Bank Tax Unfair, To Have Serious Effects - Bank Group

From CNN Money:

U.S. banks are worried about the impact of a planned tax on lenders and believe other industries that received federal money, such as car makers, should be targeted, a top economist at a banking group said Friday.

"We're concerned that such a high tax directed at the wrong parties will have serious consequences," James Chessen, Chief Economist at the American Bankers Association, told a press conference presenting ABA's latest economic forecasts.

Thursday, President Barack Obama said banks have a responsibility to make taxpayers whole for the financial-sector bailout and should pay a proposed tax by rolling back big bonuses.

If approved by Congress, the new tax--which the White House calls a "financial crisis responsibility fee"--would force about 50 banks, insurance companies and large broker-dealers to collectively pay the federal government roughly $90 billion over 10 years.

IRS e-file: It’s Safe; It’s Easy; It’s Time

According to their newest press release, the IRS’ e-file program that allows taxpayers to file their return electronically opened for business on January 15^th. This year marks 20 years of safely and securely transmitting nearly 800 million individual federal tax returns.

The Internal Revenue Service debuted e-file nationally in 1990, delivering 4.2 million tax returns. Last year, IRS e-file delivered 95 million tax returns, 66 percent of all returns filed.

“Electronic filing is more and more popular every year, and most taxpayers now e-file. IRS e-file means faster refunds. It means the option to file now and pay later if you owe additional tax. It means peace of mind knowing the IRS received the return because we send an acknowledgement. Those are the reasons this has been a popular service,” said Doug Shulman, IRS Commissioner. “IRS e-file is safe, it’s easy and everyone should try it.”

Last year, more than 49 million taxpayers missed out on the e-file benefits. The IRS urges taxpayers, especially those people already using tax software, to take the next step and e-file their return or ask their preparer to e-file their return. The IRS urges tax preparers who electronically file some of their clients’ tax returns to consider filing all tax returns through e-file.

The IRS is working on faster acknowledgements of accepted or rejected returns. Last year, taxpayers received an acknowledgement within 48 hours that the IRS had accepted or rejected their return. Paper filers do not receive any acknowledgement. Also, if the IRS rejects an e-filed return, it will provide more specific explanations of the errors that caused the rejection. This will enable taxpayers to make corrections and quickly resubmit their returns.

IRS e-file offers the fastest, safest way for people to receive their tax refunds. By using e-file and direct deposit, taxpayers can get their refunds in as few as 10 days. Taxpayers even can opt to have their refund deposited into two or three financial accounts or purchase a U.S. Savings Bond.

Federal Reserve Makes Record $52.1bn Profit

According to BBC, last year the Federal Reserve made over $51.1 in revenue last year, allowing them to pay a record $46.1 billion to the U.S. Treasury. This number represents the largest payment made to the Treasury since 1914. It was also a massive 47% increase from the year prior. As the BBC article explains, the record figure was largely a result of the Reserve’s attempts to support financial institutions with large bail out loans.

The Federal Reserve funds itself from its own operations and returns any profits to the Treasury department.

The figures suggest that US taxpayers have, so far, gained money from the US government's action in propping up the system. Some of the profit has come from interest earned on government bonds and mortgage-related securities, including those of mortgage giants Fannie Mae and Freddie Mac.

The emergency lending programs instituted by the central bank during the last year's financial crisis helped swell the Fed’s balance sheet to more than $2tn. They were designed to keep down interest rates and get banks lending to each other again, hoping to spark an economic recovery.

The Federal Reserve could also lose money on its holdings if it sells them at a time when they have fallen in value. The Fed also earned money from its emergency loans to banks and other firms, such as the giant carmakers. It charged both interest and fees on these.

Stuck in the Mud: IRS Spins its Wheels on Electronic Modernization

The popularity of electronic tax return filing has increased drastically over the past few years, and it has certainly not escaped the attention of the IRS. In an attempt to keep up with the trend and improve efficiency, the Customer Account Data Engine (CADE), a branch of the IRS began creation on a modern processing system that would get refunds back to taxpayers eight days faster than before. However, new obstacles are coming up which means the system may not be ready as quickly as the government had hoped. Checkout the following article from GCN.com on the struggle to get the system implemented.

The number of taxpayers filing electronic federal tax returns has increased steadily since 2005, accounting for more than two thirds of returns during the 2009 filing season. However, as the Internal Revenue Service enters the 2010 filing season, it is curtailing development of a major element of its modernization program and rethinking its strategy for delivering electronic services.

The Customer Account Data Engine (CADE), a part of the IRS Business Modernization Program that is intended eventually to replace the legacy Master File processing system, processed 40 million returns in 2009, producing taxpayer refunds from one to eight days faster than the older system. CADE originally was to be completed by 2012, but increasing complexities have extended that date.

“After over 5 years and $400 million, CADE is only processing about 15 percent of the functionality originally planned for completion by 2012,” a Government Accountability Office report says.

Each successive release of the system was expected to process more complex returns, but several technical challenges in the system had not been dealt with. The IRS estimated that full implementation would not be achieved until at least 2018, and possibly as late as 2028.

Continue reading at GCN.com…

Wall Street Chiefs Defend Compensation At Firms

From NPRNews.com:

Wall Street executives said Wednesday they underestimated the severity of the 2008 financial crisis and apologized for risky behavior and poor decisions. They also defended their bonus and compensation practices to a skeptical commission investigating what caused the collapse.

Americans are furious and "have a right to be" about the hefty bonuses banks paid out after getting billions of dollars in federal help, the commission's chairman told chief executives of four major banks, all survivors of the deepest and longest recession since the Depression.

As the hearings opened before the Financial Crisis Inquiry Commission, chairman Phil Angelides pledged "a full and fair inquiry into what brought our financial system to its knees."

The panel began its yearlong inquiry amid rising public fury over bailouts and bankers' pay.

'We Understand The Anger'

"We understand the anger felt by many citizens," said Brian Moynihan, chief executive and president of Bank of America. "We are grateful for the taxpayer assistance we have received."

With Bank of America having repaid its bailout money, he said "the vast majority of our employees played no role in the economic crisis" and do not deserve to be penalized with lower compensation. Moynihan said compensation levels will be higher next year than they were in 2008 — but not at levels before the financial meltdown.

The New Estate-Tax Math: Give to Charity or Your Children?

With the estate tax on a hiatus in 2010, many experts are warning that the missing tax could result in thousands of U.S. charities seeing fewer donations this year. In previous years, it was considered a smart tax move for wealthy taxpayers to leave a portion of their estate to various charities, in addition to their heirs. However, since the IRS will not assess any tax on estate in 2010, it is likely that more Americans will leave all of their wealth to heirs.

According to this article on Wall Street Journal, before the repeal of the estate tax, leaving money to charities was not really a choice for wealthy Americans, but a generally smart financial move.

With the government taking a large chunk for the estate tax, the choice was to leave a portion to heirs after the IRS took its chunk, or leave the full pretax amount to charity. In other words, for each $1 of the estate, the wealthy could leave $1 to charity, or they could leave 55 cents for their heirs and 45 cents to the IRS (with various caveats for spouses, thresholds etc).

As of Jan. 1, however, there is no estate tax, at least for a year. So the wealthy now have a more equal choice: $1 for heirs, or $1 for charity. Guess which one they probably lean toward?

“I’d like to think we’re all altruistic,” Sanford J. Schlesinger of Schlesinger Gannon & Lazatera LLP, told Financial Planning. “But especially in a dreadful economy, repeal will have a devastating effect on charity.”

Adds Ben Harris of the Brookings Institution and Urban Brookings Tax Policy Center: “With repeal, the price of charitable giving is more expensive. This is a monumental change in the estate-tax rate. We’re not talking about going from a 45% estate tax to a 35% tax. We are talking about from 45% down to zero. Does this mean people won’t give to charity anymore? No. Of course they’ll give to charity; just less.”

Should the Government Tax Bailed-out Banks to Recover TARP Money?

As the U.S. economy remains unsteady, and multiple banks that were bailed out last year are seeing huge profits, President Obama is reportedly considering a new tax on financial institutions. The tax would be levied to help recover funds from the TARP program, and help lower the deficit.

In this new article, ABCNews.com is asking their readers to weigh in on this new tax. You can find a section of their article below, but click here to share your comments with the author.

President Obama is considering a tax to recover as much as $120 billion in bailout money from the financial institutions that were rescued by the government.

This announcement comes as banks report record profits and begin paying out huge bonuses, sparking anger amongst Americans, many of whom are still out of work.

Our question to you today: Should the government tax bailed-out banks to recover TARP money?

Post your comment at ABC News.com…

The Most Valuable Teams In Sports

The recession hit some businesses hard while affecting other businesses hardly at all; the same can be said for sports teams. According to this article on Fobes.com, there are some teams that are profiting in spite of the poor economy, such as the Dallas Cowboys who top their list of most valuable teams. However, other teams were not so lucky, and showed significant reductions in revenue last year.

The recession has been more visible in the U.S., with the hurt distributed along class lines. The rich had few problems, with the bulk of the highest-valued teams in the NFL, NBA, MLB and NHL holding their own or growing, while negative growth hit the poor and middle class. In the NFL, where the average franchise value inched down about a half a percentage point, the 10 most valuable franchises gained a collective $164 million in value; the rest of the league lost a combined $303 million. Six NFL clubs appear on our top 10 list, led by the Dallas Cowboys and Washington Redskins.

Major League Baseball, where rich clubs help the poor through revenue sharing, suffered a classic middle-class squeeze. Valuation gains showed up in the top six spots and in seven of the bottom nine. But those in the middle--clubs like Atlanta, San Francisco, Texas and Cleveland--lost value.

"It's easier to revive a small-market club, where you can get young (and cheap) guys that play well together," says Tilliss. Example: The Florida Marlins, who went young and cheap and contended for much of the season on a low payroll, saw an 8% jump in value. The San Francisco Giants, still trying to carve out a post-Barry Bonds identity, patched a veteran roster together and lost 5% of their value.

In baseball, only the New York Yankees--who print money through cable riches and a sparkling new stadium--reside in the billionaire's club.

Meanwhile, it's been pretty much an equal opportunity recession in the NBA, where the majority of teams backslid. The value of the reigning champion Los Angeles Lakers dropped by $6 million from a year earlier to $607 million, but still took over the top spot from the New York Knicks, who slipped even more. No doubt, the sponsorship-heavy league is getting pinched more than others right now, after going premium over the past decade with fast-rising ticket prices and expensive luxury suites.

Continue reading at Forbes.com…

IRS Announces Streamlined and Simplified Notices to Taxpayers

From the IRS Newsroom:

Today, the Internal Revenue Service unveiled its first redesigned notices that are part of an on-going effort to improve the way it corresponds with taxpayers.

The nine new notices are among the first to be reviewed and revised for clarity, effectiveness and efficiency. The agency also will create an office that ensures the effort to improve communications is on-going and permanent.

“One of my priorities is to ensure that we have clear and simple communication with taxpayers. In the past, our notices often looked more like legal documents and not an effort to communicate clearly. The differences between the old and new notices are like night and day. They show the potential of our on-going effort in this area,” said IRS Commissioner Doug Shulman.

In July 2008, Shulman appointed the Taxpayer Communications Taskgroup to review IRS correspondence. The task group found that IRS notices have different looks, messages and do not use consistent language. Because of this, some notices are creating unnecessary confusion for taxpayers.

Nine notices will feature the new design format beginning in January. These notices account for approximately 2 million pieces of correspondence with individuals, businesses and exempt organizations. A revised web page is available at www.irs.gov/notices.

The new format includes a plain language explanation of the nature of the correspondence, clearly states what action the taxpayer must take and presents a consistent, clean design. The new format also guides taxpayers to appropriate pages on IRS.gov where they can find accurate and relevant information quickly and easily.

Use American Express Points to Pay Taxes

American Express cardholders may not be able to use their card at every single small business in the country, but the still widely accepted credit giant announced on Monday that customers could now use their rewards points to their tax bills. Several card companies offer programs that offer airline miles, gasoline credits, other rewards, but American Express’ new program to use reward points to pay taxes is an industry first. CNN Money.com posted an article this morning on AmEx’s announcement; you can find a clip from their story below.

AmEx (AXP, Fortune 500) cardholders can use the points toward federal, state and local income tax payments when they use one of two Web sites to file their taxes: Pay1040.com and OfficialPayments.com.

But to pay off $5,000 in taxes a cardmember would have to charge $1 million.

That's because it takes a whopping 200 points to pay off just $1 in taxes. And, according to an AmEx spokeswoman, cardmembers typically earn about one point for every dollar charged to their credit card.

"In light of the economy, we wanted to give cardmembers a practical use for their rewards points," said spokeswoman Mona Hamouly.

Top 10 Money-Savvy New Year’s Resolutions

Now that 2010 has begun, people across the country will make pledges to change or alter their behavior in the New Year. However, instead of making a resolution to visit the gym more often or reduce your sugar intake, why not focus on taking control of your finances? I often encourage friends and family members to setup money-savvy New Years resolutions, and this year I decided to share my advice with all of my blog readers as well.

1. Shop Smart

The average family in America spends $700 or more per month on food, much of which goes to waste. This year how about making a resolution to eat out less or save money on food by planning your meals in advance and buying in bulk. If you enjoy eating lunch out with coworkers every day, then you might consider making a resolution to only eat lunch out once a week.

2. Do Not Be Lazy

No one likes to admit it, but laziness can cost you a lot of money. I am talking about that overdraft fee you had to pay for not depositing your paycheck right away or that late fee you had to pay a few months ago for forgetting to send your rent in on time. This year, take a more proactive approach to life and you will be surprised to see how much easier it is to manage your finances. By keeping your bills organized, balancing your checkbook, and keeping a budget, you can take control of your money.

3. Cut out Credit

These days credit cards are so common that people do not think anything of using them on a regular basis. However, this is dangerous, and can cost you thousands of dollars per year in interest. Instead, why not make it a resolution to pay with cash or your ATM card unless absolutely necessary.

4. Quit Something Pricey

Are you ignoring a habit that is costing you a lot of money? Whether it is smoking, shoe shopping, or even gambling, many of us have at least a few pricey habits. By making a resolution to cut out your bad habit, you can find yourself saving quite a bit of money this year. Some might not even need to be quit all together. If your indulgence is getting expensive cocktails with dinner then you might try making a drink at home before you go out. On the other hand, if your pricey habit is buying lots of electronics then you could make it a resolution to reduce your spending.

5. Pick up Good Habits

While dropping a few habits that waste money, you should also think about picking up a few that will help you manage your finances. It could be something as easy as turning lights off when you are not home, or something more severe like making charitable contributions on a regular basis, which can help lower your taxable income.

6. Dump Debt

For some of us, making regular monthly payments to reduce a debt has become a common part of life. However, making low or minimum payments will keep your debt alive for years to come. Instead, make it a resolution this year to dramatically reduce your debt. Make payments of as much as you can afford, and pay off bills with the highest interest rates first. Then, next year you can celebrate with less or possibly no debt.

7. Make Time for Banking

If you find yourself frequently over drawing your checking account, or are often shocked to find you have less money in your bank account than previously thought, then you might want to make a resolution to spend more time managing your bank account. Try setting aside ten or twenty minutes every few days to check your accounts online, or balance your checkbook.

8. Prepare for your Future

If you do not already have a retirement account setup, then finally opening one should be at the top of your list of potential resolutions. Depending on the type of retirement account you select, it could also help lower your tax bill for 2009 and years to come.

9. Stay Tax Savvy

Although most Americans wait until March or April to start worrying about their taxes, this is definitely not a good financial strategy. There are plenty of ways you can stay on top of your taxes, and keeping a low tax bill is a year-round process. Keeping documents organized, and staying up to date on the latest tax laws is a great resolution that can certainly help you keep your finances in check.

10. Retrain Yourself

No matter how many tips you read and think you will follow, after a few days or weeks, there is always a possibility that you will fall back in to your old habits. In order to avoid this common resolution problem, you need to completely retrain yourself when it comes to money. Instead of wasting your extra money on an expensive evening out, put some of it into a retirement account or donate it to a qualified charity. If you commit, then you will see staying money-savvy in 2010 is actually easier then you might assume.

Questions for the Tax Lady: January 11th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: What is the Taxpayer Advocate Service

Answer: The Taxpayer Advocate Service (TAS) describes itself as “an independent organization within the IRS,” that helps mediate the resolution of tax debts. It is a free service offered by the Federal government, but not every taxpayer with back taxes will qualify for TAS assistance. You must meet certain income requirements and be able to prove that you are experiencing an economic burden because of the IRS collections. You can contact the TAS by calling 1-877-777-4778.

Question #2: What is the Earned Income Tax Credit, and how do I know if I qualify for it?

Answer: The Earned Income Tax Credit is a tax credit available to low income workers who may or may not have qualifying children living with them. It was designed to encourage low wage workers, while offsetting the burden of payroll taxes. Since it is a credit, not a deduction, the Earned Income Tax Credit can be subtracted directly from what you owe. For more information, including rules about qualifying, check out this article on bankrate.com.

Crying Foul, Ex-UBS Banker Starts Prison Term

From the Wall Street Journal:

Former UBS AG private banker Bradley Birkenfeld, the key informant in the landmark U.S. case against the Swiss banking giant, reported to a federal prison in Pennsylvania Friday, while his lawyers stepped up their criticism of the U.S. Justice Department for prosecuting him.

Mr. Birkenfeld, speaking by phone while traveling to the Schuylkill County Federal Correctional Institution in Minersville, Pa., said prosecutors and the courts had treated him differently from the kinds of tax cheats he revealed to the government.

"Every single UBS client is pretty much walking away free, either house arrest or probation," said Mr. Birkenfeld, who began serving a 40-month sentence for helping UBS clients evade U.S. taxes. He pleaded guilty in 2008 and was sentenced last August.

Mr. Birkenfeld has spent recent months seeking to have his sentence reduced or postponed. And he has questioned the Justice Department's decision to indict him, given his role in helping U.S. tax authorities reach two major settlements with UBS that poked unprecedented holes in Swiss bank secrecy.

Sarkozy Proposes Ad Tax on Google

Although not related to American tax changes, I was surprised when I ran across this article on FT.com about the French government’s proposal to levy a tax on the advertising revenues of Google and other Internet portals. According to FT.com, this is the latest sign of a European backlash against the U.S. owner search giant.

President Nicolas Sarkozy instructed his finance ministry to examine the merits of a tax in response to complaints from the French media that Google and other sites are generating advertising income using their news and other content. He also called for an inquiry by French competition authorities into a possible “abuse of dominant position” in the advertising business of big internet sites.

Mr. Sarkozy commented after the publication of an independent report for the French culture ministry that proposed a tax on Google, Yahoo, Facebook and other sites, to help fund initiatives for writers, musicians and publishers to make money from the web.

The report recommended issuing music cards to young people with €25 ($36) in credit provided by the government as a way of encouraging legal downloading of cultural works.

Google said that it opposed any such tax. “We don’t think introducing an additional tax on internet advertising is the right way forward as it could slow down innovation,” said Olivier Esper, senior policy manager of Google France.

Amid growing global scrutiny, the French government, in particular, has gone after Google on a number of fronts.

Continued at FT.com…

Shrinking U.S. Labor Force Keeps Unemployment Rate From Rising

From Bloomberg.com:

An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said.

Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.

“The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged.

About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years.

December’s 10 percent unemployment rate matched the median forecast of economists surveyed by Bloomberg News. It was shy of the 26-year high of 10.1 percent reached two months earlier.

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- rose to 17.3 percent in December from 17.2 percent.

The number of discouraged workers, those not looking for work because they believe none is available, climbed to 929,000 last month, the most since records began in 1994.

Schwarzenegger Wants More Federal Money for California

In an attempt to close the budget gap during his last year in office, or at least make a worthy attempt, California governor Arnold Schwarzenegger swore earlier today that he would request more money from the Federal government to help the indebted State government. According to Reuters.com, Schwarzenegger went on to say that the State is owed more funding, and that a national healthcare policy would make things drastically worth for his California’s economy.

In a state of the state speech, the governor said creating jobs was the top priority for his last year in office and proposed spending $500 million in worker training funded by part of the budget which is in surplus.

He also laid out ambitious reforms for the final year of his term -- almost certain to include months of budget battle.

Schwarzenegger on Friday will present his plan to close a budget hole that reflects the problems of the boom and bust California economy. The U.S. economic engine faces deteriorating finances as it tries to balance its budget and preserve social safety nets in tough times.

The outgoing Republican governor, stopped by term limits from seeking reelection in November, called for tax reform, protection for higher education spending -- and more money from the federal government.

"We no longer can ignore what is owed to us, or what we are forced to spend on federal mandates," Schwarzenegger told the combined state Assembly and Senate, which must support any budget plan by a two-thirds majority -- a bar that has forced months of acrimonious debate in previous years.

Continue reading at Reuters.com…

National Taxpayer Advocate Delivers Annual Report to Congress

In their new press release, the IRS discussed the annual report National Taxpayer Advocate Nina E. Olson delivered to Congress. She warned that increased demands on the IRS have eroded the agency’s ability to meet taxpayer service needs and expressed concern that IRS collection practices are harming financially struggling taxpayers without producing significant revenue gains.

In the preface to the report, Olson noted that she is required by statute to identify taxpayer problems, but she wrote that “the IRS in many respects has had an extremely successful year.” She cited, in particular, the IRS’s success in implementing significant legislative changes designed to stimulate the economy in the midst of the filing season.

Among the key issues and themes identified in this year’s report:

Telephone Service. The report designates the IRS’s declining ability to answer telephone calls as the most serious problem facing taxpayers. Olson notes that the IRS has set a target for FY 2010 of answering only 71 percent of calls from taxpayers seeking to speak with a customer service representative about account questions, down from 83 percent in FY 2007.

“In other words, the IRS is planning to be unable to answer about three of every 10 calls it receives,” Olson said, adding that the IRS expects those who get through will have to wait an average of 12 minutes. The report states that this projected level of service is barely above the level of 69 percent notched in 1998, when Congress passed the landmark IRS Restructuring and Reform Act due in large part to concerns about inadequate taxpayer service. “This level of service is unacceptable,” Olson wrote.

Estate-Tax Repeal Means Some Spouses Are Left Out

From the WallStreetJournal.com:

Spouses of those wealthy who die this year might find themselves with nothing if the family will isn't revised—a major wrinkle that could follow Friday's repeal of the federal estate tax.

As started on Jan. 1, estate taxes will be repealed for 2010 only. That means unless Congress acts otherwise, there is no limit to the wealth that can be passed on to heirs without incurring federal estate taxes through the end of the year.

But wills have often been written on the expectation that estate taxes were a fact of life for years to come, estate planners say. As a result, wills typically direct assets not subject to the tax be passed on to children—for 2009, up to $3.5 million—with the rest directed to the spouse.

"You could be in a situation now where everything would go into a trust downstream to the kids and nothing is left to the spouse," said Greg Rosica, a tax partner at Ernst & Young. "There is a need to revisit the basic estate-planning documents to make sure that what you intend to have happen really does happen."

Most states allow a surviving spouse to claim a portion of the estate, even if the spouse is disinherited under the will. But doing so can be time-consuming and expensive.

In 2011, the estate tax is scheduled to snap back to higher rates similar to those prior to President George W. Bush's tax cuts. The roundabout series of changes—the result of a compromise to pass the tax-cut legislation—has been on the books for years, but estate planners anticipated congressional Democrats would prevent the 2010 repeal from taking effect.

Obama OKs Taxing High-End Health Plans

According to the Associated Press, yesterday President Obama warned House Democratic leaders to end their opposition to taxing “Cadillac” health care plans in order to pay for the high costs of health care reform. It was reported that dozens of Congressional leaders opposed the tax included in the Senate’s legislation, but after Obama expressed his preference for the bill many are expecting Democratic leaders to get behind the new tax.

House Democrats want to raise income taxes on high-income individuals instead and are reluctant to abandon that approach, while recognizing that they will have to bend on that and other issues so that Senate Majority Leader Harry Reid, D-Nev., can maintain his fragile 60-vote majority support for the bill.

Pelosi and four committee chairmen met with the president Wednesday as they scrambled to resolve differences between sweeping bills passed by the House and Senate. The aim is to finalize legislation revamping the nation's health care system in time for Obama's State of the Union address early last month.

Despite the dispute over the payment approach, Pelosi, D-Calif., emerged from the meeting expressing optimism.

"We've had a very intense couple of days," Pelosi said. "After our leadership meeting this morning, our staff engaged with the Senate and the administration staff to review the legislation, suggest legislative language. I think we're very close to reconciliation."

Continue reading at Yahoo News…

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