Obama’s debt-reduction plan: $3 trillion in savings, half from new tax revenue [WaPo]
President Obama will announce a proposal on Monday to tame the nation’s rocketing federal debt, calling for $1.5 trillion in new revenue as part of a plan to find more than $3 trillion in budget savings over a decade, senior administration officials said.
The proposal draws a sharp contrast with Republicans and amounts more to an opening play in the fall debate over the economy than another attempt to find common ground with the opposing party. Combined with his call this month for $450 billion in new stimulus, the proposal represents a more populist approach to confronting the nation’s economic travails than the compromises he advocated earlier this summer.
Obama Tax Plan Would Ask More of Millionaires [NYT]
Mr. Obama, in a bit of political salesmanship, will call his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.
Rep. Ryan: ‘Buffett Rule’ an example of ‘class warfare’ [OTM/The Hill]
“You tax something more, you get less of it,” Ryan said. Obama is trying to “raise the tax on capital,” he said.
UBS says trader hid loss with fake deals [FT]
Kweku Adoboli, the trader charged with blowing a $2.3bn hole in the books of UBS, allegedly disguised huge lossmaking positions with fictitious counter-trades, the bank has stated, the same tactic used by Jérôme Kerviel who caused €4.9bn of losses at France’s Société Générale in 2008. As one senior UBS executive likened the trading scandal to “a terrorist attack” that was impossible to prevent, the group revised upwards its estimate of the loss caused by Mr Adoboli from an earlier estimate of $2bn and attempted to shore up the position of chief executive Oswald Grübel.
UBS probe to be run by Deloitte [FT]
British and Swiss regulators have appointed the international audit firm Deloitte to head an investigation into events at UBS that led to $2bn of losses which may have been caused by alleged rogue trader, Kweku Adoboli. According to the UK’s Financial Services Authority and the Swiss Financial Market Supervisory Authority (Finma), the probe, which will be paid for by UBS, will look at “the details of the unauthorised trading activity; the control failures which permitted the activity to remain undetected; and … an assessment of the overall strength of UBS’s controls to prevent unauthorised or fraudulent trading activity in its investment bank”.
Obama’s Muni Tax-Exemption Tweak Is Idea Whose Time Hasn’t Yet Come [Bloomberg]
President Barack Obama’s proposal to reduce the exemption that high earners can claim on interest for their municipal-bond investments is a good example: It should be rejected on the grounds that it only makes sense as part of a sweeping reform. Politicians have been trying to kill the special tax status of muni bonds since Andrew Mellon was Treasury secretary almost 100 years ago. But there are a few good reasons the federal government has wanted to keep the exemption: State and local governments are a (rightly) powerful constituency; capital markets are the most efficient way to match investors with local infrastructure needs, and should be encouraged; and municipal projects tend to be in the public interest.
Lawmakers To Urge IRS To Ease Tax Problems For Same-Sex Couples [Dow Jones]
Even as states increasingly allow same-sex couples to marry, ambiguities in the tax code and administrative tie-ups at the Internal Revenue Service complicate and hinder these couples’ ability to pay their taxes, a bipartisan group of lawmakers will tell the head of the tax agency in a letter to be sent Monday. The IRS should move quickly to clarify the “serious issues” with which domestic partners and same-sex couples grappled while paying their taxes in 2010, urges a letter signed by 74 members of the House of Representatives to IRS Commissioner Douglas Shulman, to be sent Monday.
Tyco to Split Into Three Companies [DealBook]
As it looks to capitalize on opportunities in its disparate industries, the conglomerate will cleave off its North American residential alarm system unit, its flow control group, and its commercial security business into separate companies.