The Ticker Quick Views on Politics, Economics and Finance
Last week, when President Barack Obama fired Steven Miller, the acting Internal Revenue Service commissioner, some people wondered whether he was a fall guy. He had only been running the IRS since November, meaning he wasn’t in charge when the agency was harassing conservative nonprofit groups.
If the president was looking for someone at the IRS to fire, Miller was his only option. Other bad actors, like Lois Lerner, who directs the IRS division in charge of overseeing tax-exempt organizations, are civil servants whose firing must go through a process removed from the White House.READ MORE
Perhaps it's not surprising that the company that redefined personal technology, entertainment and communications would also redefine the meaning of a tax haven.
A new U.S. Senate report on Apple's offshore tax strategy describes more than just a byzantine structure of subsidiaries. It also shows the company claims that three of those subsidiaries are tax residents of nowhere -- not Ireland, where the subsidiaries are nominally located, nor the U.S., from which a layman could be forgiven for concluding those subsidiaries are run.READ MORE
Peggy Noonan's latest column in the Wall Street Journal is an exercise in ahistorical punditry.
Writing about the triple threat to President Barack Obama posed by the Internal Revenue Service's targeting of conservative groups seeking exemption from taxes -- along with the Justice Department's subpoenas of journalists' telephone records and the attack on the U.S. mission in Benghazi, Libya -- Noonan writes: "We are in the midst of the worst Washington scandal since Watergate."READ MORE
The knives are out -- and the media feeding frenzy is on -- for Steven A. Cohen and his $15 billion hedge fund, SAC Capital Advisors.
The firm last week told its investors in a letter that it no longer will cooperate unconditionally with federal investigators, and that the updates it provides about the progress of the government’s probe may be scant. The New York Times has reported that Cohen received a subpoena to testify before a grand jury.READ MORE
Virginia Attorney General Ken Cuccinelli is this year’s Republican nominee for governor, but he might be too extreme to win -- even against Democrat Terry McAuliffe (himself not known for generating great press). This weekend, the Virginia Republican Party came up with an unusual strategy for making Cuccinelli seem reasonable and moderate: give him a running mate who is even more extreme.
Cuccinelli’s running mate will be Bishop E. W. Jackson, a black minister with no experience as an elected official and a penchant for saying outrageous, hateful things. Last year, Jackson ran in a Republican primary for U.S. Senate and got less than 5 percent of the vote. Jackson won this time because the Virginia Republican Party picks its candidates for state constitutional offices through a convention of party activists instead of a primary. If you were an anonymous British political insider, you might say the convention process empowers the party’s “mad, swivel-eyed loon” element.READ MORE
Ben Bernanke, the chairman of the Federal Reserve, recently expressed concern that investors were taking too much risk. To some investors, this was heavy with irony -- most of the risk-taking can be attributed to the policies that Bernanke has pursued during his tenure.
Nayarana Kocherlakota, the president of the Federal Reserve Bank of Minneapolis, reinforced this point May 17. He said the Fed's policies would produce "financial market phenomena" that "pose macroeconomic risks." He made similar arguments last month in a speech I covered here and here. I'm not going out on a limb when I say that we've all endured enough "phenomena" for a while. Wouldn't it be nice if there were an alternative?READ MORE
If I were an ambitious Republican in Congress, I would focus on the one truly egregious scandal of President Barack Obama's administration.
It's not the White House response to the attack in Benghazi, Libya. The smart money is already fleeing that one. It's not the Internal Revenue Service episode, either. The IRS went off the rails, and Republicans will get political mileage from it. But the notion that White House political staff would direct IRS employees to crack down on citizen Tea Party groups is more than dubious. Democrats have had no greater allies in securing their Senate majority or in undermining Republican credibility by transforming the House of Representatives into bedlam.READ MORE
Tumblr Inc. users were not too happy about the news yesterday that Yahoo! Inc. had approved a $1.1 billion bid to buy the blogging platform, popular among the creative, the young and the social-media savvy.
Searching the tag “Yahoo” on Tumblr uncovers legions of the discontented: GIFs galore -- of a guy punching a screen, a “Tumblr" cat fighting a “Yahoo” baby and new terms and conditions to kill creativity. An image of Tumblr Chief Executive Officer David Karp stamped with the scarlet seal of “traitor” had been reblogged more than 30 times by yesterday night.READ MORE
In my column this week, I discuss some steps President Barack Obama could take to get past the current spate of faux scandals threatening to undermine his second term.
Forced resignations of high-level officials after controversies or scandals aren't uncommon in the modern American presidency. Some of the closest presidential advisers over the past half century or so have been forced out.READ MORE
The IRS scandal offers plenty of reason to be upset. It also contains some nuggets of good news: The inspector general did his job. The administration fired the agency's acting commissioner. And IRS investigators may now think twice before applying partisan filters.
In the end, the system worked.READ MORE
Albert R. Hunt
U.S. Treasury Secretary Jacob J. Lew said there will be quick results on any reshaping of the Internal Revenue Service. Acting Commissioner Daniel Werfel will “get started full-bore next Wednesday and within 30 days he will report to me and we will report to the president on actions taken,” Lew told me on Bloomberg Television today.
Werfel is going to look into whether there is a “systemic” problem at the tax agency, Lew said, and whether additional people are going to be held accountable and any failures in management corrected.READ MORE
Like most Americans, one of the few things I know about Canada is that it’s supposed to be better than us. It’s an almost unbearably functional place, what with its non-collapsed banking system and strongly growing economy and harmonious, cosmopolitan society (Quebec excepted). If Canada had nuclear weapons, it would never flirt with giving Sarah Palin control over them.
But I have bad news for you, Canada: Americans have learned about Rob Ford, and we’ll have no more of your smug superiority.READ MORE
The targeting of conservative political groups by the Internal Revenue Service looks like a scandal of the first order. IRS workers charged with determining whether so-called social-welfare groups deserved tax-exempt status screened for organizations with words such as "Tea Party," "Patriots" or "9/12" in their names.
Depending on who's doing the talking, the motives of those responsible for the targeting, or ordered their underlings to do so, range from nefarious to benign. To some, IRS workers (no doubt, all registered Democrats) were aiding President Barack Obama, drawing up the equivalent of Richard Nixon's "enemies list" in an effort to intimidate or stymie groups that likely opposed the president's re-election. To others, the IRS inspector general's report released this week confirms that workers were confused by ambiguous rules over "political activity" and "social welfare" -- whatever that language means.READ MORE
Modern fiscal conservatism has wrapped itself in one whopper of a false choice: that the U.S. must decide between economic growth and the welfare state.
That’s wrong. Conservatives ought to recognize that where there is both robust growth and a sturdy safety net, the government tends to be highly efficient and market-friendly.READ MORE
Unless you're employed by a derivatives trading desk at a large bank, here's some good news: The derivatives cabal is slowly but surely headed for a break-up.
The Commodity Futures Trading Commission yesterday approved new derivatives rules required under the 2010 Dodd-Frank financial reform law. They dictate how buyers and sellers must enter contracts, including credit-default swaps and interest-rate swaps, in the $633 trillion market.READ MORE
Matthew C Klein
(Corrects description of Tim Geithner in second paragraph.)
Ben Bernanke has repeatedly said that he wants to leave his post as Federal Reserve chairman once his term ends early next year. The consensus among economists and journalists is that Janet Yellen, the Fed's current vice chairman, will get the nod. She has years of monetary policymaking experience from her time as a Fed governor in the 1990s and as president of the Federal Reserve Bank of San Francisco in the 2000s.
Last month, Sean West of the Eurasia Group wrote for the Ticker that the prospects for tax reform were dim. Democratic Senator Max Baucus and Republican Representative Dave Camp, who head the relevant tax committees in Congress, had just agreed to pursue tax reform through an open committee process, which West took as a sign that they planned to slow-walk it to death.
Baucus, it seemed, was going to face a tough re-election fight in 2014 and wouldn’t want to make the enemies that would come from enacting tax reform. He’d pay lip service to reform but not really try to pass it. It also wasn’t clear how committed the president was to reform.READ MORE
First Fergie, now Becks. A week after Sir Alex Ferguson announced his retirement from Manchester United, David Beckham announced that he will be hanging up his boots after his final two games with Paris Saint-Germain.
For a good chunk of his 20-year career, Beckham was the most famous soccer player in the world. Not coincidentally, he was also the game’s ambassador to the U.S. for a little while, a post that had effectively been vacant since Pele’s stint with the New York Cosmos in the 1970s.READ MORE
Michael Kinsley, my former Bloomberg View colleague, goes to bat in the New Republic for "'austerians," a term he says is "a clever Krugman coinage that makes adherents sound like aliens from another planet." That would be Paul Krugman, Nobel laureate in economics, Princeton professor and New York Times columnist.
Toward the end of his column, Kinsley gets to the crux of the argument and something Krugman ignores. It's not that austerians -- those who advocate cuts in government spending and increases in taxes during bad times -- want other people to suffer. "They, for the most part, honestly believe that theirs is the quickest way through the suffering," Kinsley writes.READ MORE
The conservative gospel holds that government is best when it is closest to the people, except when it's not. Advocates of limited government prefer state government to the federal government and local government to state government.
This week in North Carolina, however, that philosophy was abandoned after local government took an action that state conservatives didn't like.READ MORE