How to Break Bread With Republicans

In a new opinion piece for the New York Times Gregory Mankiw has put together a list of ways that President Obama can work with the new Republican majority in the House. I’m thinking President Obama will not be so keen on these tactics.

From NYTimes.com:

FOCUS ON THE LONG RUN

Charles L. Schultze, chief economist for former President Jimmy Carter, once proposed a simple test for telling a conservative economist from a liberal one. Ask each to fill in the blanks in this sentence with the words “long” and “short”: “Take care of the ____ run and the ____ run will take care of itself.”

Liberals, Mr. Schultze suggested, tend to worry most about short-run policy. And, indeed, starting with the stimulus package in early 2009, your economic policy has focused on the short-run problem of promoting recovery from the financial crisis and economic downturn.

But now it is time to pivot and address the long-term fiscal problem. In last year’s proposed budget, you projected a rising debt-to-G.D.P. ratio for as far as the eye can see. That is not sustainable. Conservatives believe that if the nation credibly addresses this long-term problem, such a change will bolster confidence and have positive short-run effects as well.

Fortunately, the fiscal commission you appointed assembled a good set of spending and tax reforms. The question you now face is whether to embrace their sensible but politically difficult proposals in your own budget.

THINK AT THE MARGIN

Republicans worry about the adverse incentive effects of high marginal tax rates. A marginal tax rate is the additional tax that a person pays on an extra dollar of income.

From this perspective, many of the tax cuts you have championed look more like tax increases. For example, the so-called Making Work Pay Tax Credit is phased out for individuals making more than $75,000 a year. That is, because many Americans lose some of the credit as they earn more, the credit reduces their incentive to work. In effect, it is an increase in their marginal tax rate.

Read more here

Republicans Accuse Dems of Using IRS Audits to Bully Conservative Groups

From TheBlaze.com:

Congressional Republicans are accusing Democrats and administration officials of leaking privileged IRS information and using invasive audits to bully conservative groups, the New York Times says, and they are not happy about it.

The first charge by Republicans Senators centers around a senior Obama administration official who may have improperly accessed the tax records of Koch Industries, an oil company whose owners are major conservative donors, while the second charge lambastes Senator Max Baucus (D-MT) for scoping the funding activities of historically conservative tax-exempt groups.

According to the Times, the Treasury Department has opened up an investigation regarding allegations by Sen. Chuck Grassley (R-IA)* and six other Republican senators who claim a senior administration official disclosed confidential taxpayer information regarding Koch Industries — whose owners are major conservative donors — during a conference call with journalists.

During that call, the official pointed to Koch Industries as an example of “multibillion-dollar businesses that are structured as partnerships in ways that allow them to avoid paying sizable corporate taxes.”

Changing Stance, Administration Now Defends Insurance Mandate as a Tax

From NYTimes.com:

When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”

And that power, they say, is even more sweeping than the federal power to regulate interstate commerce.

Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations.

Under the legislation signed by President Obama in March, most Americans will have to maintain “minimum essential coverage” starting in 2014. Many people will be eligible for federal subsidies to help them pay premiums.

In a brief defending the law, the Justice Department says the requirement for people to carry insurance or pay the penalty is “a valid exercise” of Congress’s power to impose taxes.

Congress can use its taxing power “even for purposes that would exceed its powers under other provisions” of the Constitution, the department said. For more than a century, it added, the Supreme Court has held that Congress can tax activities that it could not reach by using its power to regulate commerce.

How to Fix US Deficit: Stick to the Law

According to the Christian Science Monitor, projections from the Congressional Budget Office on deficit assumptions show that if we stick to the current tax law, federal revenues should pay for spending over the next few decades. Check out the following opinion article by guest blogger Diane Lim Rogers explaining why the current tax law is in fact fiscally responsible.

I haven’t had a chance to digest CBO’s long-term outlook yet (released earlier today), but luckily I did see Ezra Klein’s post on it, which featured two charts highlighting the difference between CBO’s current-law baseline, and their “alternative fiscal scenario” which is more of a “policy-extended” baseline – similar to how the Obama Administration gauges their budget proposals.

As Ezra points out, current law, taken literally as CBO must assume, is fiscally responsible:

In theory, CBO’s deficit assumptions project the effects of settled law. And if you do that, revenues pretty much pay for spending over the next few decades.

Note that the chart shows that under CBO’s “extended baseline” scenario, reflecting current law, “primary balance” is achieved, where there is no “fiscal gap” between non-interest spending and revenues. That doesn’t mean the federal budget is perfectly balanced, because interest costs take total federal spending above revenues, but it does mean that the deficit is pretty small–as a matter of fact, less than 3 percent of GDP by 2015, which means it’s economically sustainable (because at 3 percent, the stock of federal debt is growing at about the same pace as the economy).

Coincidentally, this picture above could also be labeled “2015 Goal of President Obama’s Fiscal Commission”– because the commission’s goal is also to achieve “primary balance” and a “sustainable” level of deficits by 2015.

Continue reading at CSMonitor.com…

Lawmakers Seal Deal On Historic Wall St Reform

Lawmakers delivered a win for the Obama administration when the reached an agreement on the historic Wall Street reform bill after a 21 hour-long session debate. The bill is meant to institute tighter restrictions, more oversight, and hedge profits of the financial industry.

As this article from Reuters.com explains, the legislation represents the most sweeping financial rules revamp since the 1930s. The bill is expected to get final congressional approval next week although the new rules will not be implanted for months.

The legislation would set up a new financial consumer watchdog, create a protocol for dismantling troubled financial firms and mandate higher bank capital standards, all in an effort to avoid a repeat of the 2007-2009 credit crisis that hammered the economy and triggered taxpayer bailouts of floundering firms.

To secure agreement, lawmakers reached deals in the final hours on the most controversial sections, which restrict derivatives dealing by banks and curb their proprietary trading to shield taxpayer-backed deposits from more risky activities.

Banks will be allowed to keep most swaps dealing activity in-house, although the riskiest trading would be pushed out into an affiliate. They will also be permitted small investments in hedge funds and private equity funds.

The concessions could lessen the impact on bank profits.

The KBW bank stock index, which registered its worst performance since October last month, was 1.6 percent higher in late-morning trade, with both Goldman Sachs Group Inc and Morgan Stanley, two of the banks that will be most affected, showing gains.

Jobs Bill Likely to Be Delayed in Senate

Although the Obama administration is hoping to sign the job create bill into law before the end of this week, yesterday Senate Republicans denounced the efforts of Democrats to pass the lengthy legislation in a hurry. It is now reported that the Senate will need to wait until at least the week of February 22^nd to vote on the $80 billion job creation package.

"It's a cake that isn't quite baked yet," said Senate Minority Whip Jon Kyl (R., Ariz.), following a Senate nominations vote.

"Not enough of our members have had an opportunity to review it, for a consensus that would permit us to move forward on it that quickly," he added.

Senate Majority Leader Harry Reid (D., Nev.), had announced earlier Tuesday that despite another snowstorm rolling through the Washington region, he hoped to bring the jobs-creation bill for a vote by the end of the week.

Both the Senate and the House are in recess the week of Feb. 15 due to the Presidents' Day holiday.

Democratic leaders were still weighing procedural options late Tuesday. But with 15 senators absent from Tuesday's vote because the weekend snowstorm impeded their travel, it didn't appear that Democrats had the numbers to limit debate and push the bill to a vote without Republicans on their side.

Continue reading at the Wall Street Journal…

White House Plans to Lend $30 Billion to Small Banks

From the Wall Street Journal:

The Obama administration is finalizing plans to create a new government program to lend $30 billion to community banks that would include incentives to boost small-business lending, people familiar with the matter said, a move White House officials hope will help jump-start the economy.

Details are still being finalized and changes could be made, the people familiar with the plan said.

Under one leading version, the government would allow banks with less than $1 billion in assets to borrow an amount equal to 5% of their assets from the government. These banks would have to pay the government a 5% dividend on the loan, but that dividend would be reduced to as little as 1% if the banks substantially increased their lending to businesses.

Banks with between $1 billion and $10 billion in assets would be able to borrow up to 3% of their assets from the new program.

The plan would essentially use leftover money from the Troubled Asset Relief Program to allow banks to tap the government funds with fewer strings attached than the initial program created in 2008. Banks that already have TARP funds would be able to essentially refinance into the new program.

Continue Reading at WallStreetJournal.com…

Treasuries Set for Worst Year Since 1978 as U.S. Steps Up Sales

From BusinessWeek.com:

Treasuries headed for the worst year since at least 1978 as the U.S. stepped up debt sales to help spur growth in an economy recovering from its deepest recession in six decades.

U.S. seven-year notes were little changed before today’s $32 billion sale of the securities, the last of three auctions this week totaling $118 billion. The Treasury sold a record- tying $42 billion of five-year securities yesterday and $44 billion in two-year notes on Dec. 28. U.S. government securities have fallen 3.6 percent this year, according to Bank of America Merrill Lynch indexes, the worst annual performance since at least 1978, when Merrill began collecting the data.

“It’s the last hoop the market has to jump through in 2009,” said James Collins, an interest-rate strategist in the futures group in Chicago at Citigroup Inc., one of 18 primary dealers obliged to participate in the Treasury’s auctions. “Yields have been trending higher. It’s been a response to increased supply.”

The yield on the benchmark 10-year note was little changed at 3.80 percent at 9:24 a.m. in New York, according to BGCantor Market Data. The yield has increased 1.58 percentage points this year. The 3.375 percent debt due in November 2019 fell 1/32, or 31 cents per $1,000 face amount, to 96 17/32. The yield on a seven-year note was little changed at 3.31 percent.

The Latest Tax Changes in the Senate's Health Care Bill

The Senate is expected to vote on their health care bill (the Patient Protection and Affordable Care Act) this Christmas Eve. They are also going to vote on legislation that will raise the federal government’s debt limit. Since no Republican Senators are likely to vote in favor of either measure, Congress is attempting to use the holiday vote to help avoid negative publicity. However, in order to get the sixty votes needed to pass the measure, Democratic leaders have made quite a few changes to the legislation. To help my readers stay updated on the massive health care overhaul, I have put together this article explaining the tax changes in the Senate’s bill.

No Public Option

First of all, I think it is important to note that the most recent legislation – which will be voted on tomorrow – does not contain a public option. Although President Obama had pushed for a government run health insurance option, in order to get the necessary votes it was removed. Instead the federal government will contract with insurers for two national health plans that will be offered through a new insurance exchange. The plan will be handled by the U.S. Office of Personnel Management, which already oversees the health policies of over eight million federal government employees.

The Costs

After all the recent changes, the Congressional Budget Office estimates that the legislation would cost $871 billion over the next ten years. It is reported that the plan will be paid for by $483 billion in spending cuts, as well as $498 billion in new revenue. The budget office asserts that it will reduce the federal deficit by around $130 billion over the next decade.

Expanded Coverage

Current estimates show that 83 percent of Americans under the age of 65 have health insurance coverage. If enacted, the Senate’s plan would expand coverage to an estimated 94 percent of Americans under the age of 65. This would leave about 24 million people in this country without insurance, a third of which are thought to be immigrants living in the country without proper documentation.

Individual Mandate Tax

One of the first tactics the Senate is using to fund the legislation is through an individual mandate tax. Beginning in 2014, anyone who does not have a “qualifying” health insurance plan must pay an income surtax. The tax is expected to generate over $15 billion in federal revenue, and will begin as a 0.5% tax in 2014. However, it will increase to 1% in 2015, then 2% in 2016.

Employer Mandate Tax

In addition to levying taxes on individuals, the new bill will create an employer mandate tax that is expected to generate $28 billion over the next decade. It will force all employers with 50 or more employees to either provide health care coverage, or pay a non-deductible tax of $750 for each full time employee.

Cadillac Health Care Plans

Just like the initial bill the Senate proposed, the final legislation will include a new 40% tax on “Cadillac” health insurance plans beginning in 2013. According to the legislation, this will include plans valued at $8,500 for individuals, and $23,000 for families. However, there are a few exceptions, such as Longshoremen who lobbied heavily to have members of their union excluded from this new tax.

Cosmetic Tax No, Tanning Tax Yes

After immense pressure from the cosmetic surgery industry, the 5% tax on elective cosmetic procedures was removed from the Senate’s bill. However, in its place Democratic leaders added a 10% tax on tanning salons.

Small Business Credits

Starting in 2010 – a year sooner than originally proposed – tax credits will become available to small businesses with less than 25 employees, and an average salary of $50,000 to encourage them to offer health insurance benefits. Businesses with 10 or less employees and an average wage of $25,000 will be able to take advantage of an even larger federal credit.

Increased Medicare Payroll Tax

The original Senate bill had called for a 0.5% Medicare payroll tax increase for individuals earning more than $200,000 and married couples earning over $250,000. However, the recent amendments have raised the tax to 0.9%.

Taxes on Insurers and Medical Device Manufacturers

A whole new set of taxes will get levied on health insurance companies and medical device manufacturers. The federal government is expecting to generate over $60 billion in additional revenue over the next decade by imposing taxes on firms with $50 million or more in profit. Additionally, they also plan to levy a $2 billion per year tax on the medical device industry starting in 2011 that will increase to $3 billion in 2017.

Increased Medical Deduction Limit

Currently, if a taxpayer spends more than 7.5% of their adjusted gross income on medical expenses they can deduct the amount from their taxable income. However, the Senate’s bill will raise this to 10% but provide an exception for taxpayers over the age of 65 until the year 2016.

White House To Unveil Loans To Bring Broadband To Rural Areas

According to Nasdaq.com, the White House announced a new plan to issues $182 million in grants and loans to bring broadband access to rural areas across the country. The Obama administration claims the move will expand education and communication across the county, as well as create thousands of jobs. Over the next two and a half months the White House is expected to award over $2 billion in broadband awards.

The loans, part of a broader $7.2 billion Recovery Act program, are designed to create jobs and spur economic development, the White House's top economic priority. Vice President Joe Biden will announce the first investments later Thursday at Impulse Manufacturing in Dawsonville, Georgia, a community that will benefit from the program.

The initial $182 million in funds will go toward 18 broadband projects in 17 states, and has been matched by more than $46 million in private capital. Administration officials declined to break down which states or companies would receive the initial funds, saying details would be available later Thursday.

Jared Bernstein, Biden's top economic adviser, said the initiative would " support tens of thousands" of jobs, initially for specialists connecting the networks and workers building towers and other infrastructure. Eventually, he said, jobs would be created indirectly as the new technology allows companies to expand and communities to attract new businesses.

"When you get right down to it, this is about jobs," Bernstein said. However, he said he couldn't provide any precise forecasts on the initiative's job- creating potential.

Treasury Tightens Screws on Mortgage Firms

On Monday, the Obama administration announced a few steps they are planning to take to pressure lending institutions. The Federal government could no longer ignore complains from taxpayers who still cannot find the long-term loan assistance they need. CNN Money.com published a great article explaining how the government plans to focus on helping borrowers get into permanent modifications.

Government swat teams will go to the institutions to see what the holdup is and banks will have to submit progress reports twice a day during December.

"Now it's up to the banks to do their part to covert borrowers to permanent modifications," said Michael Barr, an assistant Treasury secretary. "Servicers to date have not done a good enough job."

Only a tiny percentage of troubled homeowners have received permanent modifications, raising concerns about the effectiveness of the $75 billion effort. Treasury officials will release the first comprehensive look at the conversions next week.

Top loan servicers will be required to report the status of each modification and their plan to reach a decision. Also, these servicers must say how they will communicate decisions to borrowers.

Continue reading at CNN.com…

Easing Impact of a Tax Rise

Earlier in the week, David Johnston, of the New York Times, posted an article with advice for taxpayers earning more than $200,000 per year – who’s tax rates will likely go up in the next fourteen months. This is due to tax cuts sponsored by President Bush that are set to expire at the end of next year.

When the Bush cuts expire, the two top tax rates will move up from 33 percent and 35 percent to 36 percent to 39.6 percent. For a couple making $500,000, the added tax will be about $6,000 per year, for a couple making $1 million about $30,000.

The bite could be less than that for business owners, however. President Obama, on the campaign trail, proposed allowing founders of small businesses to sell their enterprises without owing capital-gains taxes. Congress has yet to act on this idea.

He also campaigned on the promise that there would be no tax increases on the bottom 98 percent of earners. Earlier this year, President Obama signed a two-year tax break that one of his economic advisers, Austan Goolsbee, said “included $63 billion for the Making Work Pay Tax Credit, a direct tax cut for 95 percent of workers and the magnitude of just about the largest middle-class tax cut ever.”

For high-income taxpayers, here are some steps to arrange your affairs to get the most benefit with the least tax when the Bush cuts lapse:

Check out the tip at the New York Times website...

Electric-Car Companies Grab U.S. Cash to Blunt Risks

From Bloomberg.com:

Electric-car makers ranging from Ford Motor Co. to California startups are using $11 billion in taxpayer funds to supply a market that doesn’t yet exist.

Fisker Automotive Inc., backed by a $528.7 million U.S. loan, said today it will join the rush to the assembly line by buying a closed Delaware plant from the former General Motors Corp. for $18 million. It will spend $175 million to refurbish and retool the factory to build plug-in hybrid cars.

Obama administration aid to spur demand for more fuel- efficient autos is luring companies including General Motors Co. and Nissan Motor Co. into the electric-car push. The result may be a supply of new vehicles that outstrips demand, said Michael Omotoso, a senior manager for J.D. Power & Associates in Troy, Michigan.

“The U.S. government is saying we’ll have 1 million electric vehicles on the road by 2015; we’re saying it will take three to five years longer,” Omotoso said. “Realistically, manufacturers could be selling 80,000 to 100,000 by 2015.”

Investors betting on acceptance of electric autos include Kleiner Perkins Caufield & Byers, the venture-capital firm that employs former Vice President Al Gore and is backing Fisker.

“A huge amount of private capital is on the sideline, so a new locus for funding right now is the U.S. government,” said Ray Lane, a managing partner at Kleiner Perkins who works on the firms’ alternative energy investments. “The Department of Energy has stepped into the role of private capital, at least temporarily.”

Administration to Decide on Housing Tax Credit Soon

Despite pleas from thousands of homebuyers and intense lobbying, the Obama administration and those deciding the fate of the first time homebuyers tax credit are not ready to make a decision just yet. According to MarketWatch.com, Housing and Urban Development Secretary Shaun Donovan said earlier this week that the administration does not have the information they need yet to make the decision, and will not have that information for a few weeks.

"We understand the urgency of this situation," Donovan said at a Senate Banking Committee hearing, according to Congressional Quarterly. "And we believe that within the next few weeks, we will have additional data that will allow us to sit down with you" and discuss whether and how to extend the credit, said Donovan, according to CQ.

Sens. Christopher Dodd, D-Conn., and Johnny Isakson, R-Ga., have proposed extending the $8,000 credit through the end of next June. Created by the economic stimulus package signed by President Barack Obama in February, it's now set to expire on Nov. 30.

"The credit is set to expire in five weeks," said Dodd. "But the work of stabilizing the housing market won't be done. We still need to use every tool at our disposal to try and fix this problem," Dodd said.

The hearing came after the Commerce Department reported that new construction on U.S. housing units was essentially flat in September, at a seasonally adjusted annual rate of 590,000. See full story.

Following 14 straight quarters of declines, many economists expect that residential investment will finally add to U.S. growth in the current quarter, which ended in September.

The White House Wants to Hear YOUR Tax Reform Suggestions

With thousands of taxpayers showing up to protests around the country and a seemingly endless debate on funding for health care reform, the White House is asking for input on tax reform from regular Americans like you and I. Check out the following request that was recently posted to WhiteHouse.gov.

President Obama has asked the President's Economic Recovery Advisory Board (PERAB) to develop options for tax reform. The members of the tax subcommittee are preparing ideas to be considered by the board and would like to give anyone a chance to have input into the process on this important issue. Anyone wanting to share ideas and opinions for consideration by the subcommittee can do so here. The deadline for submissions is October 15th, 2009.

Note: The mandate to the PERAB is NOT to recommend a new tax system. They are to consider ideas on tax simplification, better enforcement of tax law, and reforming corporate taxes and to present the pros and cons of potential tax options. They were instructed not to consider options that involve raising taxes on families making less than $250,000 per year. So be mindful of their constraints when submitting ideas.

In general, the tax subcommittee will post all comments online for others to examine and those suggestions may spur other people's ideas. All statements, including attachments and other supporting materials, received are part of the public record and subject to public disclosure. You should submit only information that you wish to make available publicly. Please do not submit materials exceeding five single-spaced pages of text. If submitting via e-mail, please send to perab@do.treas.gov. Please also include a cover sheet including the submitter's name and organization, type of organization (individual, business, government, non-profit organization, or association), submission date, and contact information.

Cap and Trade Reform: The True Cost to Taxpayers

Last weekend, I was featured in a segment on FOX Business Network to discuss the United Nation’s recent general assembly, as well as the tax issues surrounding cap and trade reform. As I explained during the interview, reforms on cap and trade will have a direct effect on taxpayers, during a time where many families in this country are already struggling to get by.

American Clean Energy and Security Act of 2009

Earlier this summer, the United States House of Representatives passed H.R.2454, the American Clean Energy and Security Act of 2009, which claims to “create clean energy jobs, achieve energy independence, and reduce global warming pollution and transition to a clean energy economy.” However, the bill has become quite controversial as it includes a cap and trade “global warming reduction plan” that aims to reduce greenhouse gas emissions by 17% before the year 2020. It also includes new requirements for utility companies regarding carbon technology, incentives for energy efficient homes and buildings, as well as grants for new “green” jobs.

Highly Controversial Legislation

As with most of the recent legislation coming out of Congress, H.R.2454 has quickly become very controversial. Opponents claim that the nearly 1,300 page bill was quickly put together. They also point to its slim 219 to 212 vote passage as a bad sign. Many experts assert that the bill will do little to actually help the environment, and is mostly a way to increase Federal revenue. Currently, only about 15% of the country’s pollution permits are being auctioned off, the rest are just being given away. The new cap and trade legislation makes great efforts to convert the system to become entirely auction based. That way the Government can take more control in auctioning off permits and reap profits from energy companies, who will still be allowed to pollute – but will just be paying more to do so.

Direct Cost to Taxpayers

Like I explained in my television segment the other day, these charges to energy companies will be passed down directly to American taxpayers. Let’s take a step back and consider the domino effect: when businesses have less revenue because of higher taxes, they are going to have to make cuts elsewhere. This means consumers will end up paying more for their monthly utilities, and energy companies will likely have to reduce their work forces to reduce expenses. In Great Britain, they have a cap and trade system in place and the average family pays an estimated $1,300 per year for it. However, here in the United State experts are predicting that the cost could end up being more like $1,800.

Excessive Handouts

Another popular criticism of the American Clean Energy and Security Act of 2009 is the amount of handouts for Congress members to please their constituents. The bill is also stuffed with provisions that are favorable to companies that lobbied for the bill. According to the Center for Public Integrity, over 2,300 different lobbyists worked on the bill, which resulted on “provisions for portable spas and technical standards for hot-food-holders within the body of the bill.” All of these handouts result in direct costs to the average taxpayer.

Funding for Health Care Reform

As Joe Walsh points out in this article on Reuters, many experts are predicting that cap and trade taxes could be used to help offset the cost of health care reform. Why? “Because with all currently proposed {health care reform} bills estimated to expand deficits even as Obama pledges not to sign a bill that increases them by so much as a ‘dime,’ ever, he will need carbon cash to pay for Americans' health care.”

Walsh continues to explain that proponents of cap and trade restrictions and working with Senators to create a bill that would not include an immediate public option, but one that could become available down the road once funding was available. Analysts predict that changing cap and trade restrictions to help fund a future public option could be an easy way to get the health care reform bill passed without instant tax increases on the average American taxpayer.

Tax Inquiry Delays Pick by Obama at Treasury

From the Wall Street Journal:

President Barack Obama's nominee for the top international post at the Treasury Department has been sidetracked by a Senate committee's investigation into her personal tax returns.

Lael Brainard, nominated in March as Undersecretary for International Affairs, is the latest Obama appointee to be tripped up by the Senate Finance Committee. Of particular concern is Ms. Brainard's use of a home-office tax deduction, according to people familiar with the inquiry.

The delay in considering her nomination has left empty a treasury position responsible for negotiating with foreign governments as the U.S. gears up for the Group of 20 summit later this month, a meeting expected to focus heavily on financial regulation and economic stimulus programs. It is also reviving questions about whether a rigorous vetting process has gone too far and hobbled the administration.

"We're into September and with no confirmed undersecretary it seems to me that's a serious disadvantage," said John B. Taylor, a Stanford University professor who served in the post from 2001 to 2005.

Ms. Brainard has been working at the Treasury on preparations for the G-20, people familiar with the matter say, but until she is confirmed she can't directly negotiate with foreign governments.

White House Reports 1 Million Jobs Saved, Created

A new report from White House’s top economists was published this morning and claims that over 1 million jobs have been saved or created by the Obama administration. The economists also said, however that the estimates must "be regarded as preliminary and understood to be subject to considerable uncertainty."

President Barack Obama has promised that his $787 billion stimulus plan will create or save 3.5 million jobs by the end of next year. But the economy has fared worse than the White House predicted when it pitched the jobs plan and officials have sought to beat back criticism that the results did not justify the huge combination of tax cuts, state aid and government spending.

In its first report to Congress on the stimulus, the White House Council on Economic Advisers said Thursday that the economy would have been far worse without the stimulus.

The report attributes the million job figure to the stimulus and other policy actions but says the driving force behind the job creation is the stimulus. Economists cautioned, however, that the estimates must "be regarded as preliminary and understood to be subject to considerable uncertainty."

The report is certain to draw criticism because the U.S. economy has actually lost about 2.5 million jobs since the stimulus was signed in February. Because the White House number is based on economic models, it's impossible to say for certain what that number would have been without the stimulus.

Vice President Biden Announces “We Misread How Bad the Economy Was”

In an interview that has gotten a lot of people talking, last night on ABC’s “This Week” Vice President Joe Biden admitted that the Obama administration "misread how bad the economy was.” He did go on to say that he stood by their stimulus package and that it would create more jobs as the spending pace picks up. However, with unemployment rates continuing to rise, many people are justly concerned over this admission. Check out the video of the interview below.

According to the Associated Press Biden went on to say “that the $787 billion economic stimulus package was set up to spend the money over 18 months. Major programs will take effect in September, including $7.5 billion for broadband Internet service, plus new money for high-speed rail and the nation's electrical grid.”

Administration: Highway Fund To Go Broke In August

The Obama administration announced to lawmakers that the highway fund for ongoing projects will be empty by August, and an additional $5 to $7 billion will be needed to continue. You can find a snippet of an Associated Press article discussing the issue below, or find the full story here.

Sen. Barbara Boxer, chairman of the Senate Environment and Public Works Committee, said at a hearing the administration has told senators the Federal Highway Trust Fund will need an estimated $5 billion to $7 billion to keep current construction projects going.

The California Democrat said another $8 billion to $10 billion will be needed to keep the fund solvent through the year ending Sept. 30, 2010.

Transportation Department spokeswoman Jill Zuckman confirmed those figures.

"The administration is working closely with Congress to solve this difficult problem and ensure that states have the resources they need to maintain our roads and highways," Zuckman said.

A decline in driving that began in late 2007 has reduced federal gas tax revenue, the primary source of trust fund dollars.

The trust fund is separate from the $48 billion in transportation projects included in the economic recovery law enacted by Congress and signed by President Barack Obama earlier this year.

Congress approved an emergency transfer of $8 billion in general treasury dollars last fall to make up a projected shortfall — the first time in the history of the program that had happened. The fund dates back to creation of the federal interstate highway program in 1956.

Sen. George Voinovich, R-Ohio, said it's clear that Congress must raise the federal gas tax, which is now 18.4 cents per gallon.

"I know that doesn't go down so well with some folks," but it's "the reality of the situation," Voinovich said at the hearing, which was on Obama's nomination of former Arizona highways director Victor Mendez to head the Federal Highway Administration.

"That will be one of my highest priorities, to get on that very quickly," Mendez said of the trust fund.

The law that authorizes federal highway programs is due to expire at the end of September, but the issue hasn't been on Congress' frontburner. There is a consensus among transportation experts and lawmakers that there will have to be some form of a tax increase — always unpopular, but especially so in a recession — to make up for the lower gas tax revenues and to address a backlog of crumbling and congested highways, bridges and public transit systems.