Report: GOP to try own tax hike as cliff talks stall again

Just hours after there was a reported breakthrough in fiscal cliff negotiations, there were signs on Tuesday that the GOP will move forward with a proposed tax hike, without involving the Democrats.
Politico and The Hill said House Speaker John Boehner was preparing a bill that called for a tax hike on households making more than $1 million a year. If the proposal is similar to other ideas floated out by the GOP earlier this month, the Bush-era tax cuts would remain in place for the non-millionaires.
“For weeks, Senate Republicans–and a growing number of you–have been pushing for us to pivot to a “Plan B.” I think there’s a better way. But the White House just can’t seem to bring itself to agree to a “balanced” approach, and time is running short,” Boehner said in prepared remarks.
The Republicans control the House and in theory, can pass almost any budget measure, but the Senate is controlled by the Democrats. What’s unknown is how many GOP members in the House would vote for any form of a tax hike.
Influential activist Grover Norquist, among others, are strongly opposed to such measures.
On Monday, President Barack Obama proposed a tax hike on households making more than $400,000 a year, backing off a previous pledge to see taxes on incomes of about $250,000. The Obama administration also proposed savings from spending and entitlement cuts between $930 billion and $1.2 trillion.
Boehner rejected that proposal, insisting the spending cuts match tax revenue increases. He says the Obama plan calls for $1.3 trillion in new tax revenue, and only $930 billion in spending cuts.
“Any movement away from the unrealistic offers the president has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced,” Boehner spokesman Brendan Buck said in a statement.
The Obama plan also called for an automatic extension of the debt ceiling for two years.
“Most importantly, we’d lock in a process for tax reform and entitlement reform in 2013–the two big goals we’ve talked about for years,” Boehner said.
After the fiscal cliff talks broke down in November 2011, Republicans sought tax reform as a long-term solution to the nation’s borrowing problems.
The current GOP proposal realizes most tax revenue increases by closing tax loopholes and tightening other regulations.
If a deal isn’t reached by January 1, 2013, huge automatic spending cuts will go into effect, along with the restoration of higher tax rates for most Americans.
Economist fear the harsh measures will trigger another short-term recession.

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Why gun control, fiscal cliff issues are on collision course

Congress now faces two critical issues with an early January deadline, gun violence and the fiscal cliff, which could lead to an extraordinary session to start off the New Year.

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An intersection of the two hot-button issues is the prospect of deep cuts to the nation’s mental health system. But also on the radar is the distinct possibility that fiscal cliff and gun control debates could happen at the same time in Congress in January and early February.
President Barack Obama and House Speaker John Boehner had been in negotiations about across-the-board cuts that would include spending reductions on Medicaid as part of any fiscal cliff deal.
According to a 2005 government analysis, about 60 percent of mental health care nationally is paid for by public funds, with much of that help delivered through Medicaid.
And on Wednesday, President Obama made it clear that easier access to mental health care, along with tighter gun laws and more education efforts, are the key goals of his new gun violence policy.
The Medicaid issue is, in many ways, a stumbling block in any fiscal cliff deal.
Earlier this year, the Obama administration offered to include $100 billion in Medicaid savings as part of a fiscal cliff settlement. But last week, the newspaper The Hill said the Obama team took that offer out of the talks.
But given the aftermath of the Sandy Hook shootings and the renewed push for mental health care programs, it would be very difficult for the Obama administration to cut any Medicaid funds.
In addition, President Obama tied the issues of gun control and the fiscal cliff together at his Wednesday press conference.
President Obama claimed Republicans were too focused on besting him in the fiscal cliff negotiations.
“If this past week has done anything, it should just give us some perspective,” Obama said. “If you just pull back from the immediate, you know, political battles, if you kind of peel off the partisan war paint, then we should be able to get something done.”
President Obama also demanded the gun task force, led by Vice President Joe Biden, deliver actionable recommendations in the next six weeks. Such actions would likely include a national ban on assault weapons.
In normal circumstances, any debate over the Second Amendment would be contentious in Congress.
The additional factors of the outrage over the Sandy Hook shootings, and the very real possibility that the fiscal cliff debate could spill into next month, could lead to a situation where Congress would need to debate both issues, under intense public pressure.
The GOP and Democrats are reportedly between $300 billion and $500 billion apart on a new budget deal that would avoid huge automatic spending cuts and tax revenue gains on January 1. (That gap excludes the $100 billion in Medicaid cuts that likely won’t happen.)
While Congress could delay part of the fiscal cliff cuts and hikes, global markets are on edge about the United States seeing another financial downgrade, and how the failure to reach a deal will affect investors.
Boehner’s Plan B to include a tax hike on millionaires as part of a House bill is apparently dead, after the White House said it would veto any such measure.
Now, Boehner has 11 days to put together another deal, find a way to get the Democrats to agree to it, and get it passed by January 1.
And if the fiscal cliff situation continues into January and isn’t resolved, the vote on a likely assault gun ban would soon follow.
The National Rifle Association will have a press conference on Friday to discuss its plan to contribute to measures to prevent another Sandy Hook situation.
But it’s widely expected the NRA will lobby hard to prevent a strict assault weapon ban from passing through Congress, where Republicans control the House.
Scott Bomboy is the editor-in-chief of the National Constitution Center.

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Constitution Check: Who has the power to fill the president’s cabinet seats?

Lyle Denniston looks at the controversy over two Cabinet nominations by President Barack Obama, and how it further erodes the constitutional respectability of the nomination and confirmation process.
The statement at issue:
“With Chuck Hagel, a former senator from Nebraska, emerging as a front-runner to be President Obama’s next secretary of defense, critics are taking aim at his record on Israel as well as remarks he made about pro-Israel lobbying groups in Washington….For the White House, it is the second time a candidate’s record has come under fire even before a nomination was announced.  Last week, Susan E. Rice, the ambassador to the United Nations, withdrew her name from consideration for secretary of state after coming under weeks of withering assault by Republicans.”
–Mark Landler, New York Times reporter, in a story published on December 19 discussing the developing opposition from “Jewish leaders” to a potential Hagel nomination.
We checked the Constitution, and…

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Article II, Section 2, clearly defines two separate powers over the selection of federal government officials, including those who will serve in the president’s Cabinet. The power to make the initial choice–the nomination–lies with the president, and the power to give “advice and consent” (or the power to advise and reject) lies with the Senate. Each, of course, may be influenced by outsiders exercising their First Amendment right to “petition” the government.
Ever since the Senate, in 1795, reacted to criticism of John Rutledge’s views on a peace treaty by rejecting his nomination to be chief justice, the American public has been able to claim a voice in the nomination and confirmation process.
But one may also assume that the Founding Generation believed that it would be better for the country to let that process work, hopefully in a reasoned exercise of informed discretion–and especially so when nominations to some of the government’s most powerful offices are at stake.
About Constitution Check
In a continuing series of posts, Lyle Denniston provides responses based on the Constitution and its history to public statements about its meaning and what duties it imposes or rights it protects.
It is true, of course, that this process has not been working very well, for many nominees, and it often deteriorates into the worst kind of partisan squabbling. Still, the constitutional ideal would seem to be to let the president and the Senate work their wills.
A popularity contest, even before a nominee has been chosen at the White House, might not help improve the official process. And a popularity contest may actually be a bad idea when it produces mostly distortion or misinformation about a potential candidate’s background.
Defenders of U.N. Ambassador Susan Rice as a possible nominee to head the State Department argue that that was the case with the attack on her before President Obama had settled on any nominee for that post. Similarly, defenders of Chuck Hagel as a possible nominee to lead the Pentagon are now claiming that the Rice episode is being repeated in the developing attack on him even before any nominee is named.
The White House may not have helped itself, in either of those cases, by allowing presidential aides to float the names of people who were on the president’s “short list” for either post, because that allowed opponents to start building their challenges in advance. It may be that the White House let the names be known in order to test the initial reaction–sending up trial balloons.
Even so, there is a constitutional question arising here: is the president’s power of choice being diminished, and is the Senate’s power of review being preempted? What happened to the traditional view that a president was more or less entitled to have a Cabinet of his own choosing, and to the traditional view that the Senate would give such choices a respectful hearing? The nomination and confirmation process, like so much else in official Washington, seems to be in trouble if not actually broken.
It is one thing to allow interest groups to have their say, as they certainly have a right to do, but it is another thing to hand over to them a power to veto, in advance, the president’s choice and to take control of the Senate process even before it has begun.
President Lyndon Johnson was famous for refusing even to propose a nominee, if the identity of the person he wanted to select became known in advance. That was not a good idea, and neither is it a good idea to keep the public out of the process before Senate hearings begin.
But neither is it a good idea, in constitutional or good government terms, to have the public dialogue be one that is dominated by opponents using smear tactics and half-truths. That approach has turned American political campaigns into a sorry spectacle, no doubt discouraging talented people even from running for office.
How many individuals, qualified to become members of the president’s Cabinet, would choose to give up that chance rather than run such an obstacle course? If there were sound reasons for opposing Susan Rice and Chuck Hagel for seats in the Obama Cabinet, those should have been aired. There could have been a serious dialogue about that, in both cases. That, however, is not what occurred, and the result was further erosion in the constitutional respectability of the nomination and confirmation process.
Lyle Denniston is the National Constitution Center’s Adviser on Constitutional Literacy. He has reported on the Supreme Court for 54 years, currently covering it for SCOTUSblog, an online clearinghouse of information about the Supreme Court’s work.

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The daily gossip: Ben Affleck is open to running for Senate, and more

5 top pieces of celebrity gossip — from Claire Danes' newborn baby to Psy's pricy new Los Angeles condo
1. Ben Affleck is open to running for Senate
In recent months, Ben Affleck has been in the news as much for his political activism as for his filmmaking — but would he ever give up the gridlock and constant scrutiny of Hollywood filmmaking for the gridlock and constant scrutiny of Congressional politics? "One never knows. I'm not one to get into conjecture," said Affleck during a Wednesday taping of Sunday's Face The Nation, reports USA Today. "I do have a great fondness and admiration for the political process in this country." Affleck refused to speculate any further, but just to be safe, rival politicians should probably keep a DVD copy of Gigli handy.
2. Claire Danes and Hugh Dancy have a baby
Claire Danes may spend at least 80 percent of her Showtime series Homeland sobbing, but the Emmy-winning actress has something to smile about this week: A newborn son. People reports that the baby is the first for Danes and husband Hugh Dancy. The couple named the child Cyrus Michael Christopher Dancy, forgoing a tradition of completely insane celebrity baby names in favor of something that's merely unusual.
3. Lindsay Lohan accused of keeping $200,000 worth of Million Dollar Decorators furniture
After the scathing reviews she received for Liz & Dick, you'd think Lindsay Lohan would be happy to appear in anything. But the New York Post reports that the tabloid fixture has decided to pull out of an appearance on Bravo reality series Million Dollar Decorators — though not before receiving $200,000 worth of furniture for her Beverly Hills home. Bravo has confirmed that Lohan "was not available for the reveal shoot," but that the series was "still able to capture the outcome" — so if you've always wanted to see Lindsay Lohan's house without Lindsay Lohan in it, you're in luck.
4. Brad Pitt and John Legend praise Obama's stance on marijuana
President Obama's decision not to make the federal prosecution of marijuana users a "top priority" has endeared him to thousands of extremely relaxed supporters across the nation — and at least two high-profile supporters: Actor Brad Pitt and singer John Legend. In a recent statement, Pitt and Legend offered "joint praise" of Obama's platform, says E! Online, presumably while snickering.
5. Psy buys a condo in Los Angeles
Hey, pricy condo! After dancing his way into our hearts earlier this year, viral-video sensation Psy has horse-danced his way into a $1.25 million condo in Los Angeles' exclusive Blair House in Beverly Hills, reports TMZ. The "Gangnam Style" singer reportedly paid for his new pad entirely in cash, an act of extravagance that even surpasses that of "galloping" through a stable in a blue tuxedo.

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Kenyan house prices rise in Q3 on interest rate drop

NAIROBI (Reuters) - Kenya's house prices rose by 7.1 percent in the third quarter of 2012 compared to the same period last year, a real estate firm said on Wednesday, as lower mortgage rates on the back of falling interest rates spurred demand for prime real estate.

Housing has been one of Kenya's fastest growing sectors over the last decade, fuelled by a burgeoning middle class with higher disposable incomes. Returns on investments in the sector have easily outpaced those of equities and government securities.

HassConsult, a real estate firm which publishes the only regular property price index in the country, said a reduction in lending rates by commercial banks was expected to spur further growth of the property market and help support an upward movement of house prices.

"The week that the central bank dropped the rates, activity peaked up (September)," said Sakina Hassanali, marketing manager at HassConsult.

"Confidence in the property market has come back ... If the last six weeks are any clue, then the coming (quarter), so long as mortgages continue going down, we are in a better place than we were six months ago."

The central bank has cut its benchmark rate twice since July by a total of 500 basis points to 13 percent, having raised the rate to 18 percent last year to fight double-digit inflation and stabilise the shilling.

Inflation fell to 5.32 percent in September from 6.09 percent previously, having peaked at 20 percent late last year, while the shilling has largely oscillated at 85 to the dollar this year, from a record low of 107 in October last year.

The lending rates in commercial banks have dropped to about 19 percent, from as high as 30 percent earlier in the year, easing the cost of funding for both house developers and buyers.

"Even the psychological satisfaction of (investors) knowing that the rates are coming down, makes (investors) make that buying decision instantly," said Caroline Kariuki, the managing director of The Mortgage Company.

The east African nation of 40 million people has a massive housing shortage with annual demand at 250,000 units per year against a supply of 60,000 units, a World Bank study showed.

Kariuki said a steady rise of diaspora remittances to a record high of $891.1 million in 2011, had boosted development of the real estate sector, while China was singled out as one of the top foreign investors in east Africa's biggest economy.

"... We have seen (Chinese investors) getting financing at very cheap rates for their projects, so you will find that they have became significant players in Kenya," said Kariuki.

China is one of the main players in the construction of Kenya's infrastructure such as roads.

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Rate on 30-year mortgage hits record low 3.40 pct.

WASHINGTON (AP) — Average U.S. rates on fixed mortgages fell again to new record lows. The decline suggests the Federal Reserve's stimulus efforts may be having an impact on mortgage rates.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.40 percent. That's down from last week's rate of 3.49 percent, which was the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage, a popular refinancing option, fell to 2.73 percent, down from the record low of 2.77 percent last week.

The Fed is spending $40 billion a month to buy mortgage-backed securities. The goal is to lower mortgage rates and help the housing recovery. Fed Chairman Ben Bernanke says the program will continue until there is substantial improvement in the job market.

Some economists expect mortgage rates to fall even further because of the Fed's bond purchases.

The housing market already is benefiting from the lowest mortgage rates on record. Sales of both previously occupied and newly built homes in the U.S. are up from last year. Home prices are rising more consistently. And builders are more confident in the market and are starting to build more homes.

The broader economy is also likely to benefit from a revival in the housing market. When home prices rise, Americans typically feel wealthier and spend more.

Still, the housing market has a long way back. Sales and construction rates remain below healthy levels.

And some economists question whether lower rates will make much of a difference. The average rate on the 30-year fixed mortgage has been below 4 percent since early December. So most people who can qualify have likely already taken advantage of the lower rates.

Many people who would like to refinance or buy a home can't because they fail to meet stricter lending requirements or don't have enough money to make a down payment.

To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.6 point, unchanged from last week. The fee for 15-year loans also held steady at 0.6 point.

The average rate on one-year adjustable-rate mortgages dipped to 2.60 percent from 2.61 percent. The fee for one-year adjustable rate loans was unchanged at 0.4 point.

The average rate on five-year adjustable-rate mortgages fell to 2.71 percent from 2.76 percent. The fee remained at 0.6 point.

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Already signs Fed action is working: Boston Fed's Rosengren

QUINCY, Massachusetts (Reuters) - The Federal Reserve's decision last week to buy large quantities of mortgage-backed securities is already having a positive effect on wholesale mortgage rates, the president of the Federal Reserve Bank of Boston said on Thursday.

Eric Rosengren, in a speech to a chamber of commerce in the Boston suburb of Quincy, also said the U.S. economy was clearly in better shape than some developed peers internationally, but still not strong enough to bring the unemployment rate down more quickly.

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Ahead of the Bell: Weekly mortgage rates

WASHINGTON (AP) — Loan buyer Freddie Mac reports Thursday on whether mortgage rates are continuing to hold near recent low rates.

Last week the average rate on the 30-year fixed mortgage held steady at 3.55 percent, slightly above the record low of 3.49 percent that was reached in July. Meanwhile, the average rate on the 15-year fixed mortgage, a popular refinancing option, dipped to 2.85 percent from 2.86 percent.

Cheap mortgages have helped the housing market recover this year. Sales of new and previously occupied homes are well above last year's levels.

Home prices are increasing more consistently this year, largely because the supply of homes has shrunk while sales have risen. And the number of Americans who owe more on their mortgages than their homes are worth declined in the second quarter.

Still, the housing market has a long way back. Home sales are below healthy levels. And many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks.

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Ahead of the Bell: Weekly mortgage rates

WASHINGTON (AP) — Loan buyer Freddie Mac reports Thursday on whether mortgage rates are continuing to hold near recent low rates.

Last week the average rate on the 30-year fixed mortgage held steady at 3.55 percent, slightly above the record low of 3.49 percent that was reached in July. Meanwhile, the average rate on the 15-year fixed mortgage, a popular refinancing option, dipped to 2.85 percent from 2.86 percent.

Cheap mortgages have helped the housing market recover this year. Sales of new and previously occupied homes are well above last year's levels.

Home prices are increasing more consistently this year, largely because the supply of homes has shrunk while sales have risen. And the number of Americans who owe more on their mortgages than their homes are worth declined in the second quarter.

Still, the housing market has a long way back. Home sales are below healthy levels. And many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks.

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U.S. mortgage refinancing applications rise as rates hit record low: MBA

NEW YORK (Reuters) - Applications for home mortgages dipped last week, though demand for refinancings rose as mortgage rates fell to a record low, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, edged down 0.2 percent in the week ended Sept 14.

The seasonally adjusted index of refinancing applications gained 0.80 percent. The gauge of loan requests for home purchases, a leading indicator of home sales, tumbled 3.8 percent.

The refinance share of total mortgage activity rose to 81 percent of applications from 80 percent the week before.

Fixed 30-year mortgage rates fell 3 basis points to average 3.72 percent, the lowest rate in the history of the survey.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

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