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Sunday, December 18, 2011

The deal averting a government shutdown: Who achieved what? (The Week)

New York ? Congress reached an 11th-hour deal to keep federal agencies running. But the horse-trading isn't over

Just 27 hours before a deadline that could have shut down the federal government at midnight Friday, Democrats and Republicans reached an agreement on a $1 trillion spending bill that will keep the lights on through the end of the fiscal year in September, 2012. They still have to work out the particulars of another sticking point ? a separate measure extending a temporary payroll tax cut and jobless benefits. So what did both parties gain, and give up, to break the impasse? Here, a brief guide:

So, the parties settled their differences?
Not exactly. They still have to work out how to pay for the $120 billion payroll tax cut extension for 160 million workers, to keep it from expiring on Dec. 31. But they got close enough that the White House and Senate Democrats figured it was safe to detach the payroll-tax issue from the spending bill, which they were delaying in an attempt to force the GOP to negotiate. Now Congress can approve the spending bill, and focus on settling lingering differences over the payroll tax.

SEE MORE: Why the GOP caved in the payroll tax fight: 4 theories

Who caved?
Both sides gave up a little on the spending measure. "The final bill strips out a Republican amendment to the Treasury budget to reinstate Bush-era restrictions on travel to Cuba" ? something President Obama opposed, says David Rogers at Politico. But it also includes some GOP provisions that are hard for Democrats to swallow, such as one blocking new, greener standards for light bulbs.

Will extending the payroll tax be easy now?
Both sides say a deal is near, although anything can happen. Democrats have reportedly dropped their insistence on offsetting the cost with a surtax on people making more than $1 million a year, which was a dealbreaker for the GOP. But Republicans haven't budged on one provision Democrats have described as a poison pill ? a controversial proposal to expedite the review of the Keystone XL oil pipeline.

SEE MORE: The super committee's inevitable failure: Why it's a good thing

What happens if they can't agree?
Both sides want to extend the payroll tax holiday. If they let it expire, the portion of Americans' paychecks withheld for Social Security and Medicare will rise 2 percent ? from 4.2 percent to 6.2 percent. In such a scenario, someone making $50,000 would have to pay $1,000 more in payroll taxes. To avoid that, Congress is likely to pass a two-month extension if no long-term agreement is in sight. That way members will be able to head home for the holidays, and put off a final showdown until February.

Sources: CNN, NY Times, Politico, Washington Post

View this article on TheWeek.com
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Saturday, December 17, 2011

Payroll tax compromise set for Senate vote (AP)

WASHINGTON ? Racing for the exits after a year of bitter battling, senators are voting on compromise legislation to extend a Social Security payroll tax cut and jobless benefits for just two months, setting the table for more fighting in February.

Top Democratic and GOP leaders opted for just a short extension after failing to agree on spending reductions large enough to cover a full year renewal of the 2 percentage point tax cut for 160,000 workers and weekly jobless payments averaging about $300 for millions of people who have been out of work for six months or more.

The legislation is a partial victory at best for President Barack Obama, who's being forced to accept Republican demands for a swift decision on the fate of a Canada-to-Texas oil pipeline that promises thousands of jobs.

Votes were slated for Saturday morning on the measure, along with a final tally to send a $1 trillion-plus catchall spending measure setting the day-to-day budgets of 10 Cabinet agencies. The House cleared the spending bill Friday and will return early next week to vote on the payroll tax measure.

In a statement, White House communications director Dan Pfeiffer indicated Obama would sign the measure, saying it had met his test of "preventing a tax increase on 160 million hardworking Americans" and avoiding damage to the economy recovery.

The statement made no mention of the pipeline. One senior administration official said the president would almost certainly refuse to grant a permit. The official was not authorized to speak publicly.

The developments came a few hours after the White House publicly backed away from Obama's threat to veto any bill that linked the payroll tax cut extension with a Republican demand for a speedy decision on the 1,700-mile Keystone XL oil pipeline proposed from Canada to Texas Gulf Coast refineries.

Obama said on Dec. 7 that "any effort to try to tie Keystone to the payroll tax cut I will reject. So everybody should be on notice."

Obama recently announced he was postponing a decision until after the 2012 elections on the much-studied proposal. Environmentalists oppose the project, but several unions support it, and the legislation puts the president in the uncomfortable position of having to choose between customary political allies.

Republican senators leaving a closed-door meeting put the price tag of the two-month package at between $30 billion and $40 billion said the cost would be covered by raising fees on new mortgages backed by Fannie Mae and Freddie Mac.

The fees, drawn from a Treasury Department housing finance market reform plan, could add several thousand dollars to the 30-year cost of Fannie- and Freddie-backed mortgages. A worker making a $100,000 salary would reap a tax cut of about $330 through the short-term payroll tax extension.

Just hours before the vote, the legislation had not been made public.

The measure would also provide a 60-day reprieve from a scheduled 27 percent cut in the fees paid to doctors who treat Medicare patients.

Several officials said it would require a decision within 60 days on the pipeline, with the president required to authorize construction unless he determined that would not be in the national interest.

Officials said that in private talks, the two sides had hoped to reach agreement on the full one-year extension of the payroll tax cut and unemployment benefits that Obama had made the centerpiece of the jobs program he submitted to Congress last fall.

Those efforts failed when the two sides could not agree on enough offsetting cuts to blunt the measure's impact on the debt.

The failure tees up the issue again for early next year, but it won't get any easier to agree on spending cuts.

"We'll be back discussing the same issues in a couple of months, but from our point of view, we think the keystone pipeline is a very important job-creating measure in the private sector that doesn't cost the government a penny," said Sen. Mitch McConnell of Kentucky, the Republican leader.

There was no immediate reaction from House Speaker John Boehner, R-Ohio. Neither he nor his aides participated in the negotiations, although McConnell said he was optimistic about the measure's chances for final approval. The payroll tax cut is unpopular in GOP ranks and another vote in two month could present a headache for GOP leaders.

The State Department, in an analysis released this summer, said the project would create up to 6,000 jobs during construction, while developer TransCanada put the total at 20,000 in direct employment.

The 1,700-mile pipeline would carry oil from western Canada to Texas Gulf Coast refineries, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma.

The spending bill would lock in cuts that conservative Republicans won from the White House and Democrats earlier in the year.

Republicans also won their fight to block new federal regulations for light bulb energy efficiency, coal dust in mines and clean water permits for construction of timber roads.

The White House turned back GOP attempts to block limits on greenhouse gases, mountaintop removal mining and hazardous emissions from utility plants, industrial boilers and cement kilns.

___

Associated Press writers David Espo, Alan Fram, Donna Cassata and Jim Kuhnhenn contributed to this report.

Source: http://us.rd.yahoo.com/dailynews/rss/economy/*http%3A//news.yahoo.com/s/ap/20111217/ap_on_go_co/us_congress_rdp

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SEC charges ex-Fannie, Freddie CEOs with fraud (AP)

WASHINGTON ? The Securities and Exchange Commission on Friday brought civil fraud charges against six former top executives at Fannie Mae and Freddie Mac, saying they misled investors about risky subprime loans the mortgage giants held when the housing bubble burst.

Those charged include the agencies' two former CEOs, Fannie's Daniel Mudd and Freddie's Richard Syron. They are the highest-profile individuals to be charged in connection with the 2008 financial crisis.

The federal government has faced criticism for not bringing charges against top executives who may have contributed to the worst financial meltdown since the Great Depression.

Mudd, 53, and Syron, 68, led the mortgage giants in 2007, when home prices began to collapse. The four other top executives also worked for the companies during that time.

The lawsuit was filed in federal court in New York City.

"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, SEC's enforcement director. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk."

Fannie and Freddie both entered into agreements with the government on Friday, accepting responsibility for its conduct without admitting or denying the charges. The government-controlled companies also agreed to cooperate with the SEC on the cases against the former executives.

The Justice Department has opened up probes into Fannie and Freddie but has not charged anyone with a crime.

In a statement released through his attorney, Mudd said the lawsuit "should never have been brought" and said the government reviewed and approved all of the company's financial disclosures.

"Every piece of material data about loans held by Fannie Mae was known to the United States government to the investing public," Mudd said. "The SEC is wrong, and I look forward to a court where fairness and reason ? not politics ? is the standard for justice."

Syron's lawyers said the case was "without merit," and said the term "subprime had no uniform definition in the market" at that time.

"There was no shortage of meaningful disclosures, all of which permitted the reader to assess the degree of risk in Freddie Mac's" portfolio, the lawyers said in a statement. "The SEC's theory and approach are fatally flawed."

According to the lawsuit, Fannie told investors in 2007 that it had roughly $4.8 billion worth of subprime loans on its books, or just 0.2 percent of its portfolio. The SEC says that Fannie actually had about $43 billion worth of products targeted to borrowers with weak credit, or 11 percent of its holdings.

Mudd told a congressional panel in March 2007 that Fannie's subprime business represented less than "2 percent of our book." He also said the company held subprime mortgages "very carefully." A month later, he told a separate congressional panel that subprime loans represented less than 2.5 percent of Fannie's books.

Freddie told investors in 2006 that it held between $2 billion and $6 billion of subprime mortgages on its books. The SEC says its holdings were actually closer to $141 billion, or 10 percent of its portfolio in 2006, and $244 billion, or 14 percent, by 2008.

In a May 2007 speech in New York, Syron said Freddie had "basically no subprime exposure," according to the suit.

Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default and then sell them to investors around the world. The two own or guarantee about half of U.S. mortgages, or nearly 31 million loans.

During the financial crisis, the two firms verged on collapse. The Bush administration seized control of them in September 2008.

So far, the companies have cost taxpayers almost $150 billion ? the largest bailout of the financial crisis. They could cost up to $259 billion, according to its government regulator, the Federal Housing Finance Administration.

Mudd was fired from Fannie after the government took over. He's now the chief executive of the New York hedge fund Fortress Investment Group.

Syron resigned from Freddie in 2008. He's now an adjunct professor at Boston College.

The other executives charged were Fannie's Enrico Dallavecchia, 50, a former chief risk officer, and Thomas Lund, 53, a former executive vice president; and Freddie's Patricia Cook, 58, a former executive vice president and chief business officer, and Donald Bisenius, 53, a former senior vice president.

Lund's lawyer, Michael Levy, said in a statement that Lund "did not mislead anyone." Lawyers for the other defendants declined to comment Friday morning.

Fannie and Freddie had traditionally purchased a small number of subprime mortgage loans, which involved borrowers with credit problems who could not qualify for cheaper prime loans. But starting in the late 1990s many firms started purchasing subprime loans, and Fannie and Freddie followed suit.

Legal experts say the cases, while unusual, might not yield much in penalties against the former executives.

In July, Citigroup paid just $75 million to settle similar civil charges with the SEC. The company's chief financial officer and head of investor relations were accused of failing to disclose more than $50 billion worth of potential losses from subprime mortgages. The two executives charged paid $100,000 and $80,000 in civil penalties.

A federal judge in the case said she was "baffled" by the low settlement.

Fines against executives charged in SEC civil cases can reach up to $150,000 per violation. SEC Chairman Mary Schapiro has asked Congress to raise the limit to $1 million.

Mudd made nearly $4 million in salary and bonuses in 2007, and Syron made more than $18 million, according to company statements.

The SEC has charged more than 80 people, including 40 CEOs and senior executives, with violations stemming from the 2008 financial crisis.

Source: http://us.rd.yahoo.com/dailynews/rss/personalfinance/*http%3A//news.yahoo.com/s/ap/20111216/ap_on_bi_ge/us_fannie_freddie_charges

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Friday, December 16, 2011

Billionaire Paul Allen's New Space Project Has Deep Roots (SPACE.com)

Microsoft co-founder Paul Allen's new spaceflight venture shouldn't come as a big surprise, because the billionaire has set his sights on the heavens before.

Allen announced today (Dec. 13) that he is forming a new company called Stratolaunch Systems, which plans to launch payloads to orbit from a huge plane at high altitude. Stratolaunch Systems continues a trend for Allen, who has funded several different spaceflight and astronomy efforts over the years.

These ventures are the natural outgrowths of a lifelong fascination with space, said Allen, who as a boy dreamed of becoming an astronaut.

"For me, the fascination with space never ended, and I never stopped dreaming about what might be possible," Allen said during a press conference in Seattle today. [Images: Paul Allen's Giant Airplane Launch Pad]

Following SpaceShipOne

The air-launch concept behind Stratolaunch Systems is similar to that of SpaceShipOne, which won the $10 million Ansari X Prize for suborbital spaceflight in 2004.

The design of SpaceShipOne and its mothership, the White Knight, later became the basis for Virgin Galactic's commercial spaceliner SpaceShipTwo, which may begin carrying tourists to suborbital space as early as next year.

The similarity between the two projects is no coicidence. SpaceShipOne was a joint venture between Allen ? who reportedly invested more than $20 million in the effort ? and Scaled Composites, a California firm headed by aerospace engineer Burt Rutan.

Now, Rutan will serve on the board for Stratolaunch Systems, and Scaled will develop the new company's gigantic airplane mothership.

The multistage rocket booster used by Stratolaunch will be built by the California-based company Space Exploration Technologies, better known as SpaceX, officials said.

Funding the SETI search

Allen has also advanced research in astronomy ? specifically, the hunt for intelligent alien life in the universe. His foundation helped fund the SETI (Search for Extraterrestrial Intelligence) Institute's Allen Telescope Array (ATA), a set of 42 radio antennas located about 300 miles (500 kilometers) northeast of San Francisco.

Since 2001, Allen's foundation has given about $29 million to develop and help build and operate the array, which researchers use to scan newly discovered alien planets for microwave signals that could indicate the presence of intelligent civilizations.

"Paul was brave enough to go out on a limb and fund all of our technology development work for three years, because this is a new kind of telescope that no one had built before," Jill Tarter, director of the Center for SETI Research at the SETI Institute, told SPACE.com. "He has been a very good partner."

The long-term plan is to expand the array to 350 telescopes. Allen never intended to fund this larger array all by himself; he wanted some partners to come in and help out, Tarter said. That hasn't happened yet, so the SETI Institute is pressing forward with the 42 telescopes for now.

Allen also established the Science Fiction Museum and Hall of Fame, which opened in Seattle in 2004. His scientific interests aren't limited to spaceflight and exploration, however; they're very broad, and Allen has helped fund major research efforts in genetics, medicine and neuroscience, among other fields.

"I'm a huge fan of anything that pushes forward the boundaries of what we can do in science and technology," Allen said. "That's my history. Those are my passions."

You can follow SPACE.com senior writer Mike Wall on Twitter: @michaeldwall. Follow SPACE.com for the latest in space science and exploration news on Twitter @Spacedotcom and on Facebook.

Source: http://us.rd.yahoo.com/dailynews/rss/space/*http%3A//news.yahoo.com/s/space/20111213/sc_space/billionairepaulallensnewspaceprojecthasdeeproots

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South Carolina self-imposes scholarship reduction in NCAA response

A few months ago, the NCAA handed South Carolina a Notice of Allegations following an investigation into?impermissible benefits handed to 12 student-athletes from May 2009 through Oct. 2010. The school had until today to respond to that NOA.

And, as expected,?South?Carolina?has responded with a lengthy letter to the NCAA?agreeing with all three allegations, including the failure to sufficiently monitor allegation. As a result, self-imposed sanctions against the football program will include a loss of six scholarships over the course of three years, a reduction of official recruiting visits to 30 for the 2012-13 year and an $18,500 fine for allowing four ineligible football players to compete during the 2009-10 football season.

You can also see exhibits in the school?s response HERE if you can?t fall asleep.

?We continue to work in full cooperation with the NCAA on this very serious matter,? school president Harris Pastides said. ?As an institution, we established self-imposed penalties and implemented corrective actions.?

South Carolina?s total amount of impermissible benefits from the Whitney Hotel are roughly $47,000. Again, that?s a loss in six scholarships. For $47,000. Boise State received a loss of nine scholarships?over the course of three years?for impermissible benefits ? or, sleeping on the floor of some bro?s apartment, as we like to call it ? totaling less than $5,000, and Ohio State received a loss of five scholarships over three years for impermissible benefits to players totaling less than $1,000.

Just so we?re clear.

The school is scheduled to meet with the NCAA?s Committee on Infractions on Feb. 17-18.

Source: http://collegefootballtalk.nbcsports.com/2011/12/14/south-carolina-self-imposes-scholarship-reduction-in-ncaa-response/

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Survey: Teen marijuana use rises, alcohol use down

LANSING, Michigan (AP) ? More U.S. teens are using marijuana and see it as less of a risk, while their alcohol use has dipped to historic lows, according to an annual national survey of drug use released Wednesday.

The findings are based on an annual survey of 47,000 teens conducted by the University of Michigan for the National Institute on Drug Abuse.

One of every 15 high school seniors reported smoking marijuana on a daily or near daily basis, the highest rate since 1981.

"One thing we've learned over the years is that when young people come to see a drug as dangerous, they're less likely to use it," Lloyd Johnston, the study's principal investigator, said in a telephone interview with The Associated Press. "That helps to explain why marijuana right now is rising, because the proportion of kids who see it as dangerous has been declining."

The study said marijuana use among teens rose in 2011 for the fourth straight year after considerable decline in the preceding decade.

One of every nine students in their last year of school before college reported using synthetic marijuana within the previous 12 months.

The synthetic drug survey question was asked for the first time this year. Fake marijuana, sometimes sold in drug paraphernalia shops and on the Internet as incense, contains organic leaves coated with chemicals that provide a marijuana-like high when smoked.

A Drug Enforcement Administration emergency order banning the sale of five chemicals used in herbal blends to make synthetic marijuana took effect March 1. Many states also have their own laws banning the sale of synthetic marijuana.

White House drug czar Gil Kerlikowske called on parents to get involved to help stop the use of synthetic marijuana.

"It's not in the vocabulary of parents, and they need to be aware of it so that when they have that conversation about substance abuse that they are knowledgeable and they talk about this," he told the AP.

Alcohol use continued a trend of decline dating to the 1980s and hit a historic low for the survey, which began in the 1970s.

Other drugs showing some evidence of decline in use this year include cocaine, crack cocaine and inhalants.

___

Online:

The survey can be found at http://www.monitoringthefuture.org

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/bbd825583c8542898e6fa7d440b9febc/Article_2011-12-14-Teen%20Drug%20Use/id-383fc59c9fb042008c872ffdb37318dc

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