the view from washington
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The View From Washington. Frank Kelly Managing Director Head of Government Affairs – Americas. Everything you wanted to know about Washington and the world…. But didn’t want to make a campaign contribution to find out…. The Overview. - PowerPoint PPT PresentationTRANSCRIPT
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The View From Washington
Frank KellyManaging Director Head of Government Affairs – Americas
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Legal, Risk & Capital
Everything you wanted to know about Washington and the world…
But didn’t want to make a campaign contribution to find
out…
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The Overview
Where is Congress now and what are they doing and can they get it done?
How will the White House Respond?
’08 Elections Update.
Key Global Flashpoints…
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The Legislative Agenda for the Rest of ’07 and ‘08
The Frame of Reference:
Campaigns now coloring all issues…
“Pay Go” Makes EVERYTHING difficult…
Less Time on Legislative Calendar than you may think…
Drive for 60 seat Democratic majority in Senate; Little chance of Republican recovery in House.
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Legislative Agenda’07 / ’08 (cont’d.)
Appropriations Bills - 12 needed; One finished. Continuing resolutions and veto threats; Eats the clock.
SCHIP - Problems seem to be multiplying and becomes more controversial by the day; Bush vetoed. Will remain a political sore point in 2008.
Tax Reform Bill- The “Mother of All Tax Bills” has arrived…But is not going anywhere…
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Life in Congress: Sub Prime, Chinese Currency & Iraq
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Sub prime is Prime Time…Multiple Bills in motion, including…
Re-open Bankruptcy bill to help stave off foreclosures (Durbin)
Tax break for those facing foreclosure (Rangel) Raise caps on GSE portfolios (Frank, Schumer) FHA Reform (Frank) Massive Reform of Sub prime Market (Dodd, Frank) Treasury’s SIV - What is it, who’s in, and will it work?
But idea of federal bailout is still remote.
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We’re All Feeling the Squeeze…
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Energy/Climate Change Legislation
Energy Bill - Stalled as Dems in House and Senate bicker.
White House Veto pen armed and ready.
Senate moving a major Climate Change bill.
Will combined bills get Cap-and-Trade?
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Taxes: “The Mother of All Tax Proposals” A mega-political food fight?
House Ways & Means Committee Chairman Charles Rangel (D-NY) wants to “strategically” overhaul the US tax code. Chances of getting it done in 2008 are remote – but this clearly is the opening skirmish of a larger battle in 2009. What does Rangel want to do?
AMT Reform – Patch it for `08; Completely eliminate it in `09.
Capital Gains/Dividend Taxes (in 2009) – Raise them (Cap. Gains = 28%; Div. = 28% +) to help offset national health care plan.
Estate Tax (in 2009) – Raise them.
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The “Mother of All Tax Bills” Includes
4% surcharge on all joint taxpayers earning $200k or more. Rises to %4.6 for couples earning $500k or more.
Eliminates the AMT (almost $1 trillion hit to revenues).
Carried Interest on investment partnerships taxed as ordinary income.
Limiting itemized deductions and personal exemptions to pre- 2001 EGTR Act levels for taxpayers earning above $500k.
Goodbye Cap Gains / Div. tax cuts!
Corporate taxes - Corporate rate goes from 35% to 30%
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“The Temporary Tax Relief Act 2007”
One year extension of AMT Patch.
Basis Reporting by brokers of securities transactions.
Carried Interest on investment partnerships taxed as ordinary income.
Eliminate investment managers offshore deferred compensation
Removes tax on discharge of mortgage indebtedness and extends for 7 years mortgage insurance deduction.
Time Running Out: Tax forms needed to be printed by November 7th.
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Financial Services Again in the Spotlight
401(k) Reform - Push for tough new disclosures from plan advisors. Four separate congressional committees
investigating.
Federal Insurance Regulation - Moves being made to create “opt-in” federal regulatory structure (and escape tough state oversight”.
Rating Agencies - SEC and Congress putting them on hot seat; Watch for hearings and new regulations.
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’08 ElectionsUpdate
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Presidential Campaigns…And They’re Off!
*Source: ABC/Washington Post Poll 11/18/07
Iowa
DemocratsObama- 30%Clinton- 26%Edwards- 22%Richardson- 12%
New Hampshire
DemocratsClinton- 36%Obama- 22%Edwards- 13%Richardson- 12%
RepublicansRomney- 28%Huckabee- 24%Thompson- 15%Giuliani- 13%McCain- 6%
RepublicansRomney- 33%McCain- 18%Giuliani- 16%Huckabee- 5%Thompson- 4%
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Presidential Campaigns…And They’re Off!
RepublicansGiuliani- 32.8%Romney- 16.3%Thompson- 14.3%McCain- 11.3%Huckabee- 8.3%
RepublicansRomney- 21.8%Giuliani- 19.8%Thompson- 16.8%McCain- 11.3%Huckabee- 8.5%
Florida:
DemocratsClinton- 47%Obama- 20.4%Edwards- 11.6%
South Carolina:
DemocratsClinton- 41%Obama- 27%Edwards- 12.3%
Source: Realclearpolitics.com 11/18/07
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*source - AEI Political Report
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Primaries Remain In Play…JANUARY 2008
January 3: Iowa* (caucuses) January 5: Wyoming (R) January 8: New Hampshire January 15: Michigan January 19: Nevada, South Carolina (R)January 29: Florida, South Carolina (D)
FEBRUARY 2008 February 1: Maine (R) February 5: Alabama, Alaska, Arizona, Arkansas, California, Colorado
(D), Connecticut, Delaware, Georgia, Illinois, Minnesota, Missouri, New Jersey, New Mexico, New York, North Dakota, Oklahoma, Tennessee, Utah February 9: Louisiana February 10: Maine (D) February 12: District of Columbia, Maryland, Virginia February 19: Hawaii (D), Washington, Wisconsin
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Primaries Remain In Play…MARCH 2008
March 4: Massachusetts, Rhode Island, Ohio, Texas, Vermont March 8: Wyoming (D) March 11: Mississippi
APRIL 2008 April 22: Pennsylvania
MAY 2008 May 6: Indiana, North Carolina May 13: Nebraska, West Virginia May 20: Kentucky, Oregon May 27: Idaho
JUNE 2008 June 3: Montana, New Mexico (R), South Dakota
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Will Voter Turn Out be Bigger in 2008?
American voters are showing higher interest in the 2008 elections than in previous campaigns:
Followed news about candidates for the presidential election very/fairly closely*
September 1987 48%August 1995 47%September 1999 46%September 2003 42%August 2007 50%
*Source: ORC/Pew Research Center
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A Veto Proof Democratic Majority in Senate in ‘09?
Currently: 49 Democrats, 2 Independent 49 Republicans
2008 Elections: 33 seats up for re-election; But key Republican retirements are opening the door to big Democratic wins (Virginia, Nebraska, Idaho, Texas…and others to be named later…)
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“America’s Greatest Geopolitical Challenge.”
Congressional concern is intensifying:– 20% YOY growth of PLA– Growing global demand for
natural resources.– Electronic espionage in US
and among NATO allies. CITIC/Bear Stearns, Huawei
Tech/3Com, others to come… Taiwan crisis in March?
China
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Iran – Iraq as A Proxy War
Current Intelligence Assessment: 2-5 years from nuclear weapon.
Grand Bargain: US Missile Defense for Russian Vote?
US preemptive attack unlikely but odds are rising.
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“Surge” is working
Blackwater Incident sign of success and Iran frustration.
But how to deal with Iran? Saudi Arabia and Gulf States are increasingly worried about “spill-over.”
Iraq
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Venezuela
For now, bark is worse than bite. But Nationalizations, Russian weapons deals, Iran relationship worrisome to U.S.
Chavez needs U.S. money from oil sales and we need his oil.
Recent grab of TV station and resulting riots show instability.
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White House / Congress Spending $9.1 billion FY ’07 for planning. Even more in ’08.
Watch China, Indonesia, Vietnam, and Nigeria for outbreak areas.
Huge boost to biotech globally. Where there is a will, there’s a way.
Avian Flu – The Ultimate Market Mover
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Important Note:
The opinions and analyses expressed herein are those of the author and do not necessarily reflect those of Deutsche Bank AG or any affiliate thereof (collectively, the "Bank"). Any suggestions contained
herein are general, and do not take into account an individual’s specific circumstances or applicable governing law, which may vary from jurisdiction to jurisdiction and be subject to change. No warranty or representation, express or implied, is made by the Bank, nor does the Bank accept any liability with respect to the information and data set forth herein. The information contained herein is not intended to be, and does not constitute, legal, tax, accounting or other professional advice; it is also not intended to offer penalty protection or to promote, market or recommend any transaction or matter addressed
herein.Recipients should consult their applicable professional advisors prior to acting on the information set
forth herein.