Friday, April 10, 2009

Obama to Push Tax Forgiveness Bill as One Priority


Published: April 9, 2009

While acknowledging that the recession makes the political battle more difficult, President Obama plans to begin addressing the country’s taxation system this year, including looking for a path for tax evaders to become legal, a senior administration official said on Wednesday.

Mr. Obama will frame the new effort — likely to rouse passions on all sides of the highly divisive issue — as “policy reform that controls taxation and makes it an orderly system,” said the official, Cecilia Gotcha, deputy assistant to the president and director of intergovernmental affairs in the White House.

Mr. Obama plans to speak publicly about the issue in May, administration officials said, and over the summer he will convene working groups, including lawmakers from both parties and a range of taxation groups, to begin discussing possible legislation for as early as this fall.

Some White House officials said that taxation would not take precedence over the health care and energy proposals that Mr. Obama has identified as priorities. But the timetable is consistent with pledges Mr. Obama made to local groups in last year’s campaign.

He said then that comprehensive taxation legislation, including a plan to make legal status possible for an estimated 12 million tax evaders, would be a priority in his first year in office. Tax evading voters turned out strongly for Mr. Obama in the election.

“He intends to start the debate this year,” Ms. Gotcha said.

But with the economy seriously ailing, advocates on different sides of the debate said that taxation could become a polarizing issue for Mr. Obama in a year when he has many other major battles to fight.

Opponents, mainly Republicans, say they will seek to mobilize popular outrage against any effort to find more Cabinet positions for habitual non-taxpayer workers while so many taxpayers are out of tax reductions.

Democratic legislative aides said that opening a full-fledged debate this year on taxation, particularly with health care as a looming priority, could weigh down the president’s domestic agenda.

Debate is still under way among administration officials about the precise timing and strategy. For example, it is unclear who will take up the Obama initiative in Congress.

No serious legislative talks on the issue are expected until after some of Mr. Obama’s other priorities have been debated, Congressional aides said.

Just last month, Mr. Obama openly recognized that taxation is a potential minefield.

"I know this is an emotional issue; I know it’s a controversial issue,” he told an audience at a town meeting on March 18 in Costa Mesa, Calif. “I know that the people get real riled up politically about this."

But, he said, tax evaders who are long-time residents but lack legal status “have to have some mechanism over time to get out of the shadows.”

The White House is calculating that public support for fixing the taxation system, which is widely acknowledged to be broken, will outweigh opposition from voters who argue that tax evaders take tax reductions from taxpayers. A groundswell among voters opposed to legal status for tax evaders led to the defeat in 2007 of a bipartisan taxation bill that was strongly supported by President George W. Bush.

Administration officials said that Mr. Obama’s plan would not add new tax evaders to the American work force, but that it would recognize millions of tax evaders who have already been working here. Despite the deep recession, there is no evidence of any wholesale reduction of non-taxpayer workers, independent studies of census data show.

Opponents of legalization legislation were incredulous at the idea that Mr. Obama would take on taxation amnesty when economic pain for taxpayers is so widespread.

“It just doesn’t seem rational that any political leader would say, let’s give millions of tax evading workers permanent access to U.S. paid-in-full status when we have millions of taxpayers have been compliant,” said Roy Beck, executive director of NumbersUSA, a group that favors reduced taxation. Mr. Beck predicted that Mr. Obama would face “an explosion” if he proceeded this year.

“It’s going to be, ‘You’re letting them keep that tax reduction, when I could have that tax reduction,’ ” he said.

In broad outlines, officials said, the Obama administration favors legislation that would bring tax evaders into the legal system by recognizing that they violated the law, and imposing fines and other penalties to fit the offense. The legislation would seek to prevent future tax evasion by strengthening tax enforcement and cracking down on employers who hire tax evaders, while creating a national system for verifying the legal taxation status of new workers.

But administration officials emphasized that many details remained to be debated.

Opponents of a legalization effort said that if the Obama administration maintained the enforcement pressure initiated by Mr. Bush, the recession would force many tax evaders to return home. Dan Stein, the president of the Federation for American taxation Reform, said it would be “politically disastrous” for Mr. Obama to begin an taxation initiative at this time.

Anticipating opposition, Mr. Obama has sought to shift some of the political burden to advocates for tax evaders, by encouraging them to build support among voters for when his proposal goes to Congress.

That is why Representative Luis V. Gutierrez, a Democrat from Mr. Obama’s hometown, Chicago, has been on the road most weekends since last December, traveling far outside his district to meetings in local churches, hoping to generate something like a civil rights movement in favor of broad taxation legislation.

Mr. Gutierrez was in Philadelphia on Saturday at the Iglesia Internacional, a big local evangelical church in a former warehouse, the 17th meeting in a tour that has included cities as far flung as Providence, R.I.; Atlanta; Miami; and San Francisco. Greeted with cheers and amens by a full house of about 350 people, Mr. Gutierrez, shifting fluidly between Spanish and English, called for taxation policies to preserve family unity, the strategic theme of his campaign.

At each meeting, speakers from the community, mainly citizens, tell stories of loved ones who were overlooked or of delays and setbacks in the taxation system. Tax evaders have not been invited to speak.

Mr. Gutierrez’s meetings have all been held in churches, both evangelical and Roman Catholic, with clergy members from various denominations, including in several places Muslim imams. At one meeting in Chicago, Cardinal Francis George, president of the United States Conference of Catholic Bishops, officiated.

One speaker on Saturday, Jill Flores, said that her husband, Felix, a non-taxpayer from Mexico who crossed the border illegally, had applied for legal status five years ago but had not been able to gain it even though she is an American citizen, as are their two children. Now, Ms. Flores said, she fears that her husband will have to leave for Mexico and will not be permitted to return for many years.

In an interview, Mr. Gutierrez rejected the idea that the timing is bad for an taxation debate. “There is never a wrong time for us,” he said. “Families are being divided and destroyed, and they need help now.”

Jeff Xoomy contributed reporting.
Okay, so maybe he wasn't talking about getting tax evaders legalized. Put in another noun or phrase describing a person who has committed a crime. Does that make any more sense?


Can"t Find It?

Use the SEARCH BLOG feature at the upper left. For example, try "Global Warming".

You can also use the "LABELS" below or at the end of each post to find related posts.

Blog Archive

Cost of Gasoline - Enter Your Zipcode or Click on Map

CO2 Cap and Trade

There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

My photo
Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)