Posted by Robert Winnett, and James Kirkup · February 22, 2012 10:35 AM
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The amount of income tax paid fell sharply last month in the first formal indication that the new 50p higher rate is not raising the expected amount of revenue.
The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period.
Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate. The figures will add to pressure on the Coalition to drop the levy amid fears it is forcing entrepreneurs to relocate abroad.
The self-assessment returns from January, when most income tax is paid by the better-off, have been eagerly awaited by the Treasury and government ministers as they provide the first evidence of the success, or failure, of the 50p rate. It is the first year following the introduction of the 50p rate which had been expected to boost tax revenues from self-assessment by more than £1billion.
Posted by Jack Gillum · February 21, 2012 11:23 AM
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An unmistakable dynamic is playing out in the money game among Republican presidential candidates: New "super" political action committees are growing more powerful than the campaigns they support.
For two of the GOP front-runners, their supportive super PACs raised more money and have more cash left in the bank than the candidates' own campaigns. Helping their efforts are major financial gifts from wealthy business executives, whose contributions can be essential to the groups' continued operations.
Mitt Romney-leaning Restore Our Future and Newt Gingrich-supportive Winning Our Future raised a combined $17 million last month and spent nearly $24 million during that same period. That financial strength allowed the groups to splash the airwaves in key primary states with millions of dollars in TV ads.
The proliferation of new super PACs continues to underscore how the groups, which can raise and spend unlimited sums, are influencing the race. The groups' fundraising last month offers a periodic behind-the-scenes glimpse into the identities of the rich supporters who will help elect the next president, along with details on how the millions of dollars they donated have been spent.
Restore Our Future, which had $16 million cash on hand, has been boosted by more than two dozen repeat donors. Winning Our Future, which had $2.4 million in the bank, is largely supported by casino mogul Sheldon Adelson and his wife.
Meanwhile, Romney raised $6.5 million last month and had $7.7 million left over for his presidential bid, while Gingrich's presidential campaign raised $5.5 million during the same period and had about $1.8 million in cash remaining.
The super PACs, as well as other groups supporting other candidates and the individual campaigns, were required to disclose how much they raised and the identities of their donors in reports filed with the Federal Election Commission by midnight Monday. Those reports provided a snapshot of fundraising for President Barack Obama's early campaign and for Republican candidates as they battled during important primary elections in January.
During the month, GOP candidates Gingrich and Rick Santorum had briefly surged ahead of Romney but trailed the former Massachusetts governor in fundraising. Since then, Santorum has climbed remarkably in polls while Gingrich's support has eroded just as stunningly following the former House speaker's disappointing showing in Florida's primary.
Restore Our Future has been a boon for Romney, who has benefited greatly from the group's TV ads attacking Gingrich in particular. Such ads were purchased thanks to the financial help of repeat donors, including Marriott International Chairman J.W. Marriott Jr., who has given the super PAC $750,000 to date.
The super PAC also reported new donors, including Hewlett-Packard CEO Meg Whitman. Romney mentored Whitman, recently an unsuccessful candidate for California governor, during the 1980s at Boston-based Bain & Co., the private equity firm Romney headed. Whitman's $100,000 check to Restore Our Future came days after she joined Romney at a celebration of his victory in the New Hampshire primary.
Restore Our Future counted on continued support from at least 30 repeat donors who, along with new contributors, gave a combined $6.6 million in January, according to a review of the reports by The Associated Press.
Meanwhile, Winning Our Future's $11 million in contributions during the same period came almost exclusively from Adelson, a friend of Gingrich's and a staunch supporter of Israel. Adelson and his wife, Miriam, each gave $5 million to the super PAC in January – a move that helped keep Gingrich's struggling campaign alive.
Other GOP-leaning super PACs reported major contributions.
Endorse Liberty, the group supporting Texas Rep. Ron Paul, reported roughly $2.4 million in donations, including $1.7 from the billionaire founder of PayPal, Peter Thiel of San Francisco. Thiel, who runs a hedge fund, is a libertarian who has supported Republican causes and candidates and also has donated to California's marijuana legalization ballot measure.
Obama's campaign on Friday reported raising a combined $29.1 million in January among the campaign, the Democratic National Committee and other joint fundraising committees. The major super PAC backing Obama, Priorities USA Action, raised only $58,000 last month – mostly from a $50,000 contribution by Chicago businessman John Rogers – underscoring why Obama encouraged his supporters recently to give to the super PAC.
The reports likely will rekindle criticism of the groups, which were made possible under a 2010 Supreme Court ruling in the Citizens United case. The super PACs must legally remain independent from the candidates they support, but many are staffed with former campaign aides who have intimate knowledge of the campaigns' strategies.
Late Friday, the Supreme Court put on hold a Montana case that bore striking similarities. Two justices said the newest case provides an opportunity for the court to reconsider whether millionaires and billionaires should be allowed to continue pouring millions of dollars into the presidential election.
Posted by VICTORIA MCGRANE And JON Hilsenrath · February 21, 2012 11:09 AM
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The Federal Reserve has operated almost entirely behind closed doors as it rewrites the rule book governing the U.S. financial system, a stark contrast with its push for transparency in its interest-rate policies and emergency-lending programs.
While many Americans may not realize it, the Fed has taken on a much larger regulatory role than at any time in history. Since the Dodd-Frank financial overhaul became law in July 2010, the Fed has held 47 separate votes on financial regulations, and scores more are coming. In the process it is reshaping the U.S. financial industry by directing banks on how much capital they must hold, what kind of trading they can engage in and what kind of fees they can charge retailers on debit-card transactions.
The Fed is making these sweeping changes—the most dramatic since the Great Depression—almost completely without public meetings. Rather than discussing rules and voting in public, as is done at other agencies with which the Fed often collaborates, Fed Chairman Ben Bernanke and the Fed's four other governors have held just two public meetings since July 2010. On 45 of 47 of the draft or final regulatory measures during that period, they have emailed their votes to the central bank's secretary.
The votes, in turn, weren't publicly disclosed until last week, after The Wall Street Journal requested the information for this article. On Feb. 14, for the first time, the Fed posted on its website the names of the Fed governors voting for or against each closed-door regulatory action on Dodd-Frank since July 2010, when that law was enacted.
The Fed isn't breaking any laws by not having open meetings. But it is breaking from a long tradition of airing regulatory matters at open meetings. Bipartisan critics—including lawmakers and former regulators—say the Fed's cloistered approach deprives the public of insight into how rules are being written and makes it harder for Congress and others to hold them accountable for their decisions.
"People have a right to know and hear the discussion and hear the presentations and the reasoning for these rules," Sheila Bair, the former chairwoman of the Federal Deposit Insurance Corp., said in an interview. "All of the other agencies which are governed by boards or commissions propose and approve these rules in public meetings," she said. "I think it would be in the Fed's interest to do so as well."
The Fed's recent approach to writing financial regulations is very different from its practice in the 1980s and 1990s, when it held as many as 31 public meetings a year, according to data provided by the Fed. The governors publicly discussed not only regulations, but also obscure matters, like how much to spend on portraits of former chairmen. That began slowing in the late 1990s and fell sharply in the 2000s, and now such meetings rarely occur.
Fed officials contend they allow plenty of sunlight into their regulatory deliberations, but open meetings, which tend to be scripted and are sometimes perfunctory, don't always add value to the process. Ever-growing demands on governors' time has made it harder to coordinate schedules to allow for frequent meetings than in past decades, they add.
The Fed's closed-door process has obscured internal disagreement on at least one big issue. Last October, Fed Governor Sarah Bloom Raskin dissented when the Fed issued a proposed regulation implementing the controversial Volcker rule, which would restrict U.S. banks from making bets with their own capital.
Ms. Raskin's dissent, which she cast by email, wasn't publicly disclosed by the Fed until Feb. 14. Neither she nor the central bank has publicly explained her reasons for dissenting to the draft rule, which the Fed is writing with several other regulators.
Ms. Raskin said in an interview that she was concerned that the draft rule, mandated by Dodd-Frank and named for former Fed Chairman Paul Volcker, would be too unwieldy for banks to comply with and for regulators to enforce. She also worried that some of the exemptions were written too broadly. She said she had ample opportunity to talk through her views during the drafting process.
Her dissent is significant because regulators are still writing the rule and her views could inform banks, industry groups and others as they engage with the Fed to shape the measure, say veterans of the regulatory process. The deadline for comments on the Volcker proposal was Feb. 13, however, so it is too late for letters to be informed by her dissent. "I would have liked to have heard that discussion," said Sen. Bob Corker (R., Tenn.), a leading critic of the Volcker rule, when informed of Ms. Raskin's dissent.
The official directing the Fed's rule-writing effort, Daniel Tarullo, a governor appointed by President Barack Obama, said the central bank should have disclosed Ms. Raskin's dissenting opinion in the Volcker rule. "I can't think of any justification" for not disclosing Ms. Raskin's dissent, he said in an interview before the vote tallies were posted on the website. "When there is a dissent from any vote it has got to be noted," he said, and the practice of not publishing such internal dissents "has got to be changed in my view."
More broadly, Mr. Tarullo said open meetings aren't always the most effective means to increasing public understanding, and they aren't a gauge of regulators' work. "You can have a scripted meeting that does not show any engagement at all," Mr. Tarullo said.
Open meetings could also strain the already busy schedules of top Fed officials. The Fed currently has 250 separate rule-writing projects under way. "Compared to other waves of rule-making this is a tsunami," said John Weinberg, head of research at the Federal Reserve Bank of Richmond. The seven-member Fed board currently has two vacancies.
Mr. Tarullo said he has asked for open meetings on several final rules. A request from any governor means an open meeting must be held.
The Fed's method of writing rules for the financial industry contrasts with the way its policy committee—the Federal Open Market Committee, comprising the seven Fed governors and five Reserve Bank presidents—sets interest rates. Although their sessions are closed to the public, that group has regularly scheduled meetings on interest rates and in-person votes, intense discussion and prompt disclosure about how individuals voted and the reasons for any dissent. Mr. Bernanke has pushed the Fed to be more open on interest-rate policy, by making public its internal economic and interest-rate projections. He holds quarterly news conferences to explain the committee's decisions and thinking.
"As an agent of the government, a central bank must be accountable in the pursuit of its mandated goals, responsive to the public and its elected representatives, and transparent in its policies," Mr. Bernanke said about monetary policy-making in a 2010 speech.
Federal Reserve officials argue that their rule-writing process is already transparent. The Fed generally gives the public 60 to 90 days to comment on its proposed measures, longer than in the past. Banks and others interested in Fed rule-writing say they have frequent closed-door meetings with Fed officials to express their views. Participants in those meetings are disclosed on the Fed's website, a new practice adopted after the passage of Dodd-Frank.
Fed officials say they are called to testify before Congress and are grilled on the status of controversial regulations as they are writing them.
Mr. Tarullo said the Fed has been more transparent on regulatory issues in other ways. For instance, in 2009 the Fed disclosed details of its findings from "stress tests" on the nation's largest banks to determine their ability to withstand severe strains in the financial system. It plans to publish results from tests being done this year, too.
The Fed's approach to regulatory rule-writing is nevertheless striking in the wake of demands by Congress and the Supreme Court in 2010 that forced the Fed to disclose which banks got its emergency loans during the financial crisis.
And it differs from that of other top financial regulators. The Federal Deposit Insurance Corp., the Securities and Exchange Commission and the Commodity Futures Trading Commission, each governed by a board or a commission, have all held open meetings on most of the draft and final rules they have considered, at times with debate and public dissent, according to their websites and agendas.
Some Fed officials privately complain that the more public rule-writing approach at other agencies is often inefficient. The challenge in scheduling meetings, they say, is complicated by the fact that many rules are being written by several agencies at the same time.
"For [the Fed] to be accountable, they've got to air and discuss and debate their viewpoints," said Sen. Richard Shelby of Alabama, the top-ranking Republican on the Senate Banking Committee, who supported stripping the Fed of its supervisory authority when Congress was writing Dodd-Frank. The Fed fought hard to keep its powers. "The Fed's record shows, among other things, that it's not infallible. Look at the housing crisis," he said.
Under federal "sunshine" laws, no more than three Fed board members can meet without formal notice and opening the gathering to the public, unless it meets one of several exemptions. For instance, meetings on the supervision of banks and other financial institutions for which the Fed is responsible can be closed because the discussion includes confidential information about specific companies. But the Fed governors don't regularly meet for discussions on supervisory matters either.
The governors do meet on monetary policy—another exemption from sunshine laws. Out of 61 closed-door meetings held since the start of 2010, the vast majority have been on that topic. They have met 10 times over the same period to discuss supervisory issues, according to an analysis of agendas on the Fed website.
Michael Bradfield, who served as Fed general counsel between 1981 and 1989, said he is troubled by the infrequency with which the Fed board convenes meetings, closed or open, to consider supervisory matters. The governors are in effect delegating much of their supervisory authority to their staff, he said.
"Governors have the responsibility and they should be actively involved and not merely looking at staff documents in their offices," Mr. Bradfield said. He recalled numerous occasions when he was at the Fed and then-Chairman Volcker changed the board's view on an issue through "vigorous discussion" at almost weekly meetings devoted to bank supervisory issues.
"It makes a big difference if you sit down at a table and discuss things," he said.
The Fed's rule-writing process works like this: Teams of Fed staff write long initial drafts of rules and send governors summaries called "term sheets." With those term sheets as a guide, Fed staff meet with governors, usually one at a time, to present options and solicit feedback. For rules dealing with the biggest banks, Mr. Tarullo generally decides when a rule is ready to go to the full board for a vote. The Fed has approved 47 regulatory measures since late 2010, according to law firm Davis Polk & Wardwell LLP.
The Volcker rule vote was the only closed-door vote in which a governor formally dissented, according to Fed records. But some observers believe open meetings could reveal more nuanced differences. "Do they all have the same view every day? Obviously not. Do they have the same approach to economics? Obviously not," said Mr. Shelby, the Alabama senator.
Other regulators have recently moved toward greater transparency. The CFTC, for instance, has publicly discussed more than 90% of the 60 or so proposed Dodd-Frank rules it has issued and all but a handful of the final rules, Gary Gensler, the agency's chairman estimated. That is after years of practically no open meetings before Mr. Gensler arrived in 2009.
The CFTC also has convened more than a dozen public roundtables—several with the SEC—in which staff and market participants debate aspects of major rule-making, all streamed live to the public via the Internet.
The FDIC has opened up meetings of an advisory committee created to counsel the agency on the new power to seize and dismantle large, failing financial firms, a central plank of Dodd-Frank law. At its daylong Jan. 25 meeting, FDIC staff made presentations on how they see key aspects of its new authority working. They fielded questions and criticism from advisory members—financial executives, former regulators and academics. Fed staff attended but didn't speak.
Posted by Usa Today · February 18, 2012 3:36 PM
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President Obama, who said last month that divisions in Congress are "too deep" to tackle climate change, bypassed Capitol Hill again this week with another effort to reduce climate-warming emissions.
Secretary of State Hillary Rodham Clinton announced Thursday, accompanied by officials from Bangladesh, Canada, Ghana, Mexico and Sweden, a joint effort to curb the short-lived emissions of pollutants including soot (also called black carbon), methane and hydrofluorocarbons that account for 30% to 40% of global warming. The United States plans to contribute $12 million and Canada $3 million over two years to begin the project, which will be run by the United Nations Environment Program.
"One of the benefits of focusing on pollutants that are short-lived is, if we can reduce them significantly, we will have a noticeable effect on our climate in relatively short order," Clinton said at the State Department announcement. Scientists estimate that cutting these emissions can help prevent millions of deaths from pollution and lower global temperatures 0.5 degrees Celsius by 2050.
"Millions die annually from constantly breathing in black carbon soot that comes from cookstoves in their own homes, from diesel cars and trucks on their roads, from the open burning of agricultural waste in their fields," Clinton said. "Furthermore, methane – a greenhouse gas more than 20 times more potent than carbon dioxide – can also be an abundant source of energy if we capture it instead of just venting it into the air or flaring it."
In a recent study in Science, an international team of 24 scientists led by NASA climate modeler Drew Shindell identified 14 methane and black carbon control measures that include installing filters on diesel engines and capturing methane from oil and gas wells.
John Podesta, chairman of the board of the Center for American Progress, welcomed Clinton's initiative but said it's not the first time the Obama administration has tried to reduce these pollutants. In a review article, he said a handful of countries have blocked in the last few years an effort by the U.S., Mexico and Canada to reduce the emissions of hydrofluorocarbons.
In the announcement, Clinton said the Obama administration is taking other steps, too, to address climate change. She cited its efforts to double the fuel economy of cars and trucks by 2025, boost the energy efficiency of commercial buildings and home appliances, generate more power from renewable sources and put a million electric vehicles on the road by 2015.
Last month, in his State of the Union address, Obama mentioned "climate change" only once -- to say that divisions were too deep " right now" in Congress to deal with the issue. The House of Representatives passed a broad plan, which he supported, to reduce greenhouse gas emissions in 2009 but the effort died in the Senate.
Posted by Carol D. Leonnig and Joe Stephens · February 16, 2012 12:42 PM
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Sanjay Wagle was a venture capitalist and Barack Obama fundraiser in 2008, rallying support through a group he headed known as Clean Tech for Obama.
Shortly after Obama’s election, he left his California firm to join the Energy Department, just as the administration embarked on a massive program to stimulate the economy with federal investments in clean-technology firms.
He was one of several players in venture capital, which was providing financial backing to start-up clean-tech companies, who moved into the Energy Department at a time when the agency was seeking outside expertise in the field. At the same time, their industry had a huge stake in decisions about which companies would receive government loans, grants and support.
During the next three years, the department provided $2.4 billion in public funding to clean-energy companies in which Wagle’s former firm, Vantage Point Venture Partners, had invested, a Washington Post analysis found. Overall, the Post found that $3.9 billion in federal grants and financing flowed to 21 companies backed by firms with connections to five Obama administration staffers and advisers.
Obama’s program to invest federal funds in start-up companies — and the failure of some of those companies — is becoming a rallying cry for opponents in the presidential race. Mitt Romney has promised to focus on Obama’s “record” as a “venture capitalist.” And in ads and speeches, conservative groups and the Republican candidates are zeroing in on the administration’s decision to extend $535 million to the now-shuttered solar firm Solyndra and billions of dollars more to clean-tech start-ups backed by the president’s political allies.
White House officials stress that staffers and advisers with venture capital ties did not make funding decisions related to these companies. But e-mails released in a congressional probe of Obama’s clean-tech program show that staff and advisers with links to venture firms informally advocated for some of those companies.
David Gold, a venture capitalist and critic of Obama’s investments in clean tech, said that even if staffers had been removed from the final decision-making, they had the kind of inside access to exert subtle influence.
“To believe those quiet conversations don’t happen in the hallways — about a project being in a certain congressman’s district or being associated with a significant presidential donor, is naive,” said Gold, who once worked at the Office of Management and Budget. “When you’re putting this kind of pressure on an organization to make decisions on very big dollars, there’s increased likelihood that political connections will influence things.”
Energy Department spokesman Damien LaVera said the companies won awards based on merit, not political connections. He said the staffers and advisory board members reviewed by the Post had no role in funding decisions, nor did they have any personal financial stake in the companies. One of those administration advisers had first been appointed to his position by the Bush administration, LaVera said.“As is evident from the 10-month long congressional investigation into Solyndra, Energy Department loans and grants are decided on the merits,” White House spokesman Eric Schultz said. “What’s more, these are all professionals with expertise in clean-energy science, finance or both — but none of them play a decisional role in DOE awards and none of them are in positions of regulating the industry.”
During the 2008 campaign, the venture capital industry lined up behind Obama as he vowed to spur clean-technology development. Obama raised more than twice the venture capital contributions of his opponent, Republican candidate John McCain.
Known for making billions of dollars in the 1990s on Internet startups, venture firms in 2006 were rapidly switching to invest in clean tech. Legendary venture partner John Doerr, a leading early investor in Google and Amazon, that year called the clean-energy sector the next great profit center, “the mother of all markets.”
With the 2008 economic crisis, new private investment in fledgling clean-tech companies withered. But passage of the $787 billion stimulus package offered new opportunities to launch and grow those firms, with $80 billion set aside for clean energy and energy-efficiency efforts.
Suddenly flush with cash, the Energy Department was under orders to ramp up quickly and get money out to promising companies. The administration tapped industry players to take on key Energy Department roles, both as agency staffers and outside advisers on agency boards.
Wagle, then 38, took a job as a stimulus adviser in the agency’s recovery act office. Officials say his role did not involve making funding decisions for companies tied to Vantage Point.
Private investors cheered the administration for hiring industry colleagues. In a 2009 article, venture firm leader Jim Matheson said Wagle, along with another Washington-bound venture capitalist, David Danielson, would help ensure commercial successes from “the steady flow of dollars coming out of D.C.”
Wagle’s former employer had invested in several companies that received federal money: Brightsource, which won a $1.6 billion federal loan for a solar-generating plant; Tesla Motors, which won a $465 million loan to build electric cars; and biofuels firm Mascoma, which in 2011 received $80 million for a Michigan ethanol plant.
Wagle recently returned to the California venture capital industry to work as an investor and clean-tech adviser. Reached at his home, he declined to comment. Vantage Point Venture Partners, renamed Vantage Point Capital Partners, did not respond to requests for comment.
Danielson, formerly of General Catalyst, joined an Energy Department office whose mission was to fund breakthrough energy technologies. Officials say he had no role in arranging $105 million in funding for three General Catalyst portfolio firms.
David Sandalow, a former Clinton administration official and Brookings Institution fellow, had been paid $239,000 for consulting work for a venture capital firm, Good Energies, in 2008 before joining the Energy Department as assistant secretary for policy and international affairs, his disclosure form shows.
A Good Energies-backed firm, SolarReserve, won a $737 million agency loan. Officials say Sandalow played no role in arranging it and LaVera, speaking on behalf of Sandalow, said the assistant secretary had no financial interest in Good Energies or SolarReserve.
The Energy Department came under criticism from Republicans earlier this year when agency e-mails raised questions about a possible conflict of interest involving Steven J. Spinner, a former department loan adviser who disclosed that his wife worked for Wilson Sonsini, a Silicon Valley law firm that handled funding applications for several clean-tech companies.
One of the firm’s clients was Solyndra. Republicans have accused the Obama administration of favoring the risky company because its leading investor was tied to a major Obama donor.
Wilson Sonsini had its own connection to the White House: the firm’s chief executive, John Roos, was a top bundler for Obama’s 2008 campaign.
Before joining the administration, Spinner, a venture investor and start-up adviser, also helped raise $500,000 for Obama as a member of his national campaign finance committee. He has pledged to raise a half-million dollars or more for Obama’s reelection effort.
Once inside the agency, Spinner agreed not to discuss loan matters involving Wilson Sonsini clients. But e-mails show he urged career officials to resolve delays in the Solyndra loan, and also defended the financial prospects of Solyndra to a White House deputy before its federal loan was approved.
Spinner left the Energy Department in the fall of 2010. He did not respond to requests for comment. The department said Spinner was not involved in the company’s application review or loan approval.
A Wilson Sonsini spokesman said the firm does not believe its employment of Spinner’s wife influenced Energy Department decisions.
Investors as advisers
Thousands of agency and White House e-mails released as part of the Solyndra investigation show that venture capitalists who held advisory roles with the Energy Department were given access to Obama’s top advisers.
Steve Westly, an Obama fundraising bundler for both his 2008 and 2012 campaigns, is a founder of the venture firm Westly Group and served part time on Energy Secretary Steven Chu’s advisory board.
The e-mails show that Westly communicated with senior White House officials, including Obama adviser Valerie Jarrett, voicing concerns about the president’s planned appearance at Solyndra.
Westly’s firm also fared well in the agency’s distribution of loans and grants. Its portfolio companies received $600 million in funding. LaVera said Westly had no role in the funding decisions.
David Prend also surfaces in the e-mails as a venture capital investor who had White House access.
His firm, Rockport Capital Partners in Boston, was among the investors in Solyndra, with a 7.5 percent stake. The e-mails show him asking a White House aide to “help get the word out” about Solyndra and asking for help on another Rockport portfolio company. They show he and a group of venture capital investors met with new White House climate czar Carol Browner before Solyndra’s loan was tenatively approved, and the White House confirmed that the subject of the company came up briefly.
Prend had worked closely with the Energy Department since the Bush administration, when he was first appointed to an advisory panel for the National Renewable Energy Laboratory. He continued to advise the Obama administration, while also chairing a panel that helps advise the department on solar technologies.
The agency provided $550 million to several firms in which Rockport had invested at the time. The department gave an additional $118 million grant to an electric-car battery company, Ener1, that was partnered with Rockport portfolio car company Think. (Rockport soon after invested in Ener1.) Ener1 filed for bankruptcy protection last month.
LaVera and Chad Kolton, a Rockport spokesman, said that Prend’s advisory role was separate from stimulus programs and had no bearing on agency decisions about companies backed by Rockport.
Posted by Cbs News · February 11, 2012 10:48 PM
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LOS ANGELES (CBS) — With the city going broke you may be surprised to find out that Los Angeles is the proud owner of a million dollar yacht and it is about to undergo hundreds of thousands of dollars in renovations at taxpayer expense.
As the head of the Port of Los Angeles raced down the hall, they tried to block our camera and dodged our questions, not wanting to talk about a yacht owned by the port, which is a city agency.
But the mayor said that it is not what we think.
“It’s not a yacht. It’s a boat,” Mayor Antonio Villaraigosa said.
But whatever you call it, the Angelena II is 73 feet long and worth about a million bucks — according to a boat broker we contacted — and it is all your money.
The port bought it in 1988. It is used for public relations tours of the harbor, which run about two hours long. They are free of charge for just about any group, like one we observed for students of Banning High.
We obtained the ship’s logs for the past two years, which show cruises with as many as 48 passengers at a time. We also obtained the names of thousands of people who have been on-board.
More than 4,000 took the cruise just last year. Some of the people do business with the port, but many have nothing to do with it.
We found members of the Morongo Indian Tribe, screenwriters from Universal Studios, a YWCA cruise, people from the exclusive Jonathan Club, UCLA students and dozens of the mayor’s interns.
But he said it is all business.
“They’ve gone to see why the port is such an important part of this administration’s priorities. We have got to promote trade. That’s why I was in China, Japan and Korea,” Mayor Villaraigosa said.
“It’s not a perk to get them out on the water,” I asked?
“No. No,” he replied.
Rusty Millar can “almost” see the port from his home in Silverlake more than 20 miles away. But he and more than a dozen others from the Silverlake Neighborhood Council took a tour on the Angelena in 2006.
“I think somebody brought a boyfriend with them,” Millar said.
They brought friends and posed for pictures with the life preserver. But Millar said the tour was beneficial.
“I think it’s just a kind of goodwill kind of thing. I don’t see a problem with that,” he said.
But it is costing the port money — $147,000 combined last year for two captains primarily assigned to the Angelina; $106,000 for two deck hands; and more than $32,000 for fuel and maintenance.
The Angelena is now in drydock at the Port of L.A. and has not been out on the high seas since September. But over the next couple of months they will be spending close to three quarters of a million dollars on upgrades.
The engines have been removed because they no longer meet California emissions standards. They will be replaced by low-emission hybrid motors.
The port is using $489,000 in federal taxpayer stimulus money that is supposed to go create jobs, plus another $200,000 coming from the port — totaling $689,000 for new engines.
He said the Angelena should be sold, not refurbished with taxpayer money.
“It’s a big waste of money both for taxpayers across the country and for Los Angeles residents, who clearly aren’t all going to benefit from this and are spending money at a time when the city is more than $70 million in the red,” Schatz said.
But the port said it is worth it.
“The best way to show people the port is from the water,” said John Holmes of the Port of L.A.
The expenditures are coming even when port General Manager Geraldine Knatz testified before the City Council that she is watching spending.
Councilmembers called her in because they were following up on our investigation last year, which revealed the port threw a $200,000 party in Korea.
Knatz claimed that she learned her lesson.
“I have recognized that public perception is an important part of what we do every day and that we really have to tighten our belt and watch every dollar,” she said.
Perhaps she forgot about the $689,000 in new engines. But she did not want to talk about it.
“Why won’t you talk with me for one second. You talk about public perception being important, yet you’re spending close to three quarters of a million dollars on the port’s yacht. Is that good for public perception,” I asked?
She did not have an answer.
But just last week the port received the final go ahead from the Coast Guard for the new engines and they say the Angelena will be back on the high seas in about 90 days to continue the public relations tours at taxpayer expense.
Posted by Tennille Tracy Wsj · February 11, 2012 10:30 PM
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The U.S. government could lose $2.7 billion as a result of the loans and loan guarantees it offered to clean-energy companies, according to a White House-commissioned study carried out in the wake of Solyndra LLC's bankruptcy.
The Obama administration, which has defended its aid for clean energy in the wake of the solar-panel maker's demise, said the estimate was in line with its own projections.
Republicans have attacked President Barack Obama over the Department of Energy loan program, saying it wasted taxpayer dollars and put too much faith in unproven technologies. Solyndra closed in September after receiving $528 million in U.S. government loans.
The White House in October acknowledged the need to review the program and ordered an independent analysis by Herb Allison, a former Merrill Lynch & Co. president who had served in the Bush and Obama administrations.
Mr. Allison's review depicted the Energy Department's process of making and monitoring loans as sometimes poorly organized and lacking in oversight, though he didn't discuss any specific decisions regarding Solyndra.
To improve the odds that taxpayers get paid back, the department should create a new position of chief risk officer and make sure individual managers, not committees, are held accountable for decisions, the report said.
The Energy Department has committed to provide more than $23 billion in loans or loan guarantees to companies in solar, wind and other clean-energy areas, but it has dispersed only $8.3 billion so far. A loss of nearly $3 billion would represent 12% of the total program at the department.
The government should be prepared for many of the companies to seek relief from their loan-guarantee requirements, and officials need to clarify the conditions for granting it, the review said.
Actual losses in the Energy Department's loan-guarantee portfolio will depend on market conditions and other factors, but "more important to the ultimate performance of the portfolio will be DOE's management of it going forward," the review said.
It called for creating an "early warning system" to track the status of borrowers and loans, and said the department needs more professionals with private-sector experience to monitor risks.
Republicans stepped up their criticism of the program following Mr. Allison's report. "When taxpayers are the ones paying the price, this sort of managerial soul-searching should take place before billions of dollars are doled out, not after," said Rep. Fred Upton (R., Mich.), chairman of the House Energy and Commerce Committee, which is investigating Solyndra's loan guarantee and the broader program.
Energy Secretary Steven Chu said in a statement Friday that it was "very likely" other companies backed by the government would fail, given the inherent risk of backing new technologies, but "the vast majority of companies are expected to pay the loans back in full, on time, and with about $8 billion in interest."
Mr. Chu said the report's estimate of $2.7 billion in losses was lower than the Energy Department's own projection of $2.9 billion.
"While the portfolio includes loans to a range of projects that carry different levels of risk, today's report finds that the Department of Energy has been judicious in balancing these risks," White House spokesman Eric Schultz said.
Posted by JARED A. FAVOLE And DAMIAN PALETTA - Wsj · February 10, 2012 5:32 PM
· 1 reaction
WASHINGTON—President Barack Obama's budget request to Congress on Monday will forecast a deficit of $1.33 trillion in fiscal year 2012 and includes hundreds of billions of dollars of proposed spending on the nation's infrastructure, according to draft documents viewed by Dow Jones Newswires and The Wall Street Journal.
President Barack Obama's budget request to Congress on Monday will forecast a deficit of $1.33 trillion in fiscal year 2012, Damian Paletta reports on digits. Photo: Getty Images.
It also calls for a combination of tax increases and spending cuts to reduce the deficit by $3 trillion over 10 years. The changes are largely identical to a package of changes the White House offered last year but met stiff resistance from Republicans on Capitol Hill.
The projected deficit is actually higher than the $1.296 trillion deficit in 2011, and also slightly higher than a roughly $1.15 trillion projection released by the Congressional Budget Office last week. The White House budget, according to the documents, will forecast a $901 billion deficit for fiscal 2013, which would be equivalent to 5.5% of the nation's Gross Domestic Product. That's up from the administration's September forecast of a deficit of $833 billion, or 5.1% of gross domestic product.
The White House's projected 2012 deficit would be about 8.5% of GDP. The White House earlier this week said many of the projections in the budget request would be old by the time they were released Monday because the administration did its analysis in November.
"The Administration forecast is used to develop the Budget, and at that time we predicted the unemployment rate would average 8.9% in 2012 and 8.6% in 2013. These forecasts were close to the consensus of private forecasters at the time," White House Council of Economic Advisers Chairman Alan Krueger said in a statement earlier in the week.
The budget includes more than $350 billion in short-term measures for job growth, a six-year, $476 billion proposal for roads and other surface transportation projects. Measures to stimulate the economy include $30 billion to modernize schools, $30 billion to help states and localities retain teachers and first responders, and a tax credit for small businesses that add jobs and increase wages.
The request also includes $850 million for Mr. Obama's "Race to the Top" competition, which has won bipartisan applause for helping schools overhaul their education programs.
The draft documents don't include all the details of the president's budget, but show major similarities to the budget plan the White House laid out in September 2011. The budget doesn't appear to offer any new options for reducing the deficit beyond what the White House has already recommended. The budget proposal, for example, repeats a call for $1.5 trillion in new revenue, mostly from ending Bush-era tax cuts for families earning more than $250,000 a year. It also calls for a Financial Crisis Responsibility Fee, which would bring in $61 billion in revenue to help offset the cost of the crisis-era Troubled Asset Relief Program and a White House mortgage refinancing program.
Roughly $360 billion in deficit reduction would come from savings in health programs such as Medicare and Medicaid, and another $278 billion in "non-health" savings would come from things like changes in agriculture subsidies and federal civilian worker retirement.
Copies of the Fiscal Year 2013 Budget at the U.S. Government Printing Office in Washington on Thursday (above and below).
The White House has said the budget will reflect the president's overall economic message of trying to ensure the economy maintains momentum while everyone is paying their "fair share" of deficit reduction. "The President's 2013 Budget is built around the idea that our country does best when everyone gets a fair shot, does their fair share, and plays by the same rules," one of the budget documents said.
The budget also calls for a 5% increase in non-defense research and development spending over previous year, and proposes $2.2 billion for advanced manufacturing research and development - a 19% increase over 2012.
The president has made helping manufacturers a key plank in his re-election effort, and his budget includes tax incentives for companies that create jobs in the U.S. and doubles the deduction for advanced manufacturing. The budget also proposes a "Manufacturing Communities Tax Credit" to encourage investment in communities affected by job loss.
Republicans have already rejected many components of the White House's budget, and they have already said they will not back the $1.5 trillion in new taxes the White House is pushing.
"This unserious budget is a recipe for debt, doubt, and decline," said Brendan Buck, a spokesman for House Speaker John Boehner (R,. Ohio). "It would make our economy worse by imposing massive tax increases on small business and still pile up enormous debt that stirs greater economic uncertainty."
But White House officials plan to use their budget proposal as an offer, albeit a starting one, aimed at getting lawmakers to replace the looming $1.2 trillion in spending cuts that will kick in next year if a broader deficit-reduction package isn't implemented.
The so-called "sequester" already has many lawmakers from both parties worried, particularly over deep cuts in defense spending. The White House will propose replacing the sequester with pieces from its budget, though they have said they will not accept a deal that doesn't include new revenues to offset spending cuts.
Posted by Brad Tuttle · February 09, 2012 10:33 AM
· 1 reaction
Last year, a federal program paid out $1.6 billion to cover free cell phones and the monthly bills of 12.5 million wireless accounts. The program, overseen by the FCC and intended to help low-income Americans, is popular for obvious reasons, with participation rising steeply since 2008, when the government paid $772 million for phones and monthly bills. But observers complain that the program suffers from poor oversight, in which phones go to people who don't qualify, and hundreds of thousands of those who do qualify have more than one phone.
Last summer, a Pittsburgh Tribune-Review story shed some light on a government program that relatively few Americans knew existed. (Read more about it here.) The Lifeline program provides low-income Americans with free cell phones (basic ones such as those made by Tracfone, not smartphones) and covers up to 250 free minutes each month. As many as 5.5 million residents in Pennsylvania alone could qualify for the program, which is funded primarily by the Universal Service Fund fee added to the bills of land-line and wireless customers.
The program came to be after the Telecommunications Act of 1996 was passed, and the FCC created the Universal Service Fund to help "to promote the availability of quality services at just, reasonable, and affordable rates," among other things. All telecommunications carriers must pay into the fund, and many do so by tacking on a fee to each of their customers' bills. It's probably added into your monthly wireless bill and your landline bill, if you still have one.
The Universal Service Fund provides discounts on phone services, or in some cases, entirely free services to low-income Americans. The fund helps pay for landlines or cell phones, whichever the recipient prefers. There's also a one-time discount of up to $30 to cover an installation fee or a cell phone. Considering how cheap some cell phones are nowadays, the money more than covers the costs of a basic phone. Then, the fund covers phone bills to the tune of $10 a month, which typically translates as 250 minutes for wireless plans of the types of phones we're talking about. Americans who receive food stamps, Medicaid, or other federal aid, or who earn up to 135% of the federal poverty guidelines, qualify for the program.
Now, Bloomberg Businessweek reports, we have a pretty good idea of how much the program pays out -- and how quickly it's growing as more and more people find out about it. In 2011, Lifeline paid out $1.6 billion, more than double the amount paid in 2008 ($772 million).
What's more, an FCC audit of the program last year showed that many participants in the program were taking more than their fair share. According to Businessweek:
269,000 wireless Lifeline subscribers were receiving free phones and monthly service from two or more carriers.
Senator Claire McCaskill (D-Mo.) has been taking a closer look at the program since she personally received an invitation to apply for a free, government-subsidized cell phone in the mail. McCaskill has asked the FCC to investigate Lifeline. As a result, the FCC is building a database to see if a subscriber has more than one subsidized phone. In other words, until recently, such a database didn't exist.
The FCC, which announced the changes by using the euphemism that it is "modernizing" Lifeline, has set a goal of saving $200 million on the program in 2012. After eliminating nearly 270,000 of the duplicate subscriptions discovered in the audit last year, the FCC said it has already "saved" $33 million.
At the time, both President Barack Obama and House Speaker John Boehner lauded the move to avoid a tax increase for millions of working Americans.
But there's something the politicians weren't bragging about - the fact that they're paying for the two-month tax cut with what has turned into a brand new fee on home buyers.
The new fee is a minimum of one-tenth of 1 percent on Fannie Mae- and Freddie Mac-backed loans, and is likely to go much higher.
It will be imposed for the next 10 years on most mortgages and refinancings and it lasts for the life of the loan.
For every $200,000, it amounts to an extra $15 dollars a month.
It's bad news for Patty Anderson, who's buying a home in Virginia.
Anderson will save a couple hundred dollars from having her payroll tax cut extended but her mortgage broker told her the new fee would cost her almost $9,500.
"I was absolutely startled that it would add up to that much," she said.
The $35.7 billion collected in fees won't go into the Social Security fund to replace the lost payroll tax. It goes to the general treasury where Congress can spend it however they please.
Bill Burnett, Anderson's broker and president of the Virginia Association of Mortgage Brokers, said you won't see Congress' new charge in the paperwork, but it's there.
"It's actually built into this [interest] rate. You would never see the fee as a cost to you," he said.
Burnett said the fee will affect a "very large number" of homeowners.
"Your pocketbook is being raided in order to pay for a tax policy issue decided at the last minute by probably people who didn't understand fully what they were legislating on."
CBS News went to Capitol Hill ask what Congress was thinking when they passed the mortgage fee hike. Boehner pointed the finger at the Senate.
"As you're well aware, this bill came over from the Senate. I don't know how they justified it. We would rather have offset that two-month extension with reductions in spending," he said.
But the Senate blamed the House. And Democrats and Republicans blamed each other.
One congressman, Florida Republican Allen West, said he tried to blow the whistle on the whole thing before Christmas.
"I read the legislation and raised the flag. Unfortunately nobody paid attention to what I was saying at the time," he said, calling the fee a backdoor tax increase on the middle class.
"It absolutely is because you're talking about the homeowners - when you're talking about the people that are gonna be using the Fannie Mae, the Freddie Mac, the government-sponsored enterprises - it is absolutely a tax increase on them."
An Obama administration official defended the mortgage fee, calling it "modest." She said it's "unlikely to negatively affect borrowers" because increases "will be phased in over the next two years." And it will "help bring private capital back into the mortgage market, which [is] good for borrowers over the long term."
Maybe so. But Patty Anderson only knows that for the next 30 years, she'll be haunted by the Washington ghost of Christmas past.
"I think it just looks like Washington grabbing more money," she said.