by NFS | Aug 5, 2011 | Archives
WASHINGTON — Credit rating agency Standard & Poor’s on Friday downgraded the United States’ credit rating first time in the history of the ratings.
The credit rating agency said that it is cutting the country’s top AAA rating by one notch to AA-plus. The credit agency said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country’s debt situation.
A source familiar with the discussions said that the Obama administration feels the S&P’s analysis contained “deep and fundamental flaws.”
S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade to AA would occur if the agency sees less reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.
S&P first put the government on notice in April that a downgrade was possible unless Congress and the administration came up with a credible long-term deficit reduction plan and avoided a default on the country’s debt.
After months of wrangling and negotiations with the administration, Congress passed this week a debt reduction package at the 11th-hour that averted a possible default.
In its statement, S&P said that it had changed its view “of the difficulties of bridging the gulf between the political parties” over a credible deficit reduction plan.
S&P said it was now “pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics anytime soon.”
by NFS | Aug 2, 2011 | Archives
WASHINGTON, D.C. – The House of Representatives voted to raise the debt ceiling, only a day before the August 2 deadline for averting a default on the federal government’s debt obligations.
The vote Monday evening saw the measure approved by a 269-161 margin, with 95 Democrats voting for the bill and 95 voting against it. Sixty-six Republicans also rejected the bill, including many Tea Party freshmen, but 174 voted in favor. Rep. Gabrielle Giffords, D-Ariz., returned to the Capitol for the first time since she was shot in the head in January to cast a vote in favor of the bill and was greeted effusively by her fellow lawmakers. The Senate is expected to vote on the bill at noon on Tuesday.
The bill would give the Treasury Department the ability to borrow an additional $400 billion immediately, allowing it to avoid a default on interest payments on Treasury bonds. Payments will also go out on time for Social Security and veterans’ benefits, Medicare, unemployment insurance and other expenses.
The bill would raise the $14.3 trillion debt ceiling in several increments, getting it past the November elections. The initial infusion of $400 billion will be followed by another $500 billion in the fall, unless two-thirds of both chambers reject it. A “super committee” made up of lawmakers from both parties will meet to approve up to $1.5 billion more in borrowing authority, balanced by spending cuts and possible tax reforms. However,
Republicans are not expected to go along with any tax increases that aren’t “revenue neutral.” The committee’s recommendations will then go to Congress for an up or down vote in November. If the recommendations are rejected, the bill would set up a trigger to force deep cuts in spending, including defense.
“Tonight’s vote marks a victory for our economy and the American people,” said House Ways and Means Committee Chairman Dave Camp, R-Mich., in a statement. “The legislation not only cuts spending and reforms how Washington manages its budget, it also prevents default on our financial obligations. Importantly, the package does not increase taxes, which is critical to making sure job creators have the resources they need to invest and hire more workers. Finally, the legislation establishes the clearest path yet to a balanced budget amendment—something I have long supported and that is long overdue.”
However, many Democrats and Republicans remained unhappy with the package, including House Minority Leader Nancy Pelosi, D-Calif., who nevertheless voted for the package.
Rep. Emanuel Cleaver, D-Mo., the chairman of the Congressional Black Caucus, called it a “sugar-coated Satan sandwich” on MSNBC because it would deeply cut spending on social programs for the poor without any tax increases on the wealthy or corporations. Pelosi agreed, telling ABC News that it was a “Satan sandwich with Satan fries on the side.” However, she voted for the package to avoid a first-ever default by the U.S. government and the broader impact it would have on the economy.
On the right, Tea Party members were also unhappy with raising the debt ceiling at all. “Throughout this process, the President has failed to lead and failed to provide a plan,” said Rep. Michele Bachmann, R-Minn., the leader of the Tea Party Caucus, according to The Guardian. “The ‘deal’ he announced spends too much and doesn’t cut enough. Someone has to say no. I will.”
by NFS | Aug 1, 2011 | Archives
Many taxpayers spend time during the summer months updating their résumé and attending career fairs. The Internal Revenue Service reminds job seekers that you may be able to deduct some of the expenses on your tax return.
Here are seven things the IRS wants you to know about deducting costs related to your job search.
- To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.
- You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
- You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
- If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
- You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
- You cannot deduct job search expenses if you are looking for a job for the first time.
- The amount of job search expenses that you can claim on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You figure your deduction on Schedule A.
For more information about job search expenses, please do not hesitate to contact me.
