KeNo's Housing and Economic Portal: Monday June 14 Housing and Economic stories

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TOP STORIES:

Costly IRS Mandate Slipped into Health Bill - (www.cato-at-liberty.org) Most people know about the individual mandate in the new health care bill, but the bill contained another mandate that could be far more costly. A few wording changes to the tax code’s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare. Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress. In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:

The 2010 Health Care Act adds “amounts in consideration for property” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(1)) and “gross proceeds” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term “payments” includes gross proceeds paid in consideration for property or services.

Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.

Oakland PD banned from police boxing matches after melee Friday night - (www.merurynews.com) Police officers proving to be biggest thugs. As usual, different rules apply as they can drink, drive, speed, and attack others without penalty. A boxing match for law enforcement officers turned chaotic when supporters of an Oakland Police Department fighter escalated trash-talking into what turned into a shouting and shoving match that involved dozens of spectators. Fight fans and organizers were harshly critical of off-duty Oakland police at the Sacramento Radisson during Friday night's "Badge vs. Badge" fights, and while fans said they were unsure whether those rooting for Oakland police fighters were officers or simply friends and relatives, event organizers said the troublemakers were police. As a result of the fracas, Oakland police officers are banned from fights sanctioned by the International Association of Boxing until a review of video footage is complete, said Steve Fosum, the association's president. "It was totally instigated by Oakland PD, no doubt in my mind," said Fosum, who was in the ring Friday night. "They chose to be jerks instead of law enforcement. This was not an embarrassment to Badge versus Badge. This was not an embarrassment to law enforcement. This was an embarrassment to Oakland PD."

Union squelches Tacoma school volunteers at weekend work party - (www.thenewstribune.com) Volunteers at a weekend work party at Fawcett Elementary School in East Tacoma came prepared to get their hands dirty. But some say they felt like they were working with one grubby hand tied behind their backs last weekend due to school district and union rules. “There was a lot of work that could have been done, but wasn’t,” said Ron Joslin, whose daughter is a third-grader at the school. Tacoma Public Schools spokesman Dan Voelpel said the district appreciates volunteer efforts to help make schools better, but there’s a protocol for volunteer cleanups. First, volunteers must fill out a form detailing what the work party plans to do. “Our buildings and grounds supervisory staff need to review it to make sure that what people want to do is safe and up to school standards,” Voelpel said. “And we have to, by union contract, notify the unions affected. They can determine if the work being performed substantially takes away from union labor. They can object to the work proposed.” Mark Martinez, executive secretary for the Pierce County Building and Construction Trades Council, put it this way: “Sometimes people don’t appreciate our craft.” His union represents an estimated 60 Tacoma schools employees. Parents say one of the vetoed Fawcett projects would have removed overgrown bushes that block views of the street from the school. Other proposed projects that didn’t happen include painting a Fawcett Falcons mascot on a school wall and spreading 40 yards of beauty bark on school playgrounds and elsewhere.

Fannie Mae owns patent on residential 'cap and trade' exchange - (www.washingtonexaminer.com) When he wasn't busy helping create a $127 billion mess for taxpayers to clean up, former Fannie Mae Chief Executive Officer Franklin Raines, two of his top underlings and select individuals in the "green" movement were inventing a patented system to trade residential carbon credits. Patent No. 6904336 was approved by the U.S. Patent and Trade Office on Nov. 7, 2006 -- the day after Democrats took control of Congress. Former Sen. John Sununu, R-N.H., criticized the award at the time, pointing out that it had "nothing to do with Fannie Mae's charter, nothing to do with making mortgages more affordable." It wasn't about mortgages. It was about greenbacks. The patent, which Fannie Mae confirmed it still owns with Cantor Fitzgerald subsidiary CO2e.com, gives the mortgage giant a lock on the fledgling carbon trading market, thus also giving it a major financial stake in the success of cap-and-trade legislation.

Besides Raines, the other "inventors" are:

· Former Fannie Vice President and Deputy General Counsel G. Scott Lesmes, who provided legal advice on Fannie Mae's debt and equity offerings;

· Former Fannie Vice President Robert Sahadi, who now runs GreenSpace Investment Financial Services out of his 5,002-square-foot Clarksburg home;

· 2008 Barack Obama fundraiser Kenneth Berlin, an environmental law partner at Skadden Arps;

· Michelle Desiderio, director of the National Green Building Certification program, which trains "green" monitors;

· Former Cantor Fitzgerald employee Elizabeth Arner Cavey, wife of Democratic donor Brian Cavey of the Stanton Park Group, which received $200,000 last year to lobby on climate change legislation; and

· Jane Bartels, widow of former CO2e.com CEO Carlton Bartels. Three weeks before Carlton Bartels was killed in the Sept. 11 attacks, he filed for another patent on the software used in 2003 to set up the Chicago Climate Exchange.

The patent, which covers both the "cap" and "trade" parts of Obama's top domestic energy initiation, gives Fannie Mae proprietary control over an automated trading system that pools and sells credits for hard-to-quantify residential carbon reduction efforts (such as solar panels and high-efficiency appliances) to companies and utilities that don't meet emission reduction targets. Depending on where the Environmental Protection Agency sets arbitrary CO2 standards, that could be every company in America.

300,000 jobs in public sector face the axe - (www.timesonline.co.uk) At least 300,000 Whitehall and other public sector workers may lose their jobs as the coalition government sets to work cutting the £156 billion budget deficit. As George Osborne, the chancellor, prepares to unveil the first £6 billion of cuts tomorrow, the full scale of the job losses that will follow has begun to emerge. The initial savings to be announced will target such items as civil servants’ perks, which include taxis, flights and hotel accommodation. The package will also include a £513m cut in the budgets for quangos, with some being abolished altogether. “The outgoing chief secretary [Liam Byrne] said it all, there is no money,” said a Treasury source. “There is no time either.” Some estimates suggest that the number of job losses could reach 700,000. These will include tens of thousands of health service managers as well as many thousands of doctors and nurses, according to internal documents from the National Health Service. Three out of the 10 strategic health authorities have disclosed that they will reduce their headcounts by a total of 30,132, an average of 8.7%. If these cuts were replicated nationwide, the total job losses would amount to 120,000. A similar analysis of 75 local authorities suggests that at least 100,000 council workers across the country will lose their jobs. Thousands of police officers and their civilian support staff will lose their posts, with the Metropolitan police alone forecasting 445 job cuts.

More Global Warming Profiteering by Obama Energy Official - (www.pajamasmedia.com) Surprising documents made available to this author reveal that Assistant Secretary of Energy Cathy Zoi has a huge financial stake in companies likely to profit from the Obama administration’s “green” policies. Zoi, who left her position as CEO of the Alliance for Climate Protection — founded by Al Gore — to serve as assistant secretary for energy efficiency and renewable energy, now manages billions in “green jobs” funding. But the disclosure documents show that Zoi not only is in a position to affect the fortunes of her previous employer, ex-Vice President Al Gore, but that she herself has large holdings in two firms that could directly profit from policies proposed by the Department of Energy.
Among Zoi’s holdings are shares in Serious Materials, Inc., the previously sleepy, now bustling, friend of the Obama White House whose public policy operation is headed by her husband. Between them, Zoi and her husband hold 120,000 shares in Serious Materials, as well as stock options. Reporter John Stossel has already explored what he sees as the “crony capitalism” implied by Zoi being so able to influence the fortunes of a company to which she is so closely associated. In addition, the disclosure forms reflect that Zoi holds between $250,000 and $500,000 in “founders shares” in Landis+Gyr, a Swiss “smart meter” firm. She also still owns between $15,000 and $50,000 in ordinary shares. “Smart meters,” put simply, are electric meters that return information about customer power usage to the power company immediately and allow a power company to control the amount of power a customer can consume. These smart meters are a central component of the Obama administration’s plans to reduce electricity consumption as part of the “smart grid.”

Conflict of interest anyone?

OTHER STORIES:

Greece Has No Need to Default, Restructure: Papandreou - (www.cnb.com)

Outlook for Stocks Volatile, With Strong Headwinds - (www.cnb.com)

Obama Vows to Crack Down on Offshore Drilling - (www.cnb.com)

Goldman profited every day last quarter, but its clients fared far worse - (www.bloomberg.com)

Lender pleads guilty to felony mail fraud - (www.latimes.com)

Why do we let the Fed starve the elderly to gorge bankers? - (finance.yahoo.com)

Stocks Dive Again - (www.npr.org)

Stocks to Tumble Another 20%, Cash the Safest Place - (www.cnbc.com)

Is San Francisco the Most Overpriced City? - (www.bayarearealestatetrends.com)

Has the housing market bottomed out? Probably not. - (www.csmonitor.com)