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Yellen stands up for Fed policies

House Budget Committee Chairman Rep. Paul Ryan, R-Wis., left, and Senate Budget Committee Chairwoman Sen. Patty Murray, D-Wash., arrive at a Congressional Budget Conference on Capitol Hill on Wednesday. In the aftermath of last month’s partial government shutdown, House and Senate negotiators are trying to reach a budget agreement.

By Ylan Q. Mui

The Washington Post

WASHINGTON — The Federal Reserve has taken meaningful steps to strengthen its scrutiny of the nation’s financial system and prevent another economic crisis, the White House’s nominee to lead the central bank said Thursday. Janet Yellen appeared before the Senate Banking Committee Janet Yellen Thursday for a hearing on her confirmation. Many of lawmakers’ questions focused on what the Fed has done to shore up the banking sector and its progress in crafting new regulations required under sweeping reforms passed by Congress three years ago. They also challenged Yellen to address ways to limit the dominance of the nation’s largest financial institutions that have been dubbed “too big to fail.” Addressing that issue “has to be among the most important goals of the post-crisis period,” she said during the hearing. “Too-big-to-fail is damaging, it creates moral hazard, it corrodes market discipline, it creates a threat to financial stability, and it does — unfairly, in my view — advantage large banking firms over small ones.” A committee vote on Yellen’s nomination could come as early as next week, according to an congressional aide. She is almost certain to be approved and head to the full Senate for consideration. However, at least one Republican senator on the committee, David Vitter of Louisiana, said Thursday that he will oppose her confirmation. “Unfortunately, none of her answers were reassuring to me,” Vitter said on Fox Business Network. “I am very concerned about just the free-money policy with essentially no end in sight.” President Barack Obama nominated Yellen for the top job at the Fed last month after facing backlash from his own party — and several key Republicans — over his first choice for the position, former U.S. Treasury Secretary Larry Summers. Nearly two dozen Democrats signed a letter over the summer supporting Yellen for the job instead. “Dr. Yellen has proved through her extensive and impressive record in public service and academia that she is most qualified to be the next chair of the Federal Reserve,” committee Chairman Sen. Tim Johnson, D-S.D., said Friday. Yellen, who currently holds the No. 2 position at the Fed, has been credited with sounding early alarms about the run-up in housing prices before the market collapsed. She said Friday that the Fed should use its supervisory powers over financial firms to ward off bubbles but left open the possibility of raising interest rates in extraordinary cases. “As a first line of defense, we have a variety of supervisory tools, micro- and macro-prudential, that we can use to attempt to limit the behavior that is giving rise to those asset price misalignments,” Yellen said. But, she added, “I would not rule out using monetary policy.” Lawmakers also attempted to pin down a timeline for when the Fed might begin scaling back its $85 billion-a-month stimulus efforts. When the central bank signaled that it could begin dialing down the program this year, financial markets shivered, causing stock prices to plunge and a range of interest rates to shoot up. The Fed has since retreated from those statements. Yellen defended the move as necessary so the Fed could assess how the rise in rates would affect the housing market, which is playing a critical role in the recovery. She said the Fed considers market conditions but is not beholden to them. “I don’t think that the Fed ever can be or should be a prisoner of the markets,” Yellen said.

ASSOCIATED PRESS FILE PHOTO

Dems: Slash tax breaks to ease budget cuts GOP wants to close tax loopholes but decrease spending

Those negotiators already have pretty much given up hope of reaching a longer-term budget accord for reducing deficits years into the future. Democrats are circulating By Stephen Ohlemacher a list of 12 tax breaks labeled The Associated Press “egregious loopholes that Republicans should either WASHINGTON — Demobring to the negotiating table crats’ new mantra in budget or explain to the American talks is to close tax loopholes people why they can’t find a for certain businesses, investors and professionals as a way single loophole to close to get a bipartisan deal.” The list reads to raise more revenue to help more like talking points than ease autopilot spending cuts substantive proposals. that soon are to become more Sen. Patty Murray, D-Wash., painful. the Senate Budget Committee On their list: Deductions for chairwoman, targeted two tax corporations that pay executives in stock options instead of breaks in an op-ed article she wrote that appeared in The salaries, reduced tax rates for Washington Post last weekend: hedge fund managers and prideductions for corporations vate equity advisers, avenues for escaping corporate taxes on that pay executives in stock options and a break that allows foreign profits, and provisions American corporations to that help doctors, lawyers, conavoid U.S. taxes on the profits sultants and others who incorof foreign subsidiaries. porate themselves to avoid Among the other tax breaks Medicare taxes. Democrats are highlighting: Democratic budget negotiau Lower tax rates for hedge tors in Congress see cutting these and other tax breaks as a fund managers and private politically popular way to raise equity advisers. These financial advisers often report the revenues and ease spending fees they earn as capital gains, cuts without further swellwhich have a top tax rate of ing the deficit. Republicans 23.8 percent. If the income, say they are open to ending known as “carried interest,” some special tax breaks, but they insist the new revenue be were taxed like regular wages, they would be taxed at a top used to lower tax rates, not to increase spending. The dispute rate of 39.6 percent. Taxing carried interest as played out this week as the regular income would raise negotiators tasked with merging competing budgets written $16 billion over the next decade, according to President Barack by House Republicans and Senate Democrats met for only Obama’s 2014 budget proposal. u Wealthy entrepreneurs, the second time in public. consultants, lawyers, doctors “You can’t raise taxes high and other professionals can enough to satisfy the appeavoid Medicare payroll taxes tite of Washington to spend money,” said Sen. Chuck Grass- by setting up corporations and ley, R-Iowa. “Closing loopholes accepting the bulk of their compensation as business income are very legitimate. The tax instead of wages. All wages are code is a mess, but closing tax loopholes to spend more is not subject to the 2.9 percent Medicare tax. An additional going to have long-range good 0.9 percent tax is applied to results because you get the wages above $125,000 for a higher level of expenditure.” single person and $250,000 for The disagreement could a married couple filing jointly. doom prospects for averting Business income, on the other a second round of automatic hand, is not subject to Medicare spending cuts in January.

taxes. Ending this tax break would raise about $12 billion over the next decade, according to an estimate by Democratic congressional aides. u The mortgage interest deduction for vacation homes and yachts. Taxpayers can deduct mortgage interest paid on second homes, including mobile homes, house trailers, boats or similar property that has sleeping, cooking and toilet facilities, according to the IRS. Limiting the deduction for second homes would raise as much as $15 billion over the next decade. u U.S. companies in general don’t have to pay U.S. taxes on foreign earnings until they bring those earnings back to the U.S. However, U.S.-based corporations can finance expansion of overseas operations with debt, and then deduct the interest on that debt before reporting any foreign income for tax purposes. Obama’s 2014 budget request proposes to raise $36 billion over the next decade by limiting this tax break.

Friday, November 15, 2013 THE NEW MEXICAN

Traffic deaths rise for first time since 2005 NHTSA’s preliminary data for the first six months of this year WASHINGTON — Fatal show that 15,470 people have accidents that killed motorcydied in crashes, a decrease of clists, bike riders and pedes4.2 percent compared with the trians helped drive up the number of U.S. traffic fatalities same period last year. Statistics show that Americans drove in 2012 for the first time since 2005, according to federal data 1.4 billion fewer miles from January through July this year. released Thursday. NHTSA Administrator Higher death rates among David Strickland said he would those who travel the roadways fast-track a program to encouron two wheels or on foot accounted for more than half of age automakers to install new seat-belt interlock systems. the increase, and 28 percent of “Each year, more than 3,000 the total number of 33,561 people killed last year, according to people are killed in crashes data from the National Highway that they could have survived because they were not wearing Traffic Safety Administration. a belt,” Strickland said. The overall death toll rose Drunken driving deaths by 1,802 deaths over 2011, and that total was increased by 657 were up 4.6 percent, with the majority of those drivers showadditional deaths of motorcyclists, bike riders and pedestri- ing blood alcohol levels above .15. The number of people ans. The 9,426 deaths of road users in those three categories whose deaths were attributed to distracted driving in 2012 were only slightly eclipsed by decreased slightly from 3,360 in the number of deaths attributed to drunken driving: 10,322. 2011 to 3,328. The Washington Post

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