Federation of Connecticut Taxpayer Organizations

From the Federation:� Many municipal unions agreed to a one year wage freeze with future wage increases factored into their contracts.� Governor Rell should again call upon the State Legislature to reform State Binding Arbitration laws as she had initially proposed.� This would allow municipal leaders the ability to manage their employees and budgets and in turn control property taxes.� No public sector union should expect taxpayers to pay for wage increases as those in the private sector continue to lose their jobs,� their pensions, and their healthcare.

Municipalities Face Major Budget Challenges If State Aid Is Cut By DON STACOM The Hartford Courant�� December 1, 2009 HARTFORD � - When East Hartford Mayor Melody Currey looks at the emergency midyear budget cuts that state leaders are discussing, she questions how her town can absorb another hit.�
East Hartford would have to choose between service cuts, layoffs and a midyear surtax, she says. "Where can I go? I'm barely able to do the services we're providing now," Currey said Monday. "Our unions took cuts, I cut spending $8 million from last year � I can't go further. It's going to come to, 'What are people willing to live without?'"� At stake is $84 million that Gov. M. Jodi Rell proposes to cut from this year's state aid to municipalities. With its own budget deep in red ink, Connecticut has to chop its spending, she says.� Part of her plan is to slice about 3 percent from the roughly $2.7 billion in state aid. But Rell would exempt about $2 billion of that � the Education Cost Sharing and special education grants. Preserving those grant programs protects the core of education funding but means the local budgets that pay for police, fire service, trash collection, libraries, parks and street repairs will shoulder a bigger share of the load. Continued at �. http://www.courant.com/news/connecticut/hc-towns-budgets-1201.artdec01,0,7067783.story

Also Contained in this edition of Tax Talk:

� Municipalities Face Major Budget Challenges If State Aid Is Cut

� Pension Tension on the Rise

� Dollar steady ahead of jobs data - November employment report from ADP is expected to show 155,000 jobs lost in November

� Jobless losing a health-insurance lifeline

� AIG May Soon Lose Crown as Biggest Bailout Debtor

� New bank rules face big vote

� UN Can't Account for Millions Sent to Afghan Election Board

� Army Corps Liable for Katrina Damage, US Court Finds

� From Dowd Muska:�� Dying to Pay Taxes

� NEW HAVEN REGISTER: Dodd wrong to attack Fed

� The� Wall Street Journal on Healthcare Bill

� Shhh! Wall Street is Spending Again

� Dubai's threat to U.S. banks

� Soaring Unemployment and Double-dip Recession?

� Why Obama Isn't Changing Washington

� Junk mortgages: It just gets worse

State Budget Updates

Governor Rell Proposes Comprehensive Plan to Erase Deficit of Nearly $470 Million

**************************

Pension tension on the rise - Underfunded retirement plans are shaping up as a headache for companies and taxpayers alike. By Colin Barr, senior writer, NEW YORK (Fortune) -- Retirement plans are on the mend, but the healing process is going to be long and painful. In addition to taking a big chunk out of individuals' 401(k)s, last fall's market meltdown left 92% of corporate pension plans underfunded at year's end, according to a study by investment consultant Wilshire Associates.� As bad as that sounds, it pales in comparison to the shortfalls in public pension plans. At the end of 2006, public pension plans were already underfunded by $361 billion, according to the Pew Charitable Trusts. That was before the stock market collapse, soaring unemployment rates and tumbling tax revenues dealt municipal finances another blow.� The federal insurer of corporate pensions, the Pension Benefit Guaranty Corp., reported this month that it was $22 billion in the red in the most recent fiscal year. The PBGC takes over pensions when they are underfunded or when their sponsors go into bankruptcy, and makes up some of the payments due. Continued at �. http://money.cnn.com/2009/11/29/news/pension.pain.fortune/index.htm

**************************

Dollar steady ahead of jobs data� November employment report from ADP is expected to show 155,000 jobs lost in November. Dec 2, 2009 �LONDON (Reuters) -- The yen weakened broadly on Wednesday as traders took Japan's new monetary policy measures unveiled the previous day as a cue to sell, while mixed signals from stocks and commodities kept the dollar in check.

Receding fears over Dubai's debt problems and the prospect of U.S. interest rates staying low for some time weighed on the dollar, but talk of Asian central banks buying and the greenback's gains against the yen offered broad support.

The dollar has been widely considered the funding currency of choice in recent months as investors have sold the low-yielding unit for other currencies and assets. But the Bank of Japan's new measures have put that spotlight back on the yen. http://money.cnn.com/2009/12/02/markets/dollar.reut/index.htm

**************************

�

On average, unemployed families who lose the COBRA subsidy will see their premiums nearly triple to $1,111 a month from $389, according to Families USA, an advocacy group in Washington, D.C., in a report released Tuesday.

Jobless losing a health-insurance lifeline By Jessica Dickler, CNNMoney.com staff writer, Dec 1, 2009 As the nine-month COBRA subsidy starts to expire, millions of unemployed Americans could lose their benefits. NEW YORK (CNNMoney.com) -- Millions of long-term unemployed Americans and their families are at risk of losing their health insurance, as their eligibility for a 9-month health-premium subsidy expires. Kelly Cool, 45, has been out of work since January. The former engineer for an auto equipment supplier in Oxford, Mich., has been supporting herself and her two children since then on her $387 weekly unemployment check. She's been able to continue her health insurance thanks to a federal program that subsidizes much of the premium, keeping the cost to a manageable $137.51 a month. Continued at �. http://money.cnn.com/2009/12/01/news/economy/cobra_expiration/index.htm

**************************

New bank rules face big vote CNNMoney.com� Dec 2, 2009� House is pushing forward on regulatory reform and will pass a measure to prevent banks from getting too big to fail. The Senate? Not so much. WASHINGTON (CNNMoney.com) -- A key House committee, culminating months of debate over how to reform bank rules, is poised to pass legislation on Wednesday that aims to prevent firms from growing too big and threatening the financial system.� The House Financial Services is expected to pass, largely along party lines, a bill considered key to preventing the kinds of problems that caused last year's crisis. The bill would impose stronger supervision of Wall Street and impose tougher capital requirements for banks, while proposing a new way to take over big firms like American International Group (AIG, Fortune 500). Continued at �. http://money.cnn.com/2009/12/02/news/economy/financial_reform/index.htm

**************************

�AIG May Soon Lose Crown as Biggest Bailout Debtor by Sharona Coutts and Paul Kiel, ProPublica - December 1, 2009 4:20 pm EST AIG is coming close to losing its crown as the biggest debtor in the bailout. The company announced today that it has completed two deals that, together, shaved $25 billion off its tab to the Federal Reserve Bank of New York (PDF), bringing the combined total it owes the Fed and Treasury to about $62 billion. That�s only about $2 billion more than what Fannie Mae, the company that�s received the biggest government bailout next to AIG, still owes taxpayers.� Fannie has said that it expects its bailout total to continue to mount, as it takes losses from the slumping housing market and its role in the administration�s loan modification program.�� AIG has shifted two of its prized subsidiaries � ALICO and AIA �into new arrangements, called special purpose vehicles. The move will eventually take the subsidiaries off AIG�s books. The Fed wrote down the $25 billion in exchange for a stake in both new vehicles. The idea is to prep the subsidiaries to be sold off, or to go through public offerings on the stock market. Continued at �.. http://www.propublica.org/

**************************

UN Can't Account for Millions Sent to Afghan Election Board
T. Christian Miller and Dafna Linzer, ProPublica: "The United Nations cannot account for tens of millions of dollars provided to the troubled Afghan election commission, according to two confidential UN audits and interviews with current and former senior diplomats. As Afghanistan prepares for a second round of national voting, the documents and interviews paint the fullest picture to date of the finances of the election commission, which has been accused of facilitating election fraud and operating ghost polling places. The new disclosures also deepen the questions about the UN's oversight of money provided by the United States and other nations to ensure a fair election in Afghanistan." Continued at �. http://www.propublica.org/article/un-cant-account-for-millions-sent-to-afghan-election-board-1029

**************************

Army Corps Liable for Katrina Damage, US Court Finds
Patrik Jonsson, The Christian Science Monitor, Nov 19, 2009: "Confirming what many New Orleanians already knew in their hearts, a federal judge ruled late Wednesday that the Army Corps of Engineers - and thus the US government - is liable for a big chunk of the damage caused when hurricane Katrina pushed ashore on Aug. 29, 2005. The landmark ruling awards $719,000 to four plaintiffs from the city's Lower Ninth Ward and neighboring St. Bernard Parish who filed suit in 2006 ... More important, the ruling - which called the Army Corps 'myopic' in its maintenance of the Mississippi River Gulf Outlet canal (aka Mr. Go) - now puts pressure on President Obama to help the region settle claims that could reach into the billions of dollars." Continued at �. http://www.csmonitor.com/2009/1119/p02s20-usgn.html

**************************

From Dowd Muska:�� Dying to Pay Taxes

November 26, 2009

Want to stick it to the federal government? Wait a month, then drop dead.

On January 1, 2010, the federal death tax disappears. No matter what the value of the assets you leave behind -- $7,000, $700,000, or $700 million -- the IRS won�t get a penny if you assume room temperature during the following 12 months. On January 1, 2011, the death tax returns with a vengeance, hitting estates in excess of $1 million at a rate of 55 percent. Insane as that sounds, it�s fiscal reality.� Continued at �.. http://www.dowdmuska.com/

**************************

EDITORIAL, NEW HAVEN REGISTER: Dodd wrong to attack Fed

Published: Sunday, November 29, 2009��..In describing his legislation, Dodd said, �The financial crisis exposed a financial regulatory structure that was ... unable to prevent threats to our economic security.� The head spins at the audacity of the statement.� In 1999, Dodd voted for repeal of the Depression era Glass-Steagall Act, which separated commercial and investment banking. Financial behemoths born from that action such as Citigroup and AIG are on government life support thanks to the repeal. Further, Dodd was an opponent of efforts to put the brakes on Fannie Mae and Freddie Mac, which underwrite 75 percent of new home mortgages. As they got deeper into the quagmire of subprime mortgages, Dodd pushed for them to loosen standards even more. Both collapsed and were taken over by the government.� Dodd has been a major recipient of campaign cash from AIG, Fannie Mae and Freddie Mac.� Financial reforms are needed. But, they are being offered with a large helping of hypocrisy that is hard to stomach. Continued at �.. http://www.nhregister.com/articles/2009/11/29/opinion/doc4b1093f9b663b391597040.txt

**************************

The Wall Street Journal on Healthcare Bill: The Worst Bill Ever

Epic new spending and taxes, pricier insurance, rationed care, dishonest accounting: The Pelosi health bill has it all���The spending surge. The Congressional Budget Office figures the House program will cost $1.055 trillion over a decade, which while far above the $829 billion net cost that Mrs. Pelosi fed to credulous reporters is still a low-ball estimate. Most of the money goes into government-run "exchanges" where people earning between 150% and 400% of the poverty level�that is, up to about $96,000 for a family of four in 2016�could buy coverage at heavily subsidized rates, tied to income. The government would pay for 93% of insurance costs for a family making $42,000, 72% for another making $78,000, and so forth.At least at first, these benefits would be offered only to those whose employers don't provide insurance or work for small businesses with 100 or fewer workers. The taxpayer costs would be far higher if not for this "firewall"�which is sure to cave in when people see the deal their neighbors are getting on "free" health care. Mrs. Pelosi knows this, like everyone else in Washington. Complete article at �. http://online.wsj.com/article/SB10001424052748703399204574505423751140690.html

**************************

�

Shhh! Wall Street is Spending Again

Confident of Getting Big Bonuses, Traders Quietly Open Wallets� BY DAVID ENRICH AND SUSANNE CRAIG Wall St Journal Nov 29, 2009

Conspicuous consumption is making a comeback on Wall Street. But no one wants to admit they're doing it. As traders and investment bankers near the finish line of what looks like a boom year for pay, some are spending money like the financial crisis never happened. From $15,000-a-week Caribbean getaways to art auctions to $200,000 platinum wristwatches that automatically adjust for leap years, signs of the good life are returning. "What we're seeing in the last four to eight weeks is a fairly substantial uptick" in demand for extravagant purchases as Wall Street employees grow more confident that the market's ... http://online.wsj.com/article/SB10001424052748704498804574558220419480840.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

**************************

Dubai's threat to U.S. banks

1:34pm: Although there's little direct exposure to Dubai World's default risk, U.S. financial institutions could take major indirect hits. More

Stocks slip on Dubai debt woes

European shares buck global selloff

NEW YORK (CNNMoney.com) -- The news that the sovereign wealth fund of Dubai requested a postponement of billions of dollars of debt this week could pose a big problem for U.S. banks.� The state-run investment company, Dubai World, owes about $60 billion. It rang up much of that in a building boom that included the world's tallest skyscraper and the Palm Islands in the Persian Gulf, settlements shaped like palm trees.� According to CMA DataVision, which tracks credit markets, there's a 35.82% probability that Dubai will default on that debt.

What is Dubai World? - CNN� New York-based Citigroup (C, Fortune 500) has the most exposure to default risk at Dubai World, which a J.P. Morgan (JPM, Fortune 500) equity research note estimated at $1.9 billion. Citigroup declined to comment.

While other major banks in the United States are believed to have little direct exposure, the ripple effect could be more crippling, according to Richard Bove, a bank analyst with Rochdale Securities.

Continued at �.. http://money.cnn.com/2009/11/27/news/companies/Dubai_bank_risks/index.htm

**************************

Soaring Unemployment and Double-dip Recession?

Economics / Recession 2008 - 2010 Nov 26, 2009 By: Mike_Whitney� Email: fergiewhitney@msn.com�� Mike is a well respected freelance writer living in Washington state, interested in politics and economics from a libertarian perspective� Barack Obama's chief economic advisor, Lawrence Summers, is determined to sabotage a second round of stimulus. And, he's getting plenty of help, too. Congressional Democrats are dragging their feet because they're worried about the political backlash and midterm elections, the GOP deficit hawks are looking for a way they can derail the Obama agenda and reestablish their bone fides as fiscal conservatives, and the bailout-traumatized American people are simply opposed to anything that generates more red ink. Even Obama has joined the fray and started badmouthing stimulus stressing the importance of living within our means and trimming the deficits. So it looks like a done-deal; no more stimulus. There's only one problem, without another blast of stimulus the economy is headed for the skids.�� Continued at �.. http://www.marketoracle.co.uk/Article15369.html

**************************

OPINION

NOVEMBER 26, 2009,�

Why Obama Isn't Changing Washington, Nov 26, 2009, Wall Street Journal,

There is no way he can grow the government without attracting more lobbyists and more political acrimony.� Mr. Obama also decried the prominent role played by lobbyists. "Lobbyists aren't just a part of the system in Washington, they're part of the problem," Mr. Obama said in a May 2008 campaign speech.� I was reminded of this last statement by a recent headline on the front page of USA Today. It read: "Health care fight swells lobbying. Number of organizations hiring firms doubles in '09." The article suggested that what Mr. Obama had promised to fix had only gotten worse. �. In Washington it's business as usual, except for one thing. The bigger the role of government, the more lobbyists flock to town. By pushing for his policies, the president effectively put up a welcome sign to lobbyists. Despite promising to keep them out of his administration, he has even hired a few. So nothing has changed, except maybe that Washington is now more acrimonious than it has been.�� Mr. Barnes is executive editor of the Weekly Standard and a commentator on Fox News Channel.�� Article is continued at �. http://online.wsj.com/article/SB10001424052748704779704574555471947300090.html?mod=rss_Today's_Most_Popular

**************************

Harsanyi: Comfort food for Wall Street avengers� By David Harsanyi, Nov 26, 2009, Denverpost.com, With good reason, the prevailing economic concern of most Americans is jobs. With this in mind, two Democratic congressmen have cooked up a plan to help us out. The strategy entails sucking another $150 billion of capital investment out of the market each year and handing it to an organization that can't balance a budget, borrows money with abandon, runs massive deficits and excels at creating fairy tale jobs. Under a bill being drafted by Democratic Reps. Peter DeFazio of Oregon and Ed Perlmutter of Colorado, every purchase of a financial instrument like stocks, options, derivatives and futures would face an additional .25 percent tax � because capital gains taxes simply haven't been hampering private investment enough. The idea has the tortured (both logically and linguistically) title, "Let Wall Street Pay for the Restoration of Main Street Act of 2009." Would legislation mean that the federal government mails $150 billion in refunded tax checks to those who laid out the money for the bank bailout that Perlmutter supported? Of course not. Half of the $150 billion in tax revenue would go toward "reducing the deficit" � a confusing tidbit made all the more curious when you consider Fazio and Perlmutter have helped spend more of your money in the first year of this presidential administration than any in history, $3.52 trillion in fiscal 2009. Here's a restorative idea: Spend Less. Continued at http://www.denverpost.com/opinion/ci_13875881

�E-mail David Harsanyi at dharsanyi@denverpost.com.

**************************

Junk mortgages: It just gets worse

In 2007 we dissected one toxic issue. The horror story continues, but can we still learn from our mistakes? By Allan Sloan and Doris Burke Dec 1, 2009

NEW YORK (Fortune) -- Back two years ago when the mortgage meltdown was heating up, we wrote an article called "Junk Mortgages Under the Microscope" dissecting a particularly wretched mortgage-backed securities issue peddled by Goldman Sachs.� We wanted to show how these complex securities really worked and how Moody's and S&P, the rating agencies, aided and abetted the process by giving two-thirds of an issue backed by ultra-risky second mortgages the same safety rating they gave to U.S. Treasury securities.� We thought this was a cautionary tale -- but it's turned into a horror story. All the tranches of this issue, GSAMP-2006 S3, that were originally rated below AAA have defaulted. Two of the three original AAA -rated tranches (French for "slices") are facing losses of about 90%, and even the "super senior," safer-than-mere-AAA slice is facing losses of 25%. How could this happen? And what lessons can we take away from it?� Continued at �. http://money.cnn.com/2009/11/30/real_estate/mortgage_lessons.fortune/index.htm

**************************

Owing Big On The Tax He Helped Pass`Jon Lender Government Watch

November 15, 2009If former Democratic state Sen. Gary A. Hale hadn't voted the way he did 18 years ago, he might not owe the state $77,951 in back taxes today.
In 1991, Hale gained a measure of fame � or notoriety, depending where you stood on the question � when he switched his stance and voted in favor of a state income tax, leading to its adoption when the lieutenant governor broke a Senate tie and ended a summerlong legislative standoff.
For the first time in history, Connecticut citizens, including Hale, had to pay tax on their wages, not just sales tax and other assorted levies such as the gasoline tax. Continued at �.. http://www.courant.com/news/politics/hc-lender-column-1115,0,3546019.column