Four-Year-Old Got Homebuyer Tax Credit, Treasury Says


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Thanks, this type of thing fuels the ‘govt can’t do anything right’ constituency.

I’m always careful to make proposals that minimize incentives for fraud and abuse, and also minimize the amount of regulation and supervision needed to ensure compliance.

Hence, I’ve proposed the payroll tax holiday and per capita revenue distributions to the states to support aggregate demand.

Four-Year-Old Got Homebuyer Tax Credit, Treasury Says

By Dawn Kopecki

Oct. 22 (Bloomberg) — Children as young as four years old have
improperly received first-time homebuyers tax credits
as the U.S. failed
to adequately screen filings, a Treasury inspector general told
lawmakers today.

“Some key controls were missing to prevent an individual from
erroneously or fraudulently claiming the credit and receiving an
erroneous refund of up to $8,000,” Treasury’s J.
Russell George told the House Ways and Means Committee’s oversight
panel.

More than 1.2 million borrowers through Oct. 9 have claimed almost
$8.5 billion of the $13.6 billion set aside for “first- time” homebuyer
tax credits this year, George said.

George said the IRS has identified almost 74,000 claims that may
not have qualified as first-time homebuyers.
They also found that 580
taxpayers under 18 years old and therefore ineligible to buy a home
claimed almost $4 million in tax credits.

The credits, which are available for taxpayers who haven’t owned a
home in the last two years, are credited by Realtors and mortgage
bankers with helping to stabilize home sales this year following the
worst housing slump since the Great Depression.

Lawmakers in the Senate are pushing to extend the credit beyond its
Nov. 30 expiration and expand it to more borrowers.

“Every time Congress creates a new refundable credit — meaning
that individuals can get a check from the government whether or not they
have actual tax liability — the incentive for fraud is magnified,”

Louisiana Representative Charles Boustany, the subcommittee’s
top-ranking Republican, said during the hearing.

Waste, Fraud and Abuse

If Congress extends the credit, the IRS needs to institute better
controls to prevent waste, fraud and abuse, Boustany and Chairman John
Lewis, a Georgia Democrat, said.

Federal auditors also found claims in excess of the maximum amount
allowed, with improper documentation or that exceeded the income
requirements of $75,000 per individual and $150,000 per couple.

Senate Banking Committee Chairman Christopher Dodd and Senator
Johnny Isakson, a Georgia Republican and former Realtor, urged
colleagues at a separate hearing this week to extend the credit through
next June and to expand it to all couples earning $300,000 or less.
Isakson estimated that his plan would cost less than $17 billion in lost
tax revenue.

Purchases of existing homes in August were up 3.4 percent compared
with a year earlier, the National Association of Realtors said. New home
sales were up 30 percent from January’s record low, government figures
show.

Shaun Donovan, secretary of the Housing and Urban Development
Department, called the tax credit a “positive force” in the housing
market during the Oct. 20 hearing before the Senate Banking Committee.

“The end of the tax credit would have some negative affect in the
market,” he said. He said he doesn’t think it would cause a
“catastrophic decline” in home prices.


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greece downgrade


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If markets turn on any Euro national govt this one is a prime candidate

Subject: initial thoughts on greece downgrade: CDS maybe a couple of bp

Initial thoughts on greece downgrade: CDS maybe a couple of bp wider and bonds more or less a non event.
The deficit numbers aren’t really new news – central bank governor Provopoulos said that he expected a 12% deficit this year in the week after the Oct 4th elections, and the press was speculating 14%.
The new government are busy dragging all the skeletons out of the cupboard, trying to make a clean break.
Depending on the level of cash balances, additional issuance this year could be around 10bn.


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reaching the limits of dollar weakness?


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Yes, first recent sign of direct intervention to keep domestic wages down and support exports.

If foreign limits of tolerance for the appreciation of their currencies have been met and they start buying
dollars to support exports to the US it could trigger a dollar short covering rally/gold sell off/equity sell off/bond rally, etc.

Govt may ‘freeze’ rand – report

Oct. 22 — Cape Town – Ebrahim Patel, Minister of Economic Development, is preparing to propose “radical” economic policy adjustments after the considerable strengthening of his support base in the past 48 hours.

These include a controversial proposal to freeze South Africa’s currency at a predetermined exchange rate, so that the economy can benefit from the stability of the rand, which is coupled to an external standard.

Patel is apparently working closely with Dr Blade Nzimande, Minister of Higher Education & Training, a political ally of his, in formulating a series of interventions to adjust the economic growth rate in favour of accelerated job creation.


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reaching the limits of dollar weakness?

Anti US bias at Moody’s?


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Debt ratios are far higher in the Eurozone than the federal govt in the US, and the eurozone national govts are subject to liquidity crisis risk much like the US States.

Could there be some kind of anti US bias at Moody’s???

Rising Debts in Europe Won’t Trigger Downgrades, Moody’s Says

Oct. 22 (Bloomberg) — European countries’ rising debt won’t trigger across-the-board credit-rating downgrades because countries are measured relative to each other, Moody’s Investors Service said.

The worst recession in six decades and the stimulus measures used to moderate its effects are going to drive debt levels up in the euro zone and in the European Union over the next two years, the European Commission predicts.

“We are doing relative ranking of sovereign risk within peer groups,” Alexander Kockerbeck, a senior European analyst for Moody’s, said in an interview. “Part of the quality of an AAA country is to be able to absorb a shock of this kind.”

Moody’s ranks Germany and France among the countries with the highest credit ratings. European governments spent billions of euros to fight the region’s worst recession since World War II. As a result, the commission forecasts that euro-area debt will rise to 77.7 percent this year from 69.3 percent, and that it would advance to 83.8 percent in 2010.

Debt sustainability will continue to be monitored country- by-country, Kockerbeck said. Moody’s downgraded Ireland’s top credit rating in July, cutting it one step to Aa1.

While a temporary debt expansion should be expected, countries need to get their public finances under control soon because of the region’s ageing population, Kockerbeck said.


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Moody’s – The Aaa rating of the U.S. is not guaranteed


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The ratings agencies rate high on the deficit terrorist list.
If you know Hess send him a copy of the 7 deadly innocent frauds draft, thanks.

Unfortunately, policy makers don’t know any better and actually respond to this nonsense:

Reducing deficit key to U.S. rating-Moody’s

Oct. 21 (Reuters) — The United States, which posted a record deficit in the last fiscal year, may lose its Aaa-rating if it does not reduce the gap to manageable levels, in the next 3-4 years, Moody’s Investors Service said on Thursday.

The U.S. government posted a deficit of $1.417 trillion in the year ended September 30 as the deep recession and a series of bank rescues cut a gaping hole in its public finances. The White House has forecast deficits of more than $1 trillion through fiscal 2011.

“The Aaa rating of the U.S. is not guaranteed,” said Steven Hess, Moody’s lead analyst for the United States said in an interview with Reuters Television.

“So if they don’t get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy.”

Moody’s has a stable outlook on the U.S. rating, which indicates a change is not expected over the next 18 months.

Earlier this year, financial markets were spooked by concerns about the risk of the United States losing its top rating after Standard & Poor’s revised its outlook on Britain to negative from stable, indicating the risk of a downgrade.

Hess said that reducing the budget deficit would be a challenge.

“Raising taxes is never popular and difficult politically so we have to see if the government can do that or cut expenditure,” he said while adding it would be tough to reduce expenditure.


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Unemployment Benefit Extension Stalls in U.S. Senate


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Just in case you thought any of them understand the monetary system.

Truly the blind leading the blind.

Unemployment Benefit Extension Stalls in U.S. Senate

By Brian Faler

Oct. 21 (Bloomberg) — Legislation to extend unemployment
benefits is stalled in the U.S. Senate amid a partisan dispute
over how to finance the plan,
among other issues.
Republicans are blocking the measure that would extend
benefits by as much as 20 weeks because they want votes on
several amendments, including on how to pay for the $2.4
billion measure
so it doesn’t add to the federal budget
deficit. Democrats plan to finance the aid by extending an
employer payroll surtax
due to expire at the end of this year.

Senator Dick Durbin of Illinois, the chamber’s second-
ranking Democrat, said the unemployment benefit extension is
being delayed because Republicans are demanding votes on
unrelated issues such as immigration.

‘Pertains to the Subject’

Arizona Senator Jon Kyl, the No. 2 Republican, said his
side wants amendments on “stuff that pertains to the subject –
-how do you pay for it, for example.” He said the measure has
been further delayed by Democrats’ decision to take up a
measure that would scrap scheduled cuts in Medicare
reimbursements to doctors.

Pelosi, a California Democrat, met behind closed doors
today for four hours with economists Mark Zandi, Alan Blinder

and others to discuss possible measures to boost the economy.

She said proposals under consideration include expanded
subsidies to help the jobless buy health insurance, tax breaks
for money-losing companies and increased funding for food
stamps.

She said the measures won’t be compiled into a second
stimulus package. Instead, lawmakers plan to attach them to
other pieces of legislation moving through Congress such as the
annual appropriations bills funding government agencies, she
told reporters.

No New Stimulus Package

“We do not have plans for an additional stimulus package,
but we do have plans to stimulate the economy in the work that
we are doing,” said Pelosi.

The House approved legislation in September that would
extend benefits for 13 weeks in 27 states with unemployment
rates topping 8.5 percent. Democrats said they had hoped to
forward the bill to President Barack Obama by the end of last
month, before an estimated 400,000 Americans exhausted their
benefits.

At first, the Senate vote was delayed by 17 Democrats who
objected their states would be excluded under the House plan.
They agreed to accept a revised Senate plan extending benefits
by 14 weeks in all states, with an additional six weeks for
states with jobless rates of at least 8.5 percent.


Democrats are divided over what to do about the $8,000 tax
credit for first-time homebuyers set to expire at the end of
next month.

Expanded Tax Credit

Senate Banking Committee Chairman Christopher Dodd, a
Connecticut Democrat, has proposed a $17 billion plan that
would extend and expand the plan until June 2010. Dodd’s
proposal, cosponsored by Georgia Republican Senator Johnny
Isakson, would expand the credit to all homebuyers and increase
those eligible to couples earning as much as $300,000. Isakson
is pushing to attach the plan to the Democrats’ unemployment
aid bill.

Senate Finance Committee Chairman Max Baucus, a Montana
Democrat and the chamber’s chief tax writer, said today he
opposes the Dodd-Isakson proposal, saying any extension should
continue to be limited to first-time buyers. He said the break
should be extended until mid-2010 and financed with offsetting
savings so it doesn’t add to the government’s $1.4 trillion
deficit.

“We are going to pay for things around here,” said
Baucus.


House Majority Leader Steny Hoyer, a Maryland Democrat,
favors a one-month extension of the tax credit to be financed
with offsetting savings, said spokeswoman Katie Grant.

Cost Billions

Extending such provisions would cost billions, while
letting them lapse may be difficult because the unemployment
rate is higher than when the stimulus plan was approved.
The
national unemployment rate last month was 9.8 percent, the
highest since 1983, while the share of unemployed who have been
jobless for at least six months reached the highest level in at
least a half- century. More than 5.4 million people have been
unemployed for at least 27 weeks, according to the Labor
Department.

About 1.3 million people will exhaust their benefits by
the end of the year, according to the National Employment Law
Project.

Federal Reserve Chairman Ben Bernanke said earlier this
month that economic growth next year probably won’t be strong
enough to “substantially” bring down the unemployment rate,
which may remain above 9 percent through the end of next year.


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