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Campaign For America's Future
Progressive Breakfast
Senate Shoots For Bipartisan Jobs Bill

BREAKING: Labor Dept. monthly jobs report finds unemployment down, but US still not creating jobs: "The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged ... Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs."

Senate looking to pass small, bipartisan jobs measure next week. AP: "Democrats believe a jobs bill that includes tax breaks Republicans support is a good way to break the ice ... In addition to the tax break for hiring unemployed workers, the bill under discussion Thursday would extend unemployment payments [and] renew a program that offers the jobless a subsidy for health insurance premiums ... About $33 billion in popular tax breaks that expired at the end of 2009 ... would be extended through 2010 ... Reid has said he also wants to extend at least three programs for another year: funding for the highway trust fund; tax breaks for small businesses that buy new equipment; and a bond program to help state and local governments pay for infrastructure projects ... Tax experts, however, question how effective [a jobs tax credit] would be as long as consumer demand for products is down."

Specifics still not firm. NYT: "...they offered no details, and presented only a scant outline of proposals they might pursue, some of which echo initiatives they failed to include in last year's stimulus bill."

Sen. Baucus optimistic for bipartisanship. CQ: "Finance Chairman Max Baucus, D-Mont., was still negotiating the details of tax provisions, but he said he is close to getting a deal that would have 'meaningful' Republican support. 'Enough to show that it's bipartisan,' he added.

House may adopt Senate strategy of series of smaller job bills. Politico: "Pelosi said she wants a small-businesses package as quickly as possible, and then plans an infrastructure spending bill and an extension of unemployment insurance."

Krugman attacks Washington for putting deficit cutting ahead of job creating: "Washington now has its priorities all wrong: all the talk is about how to shave a few billion dollars off government spending, while there's hardly any willingness to tackle mass unemployment. Policy is headed in the wrong direction - and millions of Americans will pay the price."

Reid knocks Republicans for limiting size of recovery efforts. NYT: "Mr. Reid, asked after the news conference if the Democrats' jobs agenda was an acknowledgement that the stimulus measure was not big enough, snapped: 'Don't talk to me. Talk to the Republicans about how big it was, ok? Don't talk to me.' ... [Reid's aide Jim] Manley said that Democrats were virtually powerless to advance [the $154B House bill] because Republicans would block it."

Much more can be done on infrastructure. OurFuture.org's Eric Lotke: "The Economic Policy Institute has a new report detailing the positive impacts of transportation infrastructure spending. A $34.3 billion jobs package will create approximately 480,000 direct and indirect jobs ... The American Association of State Highway and Transportation Officials reports ... the list of 'ready-to-go' state infrastructure projects has surpassed the 9,800 mark."

Digby wonders why Congress hasn't passed a real jobs bill: "I suspect this is less a lack of spine than it is an unwillingness to challenge market orthodoxy and right-wing political cant, which they have internalized even more than the average American (who has benefited far less). And those who do have the imagination to see another way are powerless in the face of a political system that is at the mercy of an unprecedentedly disciplined political opposition and a Senate that no longer even tries to hide its constitutional function as the protector of the wealthy. It's a problem."

Sen. Scott Brown kicks off his term with a lie about the Recovery Act, appears to oppose jobs bill. AP: "Brown made an assertion about the last economic stimulus bill that most economists would dispute. 'The last stimulus bill didn't create one new job,' Brown said in response to a question about a jobs bill pending in the Senate." Brown embraces failed Bush policies. Bloomberg: "The new senator said he favors an 'across-the- board' tax cut to spur economic growth."

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Frustration Over Health Care Strategy

Sens. Franken and Sanders upbraid WH adviser Axelrod for lack of health care strategy. HuffPost: "Franken insisted that 'he really needed to know if the White House was going to lead,' according to one Democratic aide. Axelrod, by several accounts, didn't give a response that Franken found sufficient. And as the two continued to talk, Sanders eventually jumped in .... Sanders said, in a statement to the Huffington Post. 'We also need to realize we're not going to get 60 votes for anything, so we have to look at a very broad, omnibus-like reconciliation bill -- including health care and jobs -- that will pass the Senate with 51 votes.' Details of what transpired after that are scant."

Ezra Klein says the only thing standing between Dems and passing health care reform is the will to do it: "What Democrats can do is a lot less important than what they want to do. If 51 Democratic senators and 218 Democratic congresspeople are dead-serious about passing a bill, they can, and will, pass a bill. One of the two chambers will go first, and the other will go second. If that many Democrats were committed to this project, the other chamber won't fear their colleagues leaving them hanging out to dry. It's a fairly straightforward path to passage, and they'd begin walking down it. That they haven't moved is evidence that will is missing, not that the rules are too complex."

The Treatment's Jonathan Cohn wants Obama push, but notes finesse has been working: "...the White House has some reasons for wielding its influence carefully. Among other things, bullying legislators--even House members--can backfire ... while the relatively hands-off strategy seems ill-advised now, it's also the strategy that got the administration farther on health care reform than any before it ... [But the] time may be right for yet another [White House] intervention..."

Obama wants to put pressure on Republicans to back health care reform. Politico: "Obama appeared to be sketching out a strategy that involves putting Republicans on the spot, and if they decline to take a meaningful role, Democrats will push ahead with a vote regardless."

ThinkProgress finds Sen. Scott Brown flip-flopped on health care reform: "In an August] interview with MSNBC's Dylan Ratigan, Brown stated that the Senate health bill was 'really mirroring' the 'really great' Massachusetts health plan."

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Budget Backlash

Spare Change, Mr. President? Newsweek's Ben Adler on liberal backlash over Obama's budget: "[W]ith Obama's announcement in his State of the Union address, delineated in his budget released Feb. 1, that he wants to freeze domestic discretionary spending for three years, he may have finally caused his base to lose its patience. Liberal activists say the Democratic Party may suffer if their base stays home or simply refuses to engage in the grassroots donating and volunteering that helped propel Obama into office."

The American Prospect's Robert Reich says we either go big or go bust: "Long-term fiscal balance is necessary policy, but we can reduce the debt burden without slashing social outlay. That's exactly what we did during the quarter--century boom after World War II, when we combined high growth rates, modest budget deficits, progressive taxation, a declining debt burden - and increases in social spending. That growth was partly driven by public investment."

Congress passes PAYGO restrictions. W. Post: "Congress agreed Thursday to revive the pay-as-you-go budget rules that helped wipe out massive deficits and balance the budget during the Clinton administration, although the new version includes a long list of exceptions ... the rules allow Obama to extend tax breaks for the middle class enacted during the George W. Bush administration ... protect taxpayers from the expansion of the alternative minimum tax for two years, lower the estate tax for two years and protect doctors who serve Medicare patients from a scheduled pay cut through 2014 ... The new paygo rule, they said, will prevent additional tax cuts or new government benefit programs from being adopted unless Congress summons the will to cover the cost."

Newsweek's Daniel Gross has a simple message for those about to lose their Bush tax cut: You're Rich. Get Over It: "Whenever the subject of taxes comes up ... we're treated to a chorus of complaints that people who make $250,000 a year aren't really rich ... I have two pieces of bad news for the over-$250,000 crowd. First, the reversal of some of the temporary Bush tax cuts is probably inevitable, given the appalling mismanagement of fiscal affairs between 2001 and 2008. Second ... I regret to inform you yet again: Yes, you are indeed rich-any way you slice it."

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Dodd Tries To Move Financial Reform, But In What Direction?

Still no agreement on consumer financial protections. The Hill:"...the proposed [Consumer Financial Protection Agency] continues to face fierce opposition in the Senate ... Dodd and Sen. Richard Shelby (R-Ala.) have discussed a new division for consumer financial protections within a regulator over national banks, several industry sources say. But the two sides are split over how much independence and rule-making power to give to a new division, among other issues. Democrats have supported strong rule-writing power, while Republicans have generally favored leaving rule-making authority at the existing regulators instead of pooling the powers in the new division. In addition, industry sources say there is a debate over how much independence the head of the new division would have relative to the head of the actual regulator."

Dodd suggests Obama/Volcker "Glass-Steagall 2" plan can be done without legislation. CQ: "...Dodd said Thursday that the time is near to 'pull the trigger' on a financial regulatory overhaul, and that there may be a way outside that process to address a recently announced Obama administration plan to put new size and operating restrictions on banks ... 'There may be a way to empower the regulators,' he said."

Salon's Robert Reich rips Dodd for waiting on Wall Street approval to pass reform: "He charged that Wall Street's intransigence was the reason for Congress's failure to pass any bill to regulate the Street ... Call me old-fashioned, but I thought Congress was in charge of passing legislation, not Wall Street."

Bank reform makes Wall Street sad. NYT: "Executives at Goldman Sachs and JPMorgan Chase expressed misgivings on Thursday about the Obama administration's new proposals to restrict the size and risk-taking of the country's largest financial institutions."

Rachel Maddow rips Republicans for chasing Wall Street donations and blocking reform:"Republicans seems to have decided to run on a 'We're With Wall Street" platform."

Industry lobbying holding up reform to end subsidies to private student lenders. NYT: "...an aggressive lobbying campaign by the nation's biggest student lenders has now put one of the White House's signature plans in peril, with lenders using sit-downs with lawmakers, town-hall-style meetings and petition drives to plead their case and stay in business."

Former Bank of America chief formally accused of fraud by NY AG. Bloomberg:They allegedly deceived investors and taxpayers in 2008 by not disclosing losses at Merrill Lynch & Co. before shareholders voted on the firm's pending takeover, and using those losses to extract more bailout funds from U.S. regulators..."

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Support Still Big For Climate Protection, Clean Energy Investment

Huge public support for climate action. It's Getting Hot In Here sums up new Yale survey: "Funding more research on renewable energy, such as solar and wind power (85 percent ... Regulating carbon dioxide as a pollutant (71 percent) ... Signing an international treaty that requires the U.S. to cut emissions of carbon dioxide 90% by the year 2050 (61 percent)..."

Grassroots Montanans push for climate bill. Billings Gazette: "Farmers, professionals and small businesses from around the state pressed Sens. Jon Tester and Max Baucus about supporting measures that not only promote green energy, but also curtail greenhouse gas pollution ... Both Tester and Baucus voiced concerns Wednesday about harming Montana's economy."

Utility industry rejects narrow climate bill. Climate Progress: "...some folks are pursuing the idea of a climate bill with a cap just on utility emissions. I have serious doubts that works politically ... Not surprisingly, utilities, which were key to passage of the first ever climate bill in the House, aren't signing up to be the sole focus of emissions reductions."

New report finds strong clean energy regs would create 274,000 jobs. Mother Jones' Kate Sheppard: "Congress would have to enact a 25 percent [Renewable Energy Standard] in order to create those jobs ... even the House-passed climate and energy bill didn't meet that goal. That bill requires 20 percent to come from renewables by 2020, but it would allow 5 percent of the requirement be met through efficiency measures rather than new renewable capacity ... The Senate version currently in legislative purgatory sets the target even lower..."

Higher standard needed to fend off China. The Hill: "The Global Wind Energy Council reported this week that China alone accounted for a third of global wind power capacity additions in 2009. ... [Denise Bode, CEO of the American Wind Energy Association said] 'If this isn't the "case-closed" evidence that America must have stable renewable energy policy and hard targets in order to create jobs and revitalize our economy, I don't know what is,' ... Bode called for enactment of a national renewable electricity standard..."

Higher standards would solve problem of weak demand. McClatchy: "The U.S. installed more wind power last year - 9,900 megawatts, or enough to power 2.4 million homes - than in any other year ... Nonetheless, wind equipment manufacturers cut as many as 2,000 jobs last year. According to the American Wind Energy Association, a trade group, the drop in U.S. jobs is due, in part, to the lack of a long-term national policy that would require a certain percentage of American electricity to come from renewable sources."

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Flurry Of Campaign Finance Proposals

Dodd to introduce constitutional amendment to allow regulation of campaign finance. HuffPost quotes from statement: "[The amendment would] authorize Congress to regulate the raising and spending of money for state and federal political campaigns, and to implement and enforce the amendment through appropriate legislation."

Bipartisan bill would force CEOs to say "I approve this message" in political ads. HuffPost: "Reps. David Price (D-N.C.) and Mike Castle (R-Del.) ... plan to push the 'Stand By Every Ad Act', which would force a corporate chief to issue a similar message at the end of every commercial."

NYT edit board backs legislative, not constitutional, remedies: "Require detailed disclosure ... Empower shareholders and union members to review and approve [campaign] spending ... Enact an airtight ban on foreign intrusion in federal elections..."

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China May Concede On Currency

W. Post reports WH "hopeful" China will make currency concessions: "Treasury Secretary Timothy F. Geithner said Thursday that he believed China would allow its currency to appreciate vis-à-vis the dollar ... A team of U.S. officials was in Beijing last week, and the United States is pushing China to make the currency issue a central part of the two countries' Strategic and Economic Dialogue scheduled for this summer."

Calculated Risk says currency is key to boost exports:"Getting the Chinese to revalue (or float) their currency is probably critical to the U.S. achieving Obama's ambitious SOTU goal of doubling U.S. exports in the next five years."


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You can hear from two outstanding speakers concerning this vital topic:

Dr. Enid Sisskin has completed postdoctoral work at the National Institute of      Environmental Health Services and sits on the board of directors of several local and regional environmental organizations.  She will discuss offshore drilling and its relevance to the northwest Florida Gulf Coast.  Those of us who have heard her speak know she is entertaining while presenting important information.
Sam T. Mullins, Geologist is the owner of Well Data Services, Inc. of Milton, a firm that monitors oil wells in Santa Rosa County, the Mobile area and elsewhere.  He will speak on how the Florida environmental laws preclude drilling for oil, not only off shore but onshore.  He has expertise on where oil and natural gas reserves might be found in Florida and Alabama. (Sam is anxious to speak to us with our understanding that his job may requires him to be travel out of town on short notice.)

We will be voting on new machines this year.  Ann Bodenstein, Supervisor of Elections, will make a short presentation and pass out information on 2010 election changes.

This is a Potluck event:

  • Monday, Feb. 8, 6:00 pm
  • Holley by the Sea Recreation Center, 6845 Navarre Pkwy. (Hwy 98) Navarre
  • No charge, just bring a dish to share.  Beverages furnished.
  • Door prizes, Democrat merchandise for sale, free literature.
  • Again, we will be collecting non perishable food items to donate to the Manna Food Bank
  • Open to the public, visitors welcome.

Ed Asner as FDR  There are still seats available for this live performance at Mattie Kelly Arts Center in Niceville.  The play starts at 7:30 pm, Saturday, Feb 6.  Tickets are on sale for $30.  Call (850) 729-6000 to reserve a seat and arrange for tickets. 


Posted in: Santa Rosa Democratic Party  Tags:

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Staff posted on February 4, 2010 16:39

On January 21, 2010, Justice Samuel Alito and the rest of the right-wing majority on the Roberts Supreme Court opened the floodgates for unlimited corporate spending in elections, reversing more than 100 years of established law and changing the face of American democracy.

Five days later, President Obama rightly criticized the Court's 5-4 decision in Citizens United v. FEC during his State of the Union Address. Based on his body language, Justice Alito didn't think the criticism of his and his colleagues' audacious judicial activism was warranted.

It's not only this decision by the Roberts Court that deserves criticism, but a host of others in which the Court's conservative block has, with a one-vote majority, rewritten the law at the expense of Americans' rights.

Please watch our new video, and then take action to help correct the Court.

-- Ben Betz, Online Communications Manager


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header

Ask Rep. Oberstar to get a bill out of committeeTake Action

Can you believe that Congress still hasn't restored Clean Water Act protections?
Click here if you think it's an outrage that the bill to restore protections to 1/3 of our drinking water supply is still tied up.

Like us, you probably thought it would be a no-brainer to make sure that our estuaries, waterways, and wetland areas would remain safe from polluters and environmental degradation.

But, the Transportation and Infrastructure Committee has yet to vote this bill out of committee. They haven't even given it a name!

Ask Chairman Oberstar to get this bill back on track.

These waters are where countless birds, fish and mammals make their homes, not to mention where many of us get our tap water from.

Sign the petition to Chairman Oberstar, letting him know you're counting on his leadership.


Posted in: Action Alert  Tags:

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Staff posted on January 30, 2010 18:40

Here’s the video you’ve all been hearing about. Thanks to Mitch Stewart

Organizing for America

Yesterday, the President stood in front of a gathering of House Republicans and took questions for more than an hour, urging them to put aside partisanship and work together for the good of the country. MSNBC described it as going straight into "the lion's den."
He was inspiring.
We've highlighted some of the key moments and trust me, it's worth checking out.

Watch the video

Once you do, please pass this along to everyone you know.
This is the sort of honest dialogue and political courage that we all need to move our country forward.
Let's do it together,
Mitch
Mitch Stewart
Director

 


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From Common Dreams via Seegar Swanson:

Supreme Court Ruling Spurs Corporation Run for CongressCommonDreams.org

ERIC HENSAL
WILLIAM KLEIN

Click here to read more on our site

CommonDreams.org is an Internet-based progressive news and grassroots activism organization, founded in 1997. We are a nonprofit, progressive,


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With everything that goes on these days it is easy to forget all that has been accomplished. Here is a list I found on the White House.gov site that helps refresh our memories.

Featured Legislation

  • Signed on January 27, 2010

S. 2949 -Emergency Aid to American Survivors of the Haiti Earthquake Act

  • Signed on January 22, 2010

2009 Tax Breaks for Haiti Donations

  • Signed on October 30, 2009

Ryan White HIV/AIDS Treatment Extension Act of 2009

  • Signed on October 28, 2009

National Defense Authorization Act for Fiscal Year 2010

  • Signed on October 22, 2009

Veterans Health Care Budget Reform and Transparency Act

  • Signed on August 06, 2009

Cash For Clunkers Extension

  • Signed on June 22, 2009

Family Smoking Prevention and Tobacco Control Act

  • Signed on May 22, 2009

Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009

  • Signed on May 22, 2009

Weapons Systems Acquisition Reform Act

  • Signed on May 20, 2009

Helping Families Save Their Homes Act

  • Signed on May 20, 2009

Fraud Enforcement and Recovery Act

  • Signed on April 21, 2009

Edward M. Kennedy Serve America Act

  • Signed on March 30, 2009

Omnibus Public Lands Management Act

  • Signed on March 20, 2009

Small Business Act Temporary Extension

  • Signed on February 17, 2009

American Recovery and Reinvestment Act

  • Signed on February 11, 2009

DTV Delay Act

  • Signed on February 04, 2009

Children’s Health Insurance Reauthorization Act

  • Signed on January 29, 2009

Lilly Ledbetter Fair Pay Act


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Senator: Bill Nelson

WASHINGTON, D.C. – U.S. officials said today an estimated 200 Haitian children can now be granted quick passage to come to the U.S. for life-saving medical procedures, according to Sen. Bill Nelson.

Those children currently are in Haiti with treatable injuries, but likely would die because of a lack of equipment or supplies or absent advanced or specialized care here in the U.S.

“We must help the most vulnerable among us and that includes our neighbors in Haiti where children are in dire need right now,” said Nelson, who is scheduled to travel to Haiti with some of the doctors being sent to care for earthquake victims by the Tampa-based charity Help Brings Hope for Haiti Inc. 

Dr. Barth Green is scheduled to meet Nelson and the doctors in Port-au-Prince at the medical facilities at the airport there.  Green is the University of Miami neurosurgeon who heads The Miami Project to Cure Paralysis and who has emerged as a key player in the frantic efforts to save injured Haitians.

The plight of the most traumatized children in need of special care was brought to Nelson’s attention by Green and other doctors from the University of Miami Miller School of Medicine who are working in Haiti.  One doctor told Nelson’s office about a child with a collapsed lung; an ailment that on most days, in most hospitals may have been a routine fix.  But not right now in Haiti.

The U.S. already had a system in place for taking sick or injured children from other countries on a case-by-case basis.  But that system required trips to the embassy, gathering paperwork from doctors verifying the need is unique and can be met only in the U.S.  It's a process that can take months.

So Nelson called on Homeland Secretary Janet Napolitano last week to ask whether doctors in the field in Haiti could be allowed to determine whether a child’s case was medically compelling enough to warrant a humanitarian visa.  On Thursday, Napolitano’s office told Nelson the government was going forward with such a plan.

“Medical emergency need is grounds for humanitarian parole,” Alejandro Mayorkas, the director of U.S. Citizenship and Immigration Services, assured Nelson in a telephone call today.

Previously, Nelson had asked his state’s children’s hospitals to stand ready to help some of the quakes’ youngest and most vulnerable victims with the most serious injuries, if they could be brought here.   In a letter to the heads of 13 children’s hospitals in Florida, Nelson wrote to ask that “we come together as a community to help the children of Haiti suffering from this unprecedented disaster.” 


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Staff posted on January 14, 2010 09:22

Subject: SENATE FINANCE MEMBER ADVANCES NEW BANK PAY RULES

clip_image001

Wed., Jan. 13, 2010

Contact: Dan McLaughlin; 202-224-1679 / 202-309-1985

www.billnelson.senate.gov

SENATE FINANCE MEMBER ADVANCES NEW BANK PAY RULES

WASHINGTON, D.C. - As a fresh round of hefty Wall Street bonuses seems certain to rekindle public ire, a member of the key Senate Finance Committee is offering President Barack Obama legislation that aims to curb big CEO payouts and risky behavior by financial industry executives.

In a letter to President Obama today, U.S. Sen. Bill Nelson (D-FL) unveiled a detailed plan designed to “put an end to Wall Street compensation practices that emphasize short-term, unsustainable, and illusory profits and refocus the financial sector on its critical role as a bridge between lenders and borrowers.”

The Florida Democrat told Obama he thinks a White House proposal for new fees on big banks, which the president is reportedly poised to announce Thursday, doesn’t go far enough to address things like the billions of dollars in bonuses for 2009 that are expected to be the largest in Wall Street history.

“Like most Americans, I continue to be disturbed by the inflated executive bonuses being paid out by the same banks and Wall Street firms that helped get us into the current economic mess,” Nelson wrote of the need for his legislation, which he’s given to congressional lawyers for final preparation and shared with the office of Finance Committee Chairman Sen. Max Baucus.

Nelson’s legislation doesn’t set specific pay limits, but conditions a bank’s tax breaks on compliance with new requirements governing compensation and risky practices.

Meantime, the Federal Deposit Insurance Corporation on Tuesday moved to provide incentives to banks that adopt compensation programs aligned with stakeholder interests.  On Wednesday, some of the nation’s top bank chiefs defended their bonus and pay practices in testimony before a special commission investigating the financial collapse in 2008. 

Additionally, the Associated Press reported Obama plans on Thursday to announce a new fee on banks to recover taxpayers’ money used to bailout financial institutions after the collapse. But, according to Fox News, the president has ruled out levies on executive compensation.

“I encourage you to strengthen your proposal by incorporating in your 2011 budget the executive compensation reforms I’ll soon be introducing in the Senate,” Nelson wrote in his letter to the president.

Nelson’s legislation says compensation over $1 million would be nondeductible unless it is performance based, at least half of performance-based compensation must vest over a period of five years or more.   It would require that executives at public companies be paid in employer stock and that compensation must include arrangements for return of the money if misconduct surfaces.  Also, employees must end the use of personal hedging strategies, such as compensation insurance. 

These requirements, and others, would apply to high-level executives and other employees whose actions affect the institution’s risk exposure.

Below is the text of Nelson’s letter to Obama, followed by the draft of his legislation:

Dear Mr. President,

            I was pleased to learn that you intend to offer a proposal tomorrow to recoup taxpayer bailout funds from the country’s largest financial firms.   While this is a positive step, I believe more must be done to restore public confidence in our nation’s financial system. 

Like most Americans, I continue to be disturbed by the inflated executive bonuses being paid out by the same banks and Wall Street firms that helped get us into the current economic mess.    Meantime, these same institutions have made few meaningful changes to executive compensation and other practices that contributed to the financial crisis. 

Therefore, I encourage you to strengthen your proposal by incorporating in your 2011 budget the executive compensation reforms I’ll soon be introducing in the Senate and have attached for your consideration.

This legislation, the Wall Street Compensation Reform Act, would use the power of the tax code and shareholder disclosures to put an end to Wall Street compensation practices that emphasize short-term, unsustainable, and illusory profits and refocus the financial sector on its critical role as a bridge between lenders and borrowers.  The proposal pulls the new voluntary executive compensation standards developed by the Financial Stability Board into the tax code and gives those standards teeth. 

More specifically, the legislation will create special executive compensation tax rules that apply to “systemically significant” financial institutions.  The legislation will condition an institution’s eligibility for tax deductions on ending its reckless compensation arrangements and adopting new, long term-oriented, compensation standards.  The bill includes a number of provisions, including:  making compensation over $1 million nondeductible unless it is performance based; requiring that at least half of performance-based compensation vest over a period of five years or more;  mandating that executives at public companies be paid in employer stock; requiring compensation clawback arrangements; and, prohibiting  employees from engaging in personal hedging strategies, such as compensation insurance.  These requirements, and others, would apply to high-level executives and other employees whose actions affect the institution’s risk exposure.  In order to limit administrative complexity, the rules would be built into an existing provision of the tax code, section 162(m).   

Mr. President, I believe the provisions of the Wall Street Compensation Reform Act would put an end to the compensation practices that led us down an unsustainable path and threaten to drive us right back into the ditch. 

I look forward to working with you as the budget and financial reform process moves forward.

Sincerely,

Bill Nelson

cc:  The Honorable Timothy F. Geithner, United States Secretary of the Treasury

The Honorable Max Baucus, Chairman, Senate Committee on Finance

       The Honorable Charles Grassley, Ranking Member, Senate Committee on Finance

Wall Street Compensation Reform Act of 2010

1. Scope.  The legislation establishes a new subcategory of taxpayers subject to section 162(m) of the tax code referred to as “Systemically Significant Financial Institutions”.  It defines the term as a company or other entity that:

a. Engages primarily in activities that are financial in nature (as defined in 12 U.S.C. § 1843(k)), and

b. Meets one of the following requirements:

i. Owns or controls assets greater than $10 billion, or

ii. Owns or controls assets greater than $1 billion and maintains a leverage (debt-to-equity) ratio greater than 15:1. 

c. The definition of a systemically significant financial institution is not limited to publicly held corporations.

i. Once a taxpayer qualifies as a systemically significant financial institution, the taxpayer shall remain classified as such in future tax years.

2. General rules.  In the case of all systemically significant financial institutions:

a. Covered employees include the CEO or Managing Partner, the 25 highest paid employees (other than the CEO or Managing Partner), and other employees whose actions have a material impact on the risk exposure of the taxpayer.

b. Employees with applicable employee remuneration exceeding $1 million are presumed to engage in actions that have a material impact on the risk exposure of the taxpayer unless the taxpayer submits an information return to the Secretary that describes the role and responsibilities of the employee and the rationale for why the employee should not be classified as having a material impact on the taxpayer’s risk exposure.

c. No deduction shall be allowed in the case of applicable employee remuneration for any taxable year which is attributable to services performed by a covered employee during such year, to the extent the remuneration exceeds $1 million. 

i. The exception for remuneration payable on a commission basis in section 162(m)(4)(B) of the tax code does not apply.

ii. The exception for performance-based compensation in section 162(m)(4)(C) of the tax code is subject to the limitations below.

iii. The timing rules for deferred deductions in section 162(m)(5) of the tax code apply.

d. The size and allocation of the taxpayer’s performance-based compensation pool for covered employees must take into account the full range of current and potential risks, including:

i. The cost and quantity of capital required to support the risks taken by the taxpayer in the conduct of the taxpayer’s financial activities,

ii. The cost and quantity of the liquidity risk assumed by the taxpayer in the conduct of the taxpayer’s financial activities, and

iii. The timing and likelihood of potential future revenues from the taxpayer’s financial activities.

e. Under the material terms of performance-based compensation paid to covered employees:

i. At least 50 percent of performance-based compensation must be payable under vesting arrangements of at least five years.

ii. The proportion of performance-based compensation payable under vesting arrangements must increase based on an employee’s level of seniority or responsibility.

iii. Performance-based compensation payable under vesting arrangements must vest no faster than on a pro rata basis over a number of years.

iv. In the case of publicly traded corporations, at least 50 percent of performance-based compensation must be awarded in employer stock or other instruments that align employee compensation with long-term value creation and the time horizons of risk.

v. Performance-based compensation must be contingent on a formal agreement between the taxpayer and the employee not to use personal hedging strategies, compensation-related insurance, or liability-related insurance that undermines the risk alignment effects of this section.

f. In the case of the CEO of a publicly held corporation (and the Chief Financial Officer, if the CFO is a covered employee), performance-based compensation must be subject to substantial clawback requirements in the event the taxpayer is required to prepare an accounting restatement due to material noncompliance, as a result of misconduct, with any financial reporting requirement under the securities laws.

3. Specific rules for privately held institutions.  In the case of a systemically significant financial institution that is not a publicly held corporation, the requirements in section 162(m)(4)(C)(i) through (iii) of the tax code do not apply.  In place of these rules, the taxpayer must comply with the following requirements:

a. The taxpayer must provide for an independent or externally commissioned annual review of compensation policies and practices.  The review shall include an examination and analysis of the taxpayer’s compliance with the requirements of this legislation.

b. The taxpayer must certify that performance goals and other material terms are satisfied before any payment of deductible, performance-based compensation is made.

c. The provisions of this section shall take effect beginning in calendar year 2011.

4. Specific rules for public corporations.  In the case of a systemically significant financial institution that is a publicly held corporation, the requirements in section 162(m)(4)(C)(i) through (iii) of the tax code continue to apply.  In addition, such taxpayers shall provide to the SEC and disclose to the public an annual report on compensation policies and practices, which describes: 

a. The process used to develop and modify the corporation’s compensation policies, including the composition and the mandate of the compensation committee,

b. The actions taken to comply with this legislation,

c. Additional actions taken to implement the Principles for Sound Compensation Practices adopted by the Financial Stability Board,

d. The most important design characteristics of the compensation system, including criteria used for performance measurement and risk adjustment, the linkage between pay and performance, vesting policy and criteria, and the parameters used for allocating cash versus other forms of compensation, and

e. Aggregate quantitative information on compensation, broken down by senior executive officers and by employees whose actions have a material impact on the risk exposure of the firm, indicating:  amounts of remuneration for the financial year, split into fixed and variable compensation, and number of beneficiaries. 

    1. The amount of compensation that was nondeductible in the prior year as a result section 162(m).

g. The provisions of this section shall take effect beginning in calendar year 2011.

5. Date of enactment

    1. Except as otherwise provided, for taxpayers that meet the definition of a systemically significant financial institution in calendar year 2010, the provisions are effective for services performed in calendar year 2011 and thereafter.

i. Transition period for preexisting compensation agreements.  In the case of services covered by compensation agreements entered into prior to the date of introduction, the legislation is effective for services performed in calendar year 2012 and thereafter. 

    1. For taxpayers that meet the definition of a systemically significant financial institution for the first time in a calendar year after 2010, the provisions are effective for services performed after December 31 of the year following the calendar year in which the taxpayer meets the definition (if a taxpayer was an SSFI for the first time in 2013, the provisions would apply to services performed after 12-31-2014).

6. Regulations

a. Within 180 days after the date of enactment, the Secretary shall prescribe such guidance, rules, or regulations as are necessary to carry out the purposes of this legislation.  The guidance shall:  (1) describe the method for valuing assets for purposes of the asset test; (2) describe the method for calculating a taxpayer’s leverage ratio; (3) describe criteria for use in determining whether an employee is treated as having a material impact on the risk exposure of the taxpayer; and (4) set forth anti-abuse rules to prevent taxpayers from using independent contractors to avoid the purposes of the legislation. 


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