Sep 08 2010

Suddenly, a raft of tax-break proposals from Obama

WASHINGTON (AP) — President Barack Obama’s proposed tax breaks for business sound like ideas that have enjoyed broad Republican backing in the past. But in today’s toxic political atmosphere, he’s unlikely to get much — if any — GOP help.

Still, his plans put Republicans on the spot, making it harder for them to say no to legislation they once embraced.

In a speech on Wednesday in Cleveland, Obama will ask Congress to let businesses quickly write off 100 percent of their spending on new plants and equipment through 2011.

Its part of a raft of new Obama proposals to spur job creation and help businesses — and to try to give his party a much-needed boost ahead of November elections that will determine which party controls the House and Senate.

Clearly frustrated by the halting economic recovery and mindful of polls showing Republicans poised to make big midterm gains, Obama had his economic advisers come up with a fresh set of proposals with job-creating potential.

Among them: a $50 billion program to rebuild roads, railways and airports and to create a new infrastructure bank to oversee long-term projects. Legislation containing multiple public works projects has usually been popular in Congress across party lines.

The administration has not spelled out exactly how it would pay for all the new proposals, but suggested it would offset tax cuts by closing various corporate loopholes and levying targeted tax hikes on big business, particularly on the oil and gas industry and on multinational corporations. Some of these tax proposals were included in the budget Obama submitted to Congress earlier this year but were never acted on by Congress.

Rep. Dave Camp of Michigan, the senior Republican on the tax-writing House Ways and Means Committee, called Obama’s business tax measures serious proposals worthy of consideration. But he said that “raising taxes to cut taxes is at best a zero sum game.”

The proposed tax break for research and development has been around in one form or another since 1981 and in the past has drawn bipartisan support. However, Congress previously extended it just for short periods of time, usually just for one or two years, with frequent lapses that make it hard for businesses to plan. The credit most recently lapsed in 2009.

Obama has long advocated making the credit permanent.

His proposal to let companies quickly write off 100 percent of their investments in new plants and equipment is similar to proposals advanced several times by President George W. Bush — with considerable GOP support at the time.

The idea is to give companies an incentive to spend and invest now, rather than later. The administration claims the change would put nearly $200 billion in the hands of businesses over the next two years.

Under the current law, a company gets to deduct 50 percent of the costs upfront, and the remainder over three to 20 years, depending on the nature of the investment.

“This measure would provide tax incentives for businesses to invest in the United States when our economy needs it most,” says a White House fact sheet.

A senior administration official said the expensing provision would potentially benefit 1.5 million corporations and several million individuals. The tax break would be retroactive to this Wednesday.

Obama’s expensing and R&D tax credit proposals would generally help large businesses the most. A separate bill is before the Senate to give special tax breaks and loan incentives to small businesses. Obama has said that legislation should be Congress’ first order of business when it returns next week from its summer recess.

Chris Edwards, director of tax policy for the libertarian-leaning Cato Institute, said he favors both a permanent research tax credit and Obama’s proposal for 100 percent expensing, calling both “very positive” steps and a sign that the administration is getting seriously worried about the economy.

Still, he added, “the administration would nullify the benefits if they are matched by various tax proposals for businesses.”

Thomas Mann, a political scientist at the Brookings Institution, said Obama’s three proposals — infrastructure spending, a permanent R&D credit and upfront 100 percent business write-offs — “constitute a re-entry into the make-the-economy-grow argument.”

“All of them had support among conservatives and right-of-center economists for many years. That makes it more awkward for the Republicans just to say no,” Mann said. But that isn’t stopping them, he added.

The Obama proposals would require congressional approval, which is highly uncertain given Washington’s partisan atmosphere and the fast-approaching midterms.

“We understand what season we’ve entered in Washington,” said White House spokesman Robert Gibbs. Still, he said, even if Congress doesn’t take up Obama’s new proposals before the elections, “the president and the economic team still believe that these represent some very important ideas.”

The acceleration of the business write-off for plants and equipment would have a net long-term cost of $30 billion, far less than the amount the legislation would put in the hands of businesses, the White House contends. That’s because if companies take their write-offs upfront, they can’t depreciate the costs over a longer period for future tax breaks — as they do now.

Republican leaders greeted Obama’s most recent proposals cautiously, given past GOP support for various components.

“The White House is missing the big picture,” said House Minority Leader John Boehner, R-Ohio. “These aren’t necessarily bad proposals. …” But he said they don’t address the larger problems of “excessive government spending” and Democratic tax policies, including the impending expiration of Bush-era tax cuts.

Obama and Democratic congressional leaders want to renew the Bush tax cuts for households earning under $250,000 a year. Republicans want to extend all of them, saying a recession is no time to raise taxes.

Obama’s recently departed budget director, Peter Orszag, suggested in an op-ed article in Tuesday’s New York Times that policymakers seem locked “into a budget scenario out of which there are few politically plausible routes of escape.” As a compromise, he suggested extending the Bush tax cuts until 2013 “and then end them altogether.”

Gibbs said he had never heard Orszag make such an argument in internal White House deliberations and that the president did not agree with him on such a “compromise.”

Associated Press writers Julie Pace and Stephen Ohlemacher contributed to this report.

Sep 08 2010

Flight attendant in passenger tiff to be evaluated

NEW YORK (AP) — The flight attendant accused of onboard antics that captured the nation’s attention when he told off a passenger and slid down the plane’s emergency chute with a beer will undergo a mental health evaluation with the aim of avoiding jail time in a possible plea deal.

Steven Slater, dressed in a trim blue suit, appeared in a Queens courtroom for a brief hearing on charges of criminal mischief, reckless endangerment and trespassing after last month’s meltdown aboard a JetBlue Airways Corp. flight from Pittsburgh that had just landed at Kennedy International Airport.

He was working Aug. 9 when, he said, an argument took place with a rude passenger. After landing at JFK, he went on the public address system, swore at a passenger who he claimed had treated him rudely, grabbed a beer and exited via an emergency chute, prosecutors said.

Attorneys on both sides said a deal was being discussed. Slater will be evaluated and may qualify for an alternative sentencing program, which means he could face community service and counseling instead of jail.

Queens District Attorney Richard A. Brown said Slater’s willingness to be evaluated shows he’s taking the charges more seriously than he had in the past. Slater had spoken out after the incident, as his public opinion swelled and hundreds of thousands of fans online cheered him for standing up to the inhospitable world of airline travel.

The district attorney, speaking to reporters after the hearing, said it would behoove the public to take the Aug. 9 incident more seriously, noting the slide cost $25,000 to repair and the plane had to be taken out of service afterward, causing passenger delays.

“It’s no laughing matter,” he said.

Slater’s attorney, Daniel J. Horwitz, said his client was taking the matter very seriously and said he had been under tremendous pressure because of his terminally ill mother, recently deceased father, and health problems of his own. (Slater is HIV positive.) He said he was hoping prosecutors would take into account Slater’s “long-standing and well-regarded reputation in the industry.”

Horwitz said he hopes they can come to an agreement that favorably resolves the case, but he wouldn’t specify what he was looking for. Brown said if Slater is admitted for alternative sentencing, he could undergo a treatment program lasting weeks, but he said it depended on the outcome of the evaluation and he’s not ruling out the possibilty of jail time yet.

Slater, his head held high, left the court without speaking to the swell of reporters surrounding him. His publicist and attorney said he’s in good spirits and has spent the past few weeks in California with his ailing mother.

Slater resigned from JetBlue last week after about three years there; JetBlue said only that he was no longer an employee. Slater has spent nearly 20 years in the airline industry, but it’s not clear what he’s going to do now.

“Right now we want to get past the criminal issues. Then we’ll worry about the future,” publicist Howard Bragman said. “Obviously he will be unemployed until all this is resolved.”

JetBlue suspended Slater after the incident. It told employees in a memo that press coverage was not taking into account how much harm can be caused by emergency slides, which are deployed with a potentially deadly amount of force.

Sep 08 2010

All eyes on BP report on Gulf oil spill disaster

NEW ORLEANS (AP) — Oil giant BP PLC on Wednesday planned to release the conclusions of its internal investigation into the rig explosion that killed 11 workers and led to the massive Gulf of Mexico spill.

BP was striking first with a detailed report about what it believes went wrong on the Deepwater Horizon on April 20. It comes just days after a key piece of evidence in the explosion was raised to the surface but has not yet been analyzed. It also comes as the blame game heats up in Washington and in the courtroom.

BP was unlikely to place too much onus on itself, given the hundreds of lawsuits and billions of dollars of liabilities it faces. In public hearings, the company has tried to shift some blame to rig owner Transocean Ltd. and cement contractor Halliburton. BP was leasing the rig from Transocean and owned the well that blew out a mile under the Gulf surface, spewing some 206 million gallons of oil into the water over three months.

BP’s report is far from the final word on possible causes of the explosion, as several divisions of the U.S. government, including the Justice Department, Coast Guard and Bureau of Ocean Energy Management, Regulation and Enforcement, are also investigating.

Also, a key piece of the puzzle — the blowout preventer that failed to stop the oil from leaking from the well off the Louisiana coast — was raised from the water on Saturday. As of Tuesday afternoon, it had not reached a NASA facility in New Orleans where government investigators planned to analyze it, so those conclusions will not be part of BP’s report.

Investigators know the explosion was triggered by a bubble of methane gas that escaped from the well and shot up the drill column, expanding quickly as it burst through several seals and barriers before igniting.

But they don’t know exactly how or why the gas escaped. And they don’t know why the blowout preventer didn’t seal the well pipe at the sea bottom after the eruption, as it was supposed to.

The details of BP’s internal report have been closely guarded — and only a short list of people saw it ahead of its release. Mark Bly, BP’s group head of safety and operations, compiled the report and said in May that there was a gas plume before the explosion.

“This was a pretty large plume of gas … I think it was a large enough where there was a high likelihood it would have ignited,” he said.

There were other signs of problems, including an unexpected loss of fluid from a pipe known as a riser five hours before the explosion that could have indicated a leak in the blowout preventer.

Witness statements show that rig workers talked just minutes before the blowout about pressure problems in the well.

At first, nobody seemed too worried, workers have said. Then panic set in.

Workers called their bosses to report that the well was “coming in” and that they were “getting mud back.” The drilling supervisor, Jason Anderson, tried to shut down the well.

It didn’t work. At least two explosions turned the rig into an inferno.

Members of Congress, industry experts and workers who survived the rig explosion have accused BP’s engineers of cutting corners to save time and money on a project that was 43 days and more than $20 million behind schedule at the time of the blast.