19 March 2010
Tax cuts for wealthy should expire - U.S. panel chair New York : Most House Democrats back President Barack Obama's plan to let tax cuts for the wealthy expire this year, though the proposal will face a battle in the Senate, the acting chief of the tax-writing panel in the U.S. House of Representatives said on Tuesday. Tax cuts for all income groups enacted in 2001 and 2003, including for capital gains and dividends, will expire at the end of this year unless Congress acts to extend them. Keeping a campaign pledge, Obama wants to extend the cuts for people who earn less than $200,000 and families that earn less than $250,000. But Obama and most Democrats want to let the cuts for the richer groups expire. Republicans and a small number of conservative Democrats favour extending them all and the Democrats' slimmer majority in the Senate will make it a tougher fight in that body, Rep. Sander Levin, acting chairman of
the Ways and Means Committee, told reporters. "We're ready to fight over the issue," said Levin in his first briefing with reporters since taking over as panel chair.The 14term Michigan Democrat took over the panel earlier this month after Rep. Charles Rangel stepped down amid several congressional ethics probes. It is unclear how long Levin will stay on, though most people believe Rangel lacks enough political support to reclaim the top spot. Lawmakers will need to find a way to pay for the cuts in the lower income categories, which will cost more than $2 trillion over a decade. Levin, who has been more active on trade than tax issues, said he believes House Democrats back Obama's plan solidly, but added that "we need to persuade enough people in the Senate" to back it. Levin said it is possible the committee will hold hearings to highlight the issue of inequities in the tax system and said he hopes to start work on the issue after the Easter break.
U.S. retail sales rise as shoppers fight winter blues Washinton : U.S. retail sales rose unexpectedly last month despite heavy snow storms that were thought to have kept shoppers at home and bolstered hopes of a sustainable economic recovery. Optimism about Friday's report was tempered by a slip in consumer confidence early this month. Worries about stubbornly high unemployment held back sentiment, even though the economy appears to be on the cusp of creating jobs. "The manufacturing recovery is starting to broaden out to the key consumer area of the economy. Consumers are keeping up their end of the bargain to ensure the recovery from recession is a sustainable one," said Chris Rupkey of the Bank of Tokyo-Mitsubishi in New York. Sales rose 0.3 percent, the Commerce Department said, as consumers bought an array of goods from necessities to luxury items. Analysts had expected sales to slip 0.2 percent. January sales, however, were revised down to a gain of 0.1 percent from the previously reported 0.5
percent rise. U.S. stocks initially rose on the retail sales data but lost steam, and major indexes ended flat on the surprise drop in consumer confidence. U.S. government debt prices rose as investors focused on the weak sentiment data, while the dollar tumbled to a one-month low against the euro. The sales report was the latest in a series of data hinting at building underlying strength in an economic recovery that has been largely driven by government stimulus and a swing toward inventory building by businesses. Officials from the Federal Reserve meet on Tuesday and are expected to hold overnight interest rates in a range of zero to 0.25 percent and maintain a pledge to keep them ultra-low for an "extended period" to foster a more robust recovery. Stronger data, however, could spark a lively discussion at the meeting, as some officials have raised concerns about the inflationary impact of keeping rates too low for too long.
U.S. Senate bill would penalize China over yuan Washington : Members of the U.S. Congress on Tuesday threatened Beijing with duties on some of its exports if it fails to revalue its currency, pressuring the Obama administration to label China a currency manipulator. A bipartisan bill introduced in the U.S. Senate merges previous legislative efforts to press China to change policies that critics say keep its yuan currency cheap, effectively subsidizing Chinese exports and taxing competing imports. "When there's a 20 percent or 30 percent undervaluation that reduces the price of a product coming in, that's not fair. That's cheating," Democratic Senator Debbie Stabenow, a co-sponsor of the legislation, told a news conference. "If they're not going to do it, we're going to force them," Republican Senator Sam
Brownback added. The bill, a rare show of bipartisan accord, reflects widespread concern about high U.S. unemployment. It follows two days after Chinese Premier Wen Jiabao dismissed U.S. complaints about China's exchange-rate policy as protectionist. It also is likely to weigh on the Obama administration's deliberations whether to label China a currency manipulator in a semiannual Treasury Department report due on April 15. In the background is the realization that China is a major holder of U.S. debt.