x Abu Dhabi, UAEThursday 20 July 2017

Financial collapse upsets US candidates' planned tax cuts

Tax cuts promised by the Democratic and Republican presidential candidates are unlikely to hold up in the wake of the collapse of Wall Street and the US government's planned $700 billion bailout of American financial companies. Sarah Palin, the Republican vice presidential candidate, agrees to co-operate in the investigation into the sacking of Alaska's public safety commissioner. The Pakistan president Asif Ali Zardari is in the US for talks with President Bush on American incursions into Pakistan.

Tax cuts promised by the Democratic and Republican presidential candidates are unlikely to hold up in the wake of the collapse of Wall Street and the US government's planned $700 billion bailout of American financial companies, according to USA Today. "No matter who is elected president, budget experts said the Republican nominee John McCain and his Democratic rival, Barack Obama, will have a harder time fulfilling their campaign promises because of the federal government's effort to calm the mortgage and credit markets," said USA Today. "'Both are going to be shocked by the size of the deficit they are going to inherit,' said Leon Panetta, a Democrat who headed the House Budget Committee and then served as President Clinton's budget director and chief of staff. "On Monday, both candidates indicated they would support a bailout only with conditions. "The White House estimates the deficit will be $482bn when the next president takes office on Jan 20. Panetta estimates that figure could jump to $700bn because of the bailout. "'This is a tough bill of goods, whether it's John McCain or Barack Obama,' agreed the House Budget Committee chairman John Spratt. "It could complicate McCain's efforts to sell his plan to make permanent a series of Bush administration tax cuts that are due to expire at the end of next year. Scott Hodge, president of the Tax Foundation, a non-partisan research group, estimates the 10-year cost of extending those tax breaks at $1.5 trillion. "Obama's wish list includes a series of middle-income tax breaks that he estimates would cost $85bn a year and expanded health care coverage at about $65bn a year." Clearly the collapse of Wall Street is going to negatively impact whoever wins the presidential election in November, and both Obama and McCain are going to have to make major adjustments to their promised tax cuts in order to manage a budget deficit that is sure to balloon with the $700bn rescue package. "Thomas 'Mack' McLarty, Clinton's first chief of staff, recalled that a larger-than-expected deficit in Clinton's first term caused him 'to revise some of the tax cuts he had run on'. President George H.W. Bush reneged on his pledge not to raise taxes because of the deficit he inherited from Ronald Reagan," said USA Today. "'If Obama and McCain don't think they will have to make adjustments, 'they're operating in never-never land,' Panetta said." The secrecy with which the rescue plan is being put together, and the fact that it is being crafted mostly by appointed officials, not elected ones, is worrying some observers in Washington, who note that President Bush's inept handling of the costs of the war in Iraq should not be repeated in handling the financial crisis. "Fairly or not, some critics say they can't help but see similarities between the Bush administration's hurried approach to the financial market crisis and its headlong plunge into the Iraq war," reported Marketwatch.com. "'You can draw some valid parallels between the prosecution of the war under the Bush regime and the way the financial sector has operated in recent years," said Tom Schlesinger, head of the nonprofit research group Financial Markets Center in Howardsville, Virginia. "'It fails the most basic test of democratic accountability,' Schlesinger said. "Some policy observers point to a 'trust us' mentality in the administration's call to obtain sweeping powers that are scant on checks and balances on the executive branch. In addition, the White House is faulted with a failure to raise alarm before the situation spiraled out of control, forcing the mobilisation of more troops and untold financial resources. "It boils down to 'give me the money and trust me,' Schlesinger said. James Angel, a professor of finance at Georgetown University, said the White House appears to be 'flying by the seat of their pants'."

A lawyer for Republican vice presidential candidate Sarah Palin on Monday announced that she was finally ready to co-operate with a probe looking into her firing of Alaska's public safety commissioner when she was the governor of Alaska. "Alaska Gov Sarah Palin's lawyer met Monday with the independent counsel hired by the state to discuss the investigation into Palin's firing of Alaska's public safety commissioner, campaign officials said," reported CNN. "Palin, the Republican vice presidential nominee, has been battling allegations she fired Public Safety Commissioner Walt Monegan for improper reasons in July. "Palin's attorney, Thomas Van Flein, met with special counsel Timothy Petumenos to discuss documents and witness interviews, campaign spokeswoman Meg Stapleton said. "Stapleton was asked whether Palin would agree to be interviewed by the special counsel. "If necessary and Mr Petumenos wants it, absolutely," Stapleton replied. "'We believe and expect Mr Petumenos has demonstrated that he is fair and impartial and is searching for the truth and facts behind Monegan's reassignment,' Stapleton said. 'The governor stands ready to co-operate.' "Monegan says he was fired after he refused to fire the governor's ex-brother-in-law, a state trooper involved in an acrimonious divorce with Palin's sister. "Palin has denied any wrongdoing, telling Fox News last week that Monegan was 'insubordinate' in disputes over budget issues." The former Alaska beauty queen was also getting a crash course in foreign policy on Tuesday and Wednesday when she was scheduled to meet a slew of foreign leaders at United Nations General Assembly in New York. These meetings are meant to shore up her severe lack of foreign experience, but as one Democratic strategist said, this could be a risky proposition if the meetings backfired and highlighted her lack of foreign knowledge. "The Republican vice-presidential candidate, who obtained a passport to travel outside North America for the first time only last year, is meeting a raft of leaders from several of the world's current hotspots. But her cramming timetable fails to include any scheduled encounter with a major European leader," reported The Guardian. "Her induction begins tonight with attendance at a cocktail party held by President George Bush at the city's Waldorf-Astoria. The Lebanese president, Michel Suleiman, and other leaders, carefully selected for their goodwill towards America, were on the guest list. "She will meet the presidents of Afghanistan and Iraq, Hamid Karzai and Jalal Talabani, as well as the leader of the main US ally in Latin America, Alvaro Uribe of Colombia. The new Pakistani president, Asif Ali Zardari, is on the list, as is Indian prime minister Manmohan Singh."

Pakistani President Asif Ali Zardari was in New York on Tuesday to attend the opening of the UN General Assembly and to hold talks with President Bush about the ongoing US incursions into Pakistani territory in its fight against al Qa'eda and Taliban terrorists. "US military incursions into Pakistan that have stoked anti-American sentiments top the agenda for President George W. Bush's talks with the newly elected president of the Muslim nation, which is reeling from a deadly truck bomb that devastated a Marriott Hotel in Islamabad," reported the Associated Press. "Publicly, Bush and Pakistan President Asif Ali Zardari, who were to meet Tuesday on the sidelines of the UN General Assembly, will exhibit a show of solidarity against extremists. Privately, the two leaders will be trying to craft a delicate strategy to make progress in fighting militants while keeping US-Pakistan relations on an even keel until Bush leaves office in four months. "Pakistan is under growing pressure from the United States to act against al Qa'eda and Taliban insurgents along its border with Afghanistan, a staging ground for attacks against coalition troops in Afghanistan and bombings in Pakistan. Pakistan accuses the US of violating its sovereignty. But with little political clout, it's unclear whether Zardari can muster the domestic support he needs, especially from the Pakistani military, to step up the fight against terrorists inside his own nation." The New York Times in an editorial said that Pakistan was running out of time in its fight against extremists: "Pakistan's military is threatening to shoot US troops if they launch another raid into Pakistan's territory. Whether the threat is real or meant solely for domestic consumption, there is a real danger of miscalculation that would be catastrophic for both countries. "President Bush's decision to authorise Special Operations forces in Afghanistan to go after militants in Pakistan's lawless border region was a desperation move. The chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, admitted earlier this month that America and its allies were 'running out of time' to save Afghanistan. "We certainly share his alarm and his clear frustration that the Pakistanis are doing too little to defeat the extremists or stop their attacks into Afghanistan. But Bush and his aides should be just as alarmed about Pakistan's unraveling ? the horrific bombing at Islamabad's Marriott Hotel on Saturday is only the latest sign ? and working a lot harder to come up with a policy that bolsters Pakistan's fragile civilian government while enlisting its full support in the fight extremists. "If an American raid captured or killed a top Qaeda or Taliban operative, the backlash might be worth it. But if there is any chance of permanently rooting out extremists from the tribal areas, that will have to be done by Pakistan's military, backed up with sustained programmes for economic and political development. "For that, Washington must finally persuade Pakistan's leaders that this is not just America's fight but essential to their own security and survival as a democracy. And Pakistan's leaders must persuade their citizens," concluded the Times. The Pakistani daily newspaper Daily Times agreed that the government of Pakistan has to take a firm stand against extremists or see itself and all other moderates in the country obliterated by the extremists. "But let us ask what will happen if Pakistan pulls out of the 'war on terror'. The presumption, which is not spelled out, is that once this happens there will be no contradiction between al Qa'eda and its foot soldiers in FATA on the one hand and the state of Pakistan on the other. "But what about the well established fact that al Qa'eda has a programme of 'Islamic reform' that is global and which will start by converting Pakistan into a state based on al Qa'eda's radical caliphate which will be the base area of its declared war on the US and the West? "If we accept the assumption that our military capacity is not equal to engaging al Qa'eda in a civil war-like conflict, the unspoken assumption is that the Muslims of Pakistan will and should accept the al Qa'eda philosophy as 'true faith' and allow the transformation of the state to al Qa'eda's liking and standards. Of course, the 'liberals' will be eliminated in the new order and this 'wish' is apparent from the term 'liberal fascists' that is being used these days in some reactionary Urdu columns," warned the Daily Times. "Abandoning the war against terrorism is no solution to the problem of al Qa'eda and its radical global agenda. Those who propose it are now faced with the growing objection to the killing of innocent citizens. And they cannot convincingly argue that, after we have pulled out, either the Americans will stop attacking al Qa'eda or al Qa'eda will stop attacking us if the state of Pakistan does not capitulate to it."