Category Archives: Investing

Will your taxes go up or down? The five biggest questions on the GOP plan

By Heather Long

House versus Senate bill pie charts

The No. 1 question I get from readers lately is: How likely is the Republican tax plan to become law?

Compass Point, a research firm, puts the odds of the tax-cut bill making it to President Trump’s desk at 65 percent. Goldman Sachs, the investment bank that has a lot of alums in the White House, is telling clients the odds are now at 80 percent.

“The tax reform debate is moving forward faster than we or most other observers expected,” wrote Goldman’s economics team.

The likelihood of tax cuts actually happening in 2018 got a major boost last week after the House of Representatives passed its version of the Tax Cuts and Jobs Act, but it’s not a slam dunk from here. In sports terms, the GOP has just completed a solid first quarter. There’s a lot more game to play.

Up next are the Senate Republicans, the same group that killed the Affordable Care Act that the House repealed in July. They plan to vote on their version of the tax bill shortly after Thanksgiving. Trump wants the final bill on his desk before Christmas, but even Goldman Sachs thinks that’s unlikely. There are simply too many differences between the two chambers’ legislation. Finding a compromise in conference committee is going to take time — if it’s even possible.

“The conference committee is going to age all of us terribly,” joked Isaac Boltansky, director of policy research at Compass Point.

Trump wants a tax-cut bill — it’s the centerpiece of his economic agenda. Here are the five key hurdles that remain for passage.

Should this just be a tax bill? Or a tax and health-care bill?

As part of their legislation, Senate Republicans are trying to repeal the “individual mandate” that requires nearly all Americans …read more


The business lobby’s chance to do what’s right for America

By Steven Pearlstein

Jamie Dimon, chairman and CEO of JPMorgan Chase, also leads the Business Roundtable, which has helped put tax reform at the top of the congressional agenda. (Molly Riley/AFP/Getty Images)

The Business Roundtable, which represents the chief executives of the largest American companies, has always fancied itself as the business lobby that rises above the grubby pursuit of narrow self-interest, that eschews partisanship and hard-edge ideology, that understands that what is good for America is good for business. Its new motto, “More than Leaders. Leadership,” is meant to reflect that high purpose.

It is also worth noting that no organization has been more responsible for getting tax reform to the top of the congressional agenda than the Business Roundtable. That’s not because its CEO members want to cut tax rates for themselves and their rich friends — actually, they have been clear they don’t favor cuts in individual taxes. Rather, it is because they believe the corporate tax code, with its high statutory rate of 35 percent, its taxation of foreign profits and its endless list of arcane loopholes and preferences, makes their companies less competitive and less profitable and encourages them to move jobs, technology and investment overseas. And they are right about a lot of that.

[Hey, Dems, a better tax plan isn’t going to write itself]

Now, with recent passage of the tax bill in the House and approval by the Senate’s Finance Committee on the strength of only Republican votes, the Roundtable stands on the verge of getting the corporate tax reform that it has lobbied for for nearly two decades — and, with it, roughly speaking, a $50 billion cut in corporate taxes each year. But their provisions come as part of an unsavory package that would:

• Eventually add more …read more


The Trump administration says we have to kill elephants to help save them. The data says otherwise.

By Christopher Ingraham

Supporters of trophy hunting say that permit fees from the practice, which can run into the tens of thousands of dollars in the case of large game like elephants, can be put toward conservation efforts that help bolster the populations of endangered animals.

In part, that’s the logic behind the Trump administration’s reversal of an Obama-era ban on importing African elephant trophies from Zimbabwe.

“The U.S. Fish and Wildlife Service (Service) has made a finding that the killing of African elephant trophy animals in Zimbabwe, on or after January 21, 2016, and on or before December 31, 2018, will enhance the survival of the African elephant,” according to a notice posted Friday in the federal register.

But if the logic of killing elephants to save them strikes you as questionable, you’re not alone.

As of 2014 the African elephant population stood at an estimated 374,000, according the Global Elephant Census, a massive and costly effort to measure the continent’s remaining savanna elephant population. That’s down from an estimated 10 million elephants at the turn of the 20th century, and from 600,000 of the animals as recently as 1989.

The more detailed population trend data from the census showed that populations had been on a rebound from 1995 to about 2007. But since then, elephant populations have been declining by a rate of about eight percent annually, or 30,000 elephants each year.

“These dramatic declines in elephant populations are almost certainly due to poaching for ivory,” according to the census. “Elephant poaching has increased substantially over the past 5–10 years, especially in eastern and western Africa.”

It’s theoretically possible, of course, …read more


The Republican tax plan looks a lot like the Republican health-care plan

By Matt O’Brien

(Alex Wong/Getty Images)

There’s an easy way to tell the Republican tax plan from the Republican health-care plan.

The first one would cut the corporate tax rate to help mostly wealthy investors, and pay for some of that by cutting health-care spending for the poor and the middle class. The second one, on the other hand, would cut health-care spending for the poor and the middle class to pay for the capital-gains tax cuts it would give to mostly wealthy investors. See the difference?

Now, there are a lot of ways to think about the GOP’s latest tax bill, but the simplest one is this: It would temporarily cut taxes for the middle class the next 10 years (while actually raising them on a number of the working class), before turning into a permanent tax hike on them to help pay for its permanent cuts to corporate taxes. In all, the budget scorekeepers at the nonpartisan Joint Committee on Taxation (JCT) estimate that the Republican plan would, on average, force households making $75,000 to start paying higher taxes by 2027 at the latest. Households making between $10,000 and $30,000 would actually face higher tax bills beginning in 2021.

Even that, though, wouldn’t be enough to eventually offset the full cost of its big business tax cuts — which, to comply with Senate rules, it’d have to for Republicans to be able to pass it on a party-line vote — so they’d also get rid of Obamacare’s penalty for people who don’t buy health insurance. This, according to the nonpartisan Congressional Budget Office (CBO), would counterintuitively save the government $338 billion over the next 10 years for the reason that fewer people would be pushed to find out that they qualify for subsidized, or even free, health-care coverage. The result is that 13 …read more


‘Like Bond villains’: What happened when Steven Mnuchin and his wife posed with a sheet of money

By Eli Rosenberg

Treasury Secretary Steven Mnuchin and his wife, Louise Linton, hold up a sheet of new $1 bills, the first currency notes bearing his and U.S. Treasurer Jovita Carranza’s signatures. Jacquelyn Martin/Associated Press

Treasury Secretary Steven Mnuchin did what just about anyone would do when presented with a newly minted sheet of American currency bearing their name and signature on Wednesday: He posed for a photo.

Coming in the midst of tax-overhaul plans by President Trump and congressional Republicans that nonpartisan analysts say would disproportionately benefit corporations and wealthy individuals, among others, the photo of Mnuchin and wife Louise Linton holding up the sheet of new $1 bills became an instant meme and drew wide mockery around the Internet.

The photo was snapped Wednesday by Jacquelyn Martin, a photographer for the Associated Press, as Mnuchin and Linton, along with U.S. Treasurer Jovita Carranza, toured the Bureau of Engraving and Printing in Washington. The new $1 bills, with Mnuchin and Carranza’s signatures, are expected to go into circulation in December. The signatures of Treasury secretaries have appeared on U.S. currency for more than a century, and Mnuchin’s signature is more legible than that of his predecessor Jack Lew, the AP noted.

[Mnuchin flew on government jet to Washington following appearance at Trump Tower]

For many, there was something comical about the picture of the couple, no strangers to accusations of flaunting their wealth and privilege. Mnuchin holds the sheet on both sides, a smile on his face. His wife stands behind him, her hand on the sheet’s corner.

Coms dept: We need to come off relatable so we can pass this tax cut

Steve Mnuchin: SAY NO MORE

— Grad School Imposter (@darinself) November 15, 2017

“Only way this could be …read more


In political gamble, GOP gives permanent tax cuts to corporations, but not people

By Heather Long

The essential gamble of Republican plans to overhaul the tax code is now becoming clear: Big businesses get a large, permanent tax cut, while American families receive only temporary tax relief that expires as soon as 2023 in the House bill and 2026 in the Senate bill.

In the House bill, the tax increase would mostly hit moderate and middle-income families because a credit designed to help them expires after five years. But in the Senate plan, released late Tuesday, virtually all Americans would face higher tax rates because the individual income rate cuts go away entirely in 2026. The tax cuts for corporations do not expire.

Public opinion polls already show that many Americans believe the tax bills are designed to help the rich, not the middle class. In a Quinnipiac poll released Wednesday, just 16 percent think the plan will reduce their personal taxes, and 61 percent think the wealthy will benefit the most, similar results to many other recent polls about taxes. On top of that, Democrats are trying to hammer the GOP for what they say are disproportionate benefits for businesses and the wealthy.

Every tax bill requires difficult trade-offs. The centerpiece of President Trump and congressional Republicans’ tax plan is lowering the corporate rate from 35 percent to 20 percent, which they say will lead to faster growth and, as a result, more jobs. But that has to be paid for or it would add trillions of dollars to the U.S. debt, a burden on future generations that economists say would slow growth down the road.

“We cannot get a truly healthy American economy — 3 percent sustained growth — without tax reform,” said Mick Mulvaney, President Trump’s budget director.

To make the finances work, the …read more


Why repealing Obamacare’s individual mandate is so crucial for tax reform

By Carolyn Y. Johnson

Members of the Senate Finance Committee participate in a markup of the Republican tax reform proposal. (Photo by Win McNamee/Getty Images)

Senate Republicans slipped the repeal of a key Affordable Care Act provision into their tax bill Tuesday, adding a provision that would allow them to declare a victory on health care while gaining more than $300 billion to offset the cost of tax reform.

The individual mandate is one of the most unpopular parts of the ACA — a requirement that people either buy health insurance or pay a penalty. About 6.5 million taxpayers paid a fine in 2016, according to a January letter sent by IRS Commissioner John Koskinen.

On one hand, repealing the mandate would be a way for Republicans to claim they are keeping their promise on unraveling President Barack Obama’s signature health-care law. But dragging a major health care provision into the tax bill provides a major second benefit: giving politicians more wiggle room on their tax plan.

The tax plan can only add $1.5 trillion to the deficit over the next decade, and Republicans are bumping up against that limit. So if they want to make more changes, they’ll probably need more money. Repealing the mandate frees up about $338 billion over a decade, according to according to an analysis by the nonpartisan Congressional Budget Office.

At first glance, getting rid of the penalty might appear to make tax reform harder, since the government would lose a source of income — penalty payments by uninsured people that were projected to add up to $43 billion over a decade, according to the CBO. But a repeal would bring big savings because government spending on subsidies to help people afford coverage would plummet: 13 million fewer people would have health insurance in 2027.

…read more


6.3 million Americans are 90 days late on their auto loan payments

By Heather Long

Vehicles sit parked in a storage lot at San Bernardino International Airport. (Patrick T. Fallon/Bloomberg)

A rising number of Americans are unable to make the monthly payments on their car or truck loans and are in danger of having their vehicles repossessed, according to data released Tuesday from the New York Federal Reserve.

There are 6.3 million Americans who are 90 days late — or more — on their auto loan payments, an increase of about 400,000 from a year ago. When someone gets so far behind on their payments, they typically end up losing their vehicle.

The delinquency rate on autos has been steadily rising since 2011, a red flag at a time when the unemployment rate has been falling. The unemployment rate is now 4.1 percent, the lowest level since 2000. As more and more Americans get jobs and income, it should be easier for them to pay their bills. But the rise in auto loan delinquencies is a reminder that millions are still struggling to make ends meet.

Many of the people who can’t pay their car loans have bad credit scores of under 620 on an 800-point scale. They don’t have many options to get money to buy a new or used car and often end up getting a subprime auto loan that comes with an interest rate of 15 to 20 percent.

The Fed noticed a big difference between how people who get their auto loan from a bank or credit union vs. those who get a loan from an “auto finance lender,” such as a “Buy Here, Pay Here” firm. Among auto finance companies, 9.7 percent of their subprime loans are late by 90 days or more, not far from the delinquency rate during the worst days of the Great Recession. In contrast, banks and credit unions …read more


Senate lawmakers strike deal to free dozens of large banks from rigorous post-crisis rules

By Renae Merle

Sen. Mike Crapo (R-Idaho) leaves a meeting of the Senate Finance Committee at the Capitol. (Photo by Win McNamee/Getty Images)

Sen. Mike Crapo, the Republican chairman of the Senate Banking Committee, announced a bipartisan deal Monday to free dozens of large financial institutions from some of the most rigorous regulations put in place after the global financial crisis.

Currently, banks with more than $50 billion in assets are considered “too big to fail” and undergo the strictest regulatory scrutiny, including a yearly stress test to prove they could survive another period of economic turmoil. The proposed legislation would raise that threshold to banks with $250 billion in assets, potentially allowing several high-profile financial institutions, including American Express, Ally Financial and Barclays, to escape the extra scrutiny.

These banks have long complained that the regulations are excessive and saddle them with extra compliance costs they don’t deserve.

The Senate plan is modest compared with legislation passed by the House last summer to dismantle key parts of 2010s financial reform bill, known as the Dodd-Frank Act. But it is the most significant step taken by the Senate so far to help fulfill President Trump’s agenda of loosening financial-industry regulations that the White House has said are holding back the economy.

“The bipartisan proposals on which we have agreed will significantly improve our financial regulatory framework and foster economic growth by right-sizing regulation, particularly for smaller financial institutions and community banks,” said Crapo (R-Idaho).

Crapo secured the support of several Democrats, including Sens. Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Mark R. Warner of Virginia, before announcing the deal. The legislation is the “result of years of tough, bipartisan negotiations,” Warner said in a statement.

Despite the early bipartisan support, it is unclear whether the legislation …read more


The fastest-growing jobs in America pay about $22,000 per year

By Danielle Paquette

Home health aides make about $22,000 per year. (Scott Eells/Bloomberg)

The largest two categories of America’s fastest-growing jobs offer some of the country’s lowest wages and weakest benefits.

Over the next ten years, analysts expect to see 1.2 million more jobs for home health and personal care aides, according to a report from the Bureau of Labor Statistics. That’s more positions than the projected job creation in the eight other most rapidly growing fields combined.

By 2026, the home health aide industry will add 425,600 positions, an increase of 46.7 percent, the government estimates show. The occupation’s median annual wage today is $22,600.

The numbers of personal care aides, who handle mostly domestic tasks, meanwhile, is expected to climb by 754,000 jobs or 37.6 percent. They typically make about $21,000 per year.

Solar and wind jobs, which come with larger paychecks, are projected to grow by 105 percent and 96 percent respectively, but the tiny fields will add just 17,400 new positions in the next decade, researchers predict:

Courtesy of the Bureau of Labor Statistics

Roughly nine in ten of these positions are held by female caretakers. Nearly half identify as black or Hispanic.

Workers in these roles share one central mission: They care for people who struggle to care for themselves. But many live in poverty, and most have little to no paid days off.

“They’re typically the breadwinners in low-income households,” said Ariane Hegewisch, a labor economist at the Institute for Women’s Policy Research who co-wrote a study last year about low-wage jobs filled by women. “But what they earn makes it hard for them to pay the rent, or get an education to move into better paying jobs, or look after their children.”

Fifty-five percent of home health aides subsist on incomes below …read more