Treasury and IRS Make Inversions More Difficult

The Department of the Treasury and the Internal Revenue Service (IRS) acted last week to make corporate inversions more difficult for companies looking to swap their American address for a lower tax rate.

Corporate inversions allow U.S. corporations to register as a foreign corporation in order to lower the taxes they owe. But the transaction occurs largely on paper— meaning the location of many of a company’s employees, the markets the company serves, and the products themselves are unlikely to change significantly.

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DATA Act Becomes Law, Increased Transparency on Federal Spending to Follow

On May 9, President Obama quietly signed the Digital Accountability and Transparency Act of 2014 (DATA Act) into law. Congress and open government advocates across the political spectrum worked for years to refine and pass the spending transparency legislation. The new law, if properly implemented, will be a big win for everyone.

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TARP'd Banks Back Getting Back in the Lending Game?

The Treasury Department released its June Monthly Bank Lending Survey, and the results are...mixed. Overall, outstanding loan balances for the 22 banks receiving TARP funds fell by 1 percent in June, but the new loan originations increased by 13 percent. Looking closer at the data reveals that outstanding loans to consumers fell by 1 percent, while new loans to consumers increased by 9.7 percent in the same period.

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Snow Will Remain As Treasury Secretary

Yesterday, December 8th, President Bush asked Treasury Secretary John Snow to remain in his position for the next two years, at least. After meeting breifly with the President, he agreed. Snow first joined the Bush administration in February 2003 after former Treasury Secretary Paul O'Neill was ousted; prior to that, he headed CSX, a large railroad company. Snow's position as Treasury Secretary puts him in one of the nation's most central economic policymaking posts.

This announcement is particularly noteworthy because of the rumors that have been circulating recently regarding whether Snow would remain on board in the second term. On Monday, the New York Times even reported that "President Bush has decided to replace John W. Snow as treasury secretary and has been looking closely at a number of possible replacements, including the White House chief of staff, Andrew H. Card Jr., Republicans with ties to the White House say."

Despite the rumors, Snow will remain to help the administration sell its second term economic agenda to the public and Congress. This decision comes at a time of considerable economic uncertainty, as we are faced with an increasingly weaker dollar, a growing deficit, and looming discussions of both tax reform and an overthrow of the social security entitlement program. Mr. Snow, as today's New York Times states, is largely seen as a "salesman for White House policies."

For more information on Snow as Treasury Secretary, click here and here.

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Completing Appropriations to Dominate Lame Duck Session

Only twice in the last 15 years has Congress been able to complete all 13 of the annual appropriations bills by the end of the fiscal year, and this year is no exception. To address this uncompleted business, the 108th Congress will reconvene Nov. 16 to begin a post-election lame-duck session.

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Federal Spending Hits Ceiling Forcing Treasury to Act

Last week, federal spending again reached the debt limit put in place by Congress -- the legal amount, above which the federal government cannot borrow. If borrowing exceeds this ceiling, currently set at roughly $7.4 trillion, immediate action is necessary. Treasury Secretary John Snow was recently forced to take action to ensure that normal monetary transactions can continue.

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Hitting the Debt Ceiling

CNN is reporting that the Treasury is having to take measures to avoid going into default...

U.S. dangerously close to debt limit

The Treasury Department suspended investments in a federal employee pension fund Thursday to keep the government below its borrowing limit, Treasury Secretary John Snow said in a letter to Congress.

Snow said payments to the $56 billion Federal Employee Retirement System's Government Securities Investment Fund, known as the G-fund, would be restored once Congress raises the $7.384 trillion debt ceiling. [...]

The government was just $10 billion below the limit as of Tuesday, according to the latest available data.

Congress adjourned for an election break last weekend without raising the politically sensitive limit. [...]

Congress has already raised the debt limit twice during the Bush administration's tenure, in 2002 and 2003.

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CBO Releases Preliminary Deficit Numbers for FY2004

Last month the Congressional Budget Office (CBO) projected a $422 billion deficit for fiscal year 2004, and a $348 billion dollar deficit for FY2005. To see an OMB Watch analysis of this baseline projection read "Beyond the Baseline: 10 Year Deficits Likely to Reach $5.5 Trillion." As it turns out, the preliminary estimate released today is approximately $7 billion less than the CBO stated last month, according to their most recent Monthly Budget Review. Now they are reporting that the federal government incurred a deficit of $415 billion in FY2004.

This preliminary deficit figure is about $41 billion more than the FY2003 deficit, and 3.6 percent of the national Gross Domestic Product (GDP). Although it was reported that annual receipts rose by approximately 5.5 percent, they remain about 7 percent below their peak level in FY2000. And, according to the monthly review, individual income tax receipts remain approximately 25 percent below their peak in 2000. The drop in those receipts can be attributed to the recession, the decline in the stock market, and the Bush administration's tax cuts, the most recent of which were passed last week in a $146 billion package.

Interestingly, over half of the increase in receipts for FY2004 came from corporate income taxes, which ended up totalling approximately $57 billion more than they did in 2003. Federal income taxes paid by corporations can effectively serve to offset government outlays, and can bring down the budget deficit. Despite this fact, a study released in late September by the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ) found that between the years of 2001 - 2003, 275 of the nation's largest companies did not pay their fair share of income taxes; in addition many received excessive tax rebate checks.

A copy of the ITEP/CTJ report can be found here. Perhaps if corporations paid their fair share of taxes, and if federal legislation stopped handing out so many corporate tax breaks, we would see a decline in the deficit, which has been rising consistently since 2000.

Note: The figure $415 billion is the preliminary estimate for the national deficit; the Department of the Treasury will release the actual figure later this month.

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Action Alert! The Unfortunate Return of the Balanced Budget Amendment

The full House Judiciary Committee met on September 22 to consider, once again, the ill-conceived constitutional Balanced Budget Amendment (H. J. RES. 22). The issue will most likely be revisited by the House Committee sometime next week, although it is currently unknown exactly when. Regardless of one’s opinions about the wisdom of balancing the budget or running massive deficits, the Balanced Budget Amendment is exceptionally bad economic policy. Download Press Statement - (.pdf, 1pp) Download Factsheet - (.pdf, 1pp) Take Action!

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National Debt Limit Countdown

On August 2, Treasury Secretary John Snow urged Congress to raise the federal debt limit without delay, and warned that the limit will be reached by late September or early October.

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