working as far afield as Bolivia, China, Qatar and Vietnam. Hong Kong-based Cathay Pacific Airways and Singapore Airlines are hiring more Americans, as are carriers in Taiwan and South Korea, and increasingly, in India.
The diaspora is one symptom of a growing global shortage of well-trained commercial pilots. Aerospace giant Boeing Co. estimates the global jet fleet will grow to more than 35,000 airplanes in 2024, from fewer than 17,000 in 2004. Boeing pegs demand for new pilots at nearly 18,000 a year through 2024. China alone will need more than 35,000 new pilots over 20 years, and the rest of Asia will need 56,500, the company estimates. Many countries are currently unable to train enough pilots at home.
The result: a global bazaar where experienced pilots go to the highest bidder. Norwegians and Venezuelans are flying in China, Egyptians and Russians in India, Jamaicans and Iranians for a Japanese carrier. Four out of five pilots at Qatar Airways are foreign. More than 70 Philippine Airlines pilots have quit since 2003 for better-paying jobs elsewhere. Etihad Airways, a new airline based in Abu Dhabi, says its No. 1 source of pilots is Malaysia. India's fleet of startup carriers was so plagued by pilot poaching that the government last year began requiring pilots to serve at least six months at one carrier before moving on.
G.R. Gopinath, managing director for Air Deccan, a two-year-old budget airline in India, says he has been recruiting a dozen pilots a month from overseas. "If Indian software engineers can work in the U.S., their pilots can come and work here," he says. "It's reverse body-shopping." Pilot job fairs in the U.S. have begun attracting recruiters for Chinese and Indian startups, according to Kit Darby, president of Air Inc., a placement firm.
Posted by dan at 10:02 AM
A rhetorical question: if the supply of cheap energy is such a huge domestic, economic, and geopolitical problem, why do we have a protective tarriff on ethanol. As Laura Meckler reports in the Wall Street Journal, more people are starting to wonder.
Energy Secretary Samuel Bodman urged Congress to consider lifting the tariff on imported ethanol, as lawmakers scrambled for a response to the surge in gasoline prices.Support for lifting the tariff has bipartisan support, but it would have powerful opponents among farm-state lawmakers. Trying to kill it shows how complex the mix of energy policy and politics can be in an election year when voters are demanding action. . . .
"There's extreme demand for the ethanol available in the United States," said Geoff Sundstrom of AAA. Lifting the tariff -- which adds 54 cents to the cost of each gallon of imported ethanol -- could help ease the crunch, but Congress, not the White House, will have the final word. A big beneficiary would be Brazil, a major ethanol producer.
"It's hypocritical to say this is an important source of energy, but in spite of its importance, we're not going to bring any in from outside America," said Sen. John Sununu (R., N.H.).
But it won't be simple to eliminate the tariff. It is backed by many Midwestern lawmakers, including House Speaker Dennis Hastert and Senate Finance Committee Chairman Charles Grassley, who want to protect the domestic ethanol industry. In a statement, Mr. Grassley and Sen. John Thune (R., S.D.) said lifting the tariff "would be counterproductive to the widely supported goal of promoting home-grown renewable sources of energy."
Remember when Republicans used to be for free trade?
Posted by dan at 09:59 AM
My latest in the New York Times, on the impact of high gas prices on consumer sentiment and consumer spending.
Posted by dan at 09:55 AM