Republican Defectors Ready to Back Tax-Rate Compromise

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A few dozen Republicans have joined a bipartisan call to break the impasse between PresidentBarack Obama and House Speaker John Boehner over taxes for the highest- earning Americans.

Obama and Boehner spoke by telephone this afternoon, Boehner spokesman Michael Steel said without giving details. A White House aide also confirmed the call, speaking on condition of anonymity.

The Republicans signed a letter calling for exploration of “all options” on taxes and entitlement programs, a signal that some rank-and-file members are ready to bargain.One of the petition leaders, Representative Mike Simpson of Idaho, says he could accept higher rates for married couples earning more than $500,000 a year, in exchange for an overhaul of spending on entitlements such as Medicare.Separately, Representative Kay Granger of Texas is endorsing Oklahoma Republican Tom Cole’s call to extend all tax cuts for middle-class earners as “just the right thing to do.”What unifies these lawmakers is a recognition that Obama’s re-election has strengthened his hand in negotiations aimed at averting more than $600 billion in automatic tax increases and spending cuts set to take effect in January. The letter’s approximately 80 signers are half-Republican, half-Democratic, according to Simpson spokeswoman Nikki Watts.

‘Pretty Obvious’

“It’s pretty obvious Obama won the election, and he promised he was going to raise taxes on the wealthiest,” Simpson said in an interview. “What Republicans said is, ‘We’ve got to have entitlement reform.’”While it may be an unpalatable trade for both sides, he said, “There’s enough sane people left to get it done.”The White House budget office sent a letter to federal agencies this week to collect last-minute information and to prepare for possible automatic spending cuts in January if they aren’t modified or canceled by Congress, Obama press secretaryJay Carney said.He said the Office of Management and Budget was making contingency plans and sought the information to “finalize calculations on the spending reductions that would be required.”

Stocks Rise

Stocks rose after a two-day drop in the Standard & Poor’s 500 Index. The S&P 500 rose 0.2 percent to 1,409.27 at 4 p.m. New York time, after falling as much as 0.6 percent earlier. Treasury 10-year note yields fell one basis point to 1.59 percent at 2:59 p.m. New York time, according to Bloomberg Bond Trader data.A trade-off of higher taxes for entitlement spending cuts would require Boehner, an Ohio Republican, to persuade more than 100 of his majority party members to join House Democrats in approving a deal.Representative Steve LaTourette of Ohio said Boehner could get the 218 votes needed to send a tax increase to the Democratic-run Senate if about 120 House Democrats “buy in” to entitlement cuts, such as raising the eligibility age for Medicare or adjusting the annual Social Security cost-of-living adjustment.

Over the Line

http://www.bloomberg.com/news/2012-12-05/republican-defectors-ready-to-back-tax-rate-compromise.html

Report Bolsters the Case for Large U.S. Natural Gas Exports

By CLIFFORD KRAUSS

Published: December 5, 2012

HOUSTON — In a finding that could help create a new industry ofnatural gas exports in the United States, a government study released on Wednesday concluded that the national economic benefits of significant natural gas exports far outweighed the potential for higher energy prices for consumers and industrial users of the fuel.Enlarge This Image

Brendan Smialowski for The New York Times

To adopt to changing energy needs, Dominion Cove Point LNG in Lusby, Maryland, is being converted from a liquefied natural gas terminal to an export terminal.A blog about energy and the environment.Go to Blog »The study prepared by NERA Economic Consulting for the Energy Department, said that domestic prices would not rise sharply as a result of exports and that export revenue would generally help most Americans.Energy companies have proposed more than a dozen projects to export gas in liquefied form to Europe and Asia, where the fuel is typically three to four times more expensive than in the United States. The Obama administration has been cautious on whether to embrace large exports of gas out of concern that consumers who rely on gas for heating and cooking could see their utility prices rise. Higher exports could also raise costs to manufacturers that now benefit from the nation’s glut of cheap gas, like chemical and fertilizer manufacturers.But the huge gas export terminals, which cost billions of dollars to set up, would also generate thousands of construction jobs, spur further development of natural gas fields and generate lucrative export earnings.The administration has only approved one export terminal so far, by Cheniere Energy in Louisiana, saying it was waiting for the results of the economic study before making decisions on the rest of the projects.Now that the report has been finished, most observers expect more projects to get the green light.The report found that higher exports would actually generate more economic benefits. Noting that gas exports could produce up to $47 billion in new economic activity in 2020, when many new terminals would be up and running, it said, “Welfare improvement is highest under the high export volume scenarios because U.S. consumers benefit from an increase in wealth transfer and export revenues.”Only a decade ago, it appeared that the country’s domestic gas supplies were drying up and that huge amounts of expensive gas in liquefied form would have to be imported from Trinidad, Africa and the Middle East. But over the last few years, a technological revolution has occurred in shale gas fields across the country, driven by hydraulic fracturing and horizontal drilling. That has produced a glut that has driven the price of natural gas down by two-thirds since 2008.http://www.nytimes.com/2012/12/06/business/energy-environment/government-report-bolsters-the-case-for-large-us-natural-gas-exports.html

Banks gird for new world as Citi cuts 11K jobs

9:59PM EST December 5. 2012 - Citigroup's plan to cut 11,000 jobs is far from the first big downsizing Wall Street firms have executed since the 2008 financial crisis. And it won't be the last.The nation's third-biggest bank is the latest in a series of financial institutions to cut large numbers of jobs. Behind the cuts is new CEO Michael Corbat's push to improve Citi's performance — and free up cash flow so it can boost its paltry stock dividend, currently just a penny a share. But Citi, like its rivals, also faces pressures from new international regulations that will require banks to boost their capital to protect against future crises and new U.S. regulations flowing from the Dodd-Frank Act that are designed to limit banks' risk-taking.Indeed, while Citi's news Wednesday isn't likely to set off a short-term wave of layoffs, it's part of a broader trend toward an economy that depends much less on the finance industry for jobs and growth than it did before 2008, analysts say. Since the job market bottomed out in 2010, finance has added only 94,000 of the 5 million net new private-sector jobs, according to government data. Before the recession, finance accounted for nearly 6% of private-sector jobs and 22% of the value of the Standard & Poor's 500-stock index."We're moving from an economy where we package financial products to one where we build more things, like products and roads,'' said Nancy Bush, a banking analyst at SNL Financial. "Consumers have reduced their debt, governments will reduce their borrowing, As that happens, everything driven by the financial economy will shrink. Whether people like it or not doesn't matter.''In Citi's case, the moves were overdue, said Michael Mayo, an analyst at Credit Agricole, a persistent Citi critic who this week recommended its shares for the first time in years.Citi's specific problem is it is under-profitable even by the standards of post-crisis banks, Mayo said. It has been less than half as profitable as rival JPMorgan Chase in the last 12 months. Corbat, who took over when Citi dismissed his predecessor, Vikram Pandit, in October, is the first Citi CEO in years to deal aggressively with the bank's high overhead, Mayo said."CEOs 1 through 4 couldn't get it right,'' Mayo said, cracking wise about Citi's executive turnover since Sandy Weill left the top job in 2003. "I didn't think CEO No. 5 would be any better.''Citi's cuts had little directly to do with the changing rules. The bank has made progress toward meeting future capital standards that will phase in next year through 2019. Its capital base has grown 20% so far this year, leaving a cushion of cash and securities worth 8.6% of its risk-adjusted assets (mostly outstanding loans and trading positions) to guard against future losses, Chief Financial Officer John Gerspach said at an investor conference sponsored by Goldman Sachs Wednesday.More than half of the jobs Citi will cut are in information technology and other support areas, Citi said. Other cuts included selling or shrinking the bank's consumer businesses in offshore markets, including Pakistan, Paraguay, Romania and Turkey. Sticking with its strategy to focus on 150 cities globally where it sees the greatest potential growth in consumer banking, Citi also will close 84 branches worldwide, including 44 in the U.S.http://www.usatoday.com/story/money/business/2012/12/05/citi-banking-industry/1749139/