News Roundup

by hilzoy

* The Senate extended the Bush tax cuts on capital gains:

"The Senate gave final approval yesterday to a five-year, $70 billion tax package that would extend deep cuts to tax rates on dividends and capital gains for two years, effectively locking in all of President Bush's first-term tax cuts through the end of the decade. (...)

The House approved the package on Wednesday, and Bush said he will sign it enthusiastically once it reaches his desk.

But with interest rates rising, the dollar falling and the budget deficit stuck at around $300 billion, tax experts warn that the tax code Bush has transformed may not survive to its Dec. 31, 2010, expiration date and that Congress may have to step in again because tax revenue will not meet all of the government's needs. "We have a train wreck waiting to happen," said C. Clint Stretch, director of tax policy at the accounting giant Deloitte & Touche."

Rather than commenting, I'll just repost a graph from the CBPP about the effects of this tax cut:

Kevin Drum also has a good explanation of a gimmick
the Republicans used in order to keep the costs of this tax cut down to a level where they could pass it with a simple majority. Short version: they increase revenue slightly over the next five years at a huge financial cost later.

* President Bush's approval ratings have now entered the twenties:

"Of 1,003 U.S. adults surveyed in a telephone poll, 29% think Mr. Bush is doing an "excellent or pretty good" job as president, down from 35% in April and significantly lower than 43% in January. It compares with 71% of Americans who said Mr. Bush is doing an "only fair or poor" job, up from 63% in April. (...)

Elsewhere, roughly one-quarter of U.S. adults say "things in the country are going in the right direction," while 69% say "things have pretty seriously gotten off on the wrong track." This trend has declined every month since January, when 33% said the nation was heading in the right direction.

In terms of political-party identification, 48% of Republicans said "right direction" while 39% of Republicans said "wrong track." In comparison, just 13% of Democrats said "right direction" and 83% of Democrats responded with "wrong track.""

One interesting fact from the poll: Bush's favorable rating among men has dropped by ten full percentage points since April (from 38% to 28%.) By contrast, his favorable rating among women dropped only three percentage points, from 32% to 29%.

* Via TPM: The FBI has raided Dusty Foggo's house. Josh adds that CNN is reporting that they have also raided his CIA office. (And -- news flash -- they had search warrants, unlike the NSA.) It couldn't happen to a more deserving guy.

* Orin Kerr has posted an update on the legality of the NSA database:

"My still-very-tentative bottom line: The companies were probably violating the Stored Communications Act by disclosing the records to the NSA before the Patriot Act renewal in March 2006, although the new language in the Patriot Act renewal at least arguably made it more likely that the disclosure was legal under the emergency exception."

Meanwhile, William Arkin has a very interesting post about what the NSA is up to, including a long list of its data mining programs.

* Finally, the dollar keeps falling:

"Another week, another set of losses for the dramatically diminishing dollar, which on Friday slumped to its lowest level since October 1997 in trade-weighted terms.

The continuing sell-off came amid a series of events that should, in theory, have aided the greenback. The Federal Reserve released a broadly hawkish monetary policy statement, Thursday’s US trade data was far better than feared, and the US Treasury declined to formally cite China for currency manipulation, a ruling that would have been expected to drive further Asian gains against the dollar.

Yet sentiment has turned so decisively against the greenback that it still fell, sliding a further 1.1 per cent to $1.2879 to the euro, 2.1 per cent to $1.8897 against sterling and 1.9 per cent to SFr1.2022 against the Swiss franc, hitting new one-year lows against each, and 1.3 per cent to Y110.50 against the yen. The dollar has now lost 6-8 per cent against each of these currencies since the start of April.

The selling has been driven by two major factors. First, relative interest rate differentials continue to move against the dollar.

Despite the Fed statement, the market is only pricing in a 40 per cent chance of a June rate rise. In contrast there is increasing talk that the European Central Bank may sanction a larger-than-expected half-point rate rise next month, that Japan could initiate its first hike of the cycle as early as next month, and that the Bank of England may raise rates before the year is out.

Second, since last month’s G7 conference, markets have increasingly focused on the massive US current account deficit, some 7 per cent of GDP, and the role that a weaker dollar will almost certainly have to play in order to bring this imbalance back to a more sustainable level.

“The structural imbalances in US international trade flows remain significant and we believe forex market participants will become more concerned over the burgeoning US current account deficit and that this will contribute to a weakening dollar,” said Mitul Kotecha, head of global FX research at Calyon."

Expect interest rates to rise more than they would have otherwise, and higher prices for imports from countries that have not pegged their currencies to the dollar. And expect the attractiveness of such a peg to diminish, along with the desirability of parking one's assets in dollars, though how much they will diminish is anyone's guess.

Comments

[Steve]

How are telecom stocks doing today?

[John Thullen]

Let's see:

The NSA is watching me; the CIA is watching the NSA; The FBI is watching the CIA; the DOD is watching the FBI; the private sector has been contracted to watch my mother; my mother is watching the bond market; the bond market is watching the dollar; the dollar is watching the deficits; the border militia is monitoring Charlton Heston's cook, the White House is covertly watching the polls; the media doesn't know what to watch and I'm keeping an eye on DaveC.

Who's watching Osama Bin Laden?

[Ugh]

hilzoy -

You have one of the from/to #s in the women's approval decline wrong (or the amount of decline).

[hilzoy]

Ugh: darn, you're right. Thanks. It's 32%-29%. It interested me that Bush used to be doing better among men than among women, which I'd expect, but that that seems to have changed. (Given the margin of error, his support is roughly equal in both groups.)

[hilzoy]

AmericaBlog has good T-shirts here. (NSA: Now Spying on Americans. Black T, big white NSA, smaller rest of it underneath. Looks good.)

[Ugh]

It interested me that Bush used to be doing better among men than among women, which I'd expect, but that that seems to have changed.

Its the immigration issue I bet. The whole "they took our jobs" (can't put it in the South Park phonetics) meme likely resonates more there. Plus we're reaching The Poor Man's BTKWB limit and men had further to fall. Wilford, of course, had it coming.

[Ugh]

As for tax gimmicks, a fun one is to change the date on which estimated corporate tax payments are due by one day for a single year, thereby shifting the revenue into the next fiscal year.

[KCinDC]

Obviously the reason for the disappearance of the gender gap is that the remaining core of Bush's female supporters are motivated by his steely-eyed manliness, not by anything related to policies or competence. He'll only lose them if he starts making unfortunate wardrobe choices or develops a lisp.

[rilkefan]

It used to be I read the news and thought, "Oh, a scandal for the Bush admin, excellent - but on the other hand, it's also bad news for America, so that's not good." Then I read the news and was disgusted and frightened and outraged. Then I read the news and thought, "Oh well, at least it'll be clear to everyone that the Bush admin is a disaster, maybe they'll vote my way next time". Now I'm just bored.

[vida]

This seems like an awfully expensive program. What if we all just mail in our phone bills every month to save them the trouble of spying. Yeah, then they can pick out the terrorists by those who don't send in the bills. Or maybe you can apply to be a certified non-terrorist, like the airport screening pass deal, and then they can skip monitoring you? There's got to be a cheaper way to deal with it. Outsource the spying to India, I don't know.

[IntricateHelix]

I am so frustrated with our government right now. What can we do?

Polls of the President are in the dumper yet republicans won't represent public outcry. I think we need extensive polls of Senators. So then, they might actually think twice about making sure they are representing their constituents.

PS- I printed out a full copy of the Declaration of Independence, the Constitution, and the Bill of Rights and mailed it to the White House. I attached a note expressing my desire for the President to read some of the most elegant documents of mankind since it is apparent he has never done so.

HA! I got a chuckle from the lady who put on the postage stamp.

[kenB]

Heh, rilkefan's Four Stages of Dealing with Incompetent Administrations. I think I went through a similar cycle.

[SomeOtherDude]

A Fun Site!

It is wonderful to witness hoe their are at least some deserving folks benefiting from the economy

----------------------------
The average CEO of a Standard & Poor's 500 company made $11.75 million in total compensation in 2005, according to a preliminary analysis by The Corporate Library. And that's just their annual take. At a time when most working families are looking at shrinking retirement nest eggs, many CEOs also have negotiated golden retirements for themselves. Here are the biggest CEO pensions:

http://www.aflcio.org/corporatewatch/paywatch/

[SomeOtherDude]

A Fun Site!

It is wonderful to witness some deserving folks benefiting from the economy!

----------------------------
The average CEO of a Standard & Poor's 500 company made $11.75 million in total compensation in 2005, according to a preliminary analysis by The Corporate Library. And that's just their annual take. At a time when most working families are looking at shrinking retirement nest eggs, many CEOs also have negotiated golden retirements for themselves. Here are the biggest CEO pensions:

http://www.aflcio.org/corporatewatch/paywatch/