Chicago News Cooperative:
Although it never shared the notoriety of Miami, Los Angeles and Phoenix during America's foreclosure crisis, the Chicago area now has the nation's largest inventory of foreclosed homes because it is harder to unload troubled properties here than in most other metropolitan areas.
The inventory data compiled by RealtyTrac, a California company that tracks housing sales, place Chicago first among the country's 20 largest metropolitan areas. Real estate experts attribute the high concentration of foreclosures to numerous factors including the strong protections built into Illinois law to protect borrowers, the impact of the "robo-signing" investigation by the Illinois Attorney General, and the reluctance of banks to dump properties at prices far below the value of mortgage loans on their books.
Read the whole story: Chicago News Cooperative
Save The Economy Segment Pushed Claim That
Government Programs For "Low Income Borrowers" Caused Financial Crisis
Save
The Economy Segment Suggested That Government-Encouraged "Expansion Of
Mortgage Lending To Low Income Borrowers" Caused Housing Bubble To "Burst." From
the June 21 edition of Fox News' Special Report:
BRET BAIER (host): Tonight we continue our 10 part series
on saving the economy. This evening Chief Washington Correspondent James
Rosen looks at what many people believed triggered the downturn: the housing
collapse.(BEGIN VIDEOTAPE)
JAMES ROSEN (Fox News Correspondent): In the month of
May, the National Association of Realtors reports existing home sales fell 3.8
percent, where still the crucial segment of first-time buyers who stoke the
economy by hiring contractors for renovations and investing in their new
neighborhoods made up only 35 percent of last month's sales, well shy of 50
percent they typically comprise.Martin Baily served as chairman of the Council of Economic
Advisors under President Clinton.MARTIN BAILY (Former White House Economics Adviser): All the
programs going back to the ones that Bush instituted and the ones that Obama's
instituted have turned out to be very hard to do anything to raise the state of
the housing market. I mean, what would help consumers is if the prices stop
falling and started rising. That would be the thing that would help everybody.ROSEN: But would an across the board increase in home prices
really help with the central problem of excessive inventory, the backlog of
homes, particularly in sun belt states, that remain unsold? A conservative
economist argued a downward price mechanism would help the housing market
bottom out.VERONIQUE DE RUGY (George Mason University): I think that the
reason why a lot of sellers are not necessarily willing to lower their prices
is they are actually expecting to see whether the government once again is
going to step in and do something to prop up these prices.ROSEN: Almost a decade has passed since President George W.
Bush, speaking to a predominantly African-American audience at a church in
Atlanta, vowed to increase the rates of minority homeownership.GEORGE W. BUSH (Former U.S. President): Right here in
America, if you own your own home, you are realizing the American dream.ROSEN: Mr. Bush's initiative followed similar efforts under
President Clinton, but it was by most accounts the expansion of mortgage
lending to low-income borrowers, who present a higher risk of foreclosure, that
burst the housing bubble of the last decade and triggered the credit crisis.THOMAS SOWELL (Hoover Institution): As someone who lived in
apartments, you know, most of his life, I have never understood why there is
some sort of right to live in a house.ROSEN: And so the solutions for the housing market turn on
one's view of the effectiveness of government intervention. Clear to all is
that this slumping sector is hampering the recovery of the economy as a whole.
[Fox News, Special Report with Bret Baier, 6/21/11]
Rosen's
Analysis Of Housing Bubble Similar To Right Wing Media's Previous Attacks
On Legislation Which Encouraged Lending To Low And Moderate Income
Neighborhoods, Such As Community Reinvestment Act. Following the financial
crisis the conservative media, echoing reported Republican strategy, blamed
affordable housing initiatives for the economic downturn. The primary
initiative that came under scrutiny was the Community Reinvestment Act, which
encourages lending to "low and moderate income neighborhoods." However,
as Media Matters has documented, these right-wing attacks
relied on several myths and falsehoods. [Media Matters, 10/10/08, 10/14/09,
11/16/09, 4/20/10]
In
Fact, Fed Chair Bernanke Said Experience "Runs Counter To The Charge
That CRA Was At The Root Of, Or Otherwise Contributed In Any Substantive Way
To, The Current Mortgage Difficulties." In a November 25,
2008, letter Federal Reserve chairman Ben Bernanke said: "Our own
experience with CRA over more than 30 years and recent analysis of available
data, including data on subprime loan performance, runs counter to the charge
that CRA was at the root of, or otherwise contributed in any substantive way
to, the current mortgage difficulties." [Board of Governors of the Federal
Reserve, Letter to Honorable Robert Menendez, 11/25/08]
Law
Professor Barr: Most Subprime Mortgages Were Not Issued By Banks
Covered By The CRA. In testimony before the House Financial
Services Committee, Michigan law professor Michael Barr said that while
problems in the subprime lending industry were a driving force behind the
housing crisis, only an estimated 20 percent of subprime mortgages were issued
by depository institutions under the CRA. In his testimony, Barr stated:
Despite the fact that CRA appears to have increased bank and
thrift lending in low- and moderate-income communities, such institutions are
not the only ones operating in these areas. In fact, with new and lower-cost
sources of funding available from the secondary market through securitization,
and with advances in financial technology, subprime lending exploded in the
late 1990s, reaching over $600 billion and 20% of all originations by 2005.
More than half of subprime loans were made by independent mortgage companies
not subject to comprehensive federal supervision; another 30 percent of such
originations were made by affiliates of banks or thrifts, which are not subject
to routine examination or supervision, and the remaining 20 percent were made
by banks and thrifts. [House Financial Services Committee Testimony, 10/10/08,
via Media Matters]
Law
Professor Barr: "The Worst And Most Widespread Abuses Occurred In The
Institutions With The Least Federal Oversight." Barr also said:
Although reasonable people can disagree
about how to interpret the evidence, my own judgment is that the worst and most
widespread abuses occurred in the institutions with the least federal
oversight.The housing crisis we face today, driven
by serious problems in the subprime lending, suggests that our system of home
mortgage regulation, including CRA, is seriously deficient. We need to fill
what my friend, the late Federal Reserve Board Governor Ned Gramlich aptly
termed, "the giant hole in the supervisory safety net." Banks and
thrifts are subject to comprehensive federal regulation and supervision; their
affiliates far less so; and independent mortgage companies, not at all.
Moreover, many market-based systems designed to ensure sound practices in this
sector-broker reputational risk, lender oversight of brokers, investor
oversight of lenders, rating agency oversight of securitizations, and so on --
simply did not work. Conflicts of interest, lax regulation, and "boom
times" covered up the extent of the abuses -- at least for a while, at least
for those not directly affected by abusive practices. But no more. [House
Financial Services Committee Testimony, 10/10/08,
via Media Matters]
Federal
Reserve Bank Of San Francisco Official: "CRA Has Increased The Volume Of
Responsible Lending." Janet Yellen, then president and CEO of the
Federal Reserve Bank of San Francisco, said in a March
2008 speech that "studies have shown that the CRA has
increased the volume of responsible lending to low- and
moderate-income households. [Emphasis added]" Yellen was referring to a
2002 study conducted by the Joint Center for Housing Studies at Harvard
University titled "Community Reinvestment Act: 25th Anniversary."
[President's Speech at 2008 National Interagency, Federal Reserve Bank of San
Francisco, 3/31/08; Community Reinvestment Act: 25th Anniversary,
Joint Center for Housing Studies at Harvard University, 3/20/02]
Bloomberg
News: "Community Reinvestment Act Had Nothing To Do With Subprime
Crisis." From Bloomberg Businessweek:
Fresh off the false and politicized attack on Fannie Mae and
Freddie Mac, today we're hearing the know-nothings blame the subprime crisis on
the Community Reinvestment Act -- a 30-year-old law that was actually weakened
by the Bush administration just as the worst lending wave began. This is even
more ridiculous than blaming Freddie and Fannie.[...]
Not surprisingly given the
higher degree of supervision, loans made under the CRA program were made in a
more responsible way than other subprime loans. CRA loans carried lower rates
than other subprime loans and were less likely to end up securitized into the
mortgage-backed securities that have caused so many losses, according to a
recent study by the law firm Traiger & Hinckley.Finally,
keep in mind that the Bush administration has been weakening CRA enforcement
and the law's reach since the day it took office. The CRA was at its strongest
in the 1990s, under the Clinton administration, a period when subprime loans
performed quite well. It was only after the Bush administration cut back on CRA
enforcement that problems arose, a timing issue which should stop those blaming
the law dead in their tracks. The Federal Reserve, too, did nothing but
encourage the wild west of lending in recent years. It wasn't until the middle
of 2007 that the Fed decided it was time to crack down on abusive pratices in
the subprime lending market. [Bloomberg Businessweek, 9/29/08]
Save The Economy Segment
Pushed Dubious Claims About Tax Cuts
Save
The Economy Segment Suggested That Lowering Taxes, As It Claims Reagan Did, May
"Stimulate" The Economy. From Fox News' Special Report with
Bret Baier:
BRET BAIER: (host): Part three of our series on saving
the U.S. economy centers on taxes. Some people want lower taxes to stimulate
investments, others advocate higher taxes to generate revenue. Correspondent
Doug McKelway, looks at both sides.(BEGIN VIDEOTAPE)
DOUG MCKELWAY (Fox News Correspondent): Eighteenth century
economist Adam Smith could not have imagined the matters of today's New York
Stock Exchange, but he would have understood its purpose. In a similar work,
"The Wealth of Nations," Smith said of his fellow man, quote, "by
pursuing his own interest, he frequently promotes that of the society more
effectually than when he really intends to promote it." Smith's words live
on today among conservative economists.VERONIQUE DE RUGY (George Mason University): Wealth is
created by people pursuing their self-interest and using their skills and
ability to try to better their lives.MCKELWAY: It is that time tested tenet that has led many
politicians to make promises like this.GEORGE H.W. BUSH (Former U.S. President): Read my lips, no
new taxes.MCKELWAY: But does lowering your taxes benefit the economy
more than if that money was collected by the government?MARTIN BAILY (Former White House Economic Advisor): Well, I
think in the short run, if we were to lower taxes, that would provide some
stimulus to demand. It would put more money in people's pockets, give them more
money to spend. I have to say the problem is that we have these huge budget
deficits.DE RUGY: Government cannot create wealth. I mean, come on.
We've come out of, what, three years where government has told us that by
spending massive amounts, it could actually create jobs, and hence, you know,
create wealth, and we've seen that it hasn't worked.MCKELWAY: History is full of examples that support both
views. The Reagan years saw tax cuts and a growing economy. The Clinton years
saw tax hikes and a growing economy. But economists are careful not to confuse
correlation with causation.MARK ROBYN (The Tax Foundation): The science of economics is
about looking at what the unintended consequences of everything are.MCKELWAY: One unintended consequence of tax policy occurred
in 1991 when Congress passed a tax on luxury goods, but it resulted in BMW and
Mercedes losing 20 percent of market share. 19,000 blue collar workers in the
pleasure boat industry were laid off. Taxing the wealthy is on the table once
again, and it pits those who want the well-off to bear the burden of extra
taxes against those who believe in Adam Smith's treatise about how wealth is
created.(END VIDEOTAPE)
MCKELWAY: But there is agreement among many economists in one
area. That the tax code is absurdly complex and that simplifying it would be a
good start in pointing the economy towards prosperity again. [Fox News, Special
Report with Bret Baier, 6/22/11]
In
Fact, "No Peacetime President Has Raised Taxes So Much On So Many People" As
Reagan. In his New York Times column, Nobel Prize
winning economist Paul Krugman described Reagan's actual tax record:
Mr. Reagan presided over an unmatched economic boom. Again,
not true: the economy grew slightly faster under President Clinton, and,
according to Congressional Budget Office estimates, the after-tax income of a
typical family, adjusted for inflation, rose more than twice as much from 1992
to 2000 as it did from 1980 to 1988.But Ronald Reagan does hold a special place in the annals of
tax policy, and not just as the patron saint of tax cuts. To his credit, he was
more pragmatic and responsible than that; he followed his huge 1981 tax cut
with two large tax increases. In fact, no peacetime president has raised taxes
so much on so many people. This is not a criticism: the tale of those increases
tells you a lot about what was right with President Reagan's leadership, and
what's wrong with the leadership of George W. Bush. [The New York Times, 6/8/04]
Politico: Reagan "Repeatedly
Signed Deficit-Reduction Legislation In The 1980's That Melded Annual Tax
Increases With Spending Cuts." In an article titled "Ghost of Gipper
looms over GOP," Politico's David Rogers wrote: "[A] POLITICO review of
Reagan's own budget documents shows that the Republican president repeatedly
signed deficit-reduction legislation in the 1980's that melded annual tax
increases with spending cuts just as President Barack Obama is now asking
Congress to consider." Media Matters has also documented that this part of Reagan's legacy
is often overlooked. From Politico:
With the nation at risk of default next month, the Republicans'
fierce anti-tax orthodoxy is running square into the Ghost of the Gipper -- the
GOP's great modern, pre-tea party hero, Ronald Reagan.Indeed, a POLITICO review of Reagan's own budget documents
shows that the Republican president repeatedly signed deficit-reduction
legislation in the 1980's that melded annual tax increases with spending cuts
just as President Barack Obama is now asking Congress to consider.The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
is the most famous, because of its historic size and timing, a dramatic course
correction that quickly followed Reagan's signature income tax cuts in 1981.
But in the six years after were four more deficit-reduction acts, which
combined to almost double TEFRA's revenue impact on an annual basis.[...]
In Reagan's case, he also signed major tax reform and his
signature 1981 tax cuts forever changed the landscape.A decade after his 1981 Economic Recovery Act, for example,
Reagan budgets predicted those tax cuts would reduce annual receipts for the
Treasury by as much as $350.2 billion. But the same tables also show that the
combination of TEFRA and the four other deficit-reduction bills effectively
took back a third of this in the name of deficit reduction.The rich diversity of Reagan-era tax changes is most
striking, impacting even such conservative priorities now as the estate tax. At
the same time, Reagan also signed laws to double the federal gasoline tax to
build more roads and increase payroll taxes to stabilize Social Security. [Politico, 7/1/11; Media Matters, 7/1/11]
Economists
Agree That Lowering Taxes For The Wealthy Does Not Necessarily Create Jobs. As Media
Matters has documented, economists agree that lowering taxes for the
wealthy does not create jobs. In fact, Tax Policy Center economist Howard
Gleckman noted that "higher income households are more likely to bank the cash
than spend it." Analysts at the CBO have
also wrote that "increasing the after-tax income of businesses typically does
not create much incentive for them to hire more or produce more, because
production depends principally on their ability to sell their products." [Media
Matters, 4/14/11]
Save The Economy Segment Suggested The
Stimulus Didn't Work
Save
The Economy Segment Pushed Right-Wing Talking Point That The Stimulus
Did Not Work. The June 24 Special Report segment on
how to "save the economy" "look[ed] at whether massive government spending has
ever been the right answer." After presenting arguments from both
sides, correspondent Doug McKelway said: "If there are any experts to
answer the question of whether stimulus programs work, it might be the voter.
In the year 2010 in 1936 voters, fed up with stimulus programs, elected
conservative majority to Congress, majorities philosophically opposed to saving
economy through the government spending." From Special Report:
CHRIS WALLACE (guest host): Most people would agree there's nothing funny about the economy these days, but
some older Americans may feel they've seen this movie before. In part five of
our series on saving the economy, Correspondent Doug McKelway
looks at whether massive government spending has ever been the right answer.DOUG MCKELWAY (Fox News Correspondent): He was a
president who came to office in a financial crisis and who believed the way out
was through a massive top-down government stimulus. In 1933 it was called the
New Deal. It transformed the U.S. with an array of social programs for the
needy and public work programs for infrastructure and jobs. It strengthened
unions, regulated the banks, and created Social Security.76 years later, as historians still debate whether it worked,
a new president facing a new financial crisis brought on a new stimulus. The
American Recovery and Reinvestment Act, a $787 billion top down torrent of cash
for infrastructure, for preventing teacher layoffs,
for staving off the bankruptcy of GM and Chrysler, and for thousands of
other projects across the 50 states. Did it work?BRAD JENSEN (Georgetown University): That it hasn't turned it
around more I think is a testimony to just how deep a hole we have dug for
ourselves.MARTIN BAILY (Former White House Economic Adviser): It was a
bit of a mess. I mean, they wanted to get it through quickly so they sort of
handed the reins to Congress. And so you've got everybody in every district
wanting some of it. So I think it could have been handled better.MCKELWAY: The nonpartisan Congressional Budget Office found that the stimulus helped the economy. By the
second quarter of the year 2010 it raised the gross domestic product by between
1.7 and 4.5 percent. It lowered the unemployment rate by between 0.7 percent
and 1.8 percent, and increased the number of people who had jobs by between 1.4
and 3.3 million.But just as Roosevelt's New Deal was dealt a second
recessionary blow in 1937, four years after it was enacted, there is debate
over whether the Obama stimulus has run out of steam.VERONIQUE DE RUGY (George Mason University): The government
doesn't have money of its own. It has to either tax people or it has borrow it.BAILY: I do think it helped because the economy really was in
free fall, and so this added a little more money to the system and helped the
recession be not quite as severe as it would have been.(END VIDEOTAPE)
MCKELWAY: If there's any expert to answer the question of whether
stimulus programs work, it might be the voter. In the year 2010 and 1936, voters fed up with stimulus programs elected
conservative majorities to Congress -- majorities philosophically opposed
to saving the economy through government spending. [Fox News, Special
Report with Bret Baier, 6/24/11]
Economists Largely Agree That The Stimulus Boosted Growth
And Mitigated Job Losses. In March 2010, 70 percent of the 54
economists it surveyed "said the American Recovery and Reinvestment Act
boosted growth and mitigated job losses." Furthermore, in a report on the
effects of the American Recovering and Reinvestment Act of 2009, the
non-partisan Congressional Budget Office noted that the stimulus added millions
of jobs to the economy, raised real gross domestic product (adjusted for
inflation) and lowered the unemployment rate. In June, the Center for Budget
and Policy Priorities (CBPP) said the "economy has now grown for seven straight
quarters." In its report the CBPP added that "economic activity ... [had been]
contracting sharply when policy makers enacted the financial stabilization bill
(TARP) and the American Recovery and Reinvestment Act." Moreover, the White
House Council of Economic Advisors' quarterly report from March showed that the
stimulus increased gross domestic product and lowered unemployment. [Media
Matters, 6/10/11]
Contrary To
McKelway's Report, Economists Say New Deal Did Not Worsen Depression -- His
"Conservative Course" Did. After McKelway reported that the Congressional
Budget Office claimed the stimulus had a positive effect on jobs, he added that
just as "Roosevelt's New Deal was dealt a second recessionary blow in 1937,
four years after it was enacted, there is debate whether the Obama stimulus has
run out of steam." However, numerous economists have said that the 1937
downturn actually occurred because Roosevelt reversed his New Deal policies,
not because he continued them.
- Krugman: Roosevelt "Eager To Return To Conservative
Budget Principles ... Precipitating An Economic Relapse That Drove The
Unemployment Rate Back Into Double Digits." [New
York Times, 11/10/08] - Economist Dean Baker:
FDR "Worried About The Whining Of The Anti-Stimulus Crowd ... When The
Proper Goal Of Fiscal Policy Should Have Been Large Deficits To Stimulate The
Economy." [Alternet.org, 1/6/09] - Economist Brad DeLong: "[M]ore 'Orthodox' Economic
Policies" And Attempt "To Move The Budget Toward Balance ... Provide
Ample Explanation Of That Downturn." [DeLong.typepad.com, 11/17/08]
While Attacking Obama's Jobs Record, Fox Regularly
Ignores Statistics Showing The Stimulus Created Jobs. Fox regularly
argues that the stimulus did not create jobs and that government spending does
not work to stimulate the economy. In fact, as McKelway himself noted, "the
Congressional Budget Office found the stimulus helped the economy."
Furthermore, according to a March 2010 study by The Wall Street Journal,
70 percent of economists surveyed said the stimulus "boosted growth and
mitigated job losses." [Media Matters, 6/13/11, 6/6/11, 5/31/11, 2/27/11, 2/18/11]
Save The Economy Segment Pushed For Estate Tax
Repeal
Fox's
"Straight News" Campaigned For Estate Tax Repeal. During the June 29
edition of Special Report guest host Shannon Bream suggested that the estate tax hurts small businesses and therefore causes the
economy to hemorrhage jobs. However, Bream offered no pushback to the claim
that estate taxes severely hurt small businesses, despite the fact that Special
Report is supposedly one of Fox's straight news programs. From
the June 29 edition of Fox News' Special Report:
SHANNON BREAM (Fox News Correspondent): We continue our look
at the ways to save the economy by focusing tonight on the estate tax, how it
affects small businesses and the people whose livelihoods depend on them.[...]
The federal estate tax can be especially tricky for many
small, family-held businesses. That's because, when an individual dies, what he
or she leaves behind can be subject to significant taxation, even if it's
primarily invested in a family business. If the entity doesn't have enough cash
on hand to meet the obligation, heirs are often forced to sell the business in
order to raise enough money to satisfy the tax bill. [Fox News, Special
Report with Bret Baier, 6/29/11]
Bream
Also Suggested Higher Estate Tax Rates Would Put Many More Small Businesses At
Risk. From the June 29 edition of Fox's Special Report:
BREAM: Small business owners have no idea what may happen
when the current rates expire at the end of 2012.DAVID LOGAN (Tax Foundation economist): There's strong
evidence to suggest that higher estate taxes lose jobs, just to put it bluntly.BREAM: For now, family-held small businesses say they're
left to wonder whether lawmakers will once again reach an 11th-hour deal on
estate taxes, leaving them hesitant to expand or invest until they get that
guidance, meaning it's up to Washington to convince them to get off the
sidelines.LOGAN: It's part of a comprehensive tax reform. And that's
what we're hoping for. That's what will alleviate that uncertainty that goes to
small businesses.BREAM: Unless Congress intervenes, beginning in 2013,
estates will be taxed starting at $1 million instead of 5 million, and the rate
will jump from 35 percent to 55 percent. [Fox News, Special Report with
Bret Baier via Media Matters, 6/29/11]
The
Segment Also Contained A Graphic Referring To The Estate Tax As
The "Death Tax." The following graphic aired during Bream's
report:
[Fox
News, Special Report with Bret Baier, 6/29/11]
In
Fact, According To The Tax Policy Center "99.9 Percent Of Deaths
Trigger No Estate Tax." From the Tax Policy Center's page on the
estate tax:
Estates larger than $5 million potentially owe estate tax in
2011. Only about 1 in 800 deaths will result in a taxable estate; 99.9 percent
of deaths trigger no estate tax. The estate tax will raise over $10 billion
from 3,300 deaths in 2011. [Tax Policy Center, accessed 6/29/11]
- Tax Policy Center: Preliminary Estimates Show
Tax Deal Would Hit Only 50 "Small Farms And Businesses" in 2011.
TPC preliminary estimates indicate that the proposed estate tax would hit only
50 "Small Farms And Businesses," defined as "[e]states for which
farms and business assets comprise at least half of gross estate and total $5
million or less." For these estates, the average tax rate is estimated to
be 7.4 percent. For all estates affected by the tax, the average tax rate is
estimated to be 14.4 percent. [Tax Policy Center, accessed 6/29/11]
AP:
"The [Estate] Tax Would Affect Just 0.14 Percent Of All Estate In 2011, Or
About 3,500 Estates, Generating About $11.2 Billion In Revenue." The
Associated Press reported that the 2010 tax deal between Obama and
Congressional Republicans exempts the first $5 million of an individual's
estate and sets a top rate of 35 percent. AP also reported that the tax would
hit only 3,500 estates in 2011 and generate roughly $11.2 billion in revenue.
From the AP article:
More than 40,000 estates worth $1 million to $10 million
would be expected to escape inheritance taxes next year under the deal struck
by Republicans and President Barack Obama.The package would leave only about 3,500 of the largest
estates subject to federal taxes next year, a boon for the wealthy that many
House Democrats say they can't accept.[...]
The federal estate tax reaches fewer than 1 percent of
inheritances, but it has long been a political lightening rod among lawmakers
from both parties. Many Republicans want to eliminate the estate tax
altogether, derisively calling it a "death tax" that makes it hard
for parents to transfer small businesses to their children.Estate tax opponents got their wish this year, when the tax
was temporarily repealed. But the tax holiday will be short-lived because,
under current law, the estate tax is scheduled to return next year with a top
rate of 55 percent for estates larger than $1 million for individuals and $2
million for married couples.The package Obama negotiated would set the top rate at 35
percent and exempt the first $5 million of an individual's estate. Couples
could exempt $10 million.At those levels, the tax would affect just 0.14 percent of
all estates in 2011, or about 3,500 estates, generating about $11.2 billion in
revenue, according to an analysis by the Tax Policy Center, a Washington research
group.Under the current law, more than 44,000 estates are projected
to be taxed next year based on the number of estate-holders in that value
bracket who are likely to die. That would generate $34.4 billion in taxes.
[Associated Press, 12/8/10, via Huffington Post]
CBO:
"Most Owners Of Family Farms And Small Businesses Are Unlikely To Owe Estate
Tax." From a 2009 Congressional Budget Office (CBO) report that
looked at the effect of the estate tax on small businesses and farms in 2000
and 2005, when the estate tax affected more taxpayers than it does now:
A commonly expressed concern is the effect of the estate tax
on family farms and small businesses, including the possibility that heirs may
be forced to liquidate the business to pay the estate tax. As with the general
public, most owners of family farms and small businesses are unlikely to owe
estate tax. About 2.1 percent of farmers (1,137) and 2.4 percent of
small-business owners (8,291) who died in 2005 had to file estate tax returns.The vast majority of estates, including those of farmers
and small-business owners, had enough liquid assets to pay the estate
taxes they owed in 2005. However, estates involving farms or small businesses
are slightly less likely than other estates to have sufficient liquid assets to
cover their estate taxes. In 2000, when the effective estate tax exemption amount
was $675,000, 138 (or about 8 percent) of the estates of farmers who left
enough assets to owe estate taxes faced a tax payment that exceeded their
liquid assets, compared with about 5 percent of all estates that owed taxes.
Those numbers are upper bounds, however, because the definition of liquid
assets used on estate tax returns excludes some money held in trusts, which
could also be used to pay estate taxes. The increase in the exemption amount
since 2000 probably further mitigated the impact on small businesses. Moreover,
the estate tax currently includes several provisions that owners of family
farms and small businesses can use to mitigate its effect. For example, heirs
are allowed to pay the tax in installments over 15 years at low interest rates,
and several special valuation provisions allow some assets to be assessed at
less than their market value. [Congressional Budget Office report on Federal
Estate and Gift Taxes, 12/18/09]
The
Phrase "Death Tax" Is A Loaded Term Created By GOP Pollster Frank
Luntz To Make The Estate Tax Unpopular. The Washington Post reported
that GOP pollster Frank Luntz (now a Fox News contributor) "poll-tested
the term 'death tax' and advised the new GOP majority to never use the terms
'inheritance' or 'estate tax' again." From the Post:
By 1994, Newt Gingrich's Republican insurgents had latched
onto the estate tax issue, but the Contract With America called for an estate
tax reduction, not repeal. In 1995, Luntz poll-tested the term "death
tax" and advised the new GOP majority to never use the terms
"inheritance" or "estate tax" again.[...]
But ultimately, whether people believe the estate tax will
affect them has little bearing on support for repeal. Early this year, with
[anti-estate tax activist Patricia] Soldano's money, Luntz again began polling,
this time in the face of record budget deficits and lingering economic unease.
More than 80 percent called the taxation of inheritances "extreme."
About 64 percent said they favored "death tax" repeal. Support fell
to a still-strong 56 percent when asked whether they favored repeal, even if it
temporarily boosted the budget deficit. [The Washington Post, 4/13/05]
Two Save The Economy Segments Pushed Right-Wing
Talking Point That Obama Policies Cause "Uncertainty"
Save
The Economy Segment Pushes Theory That Businesses Won't Invest Because Of
"Uncertainty" Caused By Health Care Reform And Financial Regulation. The
June 30 edition of the 10 Ways to Save the Economy special was dedicated to the
"uncertainty" supposedly caused by regulations. From the June 30 edition of Fox
News' Special Report:
BRET BAIER (host): In tonight's segment on saving the
economy: a look at federal regulations and the time it takes to implement them.
Correspondent Shannon Bream reports if there's one certainty, it seems to be
uncertainty.(BEGIN VIDEOTAPE)
VERONIQUE DE RUGY (George Mason University): In the next ten
years, maybe more investors, entrepreneurs, business owners, are going to be in
limbo.SHANNON BREAM (Fox News Correspondent): Each time a federal
law is passed, detailed regulations that outline how that law will be
implemented are issued by the relevant agencies. But that often takes a great
deal of time, especially when it comes to a 2,000 plus page bill like the
president's new health care program or the Dodd-Frank bill passed last year,
described as the biggest overhaul to the American financial regulatory system
in history.In fact, some regulations for the Patriot Act, first passed
in 2001, still aren't finished. Most laws like Dodd-Frank have built in time
frames for getting regulations drafted, subjected to public comment, and then
finalized. But those markers aren't always met.DE RUGY: It's hard to tell, because a lot of these rules were
going to be ruled out one after the other, and there were deadlines for some of
them. And I know we've missed a lot of deadlines on both fronts of rules that
were going to have to be written by a certain deadline. So it's really hard to
tell.BREAM: Meanwhile, businesses are left in a holding pattern,
unsure of how to move forward until they know how they'll be impacted. Dan
Danner of the National Federation of Independent Businesses says small
businesses which operate on very tight margins are especially worried about the
unknown.DAN DANNER (National Federation of Independent Businesses):
They don't know what the cost of their health care is going to be. They just
know they're going to be mandated to provide something. They're going to be
told what that is, and they have no idea what it's going to cost.BREAM: Experts say while most businesses admit they dislike
government regulation, they can deal with the requirements and red tape as long
as they know what they're facing. Danner says when the government issues
regulations in a timely fashion, the small businesses he represents can plan,
invest higher, and do their part to move the U.S. economy forward.DANNER: Small businesses and entrepreneurs are inherently
optimists, and so we look forward to the future, and our small business members
do, and they're looking forward to things getting better and them creating
jobs.(END VIDEOTAPE)
BREAM: As for how the regulations tied to implementing the
president's health care law are progressing,
the initial proposals have been drafted but the final batch of regulations
won't be issued until 2015 -- if they're finished on schedule. [Fox
News, Special Report with Bret Baier, 6/30/11]
June 28 Save The
Economy Segment Also Pushed The "Uncertainty" Talking Point. During the June 28 segment of 10
Ways to Save the Economy Shannon Bream continued to push the idea that a sense
of uncertainty was negatively impacting the economy. Bream said: "[T]he
unresolved debt crisis and how lawmakers will address issues regarding the
solvency of Medicare, Medicaid, and Social Security are fueling a level
of uncertainty that tends to bring small businesses to a standstill."
From Special Report with Bret Baier:
BRET BAIER (host): We learn today that consumer confidence
has hit a seven-month low. In tonight's report on saving the economy, we talk
about the lack of confidence by small business owners. Correspondent Shannon
Bream tells us many people feel that is a major reason for the extended
economic slump.(BEGIN VIDEOTAPE)
DAN DANNER (National Federation of Independent Business): I
mean, traditionally, we are led out of a recession by small businesses hiring
people and creating jobs. And that's not happening in this recession at this
time.SHANNON BREAM (Fox News Correspondent): Dan Danner is
president and CEO of the National Federation of Independent Businesses, a
nonpartisan group that represents small businesses across the U.S. The
organization's latest survey shows those businesses, by all accounts, crucial
to the recovery of the U.S. economy aren't feeling particularly hopeful. May
marks the third consecutive month that small business optimism dropped.Only 5 percent of small business owners say that now is a
good time to expand and data from the Bureau
of Labor statistics shows the 12-month period that ended in March 2010 marked
the lowest number of startup businesses in the U.S. since the bureau started
measuring the trend in the early 90s. So, what's driving the lack of small
business confidence?Experts say Washington's unresolved debt crisis and how
lawmakers will address issues regarding the solvency of Medicare, Medicaid, and
Social Security are fueling a level of uncertainty that tends to bring many
small businesses to a standstill.BRAD JENSEN (Georgetown University): There's enormous
uncertainty about how the political process is going to grapple with those
issues. I think that now that the economy is kind of on its back, the
uncertainty looms much larger.VERONIQUE DE RUGY (George Mason University): It paralyzes
entrepreneurs and people who usually are willing to actually take risk and
invest their own money in their business, but also invest in workers and hire
people.BREAM: And while pundits, lawmakers and economists may
disagree about how to resolve those weighty problems, there is general
agreement that coming to some kind of resolution will allow small businesses,
now waiting on the sidelines, to restart hiring and investing.DE RUGY: So lifting this uncertainty is really key to allow
and empower individuals and entrepreneurs. Because, I mean, ultimately, they
are the true actors of economic recovery.(END VIDEOTAPE)
BREAM: Small business leaders say, somewhat surprisingly
that a lack of access to capital isn't an issue for them right now. They say
that's because until the U.S. economy's long-term future is more certain, most
of them just aren't interested in expansion. [Fox News, Special Report
with Bret Baier, 6/28/11]
Fox
Has Previously Pushed The Conservative Talking Point That Obama's Economic
Policies Hurt The Economy By Leading To "Uncertainty" In The Private Sector. During
the April 3 edition of ABC's This Week, former Bush
administration official Torie Clarke asserted that "What will really get the
private sector humming and hire a lot of people is if they have predictability
and certainty about things like regulatory regimes and are some of these trade
agreements going to go through that we really need." Reps. John Boehner and
Kevin McCarthy also said that "uncertainty" on tax cuts was hindering
job creation during the September 26, 2010, edition of Fox News Sunday.
Several Fox anchors adopted the talking point soon after Boehner's and
McCarthy's comments. [Media Matters, 4/3/11, 9/27/10]
Krugman:
"Uncertainty Is Just A Myth Being Made Up" To Blame Economy On Obama. Responding
to Torie Clarke's comments on This Week, Nobel
Prize winning economist Paul Krugman said: "The reason
businesses are not investing is that they have tons and tons of excess
capacity. There is a very clear relationship historically between the
amount of unemployment and business investment. When unemployment is high, when
capacity is low, investment is low there is nothing -- all of this
stuff about uncertainty is just a myth being made up to blame this on
Obama." [ABC, This Week via Media Matters, 4/3/11]
Fox Concluded Its Series By
Pushing Another Right-Wing Talking Point On Deregulation
Special
Report: Deregulation Can "Save The Economy" Because "America Finds Herself
Increasingly In Competition," With Countries With More Heavily Deregulated
Private Sectors. From Fox News' Special Report with Bret Baier:
BRET BAIER (host): We conclude
our two week series on saving the economy tonight with a big picture look at
just what American business is up against. Chief Washington correspondent James
Rosen tells us it's a tough world out there.JAMES ROSEN (Fox News Correspondent):
Every minute of every day of every year we are locked in mortal struggle, a
fierce battle over the disposition of scarce resources and precious human
capital that pits us against nearly 200 other nations around the world.DAN DANNER (National
Federation of Independent Business): There's no question today that almost
every business is global. The whole question about outsourcing is: Where is the
best business environment?ROSEN: America finds herself
increasingly in competition. Especially with those nations known as the BRIC
countries: Brazil, Russia, India and China. Those last two, India and China,
have over the last five years both ranked among the top 40 most improved
countries in terms of easing the regulatory burden they impose on their own
business classes.MARTIN BAILY (Former White
House Economics Advisor): They embarked on a program of deregulation but they
still have a lot of it left. So I suspect that they will continue to be on a
deregulatory track.ROSEN: In 2010, and for the
fifth consecutive year, the World Bank's annual "Doing Business"
survey, which ranks 183 economies in terms of their regulatory burden, found
Singapore to be the world's friendliest regulatory environment, followed by
Hong Kong, New Zealand, the United Kingdom, and then the United States. This
fifth place ranking represented a decline for the U.S., which placed third in
2009, and saw America bucking a worldwide trend.That trend has seen 85 percent
of the world's economies over the last five years take steps to make it easier
for local entrepreneurs to operate. Last year 61 countries fared better than
the U.S. in terms of the tax burden on business owners.ROSEN: The regulatory burden
that the United States government imposes on its business class -- where do we
fall in ranking of the industrialized states?VERONIQUE DE RUGY (George
Mason University): If you had asked me this ten year ago, I would have told you,
I mean, America is the place to start a business. It's not true anymore today,
and we know that the heavier the regulation, in particular in product and labor
market, the more it reduces economic growth.ROSEN: Of course, some
regulations, like child labor laws, just to name one, remain vital. But
economists from across the spectrum agree that for America to compete in the
global economy, regulations should themselves be tightly regulated, tailored
narrowly to address specific problems and made to go away when those problems
do. [Fox News, Special Report with Bret Baier, 7/1/11]
But Special Report Failed To Note
That Obama "Order[ed] A Government-Wide Review" "To Remove Outdated Regulations
That Stifle Job Creation And Make Our Economy Less Competitive." In a Wall Street Journal op-ed
titled "Toward a 21st-Century Regulatory System," President Obama called for
the United States to "strike the right balance" between regulations
and their costs. He wrote: "Regulations do have costs; often, as a country, we
have to make tough decisions about whether those costs are necessary. But what
is clear is that we can strike the right balance. We can make our economy
stronger and more competitive, while meeting our fundamental responsibilities
to one another." From The Wall Street Journal:
[T]hroughout our history, one
of the reasons the free market has worked is that we have sought the proper
balance. We have preserved freedom of commerce while applying those rules and
regulations necessary to protect the public against threats to our health and
safety and to safeguard people and businesses from abuse.From child labor laws to the
Clean Air Act to our most recent strictures against hidden fees and penalties
by credit card companies, we have, from time to time, embraced common sense
rules of the road that strengthen our country without unduly interfering with
the pursuit of progress and the growth of our economy.Sometimes, those rules have
gotten out of balance, placing unreasonable burdens on business--burdens that
have stifled innovation and have had a chilling effect on growth and jobs. At
other times, we have failed to meet our basic responsibility to protect the
public interest, leading to disastrous consequences. Such was the case in the
run-up to the financial crisis from which we are still recovering. There, a
lack of proper oversight and transparency nearly led to the collapse of the
financial markets and a full-scale Depression.Over the past two years, the
goal of my administration has been to strike the right balance. And today, I am
signing an executive order that makes clear that this is the operating
principle of our government.This order requires that
federal agencies ensure that regulations protect our safety, health and
environment while promoting economic growth. And it orders a government-wide
review of the rules already on the books to remove outdated regulations that
stifle job creation and make our economy less competitive. It's a review that
will help bring order to regulations that have become a patchwork of
overlapping rules, the result of tinkering by administrations and legislators
of both parties and the influence of special interests in Washington over
decades.Where necessary, we won't shy
away from addressing obvious gaps: new safety rules for infant formula;
procedures to stop preventable infections in hospitals; efforts to target
chronic violators of workplace safety laws. But we are also making it our
mission to root out regulations that conflict, that are not worth the cost, or
that are just plain dumb.For instance, the FDA has long
considered saccharin, the artificial sweetener, safe for people to consume. Yet
for years, the EPA made companies treat saccharin like other dangerous
chemicals. Well, if it goes in your coffee, it is not hazardous waste. The EPA
wisely eliminated this rule last month.But creating a 21st-century
regulatory system is about more than which rules to add and which rules to
subtract. As the executive order I am signing makes clear, we are seeking more
affordable, less intrusive means to achieve the same ends--giving careful
consideration to benefits and costs. This means writing rules with more input
from experts, businesses and ordinary citizens. It means using disclosure as a
tool to inform consumers of their choices, rather than restricting those
choices. And it means making sure the government does more of its work online,
just like companies are doing.We're also getting rid of
absurd and unnecessary paperwork requirements that waste time and money. We're
looking at the system as a whole to make sure we avoid excessive, inconsistent
and redundant regulation. And finally, today I am directing federal agencies to
do more to account for--and reduce--the burdens regulations may place on small
businesses. Small firms drive growth and create most new jobs in this country.
We need to make sure nothing stands in their way.[...]
Despite a lot of heated
rhetoric, our efforts over the past two years to modernize our regulations have
led to smarter--and in some cases tougher--rules to protect our health, safety
and environment. Yet according to current estimates of their economic impact,
the benefits of these regulations exceed their costs by billions of dollars.This is the lesson of our
history: Our economy is not a zero-sum game. Regulations do have costs; often,
as a country, we have to make tough decisions about whether those costs are
necessary. But what is clear is that we can strike the right balance. We can make
our economy stronger and more competitive, while meeting our fundamental
responsibilities to one another. [Wall Street Journal, 1/18/11]
Fox
Has Repeatedly Pushed Deregulation Talking Point. Fox News shows and
others in the conservative media have repeatedly pushed for more deregulation.
Indeed, conservative media figures even used the one-year anniversary of the
Gulf of Mexico oil spill to push for deregulation of the drilling
industry. [Media Matters, 6/23/11, 6/7/11, 6/2/11, 4/20/11, 4/20/11, 2/10/11]
Only Three Of The Ten Save The Economy Segments Did
Not Clearly Push Right-Wing Talking Points
June
20: Ten Ways To Save The Economy Segment Focuses On The Importance Of
Raising Consumer Confidence. From the June 20 edition of Fox
News' Special Report:
SHANNON BREAM (guest host): Tonight, we begin a ten-part
series looking at possible ways to fix the struggling economy. First up, Chief
Washington correspondent, James Rosen, on consumer confidence.(BEGIN VIDEOTAPE)
JAMES ROSEN (Fox News Correspondent): Y2K, the dawn of a new
millennium, and also, according to the data kept by the conference board, the
peak of American consumer confidence with the 144.7 posted in January 2000, the
highest measurement ever of this crucial statistic since economists first
developed it back in 1967.MARTIN BAILY (Former White House Economic Advisor): So, they
ask consumers various questions about how they stand right now, how they think
the economy is going in the future. Everybody is kind of gloomy about the
future. People don't spend, they don't invest, they don't take risks, then the
economy is likely to remain on a slow growth or even on recession path.ROSEN: Gallup surveys this month found consumer confidence hitting
a new low for the year, a reflection analyst said of dismal job growth and Wall
Street decline. President Obama cited still another factor, high gasoline
prices.BARACK OBAMA (President, United States): It has enormous
impact on family budgets and on the psychology of consumers.ROSEN: That consumer confidence is a function of psychology
quite literally all in the mind of the average consumer leads economist to
differ over how directly a president of the United States can affect it.VERONIQUE DE RUGY (George Mason University): A lot of
presidents try to do this, right, when they talk about how they're going to
invest in our country, how they're going to invest in our roads and education.
And I think for a while, it actually works. People like this idea. But I
actually think that people are like tired, and they also understand that
nothing really good ever comes out of it.BAILY: I think a lot of people argue that Franklin Roosevelt
did. You know, he made the speech, the only thing we have to fear is fear
itself. He was a man that if you see the clips, projects a lot of confidence. I
think Ronald Reagan projects a lot of confidence.ROSEN: Across Ronald Reagan's presidency, consumer confidence
rose by 41 percent, the best showing for any chief executive since 1967. The
steepest plunge came after the tumultuous month of October 1973, which brought
the Nixon impeachment drive in Watergate, the Yom Kippur War, and the OPEC oil
embargo. By that, Christmas consumer confidence had shrunk by more than a
third. After 9/11 by contrast, confidence fell only 2-1/2 percent and quickly
rebounded.(END VIDEOTAPE)
ROSEN: Business confidence also appears to be flagging. A
"Wall Street Journal" survey of companies conducted in March found 67
percent saying they plan to cut at least some spending allocated for business
development. [Fox News, Special Report with Bret Baier, 6/20/11,
accessed via Nexis]
June
23: Ten Ways To Save The Economy Segment Discusses Need To Simplify Tax
Code. From Special Report with Bret Baier:
CHRIS WALLACE (guest host); Now, we continue our series on
fixing the American economy with a look tonight at corporate taxes. Correspondent,
Doug McKelway tells us many people believe just trying to figure out the rules
may be the hardest part.(BEGIN VIDEOTAPE)
DOUG MCKELWAY (Fox News Correspondent): Like a lot of
Americans, Brett McMahon does not understand his taxes. He runs Miller &
Long, a construction company that started out as two guys and a pick-up truck
in 1947 with total assets of $2,600. Today, it's a multimillion construction
company employing over 1,000 people. McMahon believes the current tax and
regulatory environment makes it nearly impossible for young entrepreneurs to
duplicate this company's success.BRETT MCMAHON (Miller & Long Vice President): I'm not
sure how you do it now. It used to be that we had a very simple set of
instructions, that were clear, that everyone could understand.MCKELWAY: To demonstrate the min-numbing complexity in taxes
and regulation, McMahon holds a company bank loan from 1962. It's written on a
single piece of paper. A similar loan from the 1990s shows an inch-thick
binder. And today, it would go three binders. And the corporate tax code
itself?MCMAHON: It's a 38,000 pages and four loopholes. The
constitution is four pages and covers everything.(LAUGHTER)
MCMAHON: It's idiotic. You just can't run a railroad like
that.MCKELWAY: Adding to business uncertainty, the massive federal
debt.VERONIQUE DE RUGY (George Mason University): It's gigantic
amount of debt that we have is likely to lead to massive increase in taxes in
the future.MCKELWAY: There are encouraging signs from both Pennsylvania
Avenue. There is agreement to simplify the corporate tax code.BARACK OBAMA (President of the United States): The whole
concept of corporate tax reform is to simplify, eliminate loopholes, treat
everybody fairly.MCKELWAY: The economists agree loopholes are a huge source of
revenue laws.MARK ROBYN (The Tax Foundation): There are many that don't
need to be there, and if we can get rid of those, we could cut a tax rate,
raise the same amount of revenue, and be much better off.MCKELWAY: But faced with the prospect of losing those
loopholes which effectively lower on company's tax burden, many companies are
certain to deploy armies of lawyers and lobbyists to Capitol Hill to preserve
those cherished tax breaks.That's why ongoing budget talks are a true test of Congress'
will, the will to simplify the tax structure for the betterment of the economy
even if it hurts some favored constituents and interests. [Fox News, Special
Report with Bret Baier, 6/23/11, accessed via Nexis]
June
27: Save The Economy Segment Contemplates "Whether Government
Investment On The Long-Term Spending Projects [May] Help" The
Economy. From Fox News' Special Report with Bret Baier:
BRET BAIER (host): We continue are series on saving the
economy tonight with a look at whether government investment on long-term
spending projects might help. Correspondent, Doug McKelway, starts out looking
at one of the most famous.(BEGIN VIDEOTAPE)
JOHN F. KENNEDY (Former U.S. President): I believe that this
nation should commit itself to achieving the goal, before this decade is out,
of landing a man on the moon and returning him safely to the earth.DOUG MCKELWAY (Fox News Correspondent): When President
Kennedy's goal was reached eight years later, it was regarded as the greatest
achievement of mankind but was this huge expenditure also an example of
government spending growing the economy?UNIDENTIFIED FEMALE: Go there. Did you see it?
MCKELWAY: Apollo led to benefit in everyday life. Among them,
the remarkable miniaturization yet growing power of computers. Scientists say
this miniaturization called Moore's Law is doubling every two years. Some
economists say it may bring the next economic boom.MARTIN BAILY (Brookings Institution): If you look back at
that time, I don't think anyone predicted how strongly the affect of Moore's
Law or the cheapness of computers and of telecommunications, what that was
going to do. Since then, we've had a lot of things like search engine, lot of
software stuff. These technologies are allowing us to do amazing things.MCKELWAY: Today, government is now expanding broadband
coverage as it did with electrical power in rural America 75 years ago or the
interstate highway system decades later. But rapid change mean many jobs lost
in the recession will never come back. Some now call calling for a
public/private partnership to retrain workers.BRAD JENSEN (Georgetown University): You know, how are we
going to take the 40-year-old unemployed person who's been out of work for 12
or 18 months and give them skills that they need to take a job that does exist?MCKELWAY: Some critics say that for every Apollo program,
there is another long-term massive government program that could not produce
such inspiring results.VERONIQUE DE RUGY (George Mason University): We are already
spending gigantic amount of money on roads. We are spending gigantic amount of
money on education. I mean, the government, every single budget year, the
government, whether he's a Republican or he is a Democrat tell us how they're
investing in our future, and it doesn't seem to be paying off at all.MCKELWAY: The economists are evenly divided over whether
long-term government spending programs work, but most agree there are times
when the private sector may have the inspiration but lacks money to carry out a
new idea. And in that realm, let's say the government can play a key role in
helping to grow the economy. [Fox News, Special Report with Bret Baier,
6/27/11, accessed via Nexis]
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