Beneath The Surface

Repealing the 1099 Provision in ObamaCare

Full article from WSJ

”..The Senate will vote this morning on whether to repeal part of ObamaCare that it passed only months ago. The White House is opposed, but this fight is likely to be the first of many as Americans discover—as Nancy Pelosi once famously predicted—what’s in the bill.”

• Senate will vote on amendments to rescind an ObamaCare mandate that companies track and submit to the IRS all business-to-business transactions over $600 annually.
• Although Dems claim this will raise $17 billion in revenue, Treasury Dept’s National Taxpayer Advocate Nina Olson says the costs will be “disproportionate as compared with any resulting improvements in tax compliance.”
• Under new rules, businesses will have to report the value of goods and merchandise they purchase, in addition to services acquired.
• WH doesnt want to set a precedent of repealing parts of ObamaCare… therefore they are endorsing an alternative proposal from Bill Nelson (FL-D)
• Nelson Amendment would increase the 1099 threshold to $5,000 and exempt businesses with fewer than 25 workers.
• Businesses would still have to track all purchases, not knowing in advance which contractors will exceed $5,000 at the end of the year. It also creates a marginal barrier to job creation—for a smaller firm, hiring a 26th employee would be extremely costly. Also it adds a tax on domestic oil production.

Dems claim they were blindsided and didn’t understand the implications of the 1099 provision, but that’s what happens when you don’t read the bill.

Kudlow: How to Really Solve Housing

With everybody focused on Obamacare… the administration has tried to sneak in yet another bailout for housing. Yet again, Team Obama is rewarding reckless behavior, punishing the 90 percent of responsible homeowners who are making good on their mortgages, and setting up a greater moral hazard that will surely lead to an expansion of bailout nation.

I’m talking about an add-on to HAMP, the $75 billion Home Affordable Modification Program, which has been a dismal failure…

The Office of the Comptroller of the Currency reports that nearly 60 percent of modified mortgages re-default within a year. And now comes a new, brilliant idea that if you live in your main residence, have a mortgage balance of less than $729,750, owe monthly mortgage payments that are not affordable (meaning greater than 31 percent of income), and you demonstrate a financial hardship, the government will subsidize you by offering TARP money to banks and other lenders to reduce your outstanding mortgage balance.

Former Bush economist Keith Hennessey highlights the outrage that Team Obama would actually subsidize people making up to $186,000 a year who have a mortgage balance of over $700,000. This isn’t even a middle-class entitlement. It’s an upper-middle-class entitlement. Actually, at $186,000, it’s virtually a top-earner entitlement, according to Team Obama’s definition of rich people eligible for tax hikes.

Why should the 90 percent of folks who make good financial decisions on their homes have to pay for the 10 percent who did not?

Or put it another way, just because a home loan is “underwater” — meaning its value is lower than today’s current market price — why should a responsible person whine about it and walk away? Why not service this loan for the longer term and wait for prices to improve? That’s called personal responsibility.

Bloomberg financial columnist Caroline Baum argues that lower home prices are the key to solving the housing problem. Popular blogger Barry Ritholtz says we need more foreclosures, not fewer, to solve housing. Both are correct.

Even in the foreclosure process, young families can come in and snap up cheap homes. This is a great boon to the new generation.

And take a look at places like California, Florida, and Las Vegas, where foreclosure activity has been high and prices have fallen the most. What you see is a sharp pickup in home sales, which is steadily clearing away the price-depressing inventory overhang of unsold homes. In other words, market forces work.

Bouncing from pillar to post, the White House has unsuccessfully tried mortgage modifications, foreclosure abatements, and tax credits. None of it has worked. But the price tag so far for these failed government interventions in the housing market is $75 billion and rising.

Applying TARP money to the housing problem — originally meant for banks — is an even greater outrage. TARP should be closed down, now that banks have repaid it, and turned back to taxpayers in the form of government debt reduction.

But the Obama White House rejects market forces. It rejects free-market price adjustments. As a result, it is creating a crazy subversion of normal incentives.

Obamacare — with its unwillingness to put to work true free-market and consumer-choice competition to hold down health costs — will turn out to be a failure. And so will Team Obama’s clumsy and clunky attempts to substitute government subsidies for free-market home pricing. The failed government subsidy for housing is a leading indicator. Imagine, putting more and more middle- and upper-end income earners on the government dole.

As America’s nanny state grows larger, its economy will grow weaker

Weekend Interview with Hank Greenberg: Can AIG Be Saved? - WSJ.com

The former chairman of AIG wonders why when the government took over AIG, why did it insist that Goldman and other firms receive 100 cents on the dollar on their AIG exposure, while the terms of AIG’s own bailout were so onerous as to force the firm into slow-motion liquidation.

A fairly interesting interview regarding the collapse of America’s once dominant insurance company.

Best and Worst Jobs 2010 - The Wall Street Journal Online - Interactive Graphics

Not sure how Dental Hygienist made it to the Top 10 of Best Jobs for ‘09… but here are the 200 best and worst jobs in the U.S. in 2009.

The ranking was based on five criteria — environment, income, employment outlook, physical demands and stress.

Hatch, Blackwell and Klukowski: Why the Health-Care Bills Are Unconstitutional - WSJ.com

Simply why parts of the health-care legislation is unconstitutional:

1. The Constitution does not give Congress the power to require that Americans purchase health insurance. Congress must be able to point to at least one of its powers listed in the Constitution as the basis of any legislation it passes. None of those powers justifies the individual insurance mandate.
2. A second constitutional defect of the Reid bill passed in the Senate involves the deals he cut to secure the votes of individual senators. Some of those deals do involve spending programs because they waive certain states’ obligation to contribute to the Medicaid program. This selective spending targeted at certain states runs afoul of the general welfare clause. The welfare it serves is instead very specific and has been dubbed “cash for cloture” because it secured the 60 votes the majority needed to end debate and pass this legislation.
3. command that states establish such things as benefit exchanges, which will require state legislation and regulations. This is not a condition for receiving federal funds, which would still leave some kind of choice to the states. No, this legislation requires states to establish these exchanges or says that the Secretary of Health and Human Services will step in and do it for them. It renders states little more than subdivisions of the federal government.

Obama's Security 'Breach' - WSJ.com

“[Jihadists’] latest sanctuary lies in unruly Yemen, headquarters for al Qaeda in the Arabian Peninsula, or AQAP, which last year pulled off a series of local bombings, including at the U.S. embassy in the capital Sana, killing 13. The al Qaeda chapter in Yemen has re-emerged under the leadership of a former secretary to Osama bin Laden… Ninety-seven of the 210 left at Gitmo are from Yemen, and if this transfer goes smoothly, the Administration wants to repatriate many more. Most are such hard terror cases that this year even Saudi Arabia rejected U.S. entreaties to accept them.

A Pentagon analysis, released in May, showed that one in seven freed Gitmo detainees—61 in all—returned to terrorism… The Pentagon has since updated its findings, and we’re told the numbers are even worse.

Mr. Obama’s desire to fulfill his campaign pledge to close Gitmo is an ideological fixation that risks letting killers loose to target Americans again.”