Goolsbee to Chair White House Council of Economic Advisors
On Friday, President Obama named a longtime adviser, Austan Goolsbee, to be the chairman of the White House Council of Economic Advisers. Goolsbee is a former University of Chicago economics professor and one of three economists currently serving on the council. He previously was confirmed by the Senate and will not need to be reconfirmed. Goolsbee, 41, replaces Christina Romer, who has returned to her teaching position at the University of California, Berkeley.
Clash Over Tax Cuts Extension
With the Bush tax cuts set to expire at the end of 2010, President Obama, speaking at a White House news conference on Friday, proposed extending tax cuts for families earning less than $250,000 a year while allowing taxes to rise for those with higher incomes. However, the President stopped short of promising a veto should Congress send him legislation extending, perhaps temporarily, tax cuts for everyone. Republicans have proposed extending the tax cuts for all income brackets. The cost to the Treasury of extending the top two income tax bracket rates, which the Bush tax cuts lowered from 39.6% to 35% and 36% to 33%, would be $700 billion over 10 years.
Stimulus Round Two
During a speech Wednesday, President Obama unveiled his new proposal to allow companies to expense 100 percent of their investments in new plants and equipment through the end of next year in effort to spur job creation. The President also announced a plan to invest $50 billion in new roads and railways, as well as permanently extend a tax credit, valued at close to $100 billion over 10 years, for businesses that conduct new research and development.
Likely Deal on Global Bank Capital Standards
Bank regulators from more than two dozen countries met in Switzerland on Tuesday and plan to meet again Sunday, where they could reach the framework for a deal on new capital requirements for the world’s largest banks, which could force financial institutions to maintain larger capital reserves than was expected weeks ago. The talks are being led by a global consortium called the Basel Committee on Banking Supervision, and the new rules are known as “Basel III.” The probable agreement would have a direct impact on the world’s largest financial companies, including Barclays PLC, Deutsche Bank AG, HSBC Holdings, J.P. Morgan Chase & Co., and Bank of America Corp. In addition to tougher regulatory standards, these companies and others could face new limits on their ability to pay dividends to shareholders based on their balance sheets. Many bankers had expected the new rules to require them to hold modestly higher cushions against future losses. But officials appear poised to demand larger reserves, which they believe will prevent a future financial crisis, and reserves of higher quality. Under the proposed plan, banks would be required to hold common equity equivalent to about 4.5% to 5% of their assets and an additional 2% to 2.5% of common equity during better economic periods. Tier 1 capital requirements are also set to rise to between 5.5% and 6% with an additional 3% buffer. Regulators are expected to phase in new rules between 2013 and 2018.
If you have any questions regarding any of these issues, please contact:
Matt Jessee, Policy Advisor