On Tuesday December 7, 2010, 6:01 pm EST
Tax deal should help
economy, analysts say
WASHINGTON (AP) -- The tax
deal struck by President Barack Obama and congressional Republicans essentially
gives Americans a pay raise.
The deal pumps money into
the economy almost immediately and will probably create hundreds of thousands
of jobs over the next two years, economists say.
The compromise already has
economists raising their forecasts for growth next year, mainly because it
includes a surprising one-year cut in Social Security taxes. The amount of that
cut -- 2 percent of pay for most American workers -- instantly becomes more
take-home money.
Critics complain that the
deal would further swell the $1.3 trillion federal budget deficit, however.
Democrats demand changes in
Obama-GOP tax deal
WASHINGTON (AP) --
Disappointed Democratic congressional leaders demanded changes in the White
House's tax deal with Republicans on Tuesday despite a spirited argument by
President Barack Obama that concessions were preferable to higher taxes for
millions of Americans.
In a remarkable political
role reversal, Republicans lined up to support the package, while lawmakers of
the president's party said they were prepared to oppose it.
The deal includes an
extension of expiring Bush-era tax cuts for all income levels -- not just for
lower and middle-income taxpayers, as Democrats wanted. It also contains a
renewal of jobless benefits due to expire in a few weeks, and a one-year cut in
Social Security taxes paid by workers.
Other elements would loosen
the estate tax and provide breaks for businesses to spur hiring. Officials said
that overall, the proposal could add $900 billion to the federal deficit over
two years.
Shoppers treat themselves
to lattes and lacy bras
NEW YORK (AP) -- Customers
who swore off frivolous spending during the recession are lining up again for
their $4 caffeine fix. Starbucks' net income nearly doubled and revenue rose 17
percent in the most recent quarter compared with a year earlier, as more
Americans allowed themselves a small treat.
After seeing their
retirement funds and home equity shrink severely, consumers tightened their
belts in a shift some economists dubbed the New Frugality. Fortunately for the
world's largest latte purveyor and other peddlers of small luxuries, Americans
have a short memory when it comes to the economy.
Affordable luxury goods
like gourmet coffee, lingerie and high-end skin cream have been enjoying a
comeback since the stock market began to rally in August and higher-income
Americans started feeling better about their finances.
NY feds: Boston businessman
giving up $625 million
NEW YORK (AP) -- A
97-year-old Boston-area apparel entrepreneur agreed Tuesday to forfeit $625
million to be distributed to cheated investors in jailed Bernard Madoff's
historic Ponzi scheme. A court trustee said negotiations are also under way to
recover money from the owners of the New York Mets.
The U.S. government said in
papers filed in federal court in Manhattan that Massachusetts businessman and
philanthropist Carl Shapiro, one of the first investors in Madoff's investment
business and a longtime Madoff friend, entered the forfeiture deal along with
his partners.
Stocks end flat as rally
over tax cuts fades
NEW YORK (AP) -- Stocks
closed mixed after enthusiasm over a deal to extend tax cuts faded.
Bond prices fell sharply as
traders anticipated the tax cuts would lead to ballooning budget deficits. The
yield on the 10-year Treasury note jumped to 3.13 percent, its highest level
since June 22.
President Barack Obama and
Republican leaders agreed to a broad package of tax cuts and an extension of
unemployment benefits. The compromise plan helped send stocks higher in the
morning.
Irish lawmakers offer
initial OK for brutal budget
DUBLIN (AP) -- Lawmakers
narrowly approved tax hikes Tuesday as part of Ireland's most brutal budget in
history, a 6 billion euros ($8 billion) slash-and-tax plan imposed as a key
condition of the nation's international bailout.
Rejection following
Tuesday's publication of the long-awaited 2011 budget would have forced Prime
Minister Brian Cowen's resignation and snap elections -- and raised doubts
about whether Ireland could tap 67.5 billion euros ($90 billion) from the
European Union and the International Monetary Fund.
But Cowen survived thanks
to an 82-77 vote in favor of midnight hikes in taxes on vehicle fuel. The
complex budget faces several more parliamentary tests between now and February.
Oil prices hit $90
milestone
NEW YORK (AP) -- Oil prices
on Tuesday jumped above $90 a barrel for the first time in more than two years,
a key milestone for Wall Street analysts who say tightening supplies will
eventually drive prices above the $100 mark next year.
The recent surge in oil
pushed gasoline and other fuel prices higher as well. Average heating oil and
diesel prices are expected to increase year-over-year for the first time since
2008, and the Oil Price Information Service said gasoline prices may hit a
national average of $3 per gallon before Christmas day.
The price increases
probably won't be enough to affect holiday shopping, but U.S. consumers will
eventually pull back on spending at the start of 2011, OPIS chief oil analyst
Tom Kloza said.
Rise in job openings
hopeful sign before holidays
WASHINGTON (AP) -- December
is generally a bad time to look for work, and even worse now that the
unemployment rate is nearing double digits. But there's reason for some
optimism this holiday season.
Job openings are at their
highest level in two years, according to new government data. And a
private-sector survey predicts the next few months will be the best time for
hiring since the financial crisis erupted.
That should come as some
comfort to job-seekers, especially after last week's report that the
unemployment rate rose to 9.8 percent in November and the economy added a scant
39,000 jobs.
More auto loans going to
subprime buyers
DETROIT (AP) -- Consumers
with less than stellar credit are getting car loans again as lenders loosen
their standards, and the trend is likely to continue as more lenders get into
the business.
The percentage of loans
going to subprime buyers rose 8 percent in the third quarter, their first
year-over-year increase since 2007, according to a report issued Tuesday by
Experian, a credit reporting agency. For new cars, the percentage of loans
going to subprime buyers rose 13 percent over the July-September period in
2009. The increase for used cars was 3 percent.
The majority of loans -- 63
percent -- still going to buyers with prime credit scores, which is defined as
a 680 or above. But even that is settling into a more normal pattern.
BofA unit agrees to pay
$137M in muni bond case
WASHINGTON (AP) -- Bank of
America has agreed to pay $137 million to resolve allegations that it bribed
local officials to win business from cities and towns.
Federal and state officials
announced the settlement Tuesday with the nation's largest bank.
Bank of America has neither
admitted nor denied wrongdoing in its settlements with the Justice Department,
the Securities and Exchange Commission, the Federal Reserve and attorneys
generals for 20 states.
Google delays market debut
of Chrome OS computers
SAN FRANCISCO (AP) --
Google Inc. is postponing the market debut of the first computers running on
its highly anticipated operating system by about six months to give its
engineers more time to fine-tune the software.
Under a new timetable
announced Tuesday, Google expects the first machines powered by the operating
system to go on sale in the middle of next year. The company previously
promised to have its Chrome operating system ready by the end of this year.
Google is recruiting
consumers and a handful of businesses to test a "very limited" number
of laptops using the operating system, which revolves around the company's
2-year-old Chrome Web browser. The unbranded computers will be shipped out to
people chosen to participate in the pilot program by the end of January.
AP Source: Banks interested
in Chrysler Financial
DETROIT (AP) -- Several big
banks are in talks to buy a stake in Chrysler Financial, the automaker's old
lending arm, a person briefed on the matter said Tuesday.
The banks are interested in
acquiring Chrysler Financial's substantial pool of car loans and leases because
their value has increased as used car values and the economy have recovered,
said the person, who asked not to be identified because the talks are private
and in the preliminary stages.
The person would not
identify which banks are interested in Chrysler Financial. The Wall Street
Journal and Bloomberg News reported this week that ING Group and
Toronto-Dominion Bank are among the banks.
By The Associated Press
The Dow Jones industrial
average fell 3, or 0.03 percent, to close at 11,359.16. It had been up as many
as 89 points before turning lower in the afternoon.
The broader Standard &
Poor's 500 index rose 0.6, or 0.05 percent, to 1,223.75. The S&P closed
within 2 points of its 2010 high reached on Nov. 5.
The Nasdaq composite index
rose 3.6, or 0.1 percent, to 2,598.49.
On Tuesday benchmark oil
for January delivery gave up 69 cents to settle at $88.69 a barrel on the New
York Mercantile Exchange. The contract hit $90.76 a barrel earlier in the day,
the highest price since Oct. 8, 2008.
In other Nymex trading in
January contracts, heating oil fell less than a penny to settle at $2.4702 a
gallon, gasoline futures gave up 1.87 cents to settle at $2.323 a gallon and
natural gas lost 9.5 cents to settle at $4.393 per 1,000 cubic feet.
In London, Brent crude fell
6 cents to settle at $91.39 a barrel on the ICE Futures exchange.