There it is. The tax rate on the "super-rich" is now 75%. Will this help or will it hurt the french economy? Will anyone notice what it does? Read the original here.
France taxes rich and business to slash deficitBy Daniel Flynn and Leigh Thomas
PARIS | Fri Sep 28, 2012 7:49am EDT
(Reuters) - President Francois Hollande's Socialist government unveiled sharp tax hikes on business and the rich on Friday in a 2013 budget aimed at showingFrance has the fiscal rigor to remain at the core of the euro zone.The package will recoup 30 billion euros ($39 billion) for the public purse with a goal of narrowing the deficit to 3.0 percent of national output next year from 4.5 percent this year - France's toughest single belt-tightening in 30 years.
But with record unemployment and a barrage of data pointing to economic stagnation, there are fears the deficit target will slip as France falls short of the modest 0.8 percent economic growth rate on which it is banking for next year.
The budget disappointed pro-reform lobbyists by merely freezing France's high public spending rather than daring to attack ministerial budgets as Spain did this week as it battles to avoid the conditions of an international bailout.
"This is a fighting budget to get the country back on the rails," Prime Minister Jean-Marc Ayrault said, adding that the 0.8 percent growth target was "realistic and ambitious".
"It is a budget which aims to bring back confidence and to break this spiral of debt that gets bigger and bigger."
With public debt at a post-war record of 91 percent of the economy, the budget is vital to France's credibility not only among euro zone partners but also in markets which for now are allowing it to borrow at record-low yields around two percent.
France's benchmark 3.0 percent 10-year bond was steady, yielding 2.18 percent after the announcement.
The government said the budget was the first in a series of steps to bring its deficit down to 0.3 percent of GDP by 2017 - slightly missing an earlier target of a zero deficit by then.
But early reactions were skeptical.
"The ambitions that were flagged are very audacious," said Philippe Waechter at Natixis Asset Management. "I struggle to see how we'll find the growth needed in 2013 and afterwards."
Of the total 30 billion euros of savings, around 20 billion will come from tax increases on households and companies, with tax rises already approved this year to contribute some 4 billion euros to revenues in 2013. The freeze on spending will contribute around 10 billion euros.
"SICK" MODEL?
To the dismay of business leaders who fear an exodus of top talent, the government confirmed a temporary 75 percent super-tax rate for earnings over one million euros and a new 45 percent band for revenues over 150,000 euros.
Together, those two measures are predicted to bring in around half a billion euros. Higher tax rates on dividends and other investments, plus cuts to existing tax breaks are seen bringing in several billion more.
Business will be hit with measures including a cut in the amount of loan interest which is tax-deductible and the cutting of an existing tax break on capital gains from certain share sales - moves worth around four billion and two billion euros each.
"The government is impeding investment and so will block innovation," Entrepreneurs Club head Guillaume Cairou said of the preference for raising taxes rather than cutting spending.
"France is sick because of the model it has ... but is choosing to preserve it."
Four months after he defeated Nicolas Sarkozy, Hollande's approval ratings are in free-fall as many French feel he has been slow to get to grips with the economic slow-down and unemployment at a 10-year high and rising.
Finance Minister Pierre Moscovici defended next year's growth target on French radio. But, highlighting the bet on growth underpinning the entire budget, he added that it was achievable "if Europe steadies".
Data on Friday confirmed France posted zero growth in the second quarter, marking nine months of stagnation, as a pickup in business investment and government spending was offset by a worsening trade balance and sluggish consumer expenditure.
Despite a rise in wages, consumers - traditionally the motor of France's growth - increased their savings to 16.4 percent of income from 16.0 percent a year earlier. In another setback, other data showed consumer spending dropped 0.8 percent in August.
(Additional reporting by Catherine Bremer and Brian Love; writing by Mark John; editing by Philippa Fletcher)
Showing posts with label Big Government. Show all posts
Showing posts with label Big Government. Show all posts
Friday, September 28, 2012
Monday, September 10, 2012
POTUS, the Democrats, and the Auto Industry Takeover
Yeah, I'm just going to let the editors of the National Review Online take this one. Read the original here.
The Democrats’ GM Fiction
By The Editors of the National Review
SEPTEMBER 10, 2012 4:00 A.M.
The Democrats have decided to run in 2012 as the bailout party. It is an odd choice — the 2008–09 bailouts were deeply unpopular among the general public, and even their backers were notably conflicted about the precedent being set and the ensuing moral hazard. But Democrats have nonetheless made one of the most abusive episodes in the entire bailout era their economic cornerstone: the government takeover of General Motors.
The GM bailout was always an odd duck: The Troubled Asset Relief Program (TARP) was created in order to preserve liquidity in the financial markets by heading off the collapse of key financial institutions that had made catastrophically bad bets on real-estate securities — nothing at all to do with cars, really. GM’s financial arm, today known as Ally Financial, was in trouble, but GM’s fundamental problem was that its products were not profitable enough to support its work-force expenses. A single dominant factor — the United Auto Workers union’s extortionate contracts with GM — prevented the carmaker from either reducing its work-force costs or making its products more efficiently. And its hidebound management didn’t help.
Admirers of the GM bailout should bear in mind that it was the Bush administration that first decided to intervene at the firm, offering a bridge loan on the condition that it draw up a deeply revised business plan. President Obama’s unique contribution was effectively to nationalize the company, seeing to it that the federal government violated normal bankruptcy processes and legal precedent to protect the defective element at the heart of GM’s troubles: the financial interests of the UAW. It did this by strong-arming GM’s bondholders into taking haircuts in order to sweeten the pot for the UAW. The Obama administration also creatively construed tax law to relieve GM of tens of billions of dollars in obligations — at the same time that Barack Obama & Co. were caterwauling about the supposed lack of patriotism of firms that used legal means rather than political favoritism to reduce their tax bills.
Mitt Romney’s proposal for a structured bankruptcy would have necessitated considerable federal involvement, too, but with a key difference: The UAW contracts would have been renegotiated, and GM’s executive suites would have been cleaned out, placing the company on a path toward innovation and self-sufficiency rather than permanent life support. Which is to say, Obama did for GM what he is doing by un-reforming welfare: creating a dependent constituency.
The Democrats cling to the ridiculous claim that the bailout of GM and its now-Italian competitor, Chrysler, saved 1.5 million U.S. jobs. This preposterous figure is based on the assumption that if GM and Chrysler had gone into normal bankruptcy proceedings, the entire enterprise of automobile manufacturing in the United States would have collapsed — not only at GM and Chrysler but at Ford and foreign transplants such as Toyota and Honda. Not only that, the Democrats’ argument goes, but practically every parts maker, supplier, warehousing agency, and services firm dedicated to the car industry would have collapsed, too. In fact, it is unlikely that even GM or Chrysler would have stopped production during bankruptcy: The assembly lines would have continued rolling, interest and debt payments would have been cut, and — here’s the problem — union contracts would have been renegotiated. Far from having saved 1.5 million jobs, it is not clear that the GM bailout saved any — only that it preserved the UAW’s unsustainable arrangement.
Bill Clinton bizarrely tried to claim that the bailout has been responsible for the addition of 250,000 jobs to the automobile industry since the nadir of the financial crisis. Auto manufacturers and dealerships have indeed added about 236,000 jobs since then, but almost none are at GM, which has added only about 4,500 workers, a number not even close to offsetting the 63,000 workers that its dealerships had to let go when the terms of the bailout unilaterally shut them down.
Ugly as the bank bailouts were, the federal government appears set to make its money back on most of them, with the exception of some smaller regional banks and CIT. Even AIG, one of the worst of the financial basket cases, is set to end up being a break-even proposition for U.S. taxpayers. But tens of billions of dollars will be lost on GM. The federal government put up more for a 60 percent interest in the firm than GM is worth today.
At their convention, Democrats swore that GM is “thriving,” but the market doesn’t think so: GM shares have lost half their value since January 2011. And while the passing of the Great Recession has meant growing sales for all automakers, GM is seriously lagging behind its competitors: Its sales are up 10 percent, a fraction of the increases at Kia, Toyota, Volkswagen, and Porsche. With its sales weak, its share price crashing, and its business model still a mess, some analysts already are predicting that GM will return to bankruptcy — but not until after the election.
The Obama administration talks up all of the “jobs” it saved at GM — but jobs doing what? Manufacturing automobiles that are not competitive without a massive government subsidy? Propping up an economically unviable enterprise just long enough to get Barack Obama reelected? As much as it will pain the hardworking men and women of GM to hear it, it is not worthwhile to save jobs at enterprises that cannot compete on their own merits. So long as the federal government is massively subsidizing the operation, a job at GM is a welfare program with a fairly robust work requirement. (And we all know how the Obama administration feels about work requirements.)
We have bankruptcy laws and bankruptcy courts for a reason. It may make sense to expedite the proceedings for very large firms such as GM in order to prevent disruptions in the supply chain that would, as Ford’s executives argued, harm other, healthier firms. But bankrupt is what GM was, and bankrupt is what GM is, a fact that will become blisteringly apparent should the government ever attempt to sell off the shares it owns in the company.
The GM bailout was a bad deal for GM’s creditors, for U.S. taxpayers, and, in the long run, for the U.S. automobile industry and our overall national competitiveness. No wonder the Democrats are campaigning on a fictionalized account of it.
The Democrats’ GM Fiction
By The Editors of the National Review
SEPTEMBER 10, 2012 4:00 A.M.
The Democrats have decided to run in 2012 as the bailout party. It is an odd choice — the 2008–09 bailouts were deeply unpopular among the general public, and even their backers were notably conflicted about the precedent being set and the ensuing moral hazard. But Democrats have nonetheless made one of the most abusive episodes in the entire bailout era their economic cornerstone: the government takeover of General Motors.
The GM bailout was always an odd duck: The Troubled Asset Relief Program (TARP) was created in order to preserve liquidity in the financial markets by heading off the collapse of key financial institutions that had made catastrophically bad bets on real-estate securities — nothing at all to do with cars, really. GM’s financial arm, today known as Ally Financial, was in trouble, but GM’s fundamental problem was that its products were not profitable enough to support its work-force expenses. A single dominant factor — the United Auto Workers union’s extortionate contracts with GM — prevented the carmaker from either reducing its work-force costs or making its products more efficiently. And its hidebound management didn’t help.
Admirers of the GM bailout should bear in mind that it was the Bush administration that first decided to intervene at the firm, offering a bridge loan on the condition that it draw up a deeply revised business plan. President Obama’s unique contribution was effectively to nationalize the company, seeing to it that the federal government violated normal bankruptcy processes and legal precedent to protect the defective element at the heart of GM’s troubles: the financial interests of the UAW. It did this by strong-arming GM’s bondholders into taking haircuts in order to sweeten the pot for the UAW. The Obama administration also creatively construed tax law to relieve GM of tens of billions of dollars in obligations — at the same time that Barack Obama & Co. were caterwauling about the supposed lack of patriotism of firms that used legal means rather than political favoritism to reduce their tax bills.
Mitt Romney’s proposal for a structured bankruptcy would have necessitated considerable federal involvement, too, but with a key difference: The UAW contracts would have been renegotiated, and GM’s executive suites would have been cleaned out, placing the company on a path toward innovation and self-sufficiency rather than permanent life support. Which is to say, Obama did for GM what he is doing by un-reforming welfare: creating a dependent constituency.
The Democrats cling to the ridiculous claim that the bailout of GM and its now-Italian competitor, Chrysler, saved 1.5 million U.S. jobs. This preposterous figure is based on the assumption that if GM and Chrysler had gone into normal bankruptcy proceedings, the entire enterprise of automobile manufacturing in the United States would have collapsed — not only at GM and Chrysler but at Ford and foreign transplants such as Toyota and Honda. Not only that, the Democrats’ argument goes, but practically every parts maker, supplier, warehousing agency, and services firm dedicated to the car industry would have collapsed, too. In fact, it is unlikely that even GM or Chrysler would have stopped production during bankruptcy: The assembly lines would have continued rolling, interest and debt payments would have been cut, and — here’s the problem — union contracts would have been renegotiated. Far from having saved 1.5 million jobs, it is not clear that the GM bailout saved any — only that it preserved the UAW’s unsustainable arrangement.
Bill Clinton bizarrely tried to claim that the bailout has been responsible for the addition of 250,000 jobs to the automobile industry since the nadir of the financial crisis. Auto manufacturers and dealerships have indeed added about 236,000 jobs since then, but almost none are at GM, which has added only about 4,500 workers, a number not even close to offsetting the 63,000 workers that its dealerships had to let go when the terms of the bailout unilaterally shut them down.
Ugly as the bank bailouts were, the federal government appears set to make its money back on most of them, with the exception of some smaller regional banks and CIT. Even AIG, one of the worst of the financial basket cases, is set to end up being a break-even proposition for U.S. taxpayers. But tens of billions of dollars will be lost on GM. The federal government put up more for a 60 percent interest in the firm than GM is worth today.
At their convention, Democrats swore that GM is “thriving,” but the market doesn’t think so: GM shares have lost half their value since January 2011. And while the passing of the Great Recession has meant growing sales for all automakers, GM is seriously lagging behind its competitors: Its sales are up 10 percent, a fraction of the increases at Kia, Toyota, Volkswagen, and Porsche. With its sales weak, its share price crashing, and its business model still a mess, some analysts already are predicting that GM will return to bankruptcy — but not until after the election.
The Obama administration talks up all of the “jobs” it saved at GM — but jobs doing what? Manufacturing automobiles that are not competitive without a massive government subsidy? Propping up an economically unviable enterprise just long enough to get Barack Obama reelected? As much as it will pain the hardworking men and women of GM to hear it, it is not worthwhile to save jobs at enterprises that cannot compete on their own merits. So long as the federal government is massively subsidizing the operation, a job at GM is a welfare program with a fairly robust work requirement. (And we all know how the Obama administration feels about work requirements.)
We have bankruptcy laws and bankruptcy courts for a reason. It may make sense to expedite the proceedings for very large firms such as GM in order to prevent disruptions in the supply chain that would, as Ford’s executives argued, harm other, healthier firms. But bankrupt is what GM was, and bankrupt is what GM is, a fact that will become blisteringly apparent should the government ever attempt to sell off the shares it owns in the company.
The GM bailout was a bad deal for GM’s creditors, for U.S. taxpayers, and, in the long run, for the U.S. automobile industry and our overall national competitiveness. No wonder the Democrats are campaigning on a fictionalized account of it.
Monday, August 13, 2012
Those who don't learn from history...
...are doomed to repeat it. Of course, POTUS doesn't believe it's a "doom", but rather, a success. I suppose I shouldn't be surprised that someone with no business or private sector experience would deem this a success. And I shouldn't be surprised, that he'd want more of the same. Regardless of his intent, the great orator still says that what happened with the government takeover of GM was a success. I disagree.
Read the originals here and here.
Obama: Let's repeat auto industry success
By DONOVAN SLACK
Read the originals here and here.
Obama: Let's repeat auto industry success
By DONOVAN SLACK
Politico.com
8/9/12 2:18 PM EDT
PUEBLO, Colo. – President Obama, while villifying Mitt Romney for opposing the auto industry bailout, bragged about the success of his decision to provide government assistance and said he now wants to see every manufacturing industry come roaring back.
“I said, I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,” he said. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.
“I don’t want those jobs taking root in places like China, I want those jobs taking root in places like Pueblo,” Obama told a crowd gathered for a campaign rally at the Palace of Agriculture at the Colorado State Fairgrounds here.
He made the remarks while pushing for the renewal of a tax credit for wind energy manufacturing – something Romney opposes – and for the creation of credits for companies who bring jobs home from overseas, as well as the elimination of loopholes for offshoring.
“Gov. Romney brags about his private sector experience, but it was mostly invested in companies, some of which were called 'pioneers of outsourcing,'” Obama said. “I don’t want to be a pioneer of outsourcing. I want to insource.”
Clarification: This post was updated to reflect the president's intent to express his support for manufacturing success. An earlier version was unclear about his intent.
(This is the success, that the President refers to. -TheStrategeryBlog)
Report: U.S. Treasury ups expected bailout losses to $25 billion
Published: Monday, August 13, 2012, 4:00 PM Updated: Monday, August 13, 2012, 4:17 PM
By Michael Wayland
8/9/12 2:18 PM EDT
PUEBLO, Colo. – President Obama, while villifying Mitt Romney for opposing the auto industry bailout, bragged about the success of his decision to provide government assistance and said he now wants to see every manufacturing industry come roaring back.
“I said, I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,” he said. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.
“I don’t want those jobs taking root in places like China, I want those jobs taking root in places like Pueblo,” Obama told a crowd gathered for a campaign rally at the Palace of Agriculture at the Colorado State Fairgrounds here.
He made the remarks while pushing for the renewal of a tax credit for wind energy manufacturing – something Romney opposes – and for the creation of credits for companies who bring jobs home from overseas, as well as the elimination of loopholes for offshoring.
“Gov. Romney brags about his private sector experience, but it was mostly invested in companies, some of which were called 'pioneers of outsourcing,'” Obama said. “I don’t want to be a pioneer of outsourcing. I want to insource.”
Clarification: This post was updated to reflect the president's intent to express his support for manufacturing success. An earlier version was unclear about his intent.
(This is the success, that the President refers to. -TheStrategeryBlog)
Report: U.S. Treasury ups expected bailout losses to $25 billion
Published: Monday, August 13, 2012, 4:00 PM Updated: Monday, August 13, 2012, 4:17 PM
By Michael Wayland
Mlive.com
DETROIT, MI- The U.S. Treasury Department reportedly expects to lose more than $25 billion on the $85 billion auto bailout involving General Motors and Chrysler.
A new report sent to Congress on Friday states the Obama administration now expects to lose about $25.1 billion, according to the Detroit News.
Aug. 13, DetroitNews.com: “The report may still underestimate the losses. The report covers predicted losses through May 31, when GM's stock price was $22.20 a share.”
The government still owns 500 million shares of the automaker as part of the 2009 auto bailout, which forced both automakers into government-backed bankruptcies.
To recoup all of its nearly $50 billion from GM, government officials would have to sell the remaining shares at about $53 per share.
Earlier this year, GM spokesman Selim Bingol said it is "anybody's guess" as to when the government will exit the automaker.
“The day will eventually come when the Treasury sells its GM stake,” he wrote in an executive blog post in March. “When is anybody’s guess (we have no say in the matter). Meantime, we are focused on designing, building and selling the best vehicles in the world.”
As of 3:45 p.m. today, the Detroit-based automaker’s stock [NYSE: GM] was trading for about $20.45 a share, a 38 percent decline from its initial offering price of $33 in November 2010. The stock hit a record low of $18.85 per share late last month.
During the company’s annual shareholder meeting in June, GM CEO and Chairman Dan Akerson said global economic uncertainty, along with its troubled European operations and pension obligations were hindering the stock’s performance.
“I regret that the stock has not done well post-IPO,” he said. “I will ensure you that we are all dedicated to improving that over the immediate to long-term.”
The Obama administration completely exited Chrysler last year after recovering $11.2 billion of its $12.5 billion bailout to the Auburn Hills-based automaker.
The $25 billion in losses remains less than its estimates of $30 billion in December 2009, according to the Detroit News.
DETROIT, MI- The U.S. Treasury Department reportedly expects to lose more than $25 billion on the $85 billion auto bailout involving General Motors and Chrysler.
A new report sent to Congress on Friday states the Obama administration now expects to lose about $25.1 billion, according to the Detroit News.
Aug. 13, DetroitNews.com: “The report may still underestimate the losses. The report covers predicted losses through May 31, when GM's stock price was $22.20 a share.”
The government still owns 500 million shares of the automaker as part of the 2009 auto bailout, which forced both automakers into government-backed bankruptcies.
To recoup all of its nearly $50 billion from GM, government officials would have to sell the remaining shares at about $53 per share.
Earlier this year, GM spokesman Selim Bingol said it is "anybody's guess" as to when the government will exit the automaker.
“The day will eventually come when the Treasury sells its GM stake,” he wrote in an executive blog post in March. “When is anybody’s guess (we have no say in the matter). Meantime, we are focused on designing, building and selling the best vehicles in the world.”
As of 3:45 p.m. today, the Detroit-based automaker’s stock [NYSE: GM] was trading for about $20.45 a share, a 38 percent decline from its initial offering price of $33 in November 2010. The stock hit a record low of $18.85 per share late last month.
During the company’s annual shareholder meeting in June, GM CEO and Chairman Dan Akerson said global economic uncertainty, along with its troubled European operations and pension obligations were hindering the stock’s performance.
“I regret that the stock has not done well post-IPO,” he said. “I will ensure you that we are all dedicated to improving that over the immediate to long-term.”
The Obama administration completely exited Chrysler last year after recovering $11.2 billion of its $12.5 billion bailout to the Auburn Hills-based automaker.
The $25 billion in losses remains less than its estimates of $30 billion in December 2009, according to the Detroit News.
Friday, August 3, 2012
How would you like to make $0.25 on the dollar?
If you live in France, get ready. The best part is, it won't even make a difference economically or fiscally. It's simply a political middle finger to people who are rich. Read the original here.
In France, socialist Hollande makes the wealthiest pay
By Michael Birnbaum, Published: August 2
Washington Post
PARIS — In Washington, Republicans are bashing President Obama for inflicting “European-style socialism” on the United States.
Here in Paris, a genuine socialist took the presidential oath in May, and he has wasted no time implementing policies designed to make the rich pay more.
French President Francois Hollande has made good on a campaign pledge to make the wealthiest in France pay up to 75 percent income tax. The U.S. Congress, meanwhile, is debating an Obama proposal to allow the top tax rates to rise from 35 percent to nearly 40 percent.
Although the new taxes will not make a major dent in France’s budget, they have delighted the country’s labor unions and others who thought that former president Nicolas Sarkozy, nicknamed President Bling-Bling, gave the wealthy a pass as he called for deep cuts in government spending on the poor. But the rapidly rising tax rates have some businesses and investors saying that economic growth, forecast at a catatonic 0.2 percent this year, will further suffer.
The debate echoes the one playing out in Washington but also illustrates the deep divide — in policy and politics — between the United States and Europe as the countries struggle to crawl their way out of a slowing global economy. Policies that would be considered laughably extreme on the campaign trail in Ohio or Florida have found a champion in the Elysee Palace.
Hollande’s balancing act will test whether higher taxes can work in an age when money hops borders with the click of a mouse and nervous investors display little allegiance to individual countries. Many of France’s neighbors are focusing on cutting spending to balance their budgets rather than raising taxes. Hollande plans a mixture of both, and his aides are gambling that growth will result.
Constrained by a bad economy and commitments to balance the French budget by 2017, the plans are far from the rallying cry of stimulus-led growth on which Hollande based his campaign.
Many of the 17 countries that use the euroare fundamentally reevaluating the sustainability of their model. British Prime Minister David Cameron, whose country uses the pound, has said he would welcome investors and wealthy French people taking flight from Hollande’s taxes.
Hollande’s advisers say new taxes won’t scare away investors if the government follows up with convincing plans for how it will shrink spending, open the labor market and implement other business-friendly measures. In doing so, the advisers say, they hope to reduce France’s 10.2 percent unemployment rate while being fairer to the most vulnerable parts of society by putting the weight of service cuts and tax increases on the wealthy.
“If it’s necessary to have reforms, we will do them . . . based on fiscal elements that are just,” Hollande said in a recent television interview.
Uncertainty about the future
France is contemplating rates dramatically higher than those proposed by Obama. Paris’s conservative Figaro newspaper blazed in a front-page editorial last month about “confiscation” — dredging up memories of Soviet property seizures — reprinting a famous complaint from Tour de France great Bernard Hinault that three pumps of his bike pedal went to the government for every one dedicated to pushing himself forward in the race.
Although the 75 percent tax on earnings over $1.23 million a year, up from a previous top marginal rate of 48 percent, is more a political symbol than an economic measure — because it raises too little money to make a dent in France’s funding needs — analysts say it will help give Hollande political cover to cut government spending and open the labor market, making France more competitive with its neighbors. Parliament approved a one-off wealth tax on people whose assets total more than $1.6 million, and new taxes will raise $8.7 billion this year alone.
“From a strictly economic point of view, I wouldn’t recommend these policies. But that’s not what this is,” said Elie Cohen, an economist who has advised Sarkozy and Hollande. “This is clearly designed to create some kind of consensus in this country for structural reforms” — the kinds of measures otherwise known as austerity.
Many business owners say that they are waiting to see what will happen but that they are nervous about the future.
“We pay a pretty high level of tax already. The money we earned was not stolen,” said Stanislas de Bentzmann, co-chief executive of Devoteam, a computer systems company. “I switch on the radio and I hear the news that the government is doing the opposite of what I think it should do. In this kind of mood, investment decisions are not stimulated in this country.”
But he added that investors would probably tolerate temporary tax increases if there were a “real reorganization of the welfare state” at the same time. French Budget Minister Jerome Cahuzac has said that the 75 percent income tax might be reduced once the country balances its budget.
Some economists say they think the prospect of French wealth and investment flowing out of the country is more bogeyman than real.
“French people don’t want to give up the level of service they’re getting,” said Fabrice Montagne, the chief French economist at Barclays Bank. “I wouldn’t overestimate” people leaving the country, he said.
A fragile moment
This is a fragile moment for France. Last month, Peugeot, Europe’s second largest car manufacturer, announced plans to shut down a plant and lay off 8,000 workers. Hollande has fought the plans, but he has little recourse, and his advisers are bracing for more bad news and layoffs in the fall. And with borrowing costs soaring in Spain and Italy, the euro zone’s overall prospects look dim.
Painful policy changes could be easier, with France temporarily benefiting from the fears about its neighbors. Its borrowing rates are close to record lows as nervous investors shift their euros from Spain and Italy to Germany and France, which are seen as more stable. But if markets become nervous about France’s future, rates could spike quickly.
Although France’s income taxes are high and getting higher, the country also has a national sales tax of 19.6 percent and a financial transactions tax and a social services tax of 7.5 percent of earnings, among others. French workers have long accepted the costs as the price of a government that offers cradle-to-grave social protections, but businesses have complained that the high cost of contributions to pension plans and the health-care system have made French workers more expensive than those elsewhere in Europe.
Hollande’s advisers agree there is a problem, and they have signaled that they will cut employers’ required social-safety-net contributions and shift more of the burden onto workers. Nor has the government increased every tax it can find: One of the new president’s first actions when he came into office was to halt a rise in the national sales tax that had been planned by Sarkozy, reasoning that it disproportionately hurt the poor and middle class.
Sarkozy’s associates have slammed the moves.
“I’m quite sure it will be a fiscal shock, which will be very bad for growth, and I’m quite sure that a lot of people who have money or run firms are looking at going outside France,” former finance minister Francois Baroin said in a telephone interview.
For now, with Paris emptying for summer holidays, shuttered businesses with signs saying they’ll be back in September are a reminder that some traditions are hallowed on both sides of the political aisle.
In France, socialist Hollande makes the wealthiest pay
By Michael Birnbaum, Published: August 2
Washington Post
PARIS — In Washington, Republicans are bashing President Obama for inflicting “European-style socialism” on the United States.
Here in Paris, a genuine socialist took the presidential oath in May, and he has wasted no time implementing policies designed to make the rich pay more.
French President Francois Hollande has made good on a campaign pledge to make the wealthiest in France pay up to 75 percent income tax. The U.S. Congress, meanwhile, is debating an Obama proposal to allow the top tax rates to rise from 35 percent to nearly 40 percent.
Although the new taxes will not make a major dent in France’s budget, they have delighted the country’s labor unions and others who thought that former president Nicolas Sarkozy, nicknamed President Bling-Bling, gave the wealthy a pass as he called for deep cuts in government spending on the poor. But the rapidly rising tax rates have some businesses and investors saying that economic growth, forecast at a catatonic 0.2 percent this year, will further suffer.
The debate echoes the one playing out in Washington but also illustrates the deep divide — in policy and politics — between the United States and Europe as the countries struggle to crawl their way out of a slowing global economy. Policies that would be considered laughably extreme on the campaign trail in Ohio or Florida have found a champion in the Elysee Palace.
Hollande’s balancing act will test whether higher taxes can work in an age when money hops borders with the click of a mouse and nervous investors display little allegiance to individual countries. Many of France’s neighbors are focusing on cutting spending to balance their budgets rather than raising taxes. Hollande plans a mixture of both, and his aides are gambling that growth will result.
Constrained by a bad economy and commitments to balance the French budget by 2017, the plans are far from the rallying cry of stimulus-led growth on which Hollande based his campaign.
Many of the 17 countries that use the euroare fundamentally reevaluating the sustainability of their model. British Prime Minister David Cameron, whose country uses the pound, has said he would welcome investors and wealthy French people taking flight from Hollande’s taxes.
Hollande’s advisers say new taxes won’t scare away investors if the government follows up with convincing plans for how it will shrink spending, open the labor market and implement other business-friendly measures. In doing so, the advisers say, they hope to reduce France’s 10.2 percent unemployment rate while being fairer to the most vulnerable parts of society by putting the weight of service cuts and tax increases on the wealthy.
“If it’s necessary to have reforms, we will do them . . . based on fiscal elements that are just,” Hollande said in a recent television interview.
Uncertainty about the future
France is contemplating rates dramatically higher than those proposed by Obama. Paris’s conservative Figaro newspaper blazed in a front-page editorial last month about “confiscation” — dredging up memories of Soviet property seizures — reprinting a famous complaint from Tour de France great Bernard Hinault that three pumps of his bike pedal went to the government for every one dedicated to pushing himself forward in the race.
Although the 75 percent tax on earnings over $1.23 million a year, up from a previous top marginal rate of 48 percent, is more a political symbol than an economic measure — because it raises too little money to make a dent in France’s funding needs — analysts say it will help give Hollande political cover to cut government spending and open the labor market, making France more competitive with its neighbors. Parliament approved a one-off wealth tax on people whose assets total more than $1.6 million, and new taxes will raise $8.7 billion this year alone.
“From a strictly economic point of view, I wouldn’t recommend these policies. But that’s not what this is,” said Elie Cohen, an economist who has advised Sarkozy and Hollande. “This is clearly designed to create some kind of consensus in this country for structural reforms” — the kinds of measures otherwise known as austerity.
Many business owners say that they are waiting to see what will happen but that they are nervous about the future.
“We pay a pretty high level of tax already. The money we earned was not stolen,” said Stanislas de Bentzmann, co-chief executive of Devoteam, a computer systems company. “I switch on the radio and I hear the news that the government is doing the opposite of what I think it should do. In this kind of mood, investment decisions are not stimulated in this country.”
But he added that investors would probably tolerate temporary tax increases if there were a “real reorganization of the welfare state” at the same time. French Budget Minister Jerome Cahuzac has said that the 75 percent income tax might be reduced once the country balances its budget.
Some economists say they think the prospect of French wealth and investment flowing out of the country is more bogeyman than real.
“French people don’t want to give up the level of service they’re getting,” said Fabrice Montagne, the chief French economist at Barclays Bank. “I wouldn’t overestimate” people leaving the country, he said.
A fragile moment
This is a fragile moment for France. Last month, Peugeot, Europe’s second largest car manufacturer, announced plans to shut down a plant and lay off 8,000 workers. Hollande has fought the plans, but he has little recourse, and his advisers are bracing for more bad news and layoffs in the fall. And with borrowing costs soaring in Spain and Italy, the euro zone’s overall prospects look dim.
Painful policy changes could be easier, with France temporarily benefiting from the fears about its neighbors. Its borrowing rates are close to record lows as nervous investors shift their euros from Spain and Italy to Germany and France, which are seen as more stable. But if markets become nervous about France’s future, rates could spike quickly.
Although France’s income taxes are high and getting higher, the country also has a national sales tax of 19.6 percent and a financial transactions tax and a social services tax of 7.5 percent of earnings, among others. French workers have long accepted the costs as the price of a government that offers cradle-to-grave social protections, but businesses have complained that the high cost of contributions to pension plans and the health-care system have made French workers more expensive than those elsewhere in Europe.
Hollande’s advisers agree there is a problem, and they have signaled that they will cut employers’ required social-safety-net contributions and shift more of the burden onto workers. Nor has the government increased every tax it can find: One of the new president’s first actions when he came into office was to halt a rise in the national sales tax that had been planned by Sarkozy, reasoning that it disproportionately hurt the poor and middle class.
Sarkozy’s associates have slammed the moves.
“I’m quite sure it will be a fiscal shock, which will be very bad for growth, and I’m quite sure that a lot of people who have money or run firms are looking at going outside France,” former finance minister Francois Baroin said in a telephone interview.
For now, with Paris emptying for summer holidays, shuttered businesses with signs saying they’ll be back in September are a reminder that some traditions are hallowed on both sides of the political aisle.
Wednesday, July 25, 2012
Taranto on Obamacare's Effect
Is anyone surprised by this? If so, I have many things to sell you, starting with a bridge. Read the original here.
The ObamaCare Tax Increase
WSJ BEST OF THE WEB TODAY
Updated July 25, 2012, 12:39 p.m. ET
By JAMES TARANTO
The ObamaCare Tax Increase
WSJ BEST OF THE WEB TODAY
Updated July 25, 2012, 12:39 p.m. ET
By JAMES TARANTO
The Congressional Budget Office has revised its estimates of the effects of ObamaCare, taking into account last month's Supreme Court decision that upheld most of the law. The office found that "of the 33 million people who had been expected to gain coverage under the law, 3 million fewer" now will because of changes in Medicaid., the New York Times reports. By 2022, CBO predicts, "30 million people will be uninsured." Universal health care, baby!
Here are the revenue and spending numbers:
With the expected changes as a result of the court decision, the budget office said the law would cost $84 billion less than it had previously predicted.
"The insurance coverage provisions of the Affordable Care Act will have a net cost of $1.168 billion over the 2012-2022 period--compared with $1.252 billion projected in March 2012 for that 11-year period--for a net reduction of $84 billion," or about 7 percent, the budget office said.
In addition, the budget office said that repealing the health care law would add $109 billion to federal budget deficits over the next 10 years. Specifically, it said, repeal of the law would reduce spending by $890 billion and reduce revenues by $1 trillion in the years 2013 to 2022.
Now, how can it "cost" money to repeal a massive new entitlement? Well, the entitlement comes with even more massive new taxes. So right now the prospect of cutting taxes is serving as an argument against cutting spending. The logic of Grover Norquist's "starve the beast" philosophy has never seemed clearer.
Here are the revenue and spending numbers:
With the expected changes as a result of the court decision, the budget office said the law would cost $84 billion less than it had previously predicted.
"The insurance coverage provisions of the Affordable Care Act will have a net cost of $1.168 billion over the 2012-2022 period--compared with $1.252 billion projected in March 2012 for that 11-year period--for a net reduction of $84 billion," or about 7 percent, the budget office said.
In addition, the budget office said that repealing the health care law would add $109 billion to federal budget deficits over the next 10 years. Specifically, it said, repeal of the law would reduce spending by $890 billion and reduce revenues by $1 trillion in the years 2013 to 2022.
Now, how can it "cost" money to repeal a massive new entitlement? Well, the entitlement comes with even more massive new taxes. So right now the prospect of cutting taxes is serving as an argument against cutting spending. The logic of Grover Norquist's "starve the beast" philosophy has never seemed clearer.
Wednesday, July 18, 2012
Who built what?
Who is responsible for success? If something is given, it can be taken away. James Taranto at the Wall Street Journal gives his $0.02. Read the original here.
You Didn't Sweat, He Did
Constructing a sentence is hard work when you're the World's Greatest Orator.
By JAMES TARANTO
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you've got a business, you didn't build that. Somebody else made that happen. The Internet didn't get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.
The Team then explains: "The President's full remarks show that the 'that' in 'you didn't build that' clearly refers to roads and bridges--public infrastructure we count on the government to build and maintain."
That's bunk, and not only because "business" is more proximate to the pronoun "that" and therefore its more likely antecedent. The Truth Team's interpretation is ungrammatical. "Roads and bridges" is plural; "that" is singular. If the Team is right about Obama's meaning, he shoudl have said, "You didn't build those."
Barack Obama is supposed to be the World's Greatest Orator, the smartest man in the world. Yet his campaign asks us to believe he is not even competent to construct a sentence.
You Didn't Sweat, He Did
Constructing a sentence is hard work when you're the World's Greatest Orator.
By JAMES TARANTO
Wall Street Journal
"If you've got a business, you didn't build that." If the World's Greatest Orator turns out to be a one-term president, it is likely to go down as the most memorable utterance of his career. Mitt Romney certainly hopes that happens. HotAir.com's Ed Morrissey has highlights of Mitt Romney's response, in a speech yesterday at Irwin, Pa.:
The idea to say that Steve Jobs didn't build Apple, that Henry Ford didn't build Ford Motor, that Papa John didn't build Papa John Pizza, that Ray Kroc didn't build McDonald's, that Bill Gates didn't build Microsoft, you go on the list, that Joe and his colleagues didn't build this enterprise, to say something like that is not just foolishness, it is insulting to every entrepreneur, every innovator in America, and it's wrong.
And by the way, the president's logic doesn't just extend to the entrepreneurs that start a barber shop or a taxi operation or an oil field service business like this and a gas service business like this, it also extends to everybody in America that wants to lift themself [sic] up a little further, that goes back to school to get a degree and see if they can get a little better job, to somebody who wants to get some new skills and get a little higher income, to somebody who have, may have dropped out that decides to get back in school and go for it. . . . The president would say, well you didn't do that. You couldn't have gotten to school without the roads that government built for you. You couldn't have gone to school without teachers. So you didn't, you are not responsible for that success. President Obama attacks success and therefore under President Obama we have less success and I will change that.
I've got to be honest, I don't think anyone could have said what he said who had actually started a business or been in a business. And my own view is that what the President said was both startling and revealing. I find it extraordinary that a philosophy of that nature would be spoken by a president of the United States. It goes to something that I have spoken about from the beginning of the campaign. That this election is, to a great degree, about the soul of America. Do we believe in an America that is great because of government or do we believe in an America that is great because of free people allowed to pursue their dreams and build our future?
There's a website called didntbuildthat.com with a variety of hilarious treatments of the Obama philosophy. Of course, whoever's running the site didn't build that. As he acknowledges, Al Gore did. And hey, remember Julia, Barack Obama's composite girlfriend? At 42, she starts a Web business. Under President Obama, she didn't build that.
Obama may be God's gift to comedy, but Romney is right that the philosophical stakes here are serious. The president's remark was a direct attack on the principle of individual responsibility, the foundation of American freedom. If "you didn't build that," then you have no moral claim to it, and those with political power are morally justified in taking it away and using it to buy more political power. "I think that when you spread the wealth around, it's good for everybody," Obama said in another candid moment, in 2008.
This isn't even Obama's only such revelatory comment of the past week. Politico.com reports that the president, in an interview with WTOL-TV of Toledo, Ohio, let the mask slip again when asked about the ObamaCare mandate tax. "It's less a tax or a penalty than it is a principle--which is you can't be a freeloader on other folks when it comes to your health care, if you can afford it," he said.
Of course this is a dodge. The administration claimed that the mandate was not a tax for political purposes but was a tax for legal purposes. Chief Justice John Roberts tied himself in knots to accept the argument Obama is now running away from. Between them, the solicitor general and the chief justice look as if they were too clever by 1.
What's objectionable about Obama's comment, however, is not "tax" or "penalty" or even "principle." It's the way he uses the word "freeloader."
Normally we think of a freeloader as somebody who sponges off others, which in the context of public policy means the government. A freeloader is an able-bodied welfare recipient, or someone who fakes a disability to collect Supplemental Security income, or who waits until his unemployment runs out before looking for a job.
Now, think about how the ObamaCare mandate tax is structured. As Roberts noted in his opinion for the court in NFIB v. Sebelius, "It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code. For taxpayers who do owe the payment, its amount is determined by such familiar factors as taxable income, number of dependents, and joint filing status."
The only people who pay the ObamaCare mandate tax are people who make a living. Actual freeloaders are exempt. What Obama calls a freeloader is someone who makes his own money and pays his taxes but does not spend his money in the government-approved way.
The Obama campaign hotly disputes Romney's contention that the president meant what he said. A "fact check" from the Obama-Biden "Truth Team" (formerly Attack Watch) claims that Romney "is taking President Obama's words out of context" to produce "a complete distortion." Here is the full context, as presented by the Truth Team:
"If you've got a business, you didn't build that." If the World's Greatest Orator turns out to be a one-term president, it is likely to go down as the most memorable utterance of his career. Mitt Romney certainly hopes that happens. HotAir.com's Ed Morrissey has highlights of Mitt Romney's response, in a speech yesterday at Irwin, Pa.:
The idea to say that Steve Jobs didn't build Apple, that Henry Ford didn't build Ford Motor, that Papa John didn't build Papa John Pizza, that Ray Kroc didn't build McDonald's, that Bill Gates didn't build Microsoft, you go on the list, that Joe and his colleagues didn't build this enterprise, to say something like that is not just foolishness, it is insulting to every entrepreneur, every innovator in America, and it's wrong.
And by the way, the president's logic doesn't just extend to the entrepreneurs that start a barber shop or a taxi operation or an oil field service business like this and a gas service business like this, it also extends to everybody in America that wants to lift themself [sic] up a little further, that goes back to school to get a degree and see if they can get a little better job, to somebody who wants to get some new skills and get a little higher income, to somebody who have, may have dropped out that decides to get back in school and go for it. . . . The president would say, well you didn't do that. You couldn't have gotten to school without the roads that government built for you. You couldn't have gone to school without teachers. So you didn't, you are not responsible for that success. President Obama attacks success and therefore under President Obama we have less success and I will change that.
I've got to be honest, I don't think anyone could have said what he said who had actually started a business or been in a business. And my own view is that what the President said was both startling and revealing. I find it extraordinary that a philosophy of that nature would be spoken by a president of the United States. It goes to something that I have spoken about from the beginning of the campaign. That this election is, to a great degree, about the soul of America. Do we believe in an America that is great because of government or do we believe in an America that is great because of free people allowed to pursue their dreams and build our future?
There's a website called didntbuildthat.com with a variety of hilarious treatments of the Obama philosophy. Of course, whoever's running the site didn't build that. As he acknowledges, Al Gore did. And hey, remember Julia, Barack Obama's composite girlfriend? At 42, she starts a Web business. Under President Obama, she didn't build that.
Obama may be God's gift to comedy, but Romney is right that the philosophical stakes here are serious. The president's remark was a direct attack on the principle of individual responsibility, the foundation of American freedom. If "you didn't build that," then you have no moral claim to it, and those with political power are morally justified in taking it away and using it to buy more political power. "I think that when you spread the wealth around, it's good for everybody," Obama said in another candid moment, in 2008.
This isn't even Obama's only such revelatory comment of the past week. Politico.com reports that the president, in an interview with WTOL-TV of Toledo, Ohio, let the mask slip again when asked about the ObamaCare mandate tax. "It's less a tax or a penalty than it is a principle--which is you can't be a freeloader on other folks when it comes to your health care, if you can afford it," he said.
Of course this is a dodge. The administration claimed that the mandate was not a tax for political purposes but was a tax for legal purposes. Chief Justice John Roberts tied himself in knots to accept the argument Obama is now running away from. Between them, the solicitor general and the chief justice look as if they were too clever by 1.
What's objectionable about Obama's comment, however, is not "tax" or "penalty" or even "principle." It's the way he uses the word "freeloader."
Normally we think of a freeloader as somebody who sponges off others, which in the context of public policy means the government. A freeloader is an able-bodied welfare recipient, or someone who fakes a disability to collect Supplemental Security income, or who waits until his unemployment runs out before looking for a job.
Now, think about how the ObamaCare mandate tax is structured. As Roberts noted in his opinion for the court in NFIB v. Sebelius, "It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code. For taxpayers who do owe the payment, its amount is determined by such familiar factors as taxable income, number of dependents, and joint filing status."
The only people who pay the ObamaCare mandate tax are people who make a living. Actual freeloaders are exempt. What Obama calls a freeloader is someone who makes his own money and pays his taxes but does not spend his money in the government-approved way.
The Obama campaign hotly disputes Romney's contention that the president meant what he said. A "fact check" from the Obama-Biden "Truth Team" (formerly Attack Watch) claims that Romney "is taking President Obama's words out of context" to produce "a complete distortion." Here is the full context, as presented by the Truth Team:
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you've got a business, you didn't build that. Somebody else made that happen. The Internet didn't get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.
The Team then explains: "The President's full remarks show that the 'that' in 'you didn't build that' clearly refers to roads and bridges--public infrastructure we count on the government to build and maintain."
That's bunk, and not only because "business" is more proximate to the pronoun "that" and therefore its more likely antecedent. The Truth Team's interpretation is ungrammatical. "Roads and bridges" is plural; "that" is singular. If the Team is right about Obama's meaning, he shoudl have said, "You didn't build those."
Barack Obama is supposed to be the World's Greatest Orator, the smartest man in the world. Yet his campaign asks us to believe he is not even competent to construct a sentence.
Wednesday, June 27, 2012
Stimulus money went to cheats...
...and in other news, the sky is blue. Read the original here.
GAO: $1.4 billion in stimulus credits went to tax cheats
Stimulus cash bought homes
By Stephen Dinan
The Washington Times
Wednesday, June 27, 2012
Tax cheats were given $1.4 billion in government-backed mortgage loans under President Obama’s economic stimulus, and the government doled out at least an additional $27 million in tax credits to delinquents who took the first-time-homebuyer tax break, according to a government audit released Tuesday.
Under government rules, delinquent taxpayers are supposed to be ineligible for the mortgage insurance program unless they have reached a repayment agreement with the Internal Revenue Service. But theFederal Housing Administration didn’t have the right controls to weed out bad applications, said the Government Accountability Office, Congress‘ chief investigative arm.
That meant FHA insured $1.4 billion in mortgages for 6,327 borrowers who collectively owed $77.6 million in unpaid taxes, or an average of more than $12,000 each.
The auditors said that as a category, the tax cheats had foreclosure rates up to three times as high as other borrowers, which meant the delinquent taxpayers exposed the government to even greater risks.
“In the name of ‘stimulus,’ the federal government gave mortgage insurance to thousands of people we knew were tax cheats and had a bad track record paying their debts,” said Sen. Tom Coburn, Oklahoma Republican, who joined a bipartisan group of other lawmakers to request the investigation. “The federal government needlessly put taxpayers on the line to help tax cheats buy homes. Congress needs to ensure that tax cheats are no longer allowed to take advantage of FHA programs.”
In addition to the mortgages, the auditors found that more than half of the tax-delinquent borrowers claimed the first-time-homebuyers’ credit, worth up to $8,000.
GAO said there is no prohibition against someone claiming the credit, even though they still have unpaid tax bills. The credit is refundable, meaning taxpayers can get a check back from the government if the benefit exceeds their liability. IRS rules generally call for the agency to subtract any unpaid taxes from the refund, but in three of the nine cases that GAO analyzed in depth, it said the taxpayers had declared bankruptcy, meaning the IRS was prevented from docking the refunds.
The report was the GAO’s second study looking at tax cheats and the stimulus.
In the first report, GAO said thousands of contracts and grants were paid out under the American Recovery and Reinvestment Act to those with unpaid tax bills.
Mr. Obama pushed the $831 billion economic stimulus in early 2009 as a means of bolstering the faltering economy, and promised to use strict controls to cut fraud and abuse. At its peak in mid-2010, it was responsible for as many as 3.6 million jobs, but could have funded as few as 700,000, according to the Congressional Budget Office.
Part of the Recovery Act was aimed at shoring up the housing market, which included the first-time-homebuyer tax credit and the mortgage assistance, which let the FHA insure loans at a higher rate in high-cost housing markets.
About 1.7 million individuals claimed the tax credit, while FHA insured more than $20 billion in mortgages for 87,000 homeowners, thanks to the Recovery Act provisions.
Under a White House policy, buyers who are delinquent on their federal taxes are not supposed to receive the mortgage assistance, unless they have worked out a repayment agreement with the IRS. But FHA rules don’t prod private lenders to ask for that information, and the FHAdoesn’t have a system to work with the IRS to get that information.
Mr. Coburn joined Sens. Max Baucus, Montana Democrat; Carl Levin, Michigan Democrat; Chuck Grassley, Iowa Republican; and Orrin G. Hatch, Utah Republican, to request a review of the program.
“The stimulus-spending program was ill-conceived, with far too little oversight,” Mr. Grassley said. “It shouldn’t surprise anyone, unfortunately, that tax dollars have gone to tax cheats. It’s another one of many negative consequences of writing checks without enough checks and balances.”
Compounding the matter, those with tax problems are more likely to end up in foreclosure. Nearly a third of mortgage holders with unpaid taxes were “seriously delinquent” on their payments, and 6.3 percent had been foreclosed - a rate nearly three times higher than homeowners who were paid up with the IRS.
The Department of Housing and Urban Development accepted the report and will work with the IRS to try to get access to information that would help it cull tax cheats, Carol J. Galante, an acting assistant secretary, said in the department’s official response.
She said they also will try to clarify FHA rules so lenders are clear about the eligibility requirements for loans.
GAO: $1.4 billion in stimulus credits went to tax cheats
Stimulus cash bought homes
By Stephen Dinan
The Washington Times
Wednesday, June 27, 2012
Tax cheats were given $1.4 billion in government-backed mortgage loans under President Obama’s economic stimulus, and the government doled out at least an additional $27 million in tax credits to delinquents who took the first-time-homebuyer tax break, according to a government audit released Tuesday.
Under government rules, delinquent taxpayers are supposed to be ineligible for the mortgage insurance program unless they have reached a repayment agreement with the Internal Revenue Service. But theFederal Housing Administration didn’t have the right controls to weed out bad applications, said the Government Accountability Office, Congress‘ chief investigative arm.
That meant FHA insured $1.4 billion in mortgages for 6,327 borrowers who collectively owed $77.6 million in unpaid taxes, or an average of more than $12,000 each.
The auditors said that as a category, the tax cheats had foreclosure rates up to three times as high as other borrowers, which meant the delinquent taxpayers exposed the government to even greater risks.
“In the name of ‘stimulus,’ the federal government gave mortgage insurance to thousands of people we knew were tax cheats and had a bad track record paying their debts,” said Sen. Tom Coburn, Oklahoma Republican, who joined a bipartisan group of other lawmakers to request the investigation. “The federal government needlessly put taxpayers on the line to help tax cheats buy homes. Congress needs to ensure that tax cheats are no longer allowed to take advantage of FHA programs.”
In addition to the mortgages, the auditors found that more than half of the tax-delinquent borrowers claimed the first-time-homebuyers’ credit, worth up to $8,000.
GAO said there is no prohibition against someone claiming the credit, even though they still have unpaid tax bills. The credit is refundable, meaning taxpayers can get a check back from the government if the benefit exceeds their liability. IRS rules generally call for the agency to subtract any unpaid taxes from the refund, but in three of the nine cases that GAO analyzed in depth, it said the taxpayers had declared bankruptcy, meaning the IRS was prevented from docking the refunds.
The report was the GAO’s second study looking at tax cheats and the stimulus.
In the first report, GAO said thousands of contracts and grants were paid out under the American Recovery and Reinvestment Act to those with unpaid tax bills.
Mr. Obama pushed the $831 billion economic stimulus in early 2009 as a means of bolstering the faltering economy, and promised to use strict controls to cut fraud and abuse. At its peak in mid-2010, it was responsible for as many as 3.6 million jobs, but could have funded as few as 700,000, according to the Congressional Budget Office.
Part of the Recovery Act was aimed at shoring up the housing market, which included the first-time-homebuyer tax credit and the mortgage assistance, which let the FHA insure loans at a higher rate in high-cost housing markets.
About 1.7 million individuals claimed the tax credit, while FHA insured more than $20 billion in mortgages for 87,000 homeowners, thanks to the Recovery Act provisions.
Under a White House policy, buyers who are delinquent on their federal taxes are not supposed to receive the mortgage assistance, unless they have worked out a repayment agreement with the IRS. But FHA rules don’t prod private lenders to ask for that information, and the FHAdoesn’t have a system to work with the IRS to get that information.
Mr. Coburn joined Sens. Max Baucus, Montana Democrat; Carl Levin, Michigan Democrat; Chuck Grassley, Iowa Republican; and Orrin G. Hatch, Utah Republican, to request a review of the program.
“The stimulus-spending program was ill-conceived, with far too little oversight,” Mr. Grassley said. “It shouldn’t surprise anyone, unfortunately, that tax dollars have gone to tax cheats. It’s another one of many negative consequences of writing checks without enough checks and balances.”
Compounding the matter, those with tax problems are more likely to end up in foreclosure. Nearly a third of mortgage holders with unpaid taxes were “seriously delinquent” on their payments, and 6.3 percent had been foreclosed - a rate nearly three times higher than homeowners who were paid up with the IRS.
The Department of Housing and Urban Development accepted the report and will work with the IRS to try to get access to information that would help it cull tax cheats, Carol J. Galante, an acting assistant secretary, said in the department’s official response.
She said they also will try to clarify FHA rules so lenders are clear about the eligibility requirements for loans.
Thursday, June 21, 2012
Anyone surprised
When you aren't playing with your own money, you have no sense of obligation to spend it wisely. When was the last time the government spent money efficiently and intelligently? Seriously, why is anyone surprised that so much of the money was wasted and didn't accomplish what they said it would? Not only are the people making these policies and spending this money government bureaucrats, but in this administration, many of them come from academia as well. So that's twice removed reality. Read the original here.
$9 Billion in ‘Stimulus’ for Solar, Wind Projects Made 910 Final Jobs -- $9.8 Million Per Job
By Michael W. Chapman and Fred Lucas
June 20, 2012
(CNSNews.com) – The Obama administration distributed $9 billion in economic “stimulus” funds to solar and wind projects in 2009-11 that created, as the end result, 910 “direct” jobs -- annual operation and maintenance positions -- meaning that it cost about $9.8 million to establish each of those long-term jobs.
At the same time, those green energy projects also created, in the end, about 4,600 “indirect” jobs – positions indirectly supported by the annual operation and maintenance jobs -- which means they cost about $1.9 million each ($9 billion divided by 4,600).
Combined (910 + 4,600 = 5,510), the direct and indirect jobs cost, on average, about $1.63 million each to produce.
As explained in a report by the National Renewable Energy Laboratory, which is part of the U.S. Department of Energy, the American Recovery and Reinvestment Act (“economic stimulus”) of 2009 included Section 1603, a grant program run through the Treasury Department.
The 1603 program offered “renewable energy project developers a one-time cash payment” to reduce the need for green energy companies “to secure tax equity partners” and also help them to achieve “ ‘the near term goal of creating and retaining jobs’ in the renewable energy sector.”
The National Renewable Energy Laboratory (EREL) tracked the grant program from its inception in 2009 through Nov. 10, 2011. Its report is entitled, Preliminary Analysis of the Jobs and Economic Impacts of Renewable Energy Projects Supported by the 1603 Treasury Grant Program.
The report explains that the program provided “approximately $9.0 billion in funds to over 23,000 PV and large wind projects.” PV stands for photovoltaic, which is the method by which solar power is turned into electricity, usually with solar panels or solar cells. There were specifically 197 large wind projects and 23,692 PV projects that received funds, according to the EREL report.
For calculating the number of green jobs created, the EREL did not actually count the people working at the facilities but instead relied upon Jobs and Economic Development Impact, or JEDI, computer models.
In its summary, the EREL report states that for the 2009-11 timeframe there were an average 52,000-75,000 “direct and indirect jobs per year” created for the construction, installation, and related work on the wind and solar projects.
These were temporary jobs, construction and installation work at the facilities, not long-term positions at the green energy sites.
The number of these “indirect,” temporary construction jobs averaged between 43,000 and 66,000, according to the EREL, and the “direct” jobs “supporting the design, development, and construction/installation of systems” averaged out to about 9,400 per year.
For the operation and maintenance (O&M) of the photovoltaic and large wind systems, however, the report states there are “between 5,100 and 5,500 direct and indirect jobs per year on an ongoing basis over the 20- to 30-year estimated life of the systems.”
The report further clarifies that from that number there are 910 direct jobs and 4,200-4,600 indirect jobs per year.
The 910 jobs are “directly supporting the O&M of the systems” and that number “is significantly less than the number of [indirect] jobs supporting manufacturing and associated supply chains.”
Through the grant program, $9 billion was spent to, in the end, establish 910 jobs that will last upwards of 30 years. That means those jobs cost, in the end, about $9.8 million to create.
Add in the indirect jobs -- high estimate of 4,600 -- and there are 5,510 total jobs (direct and indirect). Starting with the $9 billion in grants, the end result to establish 5,510 jobs averages out to $1.63 million per job.
$9 Billion in ‘Stimulus’ for Solar, Wind Projects Made 910 Final Jobs -- $9.8 Million Per Job
By Michael W. Chapman and Fred Lucas
June 20, 2012
(CNSNews.com) – The Obama administration distributed $9 billion in economic “stimulus” funds to solar and wind projects in 2009-11 that created, as the end result, 910 “direct” jobs -- annual operation and maintenance positions -- meaning that it cost about $9.8 million to establish each of those long-term jobs.
At the same time, those green energy projects also created, in the end, about 4,600 “indirect” jobs – positions indirectly supported by the annual operation and maintenance jobs -- which means they cost about $1.9 million each ($9 billion divided by 4,600).
Combined (910 + 4,600 = 5,510), the direct and indirect jobs cost, on average, about $1.63 million each to produce.
As explained in a report by the National Renewable Energy Laboratory, which is part of the U.S. Department of Energy, the American Recovery and Reinvestment Act (“economic stimulus”) of 2009 included Section 1603, a grant program run through the Treasury Department.
The 1603 program offered “renewable energy project developers a one-time cash payment” to reduce the need for green energy companies “to secure tax equity partners” and also help them to achieve “ ‘the near term goal of creating and retaining jobs’ in the renewable energy sector.”
The National Renewable Energy Laboratory (EREL) tracked the grant program from its inception in 2009 through Nov. 10, 2011. Its report is entitled, Preliminary Analysis of the Jobs and Economic Impacts of Renewable Energy Projects Supported by the 1603 Treasury Grant Program.
The report explains that the program provided “approximately $9.0 billion in funds to over 23,000 PV and large wind projects.” PV stands for photovoltaic, which is the method by which solar power is turned into electricity, usually with solar panels or solar cells. There were specifically 197 large wind projects and 23,692 PV projects that received funds, according to the EREL report.
For calculating the number of green jobs created, the EREL did not actually count the people working at the facilities but instead relied upon Jobs and Economic Development Impact, or JEDI, computer models.
In its summary, the EREL report states that for the 2009-11 timeframe there were an average 52,000-75,000 “direct and indirect jobs per year” created for the construction, installation, and related work on the wind and solar projects.
These were temporary jobs, construction and installation work at the facilities, not long-term positions at the green energy sites.
The number of these “indirect,” temporary construction jobs averaged between 43,000 and 66,000, according to the EREL, and the “direct” jobs “supporting the design, development, and construction/installation of systems” averaged out to about 9,400 per year.
For the operation and maintenance (O&M) of the photovoltaic and large wind systems, however, the report states there are “between 5,100 and 5,500 direct and indirect jobs per year on an ongoing basis over the 20- to 30-year estimated life of the systems.”
The report further clarifies that from that number there are 910 direct jobs and 4,200-4,600 indirect jobs per year.
The 910 jobs are “directly supporting the O&M of the systems” and that number “is significantly less than the number of [indirect] jobs supporting manufacturing and associated supply chains.”
Through the grant program, $9 billion was spent to, in the end, establish 910 jobs that will last upwards of 30 years. That means those jobs cost, in the end, about $9.8 million to create.
Add in the indirect jobs -- high estimate of 4,600 -- and there are 5,510 total jobs (direct and indirect). Starting with the $9 billion in grants, the end result to establish 5,510 jobs averages out to $1.63 million per job.
Friday, March 23, 2012
POTUS claims Solyndra collapse not administration's fault; blames anyone else he can
Seriously, man up and take responsibility for your administration. This just sounds whiny and like he's trying to get out of the responsibility. Also, my opinion on a side note. This is $500 million of federal money just gone down the wishing well. All in all, not that significant for their $14 trillion budget. And he's whining this much. Yet Joe Biden wants us to believe that if the operation to get Osama went bad, he would step up and take responsibility? You don't think he'd throw Congress and Admiral McRaven and the Navy under the bus politically? I have no evidence that he would, but I believe that his past actions and statements tilt the argument that he would. Read the original here.
OBAMA ON SOLYNDRA LOAN: ‘THIS WAS NOT OUR PROGRAM’
BLAMES 'CONGRESS' AND 'THE CHINESE' FOR FIRM’S FAILURE
BY: Andrew Stiles - March 22, 2012 11:08 am
President Obama denied culpability for the failure of solar firm Solyndra in a radio interview on Tuesday, instead pinning the blame on Congress and the Chinese.
The loans initiative used to finance Solyndra was “not our program,” he told American Public Media in response to question about Solyndra’s bankruptcy and subsequent controversy.
“Understand, this was not our program per se,” Obama said. “Congress–Democrats and Republicans–put together a loan guarantee program…to help start-up companies get to scale.”
APM: With all respect, it was a gutsy move I think to come to a solar facility. Your administration has staked a lot on clean technology, green jobs – the biggest item most people know about that strategy is, of course, a company named Solyndra, which your administration gave loan guarantees to, then went bankrupt and has been the subject of many investigations. Are you doing your ‘all of the above’ strategy right if that’s what we have to show for it, Solyndra?
OBAMA: We are doing the all of the above strategy right. Obviously, we wish Solyndra hadn’t gone bankrupt. Part of the reason they did was because the Chinese were subsidizing their solar industry and flooding the market in ways that Solyndra couldn’t compete. But understand, this was not our program per se.
Congress–Democrats and Republicans–put together a loan guarantee program because they understood historically that when you get new industries–it’s easy to raise money for start-ups, but if you want to take them to scale sometimes there’s a lot of risk involved, and what the loan guarantee program was designed to do was to help start-up companies get to scale. And the understanding is that some companies are not going to succeed, some companies are going to do very well, but the portfolio as a whole ends up supporting the kind of innovation that helps make America successful in this innovative 21st century economy. Do I wish that Solyndra had gone bankrupt? Absolutely not. And obviously it’s heartbreaking it happened for the workers who were there.
Obama has previously argued that the Department of Energy program used to finance a $535 million federal loan guarantee to Solyndra “predates” his presidency.
That’s an exaggeration of the truth, according to FactCheck.org: “Solyndra’s loan guarantee came under another program created by the president’s 2009 stimulus for companies developing ‘commercially available technologies.’”
This entry was posted in Obama Administration, Video and tagged Solyndra. Bookmark thepermalink.
OBAMA ON SOLYNDRA LOAN: ‘THIS WAS NOT OUR PROGRAM’
BLAMES 'CONGRESS' AND 'THE CHINESE' FOR FIRM’S FAILURE
BY: Andrew Stiles - March 22, 2012 11:08 am
President Obama denied culpability for the failure of solar firm Solyndra in a radio interview on Tuesday, instead pinning the blame on Congress and the Chinese.
The loans initiative used to finance Solyndra was “not our program,” he told American Public Media in response to question about Solyndra’s bankruptcy and subsequent controversy.
“Understand, this was not our program per se,” Obama said. “Congress–Democrats and Republicans–put together a loan guarantee program…to help start-up companies get to scale.”
APM: With all respect, it was a gutsy move I think to come to a solar facility. Your administration has staked a lot on clean technology, green jobs – the biggest item most people know about that strategy is, of course, a company named Solyndra, which your administration gave loan guarantees to, then went bankrupt and has been the subject of many investigations. Are you doing your ‘all of the above’ strategy right if that’s what we have to show for it, Solyndra?
OBAMA: We are doing the all of the above strategy right. Obviously, we wish Solyndra hadn’t gone bankrupt. Part of the reason they did was because the Chinese were subsidizing their solar industry and flooding the market in ways that Solyndra couldn’t compete. But understand, this was not our program per se.
Congress–Democrats and Republicans–put together a loan guarantee program because they understood historically that when you get new industries–it’s easy to raise money for start-ups, but if you want to take them to scale sometimes there’s a lot of risk involved, and what the loan guarantee program was designed to do was to help start-up companies get to scale. And the understanding is that some companies are not going to succeed, some companies are going to do very well, but the portfolio as a whole ends up supporting the kind of innovation that helps make America successful in this innovative 21st century economy. Do I wish that Solyndra had gone bankrupt? Absolutely not. And obviously it’s heartbreaking it happened for the workers who were there.
Obama has previously argued that the Department of Energy program used to finance a $535 million federal loan guarantee to Solyndra “predates” his presidency.
That’s an exaggeration of the truth, according to FactCheck.org: “Solyndra’s loan guarantee came under another program created by the president’s 2009 stimulus for companies developing ‘commercially available technologies.’”
This entry was posted in Obama Administration, Video and tagged Solyndra. Bookmark thepermalink.
Sunday, August 21, 2011
Government Motors claims no responsibility for General Motors warranties
Remember when the President said that the "US will guarantee GM, Chrysler warranties..."? He may have to, as GM says it is not responsible to fix and redeem warranties for previous GM cars. Read the original here.
GM says bankruptcy excuses it from Impala repairs
Reuters.com
Fri Aug 19, 2011 3:47pm EDT
* New GM said not responsible to fix Impala made by old GM
* Suspension problem said to cause excessive tire wear
By Jonathan Stempel
NEW YORK, Aug 19 (Reuters) - General Motors Co (GM.N) is seeking to dismiss a lawsuit over a suspension problem on more than 400,000 Chevrolet Impalas from the 2007 and 2008 model years, saying it should not be responsible for repairs because the flaw predated its bankruptcy.
The lawsuit, filed on June 29 by Donna Trusky of Blakely, Pennsylvania, contended that her Impala suffered from faulty rear spindle rods, causing her rear tires to wear out after just 6,000 miles. [ID:nN1E7650CT]
Seeking class-action status and alleging breach of warranty, the lawsuit demands that GM fix the rods, saying that it had done so on Impala police vehicles.
But in a recent filing with the U.S. District Court in Detroit, GM noted that the cars were made by its predecessor General Motors Corp, now called Motors Liquidation Co or "Old GM," before its 2009 bankruptcy and federal bailout.
The current company, called "New GM," said it did not assume responsibility under the reorganization to fix the Impala problem, but only to make repairs "subject to conditions and limitations" in express written warranties. In essence, the automaker said, Trusky sued the wrong entity.
"New GM's warranty obligations for vehicles sold by Old GM are limited to the express terms and conditions in the Old GM written warranties on a going-forward basis," wrote Benjamin Jeffers, a lawyer for GM. "New GM did not assume responsibility for Old GM's design choices, conduct, or alleged breaches of liability under the warranty."
David Fink, Trusky's lawyer, declined to comment.
John Penn, a former president of the American Bankruptcy Institute who is not involved in the case, said the question of "successor liability" is common for manufacturing companies that go through bankruptcy.
"The fact it comes up now is not a surprise, as this type of issue was widely discussed during GM's bankruptcy," said Penn, now a partner at Haynes and Boone in Fort Worth, Texas. "The court will need to evaluate the claims to see if they fit within any cubbyhole of liability that New GM assumed."
GM said an argument similar to Trusky's failed this year in a case involving its OnStar security and navigation product.
"There are no specific factual allegations that New GM -- as opposed to Old GM -- did anything at all in relation to her vehicle," Jeffers wrote. "Plaintiff here is trying to saddle new GM with the alleged liability and conduct of old GM."
In late afternoon trading, GM shares were down $1.62 at $21.98 on the New York Stock Exchange.
The case is Trusky v. General Motors Co, U.S. District Court, Eastern District of Michigan, No. 11-12815. (Editing by Robert MacMillan
GM says bankruptcy excuses it from Impala repairs
Reuters.com
Fri Aug 19, 2011 3:47pm EDT
* New GM said not responsible to fix Impala made by old GM
* Suspension problem said to cause excessive tire wear
By Jonathan Stempel
NEW YORK, Aug 19 (Reuters) - General Motors Co (GM.N) is seeking to dismiss a lawsuit over a suspension problem on more than 400,000 Chevrolet Impalas from the 2007 and 2008 model years, saying it should not be responsible for repairs because the flaw predated its bankruptcy.
The lawsuit, filed on June 29 by Donna Trusky of Blakely, Pennsylvania, contended that her Impala suffered from faulty rear spindle rods, causing her rear tires to wear out after just 6,000 miles. [ID:nN1E7650CT]
Seeking class-action status and alleging breach of warranty, the lawsuit demands that GM fix the rods, saying that it had done so on Impala police vehicles.
But in a recent filing with the U.S. District Court in Detroit, GM noted that the cars were made by its predecessor General Motors Corp, now called Motors Liquidation Co or "Old GM," before its 2009 bankruptcy and federal bailout.
The current company, called "New GM," said it did not assume responsibility under the reorganization to fix the Impala problem, but only to make repairs "subject to conditions and limitations" in express written warranties. In essence, the automaker said, Trusky sued the wrong entity.
"New GM's warranty obligations for vehicles sold by Old GM are limited to the express terms and conditions in the Old GM written warranties on a going-forward basis," wrote Benjamin Jeffers, a lawyer for GM. "New GM did not assume responsibility for Old GM's design choices, conduct, or alleged breaches of liability under the warranty."
David Fink, Trusky's lawyer, declined to comment.
John Penn, a former president of the American Bankruptcy Institute who is not involved in the case, said the question of "successor liability" is common for manufacturing companies that go through bankruptcy.
"The fact it comes up now is not a surprise, as this type of issue was widely discussed during GM's bankruptcy," said Penn, now a partner at Haynes and Boone in Fort Worth, Texas. "The court will need to evaluate the claims to see if they fit within any cubbyhole of liability that New GM assumed."
GM said an argument similar to Trusky's failed this year in a case involving its OnStar security and navigation product.
"There are no specific factual allegations that New GM -- as opposed to Old GM -- did anything at all in relation to her vehicle," Jeffers wrote. "Plaintiff here is trying to saddle new GM with the alleged liability and conduct of old GM."
In late afternoon trading, GM shares were down $1.62 at $21.98 on the New York Stock Exchange.
The case is Trusky v. General Motors Co, U.S. District Court, Eastern District of Michigan, No. 11-12815. (Editing by Robert MacMillan
Tuesday, August 2, 2011
Overreaction? What do you think?
From the fed's reaction, you'd think the kid was handling fissile material, or at the very least a dangerous animal like a black mamba or a honey badger (you don't mess with the honey badger!). Is this an over reaction on the the part of the Department of Fish and Wildlife or should you teach your kids to not help a baby bird? Read the original here.
Woodpecker-Saving Daughter Costs Mom $500, Possible Jail Time
FREDERICKSBURG, Va. (WUSA) -- Eleven-year-old aspiring veterinarian, Skylar Capo, sprang into action the second she learned that a baby woodpecker in her Dad's backyard was about to be eaten by the family cat.
"I've just always loved animals," said Skylar Capo. "I couldn't stand to watch it be eaten."
Skylar couldn't find the woodpecker's mother, so she brought it to her own mother, Alison Capo, who agreed to take it home.
"She was just going to take care of it for a day or two, make sure it was safe and uninjured, and then she was going to let it go," said Capo.
But on the drive home, the Capo family stopped at this Lowes and they brought the bird inside because of the heat. That's when they were confronted by a woman from the Department of Fish and Wildlife.
"She was really nervous. She was shaking. Then she pulled out a badge," said Capo.
The problem was that the woodpecker is a protected species under the Federal Migratory Bird Act. Therefore, it's illegal to take or transport a baby woodpecker. The Capo's say they had no idea.
"I was a little bit upset because I didn't want my mom to get in trouble," said Skylar.
So as soon as the Capo's got home, they opened the cage, the bird flew away, and they reported it to the Department of Fish and Wildlife.
"They said that's great, that's exactly what we want to see," said Capo. "We thought that we had done everything that we could possibly do."
But two weeks later, that same woman from the Department of Fish and Wildlife showed up at the Capo's front door. This time, Capo says she was accompanied by a state trooper. Alison Capo was cited for unlawfully taking a migratory bird and now she's been slapped with a $535 fine.
"I feel harassed and I feel angry," said Capo.
"Kids should be able to save a baby bird and not end up going home crying because their mom has to pay $535. I just think that's crazy," said Skylar.
9NEWS NOW has tried repeatedly to contact the Department of Fish and Wildlife. So far, they have not returned any of our calls. If convicted, Capo could face up to a year behind bars.
Woodpecker-Saving Daughter Costs Mom $500, Possible Jail Time
FREDERICKSBURG, Va. (WUSA) -- Eleven-year-old aspiring veterinarian, Skylar Capo, sprang into action the second she learned that a baby woodpecker in her Dad's backyard was about to be eaten by the family cat.
"I've just always loved animals," said Skylar Capo. "I couldn't stand to watch it be eaten."
Skylar couldn't find the woodpecker's mother, so she brought it to her own mother, Alison Capo, who agreed to take it home.
"She was just going to take care of it for a day or two, make sure it was safe and uninjured, and then she was going to let it go," said Capo.
But on the drive home, the Capo family stopped at this Lowes and they brought the bird inside because of the heat. That's when they were confronted by a woman from the Department of Fish and Wildlife.
"She was really nervous. She was shaking. Then she pulled out a badge," said Capo.
The problem was that the woodpecker is a protected species under the Federal Migratory Bird Act. Therefore, it's illegal to take or transport a baby woodpecker. The Capo's say they had no idea.
"I was a little bit upset because I didn't want my mom to get in trouble," said Skylar.
So as soon as the Capo's got home, they opened the cage, the bird flew away, and they reported it to the Department of Fish and Wildlife.
"They said that's great, that's exactly what we want to see," said Capo. "We thought that we had done everything that we could possibly do."
But two weeks later, that same woman from the Department of Fish and Wildlife showed up at the Capo's front door. This time, Capo says she was accompanied by a state trooper. Alison Capo was cited for unlawfully taking a migratory bird and now she's been slapped with a $535 fine.
"I feel harassed and I feel angry," said Capo.
"Kids should be able to save a baby bird and not end up going home crying because their mom has to pay $535. I just think that's crazy," said Skylar.
9NEWS NOW has tried repeatedly to contact the Department of Fish and Wildlife. So far, they have not returned any of our calls. If convicted, Capo could face up to a year behind bars.
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