Obama, lawmakers divided over deficit

Speaker of the House John Boehner (L), President Barack Obama and Senate Majority Leader Senator Harry Reid (R)

Source: Press TV
http://www.presstv.ir/detail/188554.html

US President Barack Obama and Republican leaders have failed to reach a deal over the size and components of a plan to reduce the country's huge budget deficit.

In a White House meeting on Sunday, Obama and his fellow Democrats tried to revive a push for a sweeping USD 4 trillion package that would cut the deficit through spending cuts and tax hikes.

Republicans, however, urged a focus on a smaller, USD 2 trillion measure while insisting on their opposition to tax hikes for the wealthy.

Further talks are scheduled for Monday, when Obama is set to hold a news conference in the morning before reconvening his talks with congressional leaders.

The US Treasury has announced that it will exhaust its borrowing capacity by August 2, which means that it will run out of funds to timely repay all its debts, Reuters reported.

Republicans have balked at raising the USD 14.3 trillion US debt limit without steep spending cuts, while Democrats are pushing to generate revenue by eliminating tax breaks for the wealthy and corporations in certain sectors such as the oil and gas industry.

Asked on Sunday whether an agreement could be reached within the next 10 days, Obama said “We need to.”

Treasury officials have warned that failure to seal a deal by the August deadline could spook investors, causing US interest rates to surge, stock prices to plummet and putting the US at risk of another recession.

The Obama administration says if the debt ceiling is not raised by August, the nation would default on its obligations, with potentially calamitous financial consequences worldwide.

Meanwhile, the new chief of the International Monetary Fund Christine Lagarde emphasized that in case the US fails to raise its debt limit, she foresees "interest hikes, stock markets taking a huge hit and real nasty consequences" for the American and global economies.

"I would hope that there is enough bipartisan intelligence and understanding of the challenge that is ahead of the United States, but also the rest of the world," she said.

IMF chief warns US on debt limit

New IMF chief, Christine Legarde

Source: Press TV
http://www.presstv.ir/detail/188522.html

The new head of the International Monetary Fund (IMF) says that a US debt default would jeopardize and destabilize global economy, though she added that she could not imagine US officials letting that happen.

Christine Lagarde warned that a US debt default “would be a real shock, and it would be bad news for the US economy”, so she expressed hope “that there is enough bipartisan intelligence and understanding of the challenge that is ahead of the United States, but also of the rest of the world.”

Should the US lawmakers fail to reach a compromise by the August 2 deadline, there could be “real nasty consequences”, she stressed, such as rising interest rates, depressed stock markets, increased unemployment, and decreased investment.

“I can't imagine for a second that the United States would default,” Lagarde told the ABC News in an interview. “But, clearly, this issue of the debt ceiling has to be resolved.”

She stated that a potential debt default would have repercussions beyond the US, adding, “"It would certainly jeopardize the stability, but not just the stability of the US economy it would jeopardize the stability at large."

The US congressmen have currently locked horns over the raising of the debt ceiling. While the Democrats are calling for an increase in tax revenue and an end to the tax cuts made in the Bush era for the wealthier Americans, the Republicans are against any tax increase and advocate a reduction of civil services such as Social Security and Medicare.

IMF urges US to raise debt limit

US President Barack Obama

Source: Press TV
http://www.presstv.ir/detail/186839.html

The International Monetary Fund (IMF) has urged US lawmakers to swiftly increase the country's debt limit to avoid a severe shock to a still fragile economy.

In its annual review of the US economy, the IMF on Wednesday stated that the country's growing national debt is unsustainable, Reuters reported.

It further urged the US to increase its existing USD 14.3 trillion borrowing limit by August 2 in order to avoid a default on its loans.

"And of course, the federal debt ceiling should be raised expeditiously to avoid a severe shock to the economy and world financial markets," the IMF said.

Moreover, the IMF suggested that spending cuts and tax increases should be part of the plan.

Republicans and Democrats, however, are currently at odds on how to deal with the matter. So far, little willingness has been shown on either side to faster reach an understanding.

During a press conference on Wednesday, US President Barack Obama predicted that a deal with the Republicans would soon be reached.

Meanwhile, according to a report released on Wednesday, the US has so far spent at least USD 3.7 trillion in its wars in Afghanistan, Iraq and Pakistan. And it might end up spending as much as USD 4.4 trillion.

The report also questioned what the US has gained from this multi-trillion dollar investment.

Quick Facts: US Taxation

Source: Press TV
http://www.presstv.ir/usdetail/181729.html

Highlights

The U.S. Congress and President Barack Obama approved an $858 billion tax deal in December 2010 that critics say would add to the budget deficit. Obama Stimulus Benefits

The tax law extended tax rates for all income groups, including the wealthiest top 2 percent. Reuters

More than half of the total benefit from the tax cuts in 2010 alone will accrue solely to the richest 5 percent of Americans while the middle 20 percent of Americans will reap only 7 percent of the benefit. American Progress

Some economists say extending the tax cuts for the wealthy will cost about $80 billion by the end of 2012. American Progress

Taxation

The U.S. Congress and President Barack Obama approved an $858 billion tax deal in December 2010 that critics say would add to the budget deficit. Obama Stimulus Benefits

The tax law extended tax rates for all income groups, including the wealthiest top 2 percent. Reuters

Most Democrats favored extending the lower rates for household income of up to $250,000 only. Republicans wanted to retain the cuts for everyone including wealthier Americans. Reuters

More than half of the total benefit from the tax cuts in 2010 alone will accrue solely to the richest 5 percent of Americans while the middle 20 percent of Americans will reap only 7 percent of the benefit. American Progress

Some economists say extending the tax cuts for the wealthy will cost about $80 billion by the end of 2012. American Progress

Tax deal details

Individual income and investment taxes

In the tax deal, the cost of keeping tax rates for the middle and lower income groups is $127 billion. Also the cost to retain the top two income tax rates Obama originally opposed is $61 billion. CNBC

The tax deal keeps capital gains and dividends taxed at a top rate of 15 percent. Obama and Democrats had sought a 20 percent top rate, costing $54 billion. CNBC

The tax deal repeals certain limitations on deductions for high-earning individuals, costing $21 billion. CNBC

The tax deal extends a $2,500 annual college tax credit, favored by Obama, for two years, costing $18 billion. CNBC

The tax deal extends a $1,000 child tax credit, which phases out at higher incomes, for two years, costing $72 billion. CNBC

The tax deal boosts earned income tax credit, which benefits low-earning working individuals, costing $12 billion. CNBC

Estate tax

Obama conceded to Republican demands on the estate tax - 35 percent after a $5 million individual exemption. CNBC

That level was originally pitched by Republican Senator Jon Kyl. Obama and Democrats had wanted to renew the tax at 2009 levels of 45 percent rate with a $3.5 million exemption level. The estate tax expired 2010. Cost: $68 billion. CNBC

Unemployment insurance

The deal extends long-term unemployment insurance for 13 months, without a requirement that it be paid for immediately as Republicans have demanded. CNBC

Jobless benefits usually expire after six months, but since the recession took hold in 2007 Congress has voted to extend them for up to 99 weeks. CNBC

Cost: $57 billion, according to the Congressional Budget Office. CNBC

Alternative minimum tax

The deal amends the alternative minimum tax by indexing it to inflation to prevent more than 20 million middle-class taxpayers from getting hit with the tax, intended to ensure the wealthy pay some income taxes. Cost: $137 billion. CNBC

Expensing for business

The deal lets businesses of all sizes write off investments faster in 2011. This benefits capital-intensive companies the most. Cost: $21 billion. CNBC

Payroll tax credit

Employers and workers each pay a 6.2 percent payroll tax, which funds Social Security. The bill lowers the rate for workers to 4.2 percent for one year. CNBC

The Social Security Trust Fund would be paid back by a transfer of general funds. Cost: $111 billion. CNBC

Additional industry tax breaks

The deal extends a 45-cent-per gallon tax credit for ethanol for one year and a 54-cent tariff on imported ethanol. Cost: $7 billion. CNBC

The deal revives for 2010 and extends a research and development tax credit to 2011. Cost: $13 billion for two years. CNBC

Quick Facts: Wealth inequality in the US

Source: Press TV
http://www.presstv.ir/usdetail/181748.html

Highlights

As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth. The next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%. Who rules America? Only 15% of the wealth went for the bottom 80% (wage and salary workers). Who rules America?

The top one percent of households has 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. Who rules America?

More than half of the members of the U.S. Congress are millionaires. The wealthiest member of Congress has a minimum net worth of $167.55 million. Investinganswers.com

In 2010, all members of Congress earned at least $175,000. This is far, far more than the average American makes. Investinganswers.com

Wealth inequality

As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth. The next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%. Who rules America? Only 15% of the wealth went for the bottom 80% (wage and salary workers). Who rules America?

More than 40 percent of the population has less than $10,000 saved for retirement. That could take a toll in the long run. Las Vegas Sun

Stock ownership

The top one percent of households has 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. Who rules America?

The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Who rules America?

Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America. Who rules America?

The rich in Congress

House Speaker Nancy Pelosi's net worth soared from $13.7 million in 2008 to $21.7 million in 2009. Investinganswers.com

More than half of the members of the U.S. Congress are millionaires. The wealthiest member of Congress has a minimum net worth of $167.55 million. Investinganswers.com

In 2010, all members of Congress earned at least $175,000. This is far, far more than the average American makes. Investinganswers.com

The median wealth of a U.S. Senator in 2009 was $2.38 million. Investinganswers.com

Insider trading is perfectly legal for members of the U.S. Congress -- and they refuse to pass a law that would change that. Investinganswers.com

The personal wealth of members of the U.S. Congress collectively increased by more than 16% from 2008 to 2009. Investinganswers.com

Biden, lawmakers discuss debt limit

US Vice President Joe Biden hosts a meeting with congressional Republicans and Democrats at Blair House, May 5, 2011

Source: Press TV
http://www.presstv.ir/detail/181656.html

US Vice President Joe Biden and senior lawmakers have begun discussing healthcare costs in an effort to raise the country's 14.3 trillion dollar debt limit.

Biden held a meeting with the US Republican and Democrat lawmakers on Tuesday to tackle the nation's burgeoning budget deficit and raise the 14.3 trillion dollar debt ceiling before August 2 deadline.

Top Republicans say Biden's talks are laying vital groundwork for an eventual compromise on measures to rein in the rise in the US budget deficit, but President Barack Obama will ultimately be required to seal the deal, Reuters reported.

US President Barack Obama has asked for a raise in the debt ceiling, looking to further increase the government borrowing as a solution, while Republicans disagree with the proposal.

Both Democrats and Republicans agree that the United States needs to reduce the ballooning budget deficits by $4 trillion over the coming decade.

Republicans have said they are ready to make compromise on their plans to cut healthcare costs to trim trillions of dollars from the US budget deficit. They previously offered cuts in benefits for elders, Medicare, and Medicaid funds.

Democrats, however, have opposed Republicans' plans despite they say they too want to curb the budget deficit. They suggest cutting the deficit by increasing taxes on the wealthy.

Experts say failure to increase the debt limit could be devastating for the US and other economies around the world. Medicare and Medic aid represent nearly a quarter of all US federal spending.

In his 2012 budget plan, President Obama aims to slash $1.1 trillion from the US deficit in over a decade, which triggered a fight on fiscal priorities with Republicans who want even deeper spending cuts.