Most Americans Face Lower Tax Burden Than in the 80s

Abstract: BELLEVILLE, Ill. — Alan Hicks divides long days between the insurance business he started in the late 1970s and the barbecue restaurant he opened with his sons three years ago. He earned more than $250,000 last year and said taxes took more than 40 percent. What’s worse, in his view, is that others — the wealthy, hiding in loopholes; the poor, living on government benefits — are not paying their fair share. “It feels like the harder we work, the more they take from us,” said Mr. Hicks, 55, as he waited for a meat truck one recent afternoon. “And it seems like there’s an awful lot of people in the United States who don’t pay any taxes.” These are common sentiments in the eastern suburbs of St. Louis , a region of fading factory towns fringed by new subdivisions. Here, as across the country, people like Mr. Hicks are pained by the conviction that they are paying ever more to finance the expansion of government. But in fact, most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. According to an analysis by The New York Times , the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980. Households earning more than $200,000 benefited from the largest percentage declines in total taxation as a share of income. Middle-income households benefited, too. More than 85 percent of households with earnings above $25,000 paid less in total taxes than comparable households in 1980. Lower-income households, however, saved little or nothing. Many pay no federal income taxes, but they do pay a range of other levies, like federal payroll taxes, state sales taxes and local property taxes. Only about half of taxpaying households with incomes below $25,000 paid less in 2010. The uneven decline is a result of two trends. Congress cut federal taxation at every income level over the last 30 years. State and local taxes, meanwhile, increased for most Americans. Those taxes generally take a larger share of income from those who make less, so the increases offset more and more of the federal savings at lower levels of income. In a half-dozen states, including Connecticut , Florida and New Jersey , the increases were large enough to offset the federal savings for most households, not just the poorer ones. Now an era of tax cuts may be reaching its end. The federal government depends increasingly on borrowed money to pay its bills, and many state and local governments are similarly confronting the reality that they are spending more money than they collect. In Washington, debates about tax cuts have yielded to debates about who should pay more. President Obama campaigned for re-election on a promise to take a larger share of taxable income above roughly $250,000 a year . The White House is now negotiating with Congressional Republicans, who instead want to raise some money by reducing tax deductions. Federal spending cuts also are at issue . If a deal is not struck by year’s end, a wide range of federal tax cuts passed since 2000 will expire and taxes will rise for roughly 90 percent of Americans, according to the independent Tax Policy Center . For lower-income households, taxation would spike well above 1980 levels. Upper-income households would lose some but not all of the benefits of tax cuts over the last three decades. Public debate over taxes has typically focused on the federal income tax, but that now accounts for less than a third of the total tax revenues collected by federal, state and local governments. To analyze the total burden, The Times created a model, in consultation with experts, which estimated total tax bills for each taxpayer in each year from 1980, when the election of President Ronald Reagan opened an era of tax cutting, up to 2010, the most recent year for which relevant data is available. The analysis shows that the overall burden of taxation declined as a share of income in the 1980s, rose to a new peak in the 1990s and fell again in the 2000s. Tax rates at most income levels were lower in 2010 than at any point during the 1980s. Governments still collected the same share of total income in 2010 as in 1980 — 31 cents from every dollar — because people with higher incomes pay taxes at higher rates, and household incomes rose over the last three decades, particularly at the top. There are now many more millionaires, in other words, paying more than they did in 1980, but they are paying less than they would have if tax laws had remained unchanged. And while they still pay a larger share of income in taxes than the rest of the population, the difference has narrowed significantly. The trend can be seen by comparing three examples: ¶A household making $350,000 in 2010, roughly the cutoff for the top 1 percent, on average paid 42.1 percent of its income in taxes, compared with 49 percent for a household with the same inflation-adjusted income in 1980 — a savings of about $24,100. ¶A household making $52,000 in 2010, roughly the median income, on average paid 27.7 percent of its income in taxes, compared with 30.5 percent in 1980, saving $1,500. ¶A household making $22,000 in 2010 — roughly the federal poverty line for a family of four — on average paid 19.4 percent in taxes, compared with 20.2 percent, saving $200. Jared Bernstein , who served as chief economist to Vice President Joseph R. Biden Jr. , said the Times analysis highlighted the need to raise taxes on the affluent and cut taxes for the poor. He cautioned that the middle class most likely would need to pay more, too. “When you look at these numbers, you understand why we’re not collecting the revenue we need to support the spending we want,” said Mr. Bernstein, a senior fellow at the Center on Budget and Policy Priorities , a liberal research group. “We’ve really gutted the system.” But Douglas Holtz-Eakin , a prominent conservative economist, said the changes in taxation over the last three decades reflected a conscious and successful strategy to encourage economic growth that should be reinforced, not reversed. Mr. Holtz-Eakin, a former director of the Congressional Budget Office who is the president of the American Action Forum , said government should reduce deficits primarily through spending cuts, particularly to Medicare and Medicaid , the health programs that are the largest source of projected increases in the federal debt. “We can’t grow our way out of it, and we can’t tax our way out of it,” he said of the government’s fiscal predicament. “We have a spending problem, period.” Mr. Hicks, like many residents of Belleville, views this debate with unhappiness. He would like the government to cut spending but not reduce services. He is certain that the government should not raise taxes on the middle class, a group in which he includes himself, but he is ambivalent about asking anyone to pay more. Higher taxes would hurt his businesses, he said, so raising taxes on those who make more money seems likely to hurt their businesses, too. “At this point, I guess it’s inevitable in order to get us out of this hole,” Mr. Hicks said of higher taxes. “ Illinois is in bad shape, along with a lot of the nation. But I don’t feel like we should tax the middle class any more than we are right now. There’s going to come a point where they take the incentive out of working hard.” If the government cut his taxes, Mr. Hicks said, he would use the money to put a roof over the picnic tables outside the restaurant, expanding the year-round seating area. He already employs 14 people; then he could hire more. And if taxes rose? Would Mr. Hicks, who started working when tax rates were higher, really choose to slow down? He smiled. “No,” he said. “I like it. What else would I do with my time?” Cutting From Both Ends The federal income tax, which will turn 100 next year, is in decline. Congressional Republicans and Democrats have repeatedly voted to reduce the share of income that people must pay. Over the last decade, annual revenues from federal taxation of individual and corporate income averaged just 9.2 percent of the nation’s gross domestic product, the lowest level for any 10-year period since World War II . The recession and new rounds of tax cuts further reduced revenues, to 7.6 percent of economic output in the 2009 and 2010 fiscal years. Stronger economic growth has produced a modest increase in tax collections, but the White House budget office estimates that collections for the fiscal year that ended in September will total 9 percent of economic output, still less than before the financial crisis. Federal spending, meanwhile, grew faster than the economy over the last decade — particularly during the recession. To pay those bills, the government borrowed more money than it collected in income taxes in each of the last three fiscal years, something it had not done in even a single year since World War II, federal data show . Congress could have eliminated those deficits by cutting spending. It might also have averted those deficits by leaving the tax code unchanged. The government on average would have collected an additional $800 billion in each year from 2006 to 2010 if the 1980 code had remained in effect and economic activity had continued at the same pace, the Times analysis found. The annual federal deficits during those years averaged $714 billion. Leaving the tax code as it was in 1980, however, would not have solved the nation’s long-term fiscal problems. Increases in federal spending, driven primarily by the rising cost of health care, are projected to outstrip even the revenue-raising capacity of the 1980 tax code in the coming decades, necessitating some combination of spending cuts and tax increases. The income tax stands apart from other forms of taxation. It is the reason that upper-income households pay a larger share of their income in taxes than the rest of the population. The combined burden of all other federal, state and local taxes takes roughly the same share from all taxpayers. And many Americans — even in a middle-class, Democratic stronghold like Belleville — have misgivings about imposing higher tax rates on the affluent, an important reason that income taxation has declined. The share of Americans who said high-income households paid too little in taxes fell from 77 percent in 1992 to 62 percent in 2012, according to Gallup , even as income inequality rose to the highest levels since the Great Depression . Some people in Belleville subscribe to the argument that higher tax rates impede economic growth by discouraging investment. For others, it is a matter of fairness. Anita Thole, a middle-income safety supervisor for a utility contractor, is not wealthy. She does not expect that she ever will be. She is a single mother with a daughter in college, and she said she regarded the wealthy with a mixture of envy and admiration. But she does not want them to pay higher taxes. “They work their butt off to get what they got,” she said. “I wouldn’t want them to pay more so that I can pay less.” Do they work harder than you? “What? No. I work my butt off,” Ms. Thole, 46, said. “But you got to believe in the American dream. You got to love them for what they did, for what they made of themselves and for being more aggressive than me.” Ms. Thole, like many in Belleville, is also convinced that governments could avoid raising taxes by adopting more frugal habits. “There’s some days we stay home and we eat peanut butter,” she said. What would she like governments to cut? “I really like it when they cut the weeds along the highway,” she said. “I like it when there’s good roads to drive on. The schools, I don’t know, I don’t want to pull back from the schools. I don’t have the answer of where to pull back. “I want the state parks to stay open. I want, I want, I want. I want Big Bird . I think it’s beautiful. What don’t I want? I don’t know.” To Tax or Not to Tax? William L. Enyart is a rarity in Belleville: he wants to raise his own taxes. Mr. Enyart and his wife are lawyers, although for the last five years he led the Illinois National Guard. The couple made $380,587 in 2011 and paid $104,864 in federal taxes. His conviction that they should have paid more may not be shared by many of the area’s higher-income residents. But as the newly elected Democratic congressman for southwestern Illinois, Mr. Enyart, 63, is also the only man in town with a direct vote on federal tax policy. Mr. Enyart, who won the seat of a retiring Democratic congressman, campaigned in part on his support for Mr. Obama’s tax plan. He defeated a Republican candidate who opposed it, 52 percent to 43 percent. But Mr. Enyart said he heard little enthusiasm for tax increases in his district. What has changed, he said, is that people are increasingly concerned about cuts to government benefits and services. “Nobody likes to pay taxes. Nobody wants to raise taxes on anybody,” Mr. Enyart said. “But nobody wants to cut veterans services, nobody wants to give up that Interstate highway, nobody wants — pick the service that you like. These are necessary services, and they need to be paid for.” The tax increase proposed by Mr. Obama, on taxable income — income after deductions and other adjustments — above $250,000 a year, would pay for only a small part of those services. It would reduce the projected deficit over the next decade by a little less than 10 percent, according to the Congressional Budget Office . Nonetheless, Mr. Enyart said that he did not support broader tax increases. The focus, he said, should be on requiring the rich to pay more. “We have the greatest disproportion of wealth since 1928, and I don’t think that’s a healthy thing,” he said. “How much money is enough? Do hedge fund traders really need to make a billion dollars a year and pay only 15 percent in taxes when we have teachers making $50,000 and paying 20 percent?” John Siemens, who did not vote for Mr. Enyart, said that kind of “raise taxes” talk was a crowd-pleasing distraction from the need for painful spending cuts. Mr. Siemens and his wife, Jan, both 59, own a company with a pair of factories in southwestern Illinois where workers assemble dollar-bill scanners for vending machines, dashboard lights for automobiles, magnetic probes for hospitals and other electronic equipment. They earned about $250,000 last year, so Mr. Obama’s plan would not have increased their income taxes. But it would raise the estate taxes they would have to pay to pass the company to their children someday. Like many opponents of the president’s plan, Mr. Siemens thinks higher taxes will discourage investment and slow economic growth. “There’s some tax rates that probably do need to be raised,” he said. “There are some that need to be lowered. But the politicians are not having an honest discussion. Is it fair or not fair is not the question. The question is, If you want to raise revenues, does that make sense or not?” He noted as an example that interest on municipal bonds is tax-exempt, which encourages the wealthy to lend to local governments. “Those lower tax rates were put into place for a reason,” he said. “It’s not just, let’s give the wealthy a break.” Mr. Siemens does have a concern about fairness. He believes that lower-income households are not paying enough in taxes. “By any measure, the wealthy are still paying a disproportionate amount of their income in taxes,” he said. “Is that fair or not fair? I don’t know, but I have an issue with the dramatic reduction of taxes at the low end because I think everybody needs some skin in the game.” The debate is no longer theoretical here in Illinois. Facing perhaps the deepest budget crisis of any state , the Illinois legislature last year raised the state income tax rate to 5 percent from 3 percent . Unlike the federal income tax, Illinois taxes all income at the same rate. Mr. Enyart said that the state needed more revenue, but that it should move to a tax system that imposed a heavier burden on high-income households. Mr. Siemens said the state should have cut spending. The higher taxes have increased his costs and given an advantage to competitors in other states. And there are broader ripples, too: he said he was planning to buy some used machines, rather than new ones, to save money. “We feel the burden of that, but it hasn’t gotten to the threshold of pain yet where we would move,” Mr. Siemens said. “There’s a lot of expense that would be incurred in moving, including a disruption of the work force, which you are always loath to do.” View From the Lower End Taylor McCallister, 20, works the front window at Mr. Hicks’s barbecue restaurant, taking orders from customers. She also works a second job and attends Southwestern Illinois College. She earned about $30,000 last year and, like her boss, she wishes the government would take less of that money. “When I see my check it’s like, damn, that’s a huge chunk that was taken out,” she said. “I could have been making $450 instead of $378.” Mitt Romney’s remarks about the “47 percent” focused public attention on the rising share of Americans who do not pay federal income taxes, a trend that has encouraged the public perception that lower-income households are getting a sweetheart deal. The share of Americans who think lower-income households pay too little in taxes increased to 24 percent in 2012 from 8 percent in 1992 , according to Gallup. But low-wage workers like Ms. McCallister still pay federal payroll taxes, which provide financing for Social Security and Medicare. They still pay sales taxes. Even if they are renters, they still bear the cost of property taxes in the form of higher rents. And those taxes have climbed most quickly in recent decades. The average American in 2010 paid 30 percent more of income in payroll taxes than in 1980, even while paying 27 percent less in federal income taxes. As a result, revenue from the payroll tax almost equaled income tax revenue before a temporary payroll tax cut took effect in 2011. The cut is scheduled to expire at the end of this year. The rise of the payroll tax reflects the general movement away from requiring upper-income households to pay a larger share of income in taxes. All workers pay the same Social Security tax on wages below a threshold, which stood at $106,800 in 2010. The Medicare tax imposes a single rate on all wages, without a threshold. Some experts argue, however, that payroll taxes are a special case because workers are entitled to Social Security benefits based in part on the amounts that they pay in taxes — a system more akin to a pension plan than an income tax. In Illinois, the average burden of state and local taxes rose to 10.2 percent of income in 2010 from 8.8 percent in 1980, even before the latest round of tax increases last year. And Illinois, like most states, takes a larger share of income from those who make less. Illinois households earning less than $25,000 a year on average paid 14.3 percent of income in state and local taxes in 2010, while those earning more than $200,000 paid 9.4 percent, according to the Times analysis. Ms. McCallister said she and her friends worry about the nation’s financial problems. Their answer is simple: Someone has to pay more, and the affluent can best afford to do so. She said it was time to reverse a trend that had been going on so long it predated her birth by a decade. “I want to know honestly how the more wealthy feel,” she said between tending to customers. “You’d think that they would want to help. We’re working these kinds of jobs and that’s what we have to do to make it through, and there’s other people making all this money. I don’t get it, honestly. “I feel that maybe people who don’t make as much shouldn’t have to pay as much in. But who makes the rules? “Not me.”

Federal Budget
Federal Taxes
Wages and salaries
Income Inequality
US Politics
US Economy
US states
Income tax
Tax


Race for Governor’s Post Turns Texas Republicans Against Each Other

Abstract: HOUSTON — Gov. Rick Perry looks as if he stepped out of a Marlboro billboard: square-jawed, weathered face, a shock of black hair, steely eyes. He even says “howdy” when he enters the room. His public persona is so folksy that many opponents have underestimated his political skills. But Mr. Perry, a conservative ideologue whose recent flourishes include expressing sympathy for secessionists and supporting a failed effort to add a “choose life” logo to license plates, is already the longest-serving governor in Texas history and has announced that he is running for an unprecedented third term. The battle shaping up in the Texas Republican Party over whether he deserves another four years mirrors the larger conflict between the Republicans’ moderate and conservative wings on the national level, strategists say. “This is a civil war,” Mr. Perry said in an interview, “brother against brother.” Mr. Perry’s opponent is Kay Bailey Hutchison , the state’s senior senator. On most issues, Ms. Hutchison is also a steady conservative hand, but her tone is more moderate, her positions on social issues are more nuanced, her votes on government spending are more pragmatic. The senator plans to formally open her campaign with a five-day tour of the state next week. She cuts a patrician figure on the hustings, a slender woman with a mellifluous voice and an easy smile. She has taken aim at the governor’s failure to reduce property taxes and his support for toll roads, but her main message has been a warning that the party cannot stay in power unless it widens its appeal. “I do not want a governor who is going to narrow our base, make it dwindle,” Ms. Hutchison said in a speech this week. “That is what has happened at the national level, and that is not going to happen in Texas.” “I will work to build the Republican Party,” she added, “not make it narrower. I am for Ronald Reagan’s big tent.” Elected to the Senate 16 years ago, Ms. Hutchison, now 66, has wanted for a long time to be governor. She pulled out of the governor’s race in 2006 only after several major Republican donors persuaded her that Mr. Perry would not run for a third term. Mr. Perry, 59, denies he ever made such a promise, though some Republican donors now supporting Ms. Hutchison insist he did. In any event, the bad blood has made it impossible for party leaders to head off a primary fight this time around, several prominent Republicans said. Ms. Hutchison argues that Mr. Perry’s aggressive courtship of conservatives has alienated moderates, independents and minorities. The party lost all the state’s major metropolitan counties in the presidential election last year, an ill omen for the future, and its majority in the Texas House has shrunk to a single seat. The senator has the support of a handful of people who helped put George W. Bush in the White House. She has also attracted the support of Republicans with deep pockets from Dallas and Houston who backed Mr. Perry in the last two elections. Some of those people fear that the rightward tilt of the state party organization leaves an opening for a Democrat to win back the governorship for the first time since Ann Richards captured it 19 years ago. Others say Mr. Perry has not done enough to cut taxes on property and businesses. Mr. Perry, on the other hand, enjoys strong support from evangelical leaders and the voters who usually turn out heavily in the primaries: members of antitax groups, religious conservatives, creationists, foes of abortion and a variety of other Texans opposed to big government. A former Air Force pilot, Mr. Perry began his political career as a Democratic state legislator from West Texas. Switching parties in 1989, he won a race for agriculture commissioner. He was elected lieutenant governor in 1999, then became governor in December 2000 after Mr. Bush won the presidency. He has captured the two elections since. “He’s been consistently underestimated by people, politically,” said James Henson, director of the Texas Politics project at the University of Texas. “He’s locked down the conservative section of the primary base. The people that don’t like him make fun of him for the things that have strengthened his position. People think these are Neanderthal throwback positions, but Rick Perry and Jon Stewart don’t have any overlapping constituency.” In years when there is no presidential election, fewer voters generally turn out for the primaries. Since Republicans typically dominate statewide races in Texas, the winner of their primary usually cruises through the general election. That means a relatively small number of highly motivated conservative voters play a pivotal role in choosing the governor, strategists say. Ms. Hutchison is hoping to break that formula by drawing more moderates and independents to the primary. She has painted Mr. Perry as a divisive party leader more interested in partisan politics than in solving the state’s problems. “People want someone who has a vision for the future,” she said, “and we are not seeing new ideas.” On the other side, Mr. Perry is betting he can cast Ms. Hutchison as a Washington insider with questionable credentials as a conservative. “We would say it’s a fight between a real, proven conservative and one who is not so conservative,” he said. So far, only Tom Schieffer, a businessman, former ambassador and onetime state legislator, and the singer and writer Kinky Friedman have announced candidacies for the Democratic nomination, although Ronnie Earle, former Travis County district attorney, is exploring a run. Whatever the outcome of that race, political scientists here say, its winner will be at a big disadvantage against either Mr. Perry or Ms. Hutchison. Ms. Hutchison has amassed $12.5 million for her run, to Mr. Perry’s $9.3 million. Though she has yet to resign from the Senate to stump full time, her campaign is already in high gear, its press office producing daily attacks on the governor. But the senator was largely silent for the first half of the year, and her early reluctance to engage Mr. Perry has hurt her, Republican strategists say. Several recent polls suggest that he now has a significant lead among primary voters. While both candidates say taxes and fiscal policy will be leading issues in the campaign, they can both claim to be tightfisted with the public’s money, and so their differences on some social issues are likely to become a battleground. He is firmly against abortion, for instance, while she backs many restrictions on it but opposes overturning Roe v. Wade. He is against embryonic stem cell research; she supports it. Against that kind of backdrop, Ms. Hutchison was led to tell Republicans gathered this week in Horseshoe Bay, near Austin, that she was just as conservative as the governor. “I’m not from Washington,” she said. “I’m from Texas.”

Perry Rick
Hutchison Kay Bailey
Politics and Government
Elections
Republican Party
Texas


Cost of Borrowing Zooms Higher for Corporations

Abstract: Like consumers and homeowners, America’s corporations binged on easy credit when times were flush, racking up huge debts. Now the bills are due, and paying them back will not be easy, or cheap. This year alone, more than $700 billion in corporate loans will come due, according to Standard & Poor’s. That is the size of the federal bailout of the financial sector. Many companies were counting on being able to borrow more money to meet those obligations and kick their debt farther down the road. But with the credit markets still tight, corporations are being forced to pay much higher interest rates than they did a few years ago, putting more strain on balance sheets already hammered by falling profits and a grinding recession. It is a lesson the discount carrier Southwest Airlines learned firsthand in December, when it went to the bond markets to raise $400 million, in part to cover its losses from betting that fuel costs would stay high. Southwest, the only domestic airline with an investment-grade credit rating, put up 17 of its Boeing jets as collateral and agreed to pay interest of 10.5 percent, nearly double the rate it had paid in 2004 to raise $350 million. The company chafed at the costs, but it paid them because it needed cash and did not know what credit markets would look like in six months or a year. “That’s the market now,” said Laura Wright, the airline’s chief financial officer. “There is not money available at the rates we were able to get a year ago.” Southwest said it had seized the opportunity to raise cash at a time when other companies could not borrow at all. Companies with poor credit ratings are virtually locked out of credit markets or face the prospect of paying 20 percent interest. Many of them are slashing costs, canceling projects or putting assets up for sale to avoid defaulting on their debts. Despite huge government rescue programs and drastic reductions in the Federal Reserve’s benchmark interest rate, borrowing costs for companies have remained stubbornly high. Investors are wary of anything riskier than ultrasafe Treasury bills, and banks, which lost billions of dollars making bad loans, have tightened their lending. “This is going to be a very challenging year for corporate treasurers,” said Roger Lister, chief credit officer at the financial institutions unit of DBRS, the credit rating firm. Still, borrowing costs have fallen from record levels in October and November, especially for investment-grade bonds, and more companies have sold new debt in recent weeks. Investors who are getting scant returns — or none at all — from Treasuries are starting to gamble again on relatively safe corporate debt. “You are getting a very nice return in real terms,” said Jim T. Swanson, chief investment strategist at MFS Investments, a mutual fund firm in Boston. “Companies are willing to pay the price, and the market is willing to take on new issuance.” Despite this, capital markets are still shaky. Even companies with strong credit ratings are paying about 5 percentage points more than the federal government to borrow money, according to Standard & Poor’s. That is more than double the premium they paid last January. Companies with so-called junk credit ratings are paying a 15 percent premium. “That’s an extraordinary spread,” said Diane Vazza, head of global fixed-income research at Standard & Poor’s. “That’s unprecedented in the speculative-grade market.” On top of this, corporate bonds are at risk of being crowded out of the market as the government issues piles of new Treasury notes to combat the financial crisis . And another flood of government bonds is likely if Congress passes an $825 billion economic stimulus measure. What is more, the government guaranteed nearly $108 billion in cheap debt for financial companies in the last two months of 2008 as part of the rescue package. By contrast, relatively few nonfinancial companies have been able to raise money in recent months. And those doing so have paid dearly for it. For example, Nabors Industries , an oil services company, issued $1.1 billion in 10-year bonds two weeks ago, agreeing to a 9.25 percent interest rate. A year earlier, when oil prices were shooting up, the company had to pay just 6.15 percent to borrow $975 million. Taking out a $1.1 billion at last year’s rates, could have cut annual interest payments by about $34 million. The higher interest bill may be too much to bear for some companies. “Can existing business models support the significantly higher cost of debt that exists now?” asked Max Bublitz, chief strategist at SCM Advisors, an investment firm in San Francisco. “That’s a real issue.” In all, corporations in the United States borrowed about $172.7 billion in the fourth quarter, down slightly from $179.1 billion issued in the last three months of 2007, according to DeaLogic. Some businesses planned well for the refinancing crisis, having socked away cash or set up lines of credit with banks that allow them to refinance debt at predetermined rates, said Ed Liebert, chairman of the National Association of Corporate Treasurers. Others that need to bring new debt to market could sell shorter-term notes at lower interest rates or turn to institutional investors like pension funds or insurance companies and issue debt privately, in hopes of negotiating better rates. Companies with shaky credit are especially vulnerable as their debts come due and are likely to be among the earliest of many expected defaults this year if they cannot find more cash.

Emergency Economic Stabilization Act (2008)


Bodies of 2 Jet Ski Riders Are Found at a Marina

Abstract: Two people, missing since they fell into the water while riding a Jet Ski during Fourth of July celebrations, were found dead at a nearby marina on Friday, the police said. Willie Tom, 44, and Celine Fu, 29, had taken a Jet Ski into Coney Island Creek about 8 p.m. Thursday, the police said. They fell into the water, prompting divers from the Police and Fire Departments to search the area. The divers returned on Friday morning, the police said. After noon, the bodies of Mr. Tom, who lived in Manhattan, and Ms. Fu, of Brooklyn, were pulled from the water at Marine Basin Marina in Brooklyn , the police said. News reports suggested that Mr. Tom, described as an experienced Jet Ski rider and a strong swimmer, and his passenger had not been wearing life jackets. Police and fire officials declined to comment on the reports.

Coney Island Brooklyn
Fatalities,casualties
July 4th
Boat Accidents


Congressman Seeks to Replace Wife on Ballot

Abstract: Just when they thought he was out, Robert E. Andrews pulled himself back in. Mr. Andrews, the New Jersey congressman who declined a re-election bid last spring to mount a challenge to Senator Frank R. Lautenberg in the Democratic primary — an effort that ultimately failed — abruptly announced on Thursday that he would try to hold onto his House seat after all. At the same time, Mr. Andrews’s wife, Camille — who in June won a primary to replace Mr. Andrews in New Jersey’s First Congressional District — gave word on Thursday that she, too, was having second thoughts. Mr. Andrews said in a statement that his wife had taken her name from the ballot for his seat. Benjamin Parvey, Mrs. Andrews’s campaign manager, confirmed Thursday night that she had done so. That clears the way for Mr. Andrews to get back on the ballot as the Democratic candidate, just in time for November’s general election. The Republican candidate is Dale M. Glading. It is the latest move in a game of musical chairs that has provoked more than a few rolled eyes in New Jersey, where Mr. Andrews’s bid to unseat Mr. Lautenberg, after pledging support for the four-term incumbent, ruptured the Democratic Party and alienated many of his colleagues in the House. Indeed, certain jaded souls had long predicted that Mr. Andrews, 51, had planned all along to run again should his bid to unseat the 84-year-old Mr. Lautenberg fail, despite publicly insisting that he was leaving Congress for good. (Mr. Andrews lost the Senate primary with roughly 34 percent of the vote to Mr. Lautenberg’s 61 percent.) “This is something that we couldn’t have predicted six months ago — not,” said Brigid Harrison, a political scientist at Montclair State University. But in an interview, Mr. Andrews insisted that he had made up his mind only in the last week, after discussing it with his wife all summer. “Her plan was to be considered as a serious candidate,” Mr. Andrews said of his wife, a dean at the Rutgers School of Law in Camden. “I had no intention of going back to the Congress until a week ago. I just looked deep into what I believe in and decided that this is what I had to do.” He said he had entertained job offers in finance, including one from Goldman Sachs, but ultimately decided his heart was in public service. Mr. Andrews said that his wife had concluded around the same time that his prospective financial career would pose a conflict of interest if she came to serve in Congress. “Public service is the most meaningful professional activity in my life,” he said. “The other options I had available to me were attractive, but they were not as attractive as public service.” Some New Jersey Democrats said privately that they had been expecting the news since the Democratic National Convention last week, where Mr. Andrews spoke at a breakfast given by the New Jersey Congressional delegation. “It wasn’t like a swan song — it was about the direction our country needs to go in,” said one state Democratic operative who asked for anonymity because he was not authorized to comment. “I turned to a colleague and said, ‘I think this guy’s coming back.’ ” Under state rules, the vacancy on the ballot caused by Mrs. Andrews’s departure must be filled by Sept. 17, on a vote by local Democratic officials from the Congressional district. Mr. Andrews has the support of key party figures in southern New Jersey, especially in his home base, Camden County. Political experts said his selection to fill the vacancy for the nomination was all but preordained. “This has outraged some people in Camden waiting to move up,” Dr. Harrison said. But the district was well organized by party leaders, she said, as demonstrated by the orderly election of Mrs. Andrews in the June primary to fill her husband’s seat, seen by some as a place-holding measure. About 600 officials are eligible to vote on the vacancy, according to the congressman’s campaign. Mr. Andrews said he had spent Thursday trolling for votes, reaching about 150 people by the late afternoon. “I’ve been spending the day doing that, and the party leaders locally have been very supportive of my candidacy,” he said. Several in the party released statements of support through Mr. Andrews’s campaign on Thursday. “Rob’s seniority and standing in the Congress are great benefits for South Jersey,” said Jim Beach, the co-chairman of the Camden County Democratic Party. “We need him in Congress.” Mr. Lautenberg declined to comment. But other New Jersey Democrats were less generous, particularly some colleagues in the Congressional delegation who had been outraged when Mr. Andrews broke ranks to try to beat Mr. Lautenberg. “I guess nothing should surprise me,” said Representative Bill Pascrell Jr., a Democrat from Paterson. “But obviously it’s a flaw in his character. We all have flaws in our character, but we try to solve them. I think it’s very disingenuous.”

Andrews Robert E
Lautenberg Frank R
House of Representatives
New Jersey


Bull Market Dividends Were a Sign of Lax Lending

Abstract: “Dividends don’t lie.” Chalk up the death of another Wall Street cliché. In the late bull market, dividend payments provided one of the seemingly strongest arguments for the bulls. Maybe earnings numbers could be manipulated, but dividend payments required cash. If the company had the cash to hand out, you could be confident the earnings were real. It was a lie. It is now becoming clear that the great news on the dividend front from 2004 through 2006 was not an indication of solid corporate performance; it was just another sign of lax lending standards. Lenders who willingly handed out money to homeowners with bad credit were even more generous to corporate borrowers. Now the situation has reversed. The quarter just ended had the worst dividend news for American companies in half a century, and this quarter could be even worse. Many corporate boards review annual performance and decide what to do about the dividend during the first two months of each year, and it is not likely to be a happy time. Until those meetings are completed, buying stocks for their high dividend yields may be risky. “Investors need to be careful of overly generous yields,” said Howard Silverblatt of Standard & Poor’s, pointing to the possibility that more cuts will soon be announced. In the final three months of 2008, S.& P. counted 288 announcements by public American companies of dividend reductions or eliminations, in contrast to 239 companies that either initiated or raised their payouts. It was the first time since 1958 that there were more negative announcements than positive ones. In the boom years of 2004 through 2006, there were fewer than 100 negative announcements each year — the three best years in that regard since S.& P. started collecting data in 1955. Companies appeared to be flush with cash during those days, but some of that was a mirage stemming from optimistic accounting, particularly at banks. In other cases, the cash was real but it did not stay in corporate treasuries very long. Wall Street was preaching the doctrine of shareholder value, and corporate America bought shares back at an unprecedented rate. From the fourth quarter of 2004 through the third quarter of 2008, the companies in the S.& P. 500 — generally the largest companies in the country — reported net earnings of $2.4 trillion. They paid $900 billion in dividends, but they also repurchased $1.7 trillion in shares. As a group, shareholders were paid about $200 billion more than their companies earned over that four-year period. Suffering investors who held onto their shares during the 2008 plunge may want to reflect on the fact that investors who were dumping shares got roughly twice as much of the money as the loyal holders did. It was not only public companies that were able to pay dividends with cash that might have come from lenders rather than profits. Private equity firms were able to bolster their returns by having companies they owned borrow more money and use the cash to pay dividends. Now some of those same companies are struggling to find cash to finance operations. The pain from the excessive payouts to shareholders from years past will be amplified by the fact that corporate loans have a lot in common with the exploding mortgages that came to dominate the home mortgage market before it collapsed. Until the recent boom, the vast majority of home mortgages called for the homeowner to make monthly payments for up to 30 years, with the loan paid off by the time the payments stopped. With fixed-rate mortgages, the payment was constant, so a homeowner who kept his or her job could repay the loan even if the home’s value fell. Even with adjustable-rate mortgages, there would be no increased payment unless market interest rates rose. The new mortgages ended that. Some were known as 3-27 or 2-28 mortgages, with a teaser interest rate for the first two or three years, and then a sharp increase in payment no matter what happened to market rates. Others were interest-only, or called for payments of even less than the interest being accrued. The common thread was that the borrower would have to refinance at some point. Now, of course, many cannot. Their homes are not worth what is owed, or their income is not adequate to support such a loan under the tighter prevailing standards. In the business sector of the economy, similar loan terms were common. Many companies were financed by bank lines of credit that had to be renewed every few years. Even bond issues were only for 5 or 10 years. Most commercial real estate loans in recent years called for payments of just the interest, with the entire loan to be refinanced within 10 years. To make things seem even better during the good years, lenders were willing to lend larger sums, assuming that rents would rise rapidly in commercial buildings, or that profits would do the same at companies. Where that did not happen — which is to say at most places — many loans will not be able to be rolled over when they mature. Unnecessary bankruptcies loom. So did dividends lie? Perhaps they were simply misunderstood. Their real message from 2004 through 2006 was not that corporate America was doing so well. It was that lenders had embarked on an unsustainable credit expansion that was sure to end in tears.

Stocks and Bonds
Credit
Subprime Mortgage Crisis


How Controversial Is Gov. Paul LePage of Maine? Here’s a Partial List

Abstract: Paul R. LePage, the Republican governor of Maine, faced a torrent of outrage and political pressure on Monday even from some members of his own party, after 48 hours last week in which he threatened a Democratic lawmaker in a profane voice mail message, made sweeping statements about race and ended the week by doubling down and seeming to endorse racial profiling to address the state’s drug crisis. Mr. LePage, 67, has been the center of controversy many times over comments widely perceived as racially insensitive or otherwise offensive. But over the weekend, top Democrats in the state called for him to resign. And State Senator Amy Volk, a Republican, questioned Mr. LePage’s mental health on Sunday in a Facebook post that also revealed that lawmakers were considering whether to convene a special legislative session to address his latest statements. “I share your deep concerns regarding the governor’s behavior,” Ms. Volk wrote. “What I do not know is whether it is due to substance abuse, mental illness or just ignorance.” She added, “Some sort of censure would seem appropriate, and I would welcome the ability to go on the record with a vote.” Top Republicans huddled in meetings on Monday and over the weekend and said they wanted to meet with Mr. LePage, but had not yet settled on a course of action. “Look, if anybody did this that was an employee of any corporation in our state, there would be ramifications,” said Michael Thibodeau, the Republican president of the State Senate, according to The Portland Press Herald . A spokeswoman for Mr. LePage did not respond to a request for comment on Monday. Brash and often unapologetic, Mr. LePage, a businessman, swept into office in 2010 with Tea Party support, and was re-elected in 2014 by a base drawn to his unfiltered style. He has survived wave after wave of controversies. Here is a selected list: 2016 August On Wednesday, Mr. LePage told attendees at a town hall meeting that the vast majority of drug dealers in Maine, which is in the grips of a heroin crisis, were black or Hispanic, and said he was keeping a binder of charged criminals to prove it. Those comments were condemned by the American Civil Liberties Union of Maine, which raised concerns about racial profiling, and by Democratic lawmakers like State Representative Drew Gattine, who said the remarks were racially charged. Mr. LePage, under the impression that Mr. Gattine had called him a racist, left a voice mail message for Mr. Gattine, in which he called him obscenities and said, “I am after you.” According to The Press Herald, Mr. LePage then told reporters that he would like to have a duel with Mr. Gattine and shoot him between the eyes. On Friday, Mr. LePage apologized to the state for his word choice, but declined to apologize directly to Mr. Gattine . He took his binder of drug arrests, with mug shots, to a news conference, and compared Maine’s drug crisis to a war in which combatants must identify and shoot at the enemy. “The enemy right now, the overwhelming majority of people coming in, are people of color, or people of Hispanic origin,” Mr. LePage said. On Monday, he seemed to double down on his remarks, the State House News Service reported. At a meeting of New England governors and Canadian provincial premiers in Boston, he said: “What I said was this: Meth lab arrests are white. They’re Mainers. The heroin-fentanyl arrests are not white people. They’re Hispanic and they’re black, and they’re from Lowell and Lawrence, Mass.; Waterbury, Conn.; the Bronx and Brooklyn. I didn’t make up the rules. That’s how it turns out. But that’s a fact. It’s a fact. What — do you want me to lie?” April Mr. LePage apologized after storming offstage and calling protesting students “idiots” during a public appearance. March Mr. LePage displayed “Wanted”-style posters aimed at environmentalist and union groups during a town meeting, saying those groups were holding the state back. February Mr. LePage said asylum-seekers brought disease and the “ziki-fly.” When asked to apologize at an event in June, Mr. LePage did not, and said conditions like hepatitis C and H.I.V. were on the rise in Maine. Mr. LePage also drew criticism that month for appearing to mock a Chinese businessman’s name. That month, Mr. LePage also delivered his State of the State address in the form of a letter , breaking the tradition of giving a speech to lawmakers. He said it would be “silliness” to address lawmakers who had tried to impeach him. January Mr. LePage apologized for a “slip-up” after saying drug-dealers would come from out of state and “impregnate a young white girl” before leaving. The drug dealers, he said, in a comment that was widely perceived as racially charged, “are guys with the name D-Money, Smoothie, Shifty — these types of guys.” 2015 July Mr. LePage apologized to the son of a cartoonist for The Bangor Daily News because he had told the son he would “like to shoot” his father. That comment drew criticism, with some noting its added insensitivity given the attack at the Charlie Hebdo newspaper in Paris earlier that year, although the son said he was not offended. June A charter school in Maine said Mr. LePage had threatened to take away its funding if it did not rescind a job offer to the House speaker, Mark Eves, a Democrat. “The full power of the state was used to put a father of three out of a job because he was a lawmaker who disagrees with the governor on policy,” the editorial board of The Press Herald wrote . Some Democrats called for impeachment, but an effort to investigate Mr. LePage — which would have been a precursor to impeachment in January 2016 — did not muster enough support for a vote. May Mr. LePage vowed to veto all Democratic-sponsored bills until the party accepted his effort to eliminate the state’s income tax. The question of whether Mr. LePage had vetoed 65 bills within the proper time frame ended up in the State Supreme Court , which found that the bills could stand as law . 2013 August Two lawmakers, who remained anonymous, said they had heard Mr. LePage say at a fund-raiser that President Obama “hates white people.” June Mr. LePage made a graphically lewd statement about Troy Jackson, a Democrat who was the assistant Senate majority leader at the time. He added that Mr. Jackson was a “bad person” with “no brains” and a “black heart.” 2012 July Mr. LePage compared the Internal Revenue Service to the Gestapo in a radio address. Asked about the comment in a follow-up interview several days later, he said: “What I am trying to say is the Holocaust was a horrific crime against humanity and, frankly, I would never want to see that repeated. Maybe the I.R.S. is not quite as bad — yet.” 2011 January Mr. LePage said leaders from the N.A.A.C.P. who had questioned his decision not to attend Martin Luther King’s Birthday events could “kiss my butt.” 2010 September During his campaign for governor, Mr. LePage told a group of fishermen that he would tell Mr. Obama to “go to hell.”

Paul R LePage
Maine
Governors
Republicans
Drew Gattine


Eliud Kipchoge of Kenya Wins Marathon; Galen Rupp Takes Bronze

Abstract: RIO DE JANEIRO — The favorite Eliud Kipchoge of Kenya won the Olympic marathon on Sunday, drawing away over the final four miles to win in 2 hours 8 minutes 44 seconds. Feyisa Lilesa of Ethiopia took second in 2:09:54, while Galen Rupp of the United States won the bronze medal in 2:10:05, his personal best. Kenyans won both marathons at the Rio Games. Jemima Sumgong won the women’s marathon, becoming the first Kenyan woman to win a gold medal in the 26.2-mile event. Dressing Up, and Stripping Down, as Games End 14 Photos View Slide Show › Image James Hill for The New York Times “It is amazing for us,” Kipchoge, 31, said. “Kenyans will be very happy. This is history, the first time the women and the men win” in the same Olympics “and it is the best moment of my life.” At 35 kilometers, or 21.7 miles, of the men’s race, Kipchoge held a lead of only one second over Lilesa and Rupp. Rupp seemed in a position to become perhaps the first American man to win the Olympic marathon since Frank Shorter won in 1972. But this was only the second marathon run by Rupp, who ran his first at the Olympic trials in February. He had finished fifth in the 10,000 meters in Rio after winning a silver medal in the event at the 2012 London Olympics. On Sunday, he began to fall back. Image Kipchoge won the men’s Olympic marathon on Sunday in 2 hours 8 minutes 44 seconds. Credit Lucy Nicholson/Reuters At one point, Kipchoge motioned to Lilesa, 26, to help him share the lead. Lilesa would not or could not. And so Kipchoge drew away, winning by more than a minute, becoming what many consider the greatest marathon runner ever. He has won seven of the eight marathons he has entered. “It was a championship, and it was a bit slow, so I decided to take over,” Kipchoge said. “Maybe it was the rain, maybe not. Everyone wants a medal. I was coming here for gold.” In April, he had come within eight seconds of the world record at the London Marathon, running his personal best of 2:03:05 on a cool, blustery day. Last fall, while winning the Berlin Marathon, Kipchoge might have set the world record, but the insoles came out of his Nike shoes. Image Eliud Kipchoge of Kenya leading the pack in the men’s marathon on Sunday. Credit Quinn Rooney/Getty Images There was no chance of a world record at this Olympic marathon, which lacked pacesetters and had some sharp turns, and where an early morning rain had left the air muggy with a temperature in the 70s. At the halfway point, a group of about two dozen runners had a shot at the lead, running a 1:05:55. But the lead pack was down to nine runners at 30 kilometers (18.6 miles). By 20.5 miles, it was left to Kipchoge, Lilesa and Rupp to decide the race’s between them. “I was emotionally drained after the 10K, but I got it out of the system and decided to have an attacking race,” Rupp, 30 said. “Maybe this is my best event.” The other American finishers were Jared Ward, sixth in 2:11:30, and Meb Keflezighi, 33rd in 2:16.46.

2016 Summer Olympics
Marathon
Eliud Kipchoge
Galen Rupp


House G.O.P. Considers Ban on Lobby-Paid Travel

Abstract: WASHINGTON, Jan. 10 - House Republicans assembling a package of proposed changes in lobbying rules are contemplating a ban on all travel underwritten by outside groups, the lawmaker who is leading the effort said Tuesday. The lawmaker, Representative David Dreier of California, chairman of the Rules Committee, said Speaker J. Dennis Hastert has endorsed the idea of prohibiting members of Congress and their aides from accepting trips not paid for out of Congressional budgets. "The plan is to be really bold and strong here," said Mr. Dreier, who said he discussed a potential overhaul of lobbying rules Tuesday with Senator John McCain, the Arizona Republican who has introduced his own plan in the Senate. Mr. Dreier said he was scheduled to meet Wednesday with Representative Steny H. Hoyer of Maryland, the No. 2 Democrat in the House, in an effort to approach the issue in a bipartisan way. A ban on privately financed travel is likely to be unpopular with many lawmakers as well as a variety of special-interest groups that arrange and pay for trips around the globe for lawmakers and senior aides as a way to foster relationships and educate them on their issues of interest. Registered lobbyists are prohibited from paying for such travel. But Jack Abramoff, the lobbyist who pleaded guilty to federal corruption charges last week, is accused of using third-party groups to pay for lavish trips overseas for Representatives Tom DeLay of Texas and Bob Ney of Ohio as well as senior Congressional aides. Many other lawmakers have also run afoul of requirements for reporting their private travel. Mr. Hastert and others have previously suggested creating a system for lawmakers that would require trips to be approved in advance by the House ethics committee but not eliminate them. Mr. Dreier said he was also examining ideas for new reporting requirements for lobbyists as well as tougher restrictions on how long lawmakers and aides must wait after leaving Congress before returning there to work as lobbyists. The current period is one year. "There is a strong sense that we do need to move on this," Mr. Dreier said. "I think the American people want us to act." The discussion on lobbying rules was intensifying as two senior Republicans, Representatives Roy Blunt of Missouri and John A. Boehner of Ohio, continued their recess battle to replace Mr. DeLay, who said Saturday that he was abandoning any effort to regain the position of majority leader after he was forced to step down last year as a result of his indictment in Texas. House leaders had been leaning toward a Feb. 2 election to fill that post, but lawmakers and aides said that there was a new move to conduct it earlier, possibly Jan. 30, if lawmakers can arrange to return to the capital. That change would allow President Bush to deliver his State of the Union address on Jan. 31 without the distraction of a leadership battle. Aides to Mr. Blunt released the names of new supporters on Tuesday as they counted 44 publicly declared backers of the 116 votes needed. Among them were Representatives Duncan Hunter of California, chairman of the Armed Services Committee, and Jack Kingston of Georgia, a member of the leadership. Aides to Mr. Boehner said he was making progress as well, putting their public pledge total at 30. They said time was on their side. Mr. DeLay, a longtime party vote counter who returned to the Capitol on Tuesday to begin his permanent transition out of the majority leader's position, said the contest was competitive. "It's a real race," he said. "The first we've had since '94." Mr. DeLay said that one reason for his quick trip to Washington was to consult with staff members who would need to change jobs. He said he was "at peace" with his decision to leave the leadership -- a move that came after lawmakers began circulating a petition calling for new elections -- and said the shake-up would ultimately be good for House Republicans. "It's a cleansing process," he said.

WASHINGTON (DC)
HASTERT J DENNIS
LOBBYING AND LOBBYISTS


Planned Parenthood Tells Congress More Videos of Clinics Might Surface

Abstract: WASHINGTON — Planned Parenthood on Monday told congressional investigators that abortion opponents had harassed and unlawfully infiltrated its clinics for years and most likely possessed thousands of hours of surreptitious video recordings that they could “deceptively edit” and spread for months to come. The charge came in a five-page letter from a Planned Parenthood lawyer that was the group’s initial response to an investigation by Republicans on a House committee. Last week, the committee opened the inquiry after anti-abortion activists circulated a video showing one of the organization’s doctors describing how some affiliates provide donated fetal tissue to researchers. The activists allege that the video proved that Planned Parenthood sells parts from aborted fetuses for profit, which is a criminal offense — an allegation now echoed by some Republican lawmakers and presidential candidates. Planned Parenthood denies the charge, citing the doctor’s statements in the video as proof that affiliates charge only small amounts to cover handling costs, which is legal. The group’s prediction of more videos to come is based on reports from its clinics nationwide that abortion opponents had infiltrated them, posing questions to unsuspecting employees and patients. If more videos surface, that could galvanize conservatives in Congress for some time, even contributing to the risk of a government shutdown this fall if enough Republicans try, as they have in the past, to block spending bills unless federal funding to Planned Parenthood is eliminated. In the letter to the House Energy and Commerce Committee, the lawyer for Planned Parenthood, Roger K. Evans, said the organization’s chief medical officer, Dr. Raegan McDonald-Mosley, would brief congressional staff investigators about the group’s practices in getting patients’ consent and providing tissue to medical researchers. But in a letter Friday, the committee requested a briefing by July 31 from Dr. Deborah Nucatola, who was secretly recorded on the video with two abortion opponents posing as biotechnology representatives. Planned Parenthood is still considering whether Dr. Nucatola should speak to congressional staff members, Mr. Evans said, given the allegations of criminality against her from Republicans. While promising Planned Parenthood’s cooperation with the committee, Mr. Evans devoted much of his letter to outlining, as he put it, “some significant and disturbing facts about the individuals who have spurred this unfounded controversy, extremists who have spent a decade deceiving the public and making false charges” to try to close Planned Parenthood and end abortions. He said the activist mainly responsible for the video, David Daleiden, created a fake company called Biomax Procurement Services for “a campaign of corporate espionage.” He said Mr. Daleiden had been involved in at least 10 “attacks” on Planned Parenthood over eight years, “gaining access to our health centers and offices under false pretenses, taping staff (and sometimes patients) without their knowledge,” and making at least 65 recordings. Mr. Daleiden on Monday declined to be interviewed, as he did last week when his video appeared on a website for a group he recently created called the Center for Medical Progress . But a statement on the site Monday said the center “follows all applicable laws in the course of our investigative journalism work,” and promised that “more clear evidence that Planned Parenthood routinely profits from the sale of baby parts” was coming. Mr. Evans, in his letter, said Mr. Daleiden’s ruse to infiltrate Planned Parenthood included putting up exhibits for Biomax at the organization’s conferences in recent years. The lawyer also raised questions about whether Biomax or the Center for Medical Progress violated state or federal laws involving corporate filings and taxes. A Biomax representative at least once was admitted by Planned Parenthood employees to “a highly sensitive area in a clinic where tissue is processed after abortion procedures,” Mr. Evans wrote. Another time, a Biomax representative asked about the racial characteristics of tissue provided to researchers; anti-abortion activists have often alleged that Planned Parenthood engages in “genocide” of African-American babies. And Biomax proposed “sham procurement contracts,” offering one clinic $1,600 for a fetal liver and thymus, Mr. Evans said. In the video, Dr. Nucatola says that clinics charge $30 to $100 for a specimen. Mr. Evans, in his letter, noted that she also said 10 times during a two-and-a-half-hour lunch that the charges were for expenses, not profit. But, he added, those statements were not included in the initial nine-minute video. He said they were in the full-length video, which was released at the same time.

Abortion
Planned Parenthood
Video Recordings
Downloads and Streaming
House of Representatives
Congress
David Daleiden
Raegan McDonald-Mosley


Man Charged With Killing a Developer in January

Abstract: The New York Police Department has arrested a 26-year-old man in connection with the kidnapping and killing of a Brooklyn developer, whose body was found smoldering in a trash container at a gas station in Nassau County on Jan. 3. The suspect, Kendel Felix, of 921 Montgomery Street in Brooklyn, has been charged with second-degree murder, the police said Wednesday night. Earlier in the day, the police were questioning the suspect. “We’re very pleased with the direction the investigation is now going,” the New York police commissioner, William J. Bratton, told reporters earlier on Wednesday. “Over the last 24 hours, the pace of that investigation has accelerated significantly, and our anticipation is over the next 24 hours that it will continue to accelerate and hopefully draw to a conclusion.” Mourners at the funeral of the developer, Menachem Stark, described him as a pillar of the Hasidic community. But his finances were in disarray , even as he opened buildings across northern Brooklyn. Court records indicate that he and a business partner had defaulted on major loans. Mr. Stark, 39, had been abducted as he was leaving his office at 331 Rutledge Street in Williamsburg, Brooklyn, shortly before midnight. Two kidnappers forced him into a minivan after a struggle that lasted for several minutes, the police said. Mr. Stark’s remains were found at a gas station in Great Neck the next day. An autopsy found that he had died from asphyxiation, indicating that he had probably been suffocated.

Menachem Stark
Murders
Williamsburg Brooklyn
Great Neck NY
NYC
Kendel Felix
Kidnapping


Icy Stillness and Muted Fishing in a New England Port

Abstract: NEW BEDFORD, Mass. — Mark Abraham, who has fished the New England coast for decades, kept a sharp eye on his catch as the slimy haddock spilled onto a dockside conveyor belt. He had just returned from 10 frigid days at sea, among the most brutal he has spent. “It’s probably been the worst winter in 10 years,” he said as workers sorted the fish by weight and slid them into bins. “It’s not even the ice that’s stopping you, it’s the wind. It’s too rough to fish. If it’s rough like that, you don’t catch anything.” This winter has pounded much of New England with record snowfall, encased the region in a deep freeze that has kept the snow from melting, and disrupted work, school and lives in general for millions of residents. Here in New Bedford , the top commercial fishing port in the nation, the winter has also slowed commerce, as was instantly apparent from Mr. Abraham’s relatively meager haul. He unloaded 18,800 pounds of haddock at the Whaling City Seafood Display Auction here; Richard Canastra, president of the auction, said that in good weather, Mr. Abraham might have brought in 40,000 pounds. A glance at the historic harbor, the epicenter of the whaling industry in the 19th century, when New Bedford was the richest city per capita in the world, also tells the story. The Acushnet, the river that is the city’s lifeline to the sea — and the name of the New Bedford whaling ship that Herman Melville shipped out on in 1841 — is nearly frozen over. Vast ice floes clog the harbor, and many smaller vessels are locked in place. For an active port, it is astonishingly still. Nothing moves for hours. Old salts who know their history know the dangers of trying to navigate waterways caked with ice. The Whaling Disaster of 1871 was a teachable moment, when 33 whaling ships, many of them from New Bedford, were trapped in the Arctic off the Alaskan coast; the ice tightened like a noose around four of the vessels and eventually crushed their hulls. For the first time in more than a decade, the Coast Guard in February issued “severe ice” bulletins for southeastern New England. “The severe frigid weather we have experienced for the past two weeks or so is expected to continue for at least another five days,” read one bulletin, issued Wednesday. The Army Corps of Engineers has banned vessels shorter than 65 feet from Cape Cod Canal. The Coast Guard has no mandatory restrictions in place, but warns that buoys and other navigational aids have been submerged or blown off their stations and rendered useless. It recommends daylight passage only and one-way traffic. “Virtually all mariners have adopted these measures,” said Edward G. LeBlanc, chief of the waterways management division of the Coast Guard for Southeastern New England . Image With boats unable to move up the channel, a seafood auction employee used the time to clean a filter. Credit Charlie Mahoney for The New York Times Mr. LeBlanc helps assign the Coast Guard cutters that break up the ice, though the latest bulletin warned that the ice was so thick in spots that it could not be broken. “Every day we look at where the ice is forming, what deliveries are expected and what ships need to get out,” he said. “Is it to bring in automobiles, which is important for the economy, or is it to bring heating oil and gas, which is vital to keeping people warm? Keeping ferries running to the islands is also key, not just a convenience but a necessity.” Bigger fishing vessels, like the Humbak , on which Mr. Abraham sailed, continue to operate because livelihoods depend on them. Mr. Canastra, who runs the last fish auction in New Bedford, auctioned Mr. Abraham’s haddock to buyers and processors the morning after it was unloaded. They in turn sold it to restaurants and supermarkets. The prices have climbed, Mr. Canastra said, because supply is low and demand is high; heavily Catholic New England is in the Lenten season and needs more fish on Fridays. From Jan. 1 through last Monday, Mr. Canastra said, the haul from all of his fishermen was 45 percent lower than in the same period last year. He attributed the decline to the weather as much as to federal quotas. “In a way, the quotas are worse,” he said. “The storms are only two months of the year, while the quotas are 12.” Image Crew members on the Ida Lewis prepared tools to tend to navigational gear in New Bedford Harbor last week. Credit Charlie Mahoney for The New York Times The harbor is not the only victim of the harsh winter. New Bedford is enduring record snowfalls and bitter temperatures; on Feb. 21, they plunged to 12 below zero. Like Boston, the city has had to truck snow out of its compact downtown to outlying snow farms. One of them, along the harbor here, is so vast that Jonathan F. Mitchell, the mayor of New Bedford, calls it a mountain range. Mr. Mitchell said he had set aside $350,000 for snow removal but had already spent twice that, with little to show for it since nothing has melted. “It’s a big pain in the butt,” he said. He had to close City Hall for several days, which also meant shutting down the schools and libraries, which in turn ground many businesses to a halt. Over the last several years, New Bedford has done much to pull itself out of the economic doldrums that have stymied so many other old Northeast industrial towns. But one growing concern here is that the harsh winter may nip that progress because it knocked out the transit system in Boston. That could mean little political will — and no spare money — to build a long-promised commuter rail line between New Bedford and Boston, 60 miles away. Mr. Mitchell said that while he wanted the rail service, it was not central to the city’s economic development strategy, which he said depended more on growth at the port and on building out the campus of the nearby University of Massachusetts Dartmouth. The mayor has another plan in the works, saying that New Bedford could bolster Boston’s bid to host the 2024 Summer Olympics by staging the sailing races in nearby Buzzards Bay. Those races are tentatively planned for Boston Harbor, but, Mr. Mitchell said, “New Bedford may well be the best place in America to host Olympic sailing.” If the ice ever melts.

New Bedford Massachusetts
Port
Commercial fishing
New England
Winter
Ice
Acushnet River


Council to Ask Banks to Describe Efforts to Aid Poor Areas

Abstract: As a huge trading loss at JPMorgan Chase intensifies criticism of the nation’s big banks, the New York City Council plans to vote on Tuesday to require banks to make public their efforts to be socially responsible before the city decides where to deposit the billions of dollars it keeps in banks. The city currently deposits money at 31 banks — among them JPMorgan Chase, Citibank, Bank of America , Capital One , Deutsche Bank , HSBC and Wells Fargo — chosen for their financial soundness and ratings by federal and state agencies. But leaders of the Council say those criteria are no longer enough. As the Occupy Wall Street movement focuses attention on the role of banks in the financial crisis, and the JPMorgan loss prompts calls for increased regulation, council members want the city to begin weighing the services banks offer in poor neighborhoods when determining which ones to do business with. Cleveland and Philadelphia have had laws in place for over a decade similar to the one being proposed in New York, and now the financial crisis has led several other cities to consider them . Pittsburgh recently passed a bill that requires banks that want city deposits to submit community reinvestment plans every two years. Los Angeles , Boston , and San Diego are all considering similar measures. The New York measure, championed by Christine C. Quinn , the Council speaker and a leading candidate for mayor in 2013, opens yet another rift between the Council and Mayor Michael R. Bloomberg over how the city should respond to concerns about economic inequality. The mayor has already threatened to sue the Council over two other pieces of legislation, the so-called living- and prevailing-wage bills, which would raise wages for some private-sector workers above the minimum wage. In a brief interview Friday, as he left a breakfast with local bankers in the Bronx , Mr. Bloomberg said he strongly opposed new restrictions on where the city could put its deposits, which can be as much as $7 billion. “You would think, between the federal government and the state government, we’d have enough bank regulations,” Mr. Bloomberg said. “I don’t know why the City Council thinks that they have the expertise, or can really add anything other than just adding costs to banks to try to comply.” The banking industry is fighting hard against the bill, which Michael P. Smith, the president of the New York Bankers Association, called “unacceptable as far as our industry is concerned.” “This would represent a whole new layer of regulation,” said Mr. Smith. He said federal and state governments already monitored community performance by banks, and he warned that the measure could discourage banks from taking public deposits. Representatives of Bank of America, Bank of New York Mellon , Capital One, Citibank and HSBC declined to comment, referring questions to the association. Kevin Friedlander, a spokesman for Wells Fargo, said that after a year of talking with the sponsors of the measure, “We can’t support this proposal in its current form.” But some bankers were more sympathetic to the idea. Keith Pilkington, a spokesman for Amalgamated Bank, said, “Amalgamated Bank understands and shares the frustration of the City Council and tens of millions of Americans at a banking and financial system that took tens of billions of dollars in taxpayer aid.” “Amalgamated Bank believes that there is room to improve the pending bill to minimize the administrative and reporting burden on banks and urges the Council to make such changes before passage,” Mr. Pilkington said. “However, Amalgamated Bank believes that banks, and all other businesses that voluntarily choose to do business with New York City should be businesses that pay their employees living wages with benefits and that are committed to the long-term viability, diversity and vibrancy of New York City.” Ms. Quinn, who in her early 20s worked for the Association for Neighborhood Housing and Development , a housing organization that has pushed the measure, said she was motivated by seeing the owners of apartment buildings around the city get overloaded with debt and then be foreclosed on during the financial crisis. She said the proposed measure, which is being sponsored by Councilman Albert Vann of Brooklyn and appears to have the support of a veto-proof majority, was simply about transparency. “It’s a bill to allow New Yorkers, whose money gets deposited in banks, to know how those banks are behaving in their neighborhoods,” she said, adding that it was “not designed to be finger-wagging and punitive.” The Council bill, called the Responsible Banking Act, would require the Department of Finance to create a new advisory board, which would publish an annual report on how banks that apply to take city deposits were doing in meeting the credit needs of the city’s neighborhoods. Banks would be required to provide detailed information, by census tract, about branch locations, loans , delinquencies, foreclosures and loan modifications . The information, as well as the advisory board’s evaluation of the banks, would be published on the Department of Finance Web site and, in the language of the bill, “may be considered” by the mayor, comptroller, and finance commissioner in deciding which banks should be allowed to take city deposits. John Taylor, the president of the National Community Reinvestment Coalition, a network of community organizations that is helping officials in several cities draft “responsible banking” laws, said the measures allowed the cities to push banks to offer more services in poor neighborhoods. “People have stopped looking to the federal government alone to solve all these problems and are looking at what they can do on a local level — what can we do to stimulate economic development and investment in our town,” he said. Marlene Cintron, the president of the Bronx Overall Development Corporation, a nonprofit agency, said that she thought the bill was a good idea. A particular problem in the Bronx, she said, is the small number of local bank branches, a situation she said made banking expensive for residents and encouraged predatory lending. “I’ve always wanted to know what our institutions have been doing in the Bronx — for the Bronx,” she said.

Banking and Finance
Regulation and Deregulation
New York City Council
Mike Bloomberg
Christine C Quinn
NYC
JPMorgan Chase


Legal Bills for Fannie and Freddie Abuses Cost Taxpayers $160 Million

Abstract: Since the government took over Fannie Mae and Freddie Mac , taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress. The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted. The legal payments show no sign of abating. Documents reviewed by The New York Times indicate that taxpayers have paid $24.2 million to law firms defending three of Fannie’s former top executives: Franklin D. Raines , its former chief executive; Timothy Howard, its former chief financial officer; and Leanne Spencer, the former controller. Late last year, Randy Neugebauer, Republican of Texas and now chairman of the oversight subcommittee of the House Financial Services Committee, requested the figures from the Federal Housing Finance Agency. It is the regulator charged with overseeing the mortgage finance companies and acts as their conservator, trying to preserve the company’s assets on behalf of taxpayers. “One of the things I feel very strongly about is we need to be doing everything we can to minimize any further exposure to the taxpayers associated with these companies,” Mr. Neugebauer said in an interview last week. It is typical for corporations to cover such fees unless an executive is found to be at fault. In this case, if the former executives are found liable, the government can try to recoup the costs, but that could prove challenging. Since Fannie Mae and Freddie Mac were taken over by the government in September 2008, their losses stemming from bad loans have mounted, totaling about $150 billion in a recent reckoning. Because the financial regulatory overhaul passed last summer did not address how to resolve Fannie and Freddie, Congress is expected to take up that complex matter this year. In the coming weeks, the Treasury Department is expected to publish a report outlining the administration’s recommendations regarding the future of the companies. Well before the credit crisis compelled the government to rescue Fannie and Freddie, accounting irregularities had engulfed both companies. Shareholders of Fannie and Freddie sued to recover stock losses incurred after the improprieties came to light. Freddie’s problems arose in 2003 when it disclosed that it had understated its income from 2000 to 2002; the company revised its results by an additional $5 billion. In 2004, Fannie was found to have overstated its results for the preceding six years; conceding that its accounting was improper, it reduced its past earnings by $6.3 billion. Mr. Raines retired in December 2004 and Mr. Howard resigned at the same time. Ms. Spencer left her position as controller in early 2005. The following year, the Office of Federal Housing Enterprise Oversight , then the company’s regulator, published an in-depth report on the company’s accounting practices, accusing Fannie’s top executives of taking actions to manipulate profits and generate $115 million in improper bonuses. The office sued Mr. Raines, Mr. Howard and Ms. Spencer in 2006, seeking $100 million in fines and $115 million in restitution. In 2008, the three former executives settled with the regulator, returning $31.4 million in compensation. Without admitting or denying the regulator’s allegations, Mr. Raines paid $24.7 million and Mr. Howard paid $6.4 million; Ms. Spencer returned $275,000. Fannie Mae also settled a fraud suit brought by the Securities and Exchange Commission without admitting or denying the allegations; the company paid $400 million in penalties. Lawyers for the three former Fannie executives did not respond to requests for comment. A company spokeswoman did not return a phone call or e-mail seeking comment. In addition to the $160 million in taxpayer money, Fannie and Freddie themselves spent millions of dollars to defend former executives and directors before the government takeover. Freddie Mac had spent a total of $27.8 million. The expenses are significantly larger at Fannie Mae. Legal costs incurred by Mr. Raines, Mr. Howard and Ms. Spencer in the roughly four and a half years prior to the government takeover totaled almost $63 million. The total incurred before the bailout by other high-level executives and board members was around $12 million, while an additional $18 million covered fees for lawyers for Fannie Mae officials below the level of executive vice president. Many of these individuals are provided lawyers because they are witnesses in the matters. Employment contracts and company by-laws usually protect, or indemnify, executives and directors against liabilities, including legal fees associated with defending against such suits. After the government moved to back Fannie and Freddie, the Federal Housing Finance Agency agreed to continue paying to defend the executives, with the taxpayers covering the costs. But indemnification does not apply across the board. As is the case with many companies, Fannie Mae’s by-laws detail actions that bar indemnification for officers and directors. They include a person’s breach of the duty of loyalty to the company or its stockholders, actions taken that are not in good faith or intentional misconduct. Richard S. Carnell, an associate professor at Fordham University Law School who was an assistant secretary of the Treasury for financial institutions during the 1990s, questions why Mr. Raines, Mr. Howard and others, given their conduct detailed in the Housing Enterprise Oversight report, are being held harmless by the government and receiving payment of legal bills as a result. “Their duty of loyalty required them to put shareholders’ interests ahead of their own personal interests,” Mr. Carnell said. “Had they cared about the shareholders, they would not have staked Fannie’s reputation on dubious accounting. They defied their duty of loyalty and served themselves. At a moral level, they don’t deserve indemnification, much less payment of such princely sums.” Asked why it has not cut off funding for these mounting legal bills, Edward J. DeMarco, the acting director of the Federal Housing Finance Agency, said: “I understand the frustration regarding the advancement of certain legal fees associated with ongoing litigation involving Fannie Mae and certain former employees. It is my responsibility to follow applicable federal and state law. Consequently, on the advice of counsel, I have concluded that the advancement of such fees is in the best interest of the conservatorship.” If the former executives are found liable, they would be obligated to repay the government. But lawyers familiar with such disputes said it would be difficult to get individuals to repay sums as large as these. Lawyers for Mr. Raines, for example, have received almost $38 million so far, while Ms. Spencer’s bills exceed $31 million. These individuals could bring further litigation to avoid repaying this money, legal specialists said. Although the figures are not broken down by case, the largest costs are being generated by a lawsuit centering on accounting improprieties that erupted at Fannie Mae in 2004. This suit, a shareholder class action brought by the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio, is being heard in federal court in Washington. Although it has been going on for six years, the judge has not yet set a trial date. Depositions are still being taken in the case, suggesting that it has much further to go with many more fees to be paid.

Lawsuit
Federal Housing Finance Agency
Franklin D Raines
Leanne Spencer


Travel to Cuba Eases, but Airlines Will Miss Initial Rush

Abstract: The Obama administration this week lifted some travel and trade restrictions on Americans traveling to Cuba, but commercial airlines will not be flocking to Havana for at least another year, experts say. The new rules , which took effect on Friday, removed the need for travelers to get approval from the United States government before traveling to Cuba. Now, many more are able to travel legally, spend more money on the island, buy Cuban cigars and increase remittances to their families there. But before airlines can schedule direct flights to Havana and other airports, the two countries must still negotiate a new air service agreement. Until that happens, travelers will have to rely on charter flights booked through specialized travel agencies, and that is not expected to change for the next 12 to 18 months, according to travel experts and industry officials. The timeline could be further complicated by opposition in Congress as well as the presidential election next year, which could delay matters in unpredictable ways. “These are big changes and this will take some time, as there has been 50-plus years of mistrust to overcome,” said Tom Popper, the president of Insight Cuba, a travel agency that has been operating in Cuba since 2000 and sends about 3,000 Americans to the country each year. He did not see the hurdles as insurmountable. “There is excitement in Cuba about those changes, and there is a willingness to change,” he said. “Like us, they are looking at this closely. We’ve been divided forever and all of a sudden, in a three-week period, everything changes.” About 100,000 Americans already visit Cuba each year, a number that has surged since more flexible travel rules were introduced in 2011. Cubans living in the United States make an additional estimated 400,000 visits a year. Still, the new policy means that those numbers are certain to increase. Travel agencies have already reported a jump in interest since the Obama administration announced that it was restoring diplomatic relations with Cuba last month, and they are increasing charter capacity in the coming months to address the expected growth in demand. “This will make a huge difference in the numbers of people who can go,” said Bob Guild of Marazul Charters, a travel agency that has been organizing trips to Cuba for 36 years. “This opens up a chance for the American people to go to Cuba that they didn’t have before.” Outside the United States, many airlines already serve Cuban destinations. Travelers can also go to Canada, Mexico, or several Caribbean countries first and take connecting flights there, a loophole that many Americans have taken to circumvent restrictions imposed by the United States, since Cuba does not ban Americans from entering. The biggest carriers, American Airlines, Delta Air Lines and United Airlines, among others, quickly signaled interest in Cuba after the new policy was announced, but so far have not made plans to fly there. “We look forward to expanding service into Cuba as more opportunities become available,” Delta said. JetBlue operates charter flights from Fort Lauderdale, Fla., while American Airlines has been operating charter flights booked by travel agencies into Cuba for 15 years from Miami and Tampa, Fla. Neither is expected to schedule its own commercial flights until a new air service agreement can be established to replace an agreement dating to 1953. Image José Martí International Airport in Havana. Washington has eased restrictions on travel to Cuba. Credit Reuters “We are reviewing the changes to the Cuba travel policy and will continue to be guided by the laws and policies of the U.S. government and the governments of the countries we serve, as they evolve,” American Airlines said in a statement. United said on Thursday that it planned to seek approval for regular flights from Newark and Houston. The trade group Airlines for America said, “There are still a number of steps to be resolved on this issue.” The Department of Transportation issued a notice on Thursday that outlined the steps that needed to be taken before commercial flights could resume. To start, the two governments need to agree on how many flights can operate, at what frequency and from which airports. Cuba, with at least 10 airports, has plenty of gates, but some aviation experts doubt that it will be willing to open up its airspace entirely, to protect the interests of its national airline, Cubana de Aviación. An air service agreement would also encompass things like airport fees and other reciprocal arrangements between airlines and airports. Once an agreement is reached, domestic carriers will most likely face some forms of capacity limits to Cuba, analysts said. This could require the Department of Transportation to seek competitive bids from American carriers interested in flying to Cuba, just as it does to constrained airports in China or Japan, for instance. In its notice, the department said that airlines that served Cuba before the 1959 revolution would not have an advantage over other airlines. Under the new rules outlined by the White House on Thursday, Americans who travel to Cuba for any of a dozen specific reasons will no longer be required to obtain a special license from the Treasury Department. But travel will still be limited to people including those with close relatives in Cuba, those traveling on humanitarian or religious missions, travelers on educational programs, as well as academics and journalists. While specific trips for tourism remain officially banned, the government will no longer be able to enforce any direct oversight. The new rules therefore represent a momentous change, and there is likely to be a major touristic rush to Cuba in the coming years, according to travel specialists. “The floodgates have opened,” Arthur Frommer, founder of the Frommer’s travel guide series, wrote on his blog . “Starting now, any determined American will be able to travel, without hindrance, to Cuba.” Travelers will also be permitted to use credit cards, spend more money in Cuba, and bring back more souvenirs, including up to $100 in tobacco or alcohol. Mr. Frommer added, “It’s obvious that Americans who honestly believe they fit within 12 permitted categories of travel for Cuba can simply pack up and go.”

Cuba
Airlines,airplanes
Travel,Tourism
Embargoes Sanctions
US Politics