Stimulus Funds Going to Slashed Programs

From USAToday.com:

More than $3.5 billion in economic stimulus funds are going to programs that President Obama wants to eliminate or trim in his new budget.

The President released his budget this month and a USA TODAY review of stimulus spending reports shows the budget recommends getting rid of Army Corps of Engineers' drinking-water projects, which received $200 million in stimulus funds, and a U.S. Department of Agriculture flood-prevention program, which received $290 million.

The administration's budget plan says the corps and USDA programs are inefficient and duplicate similar but more effective work by other agencies. The proposed cuts indicate the programs “shouldn't have gotten money from the $862 billion stimulus package”, said Tom Schatz of the non-partisan budget watchdog Citizens Against Government Waste.

"It's certainly inconsistent, and it would have been better to have this realization a year ago," Schatz said. "But if inconsistency means they're going to cut the programs, it's OK. It's the other way around that bothers us."

Minority Broadcasters Seek Federal Aid

From the Wall Street Journal:

A group of minority broadcasters asked Treasury Secretary Timothy Geithner Monday for financial assistance akin to the aid that has been extended to the financial and auto industries.

"Minority-owned broadcasters are close to becoming an extinct species," the letter said. "Even in better economic times, minority broadcasters have historically had difficulties accessing the capital markets."

The broadcasters told Mr. Geithner they can bounce back if they are given some temporary assistance while the credit markets are slow. "Unlike the auto business, broadcasting has been healthy for many years," their letter said.

The broadcasters appeal follows a proposal sent in May to Mr. Geithner by a group of influential House members asking for a minority broadcaster support program, bridge funding, or government-backed loans.

The House letter was signed by House Majority Whip James Clyburn (D., S.C.) and a group of key committee chairmen, including Financial Services Committee Chairman Barney Frank (D., Mass.) Ways and Means Committee Chairman Charles Rangel (D., N.Y.) and Oversight Committee Chairman Edolphus Towns, (D., N.Y.).

At a hearing last week, National Association of Black Owned Broadcasters President James Winston told lawmakers that advertisers have severely cut investments in minority audiences at the same time minority broadcasters are having difficulty negotiating loan terms with banks.

Research from the Internet advocacy group Free Press says minorities own just 7.7% of full power commercial radio stations and 3.2% of full power commercial TV stations.

Ten Banks Allowed To Pay Back TARP

Ten banks have been allowed to pay back their TARP (Toxic Asset Relief Program) funds, reports CNNMoney.com. The decision will return an expected $68 billion of federal money to taxpayers. Check out a segment of their story below.

Ten leading banks won approval to repay money from the government's controversial TARP program, regulators said Tuesday, which could represent approximately $68 billion in bailout funds returned to taxpayers.

The Treasury Department, which has overseen the $700 billion Troubled Asset Relief Program, did not indicate which banks were included in that group, although most lenders confirmed the news separately.

Eight of the nine banks that were found to not need new capital following the government's bank stress tests last month made the list. JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500), American Express (AXP, Fortune 500), Bank of New York Mellon (BK, Fortune 500), State Street (STT, Fortune 500) as well as regional banking giants Capital One (COF, Fortune 500), BB&T (BBT, Fortune 500) and U.S. Bancorp (USB, Fortune 500) all said they will pay back TARP funds. (Insurer MetLife also was not required to raise capital but it did not receive any TARP money.)

Investment bank Morgan Stanley (MS, Fortune 500), which was the only financial firm that regulators did ask to raise money after the stress tests, confirmed it also won approval from the Treasury Department to pay back $10 billion.

Chicago-based Northern Trust (NTRS, Fortune 500), which took in $1.576 billion under the program but was not part of the bank stress tests, also announced Tuesday it is paying back TARP funds.

So far, the Treasury Department has allowed nearly two dozen small, mostly community-based lenders to redeem the government's preferred shares, representing nearly $1.9 billion in taxpayer money.

Should the latest banks agree to redeem the company's preferred-shares the government acquired last fall, that would represent approximately another $68 billion in TARP repayments.

"These repayments are an encouraging sign of financial repair, but we still have work to do," Treasury Secretary Tim Geithner said in a statement.

Proceeds received from those 10 banks will be applied to the Treasury Department's general account, the agency said Tuesday, some of which be will used to promote financial stability should the economy take a turn for the worse. A portion of those funds will also be used to reduce Treasury's borrowing and the nation's rapidly rising level of debt.

The banks that buy back the government's stake will also be able to repurchase the warrants, or rights to purchase shares at a future date, the government acquired when it injected capital into many of these banks late last year.

Treasury said those obligations could be purchased at "fair market value", but did not offer details on how that would be determined.

There has been talk that the government may auction those warrants on the open market in order to quell criticism about their pricing. Some have charged that allowing banks to redeem warrants at too cheap of a price would be to the disadvantage of U.S. taxpayers who stand to make significant gains should bank stocks continue to move higher in the months and years ahead.

Large lenders have been working particularly hard to break free from the TARP program for several months. Many have raised billions of dollars in fresh capital in recent weeks and issued debt without government backing.

Your Share of Stimulus Tax Breaks

Earlier this morning I saw an article on kcbd.com discussing the tax breaks the new stimulus offers, and who qualifies for what. A segment of the article can be found below, but the full post can be read here.

A study of the recovery plan shows most households will qualify for a tax break. Boost for some could be worth several hundred to several thousand dollars.

Roughly 97% of American households could see tax savings as a result of the American Recovery and Reinvestment Act, according to a new analysis by a nonpartisan research group.

The Tax Policy Center crunched the numbers and concluded that the average savings would be $1,179. But how much a household actually gets depends on income, marital status and whether a filer has children. The savings range from a few hundred dollars to several thousand.

The law, which President Obama signed on Tuesday, contains a range of tax breaks for individuals. Those likely to affect the greatest number of households are the new Making Work Pay credit worth up to $400 ($800 for joint filers); a patch to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax; and expansions of the earned income tax credit and the child tax credit for low-income families.

There are also breaks that address specific situations: a new credit for first-time home buyers, a sales tax deduction for car buyers and a new credit to help pay for college tuition. For people receiving unemployment benefits, the first $2,400 will be tax free.

On Saturday, Obama said the government had already taken action on the broadest of the law's cuts -- the Making Work Pay.

The Treasury Department has told employers to reduce the amount of taxes withheld from paychecks by April 1. Treasury estimates that a typical family will begin taking home about $65 more per month, according to Obama.

"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said in his weekly video and radio address.

Compromise Stimulus Bill Trims Tax Break for Car Buyers

From The Los Angeles Times:

Congress has downsized a proposed tax break for new-car buyers. The compromise version of the ginormous economic stimulus bill includes a Senate-approved provision that would allow consumers to claim a federal income tax deduction for sales taxes and excise taxes paid on new vehicles.

But the compromise worked out between House and Senate negotiators deletes another provision that senators had approved, which would have made interest on new-vehicle loans deductible as well.

Under the new version, a family could save between $300 and $600 on a new car, according to a statement released by Sen. Barbara A. Mikulski (D-Md.), who sponsored the original tax break.

Mikulski had said her original version would have saved buyers $1,500 on a $25,000 new-car purchase.

According to Automotive News, the tax break was scaled back to appease lawmakers concerned about the high cost of the $790-billion stimulus package. Trimming the interest deduction from Mikulski's proposal cut the cost of the tax break from $11 billion to $2 billion.

Congressional leaders said Thursday that they hoped to vote on the stimulus package today and send it to President Obama by Presidents Day, which is Monday.

Stimulus Includes GM Tax Break

From The Associated Press:

General Motors Corp. would receive a tax break in the $790 billion stimulus bill after the automaker argued its government-led restructuring would unintentionally lead to at least $7 billion in tax liabilities.

General Motors, which received a $13.4 billion lifeline from the Bush administration last year, would have been required to pay additional income taxes from its government loans, potentially undermining its turnaround plan.

GM received $9.4 billion in federal loans and is expected to receive another $4 billion, while Chrysler LLC has received $4 billion in loans and hopes to get another $3 billion. The companies must submit plans next week showing how they will restructure their companies and become profitable.

President Barack Obama, in an interview Wednesday with about a dozen selected reporters from news organizations, said he was committed to helping the U.S. auto industry and more help could be available if the plans are realistic.

If not, Obama said, "Then we're going to have to ask them to go back to the drawing board."

"Get me a plan that works," Obama said, according to the Detroit Free Press and The Detroit News.

More States Considering Tax Breaks to Woo Jobs

From the Wall Street Journal:

Rising unemployment has touched off a race among state governors to woo companies with tax breaks and financial incentives, even as budget shortfalls force cuts in education, health care and other services.

Governors from both parties and from states large and small are counting on the federal stimulus package—passed by the House last week and headed for the Senate—to perk up their economies and create tens of thousands of new construction jobs, but they're not convinced it will be enough. So they've laid out urgent calls to chase private-sector jobs with public money.

Under Gov. Jon Corzine, a Democrat, New Jersey has promised to send small businesses a $3,000 check for every new hire. Minnesota Gov. Tim Pawlenty, a Republican, calls for an expansive package of business tax cuts, including tax-free zones for companies that create "green jobs."

Other states are considering establishing multimillion-dollar loan funds for entrepreneurs, phasing out the corporate income tax, and pledging financial backing to banks willing to extend lines of credit to small businesses.

As he prepared his budget last week, Missouri Gov. Jay Nixon, a Democrat, could hear the chants from a rally of child-welfare advocates outside his office window. Mr. Nixon said he expected anger over his plan to slash the state work force by 1,300 and eliminate or trim dozens of programs. Among his proposals: a $14.6 million cut for university extension courses, a $3.4 million cut for rural health care, and a $250,000 cut for early-childhood literacy programs.

Mr. Nixon says he needs those savings to balance the budget while still expanding—by about $20 million—incentive funds that underwrite corporate job creation. Mr. Nixon's staff cites a deal announced last July with Orgill Inc., a national hardware wholesaler, which received more than $7 million in state aid to build a distribution center in rural Sikeston with a goal of creating 350 jobs.

That amounts to a subsidy of $20,000 per job, but officials expect the state treasury to recoup that many times over in taxes paid by the newly employed.

"Everything stems from jobs," Mr. Nixon said. "Now is not the time to back off the field of economic development."