Global Warming Deal Decades Away as `Dysfunctional’ U.S. Delays Commitment – Delegates at the United Nations climate talks stayed up two nights in a row last week to agree on a proposal to slow global warming. Next year’s negotiations may be even tougher. The plan approved on Dec. 11 creates a climate fund to channel as much as $100 billion a year in aid to developing nations by 2020, protects forests and outlines methods to verify cuts in fossil fuel emissions. No new targets for curbing greenhouse gases were set, and debate on the future of the Kyoto Protocol, which limits emissions by developed countries until 2012, was put off until the next meeting in Durban, South Africa, in December 2011. With President Barack Obama struggling to salvage his energy agenda and richer and poorer nations in conflict over extending Kyoto’s emission limits, a new worldwide climate treaty may be 20 years away, said Tim Wirth, who in 1997 led the U.S. delegation in Kyoto, Japan. Such a delay endangers the future of $2.7 billion a year in pollution credits sold under a UN program based on the Kyoto agreement.
The Tax Deal and the Apocalypse – The proponents of the tax deal that President Obama and the Republicans negotiated last week have gotten out their TARP and Iraq War hysterics. All the important people are now telling us that if Congress doesn’t approve the package, it will be the end of the world! To be an important person in Washington these days requires a solid record of failure. That is why we have 25 million people unemployed, underemployed or out of the labor force altogether. And those who got us into this disaster are still overwhelmingly the ones calling the shots. So, people who want a realistic assessment of what the defeat of this tax package means for the economy may not want to rely on the usual suspects. As I have noted before, the major risk of this deal is that it would undermine Social Security. The deal temporarily lowers the Social Security tax by 2 percentage points. In principle, the tax rate will go back to its current rate after the end of next year. However, several prominent Republicans have already made it clear that they will call the expiration of this tax cut a tax increase. And they will point out that it is an extremely regressive tax increase that disproportionately hits low- and moderate-income workers.
Democrats are particularly anxious about changes to the estate tax that would permit a couple to pass $10 million on to heirs tax-free and would tax inheritance beyond that amount at 35%. The provision, which Hoyer said "a number of us would like to change," would cost $68 billion over the next decade.
- First, 21% of HAMP permanent modifications have redefaulted in their first year. That’s ghastly given that HAMP permanent modifications have an additional 3 months of trial seasoning and fairly serious payment reductions. The fact that Treasury hasn’t been reporting on this itself, much less analyzing the reasons for the redefaults is disgraceful.
- Second, if past trends continue, starting this month, there will be more HAMP redefaults each month than new permanent modifications. That means that the total number of active permanent modifications will peak at around 500,000 and decline.
- Third, it looks as if Treasury will only end up spending $4B for HAMP out of the $75B allocated for homeowner assistance.
My take: Treasury should shut down the program. At this point all it does it provide political cover for the failure to take meaningful steps to help homeowners and stabilize the housing market. But is anyone really buying it?