Category Archives: Industry Jobs Oil Economics

Normalizing Relations with the Houthi are Failing

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So when Jen Psaki, the State Department spokesperson said we have asked for our embassy assets to be return, well it does not seem that is going to turn out well. Normalizing relations which started months ago before the coup is also failing.  Even when the United Nations makes an appeal to the Houthi, it is rejected.

Yemen’s Houthis reject U.N. Security Council call to restore order

Yemen’s Iranian-backed Houthi militia on Monday rejected a unanimous appeal from the U.N. Security Council to restore constitutional order in the country after months of chaos, Middle Eastern media reported.

At a special meeting of the 15-member Security Council on Sunday, the diplomats adopted a resolution calling on the Houthis to return control of the government to elected leaders and release President Abdu Rabu Mansour Hadi, who has been under house arrest since Jan. 22.

The six-nation Gulf Cooperation Council also met over the weekend in Riyadh and warned that Yemen’s neighbors would take action themselves if the Shiite militants continue to engage in clashes with other Yemenis and fail to allow government functions to resume.

“Yemen is collapsing before our eyes. We cannot stand by and watch,” U.N. Secretary General Ban Ki-moon warned during a Security Council briefing last week. On Monday, the Houthi rebels refused either to cede power or to release Hadi, the Al-Arabiya news agency reported from Sana, the Yemeni capital.

It quoted a Houthi statement as saying the outside world needed to “respect the will and sovereignty of the Yemeni people, and to be accurate and objective.” The Houthis also reportedly warned the Security Council “not to follow the lead of regional powers that aim tirelessly to eliminate the will of the Yemeni people in a flagrant violation of international conventions that criminalize meddling in internal affairs,” the news agency reported. A U.N. special envoy visited Hadi at his Sana home on Monday to discuss the international efforts to secure his freedom and avert further bloodshed in a country where badly deteriorating security has prompted an exodus of diplomats. Special U.N. advisor Jamal Benomar told Yemen’s Saba News Agency that he assured Hadi that the international community was working for his release. He also urged all parties to Yemen’s turmoil to engage in negotiations to avert a full-scale sectarian war.

“Either the country will descend into civil war and disintegration, or the country will find a way to put the transition back on track,” Benomar was quoted as saying by Sana. “This largely depends on the political will of Yemeni leaders. They all bear responsibility for the current state of affairs, as well as responsibility for finding a way to pull the country from the brink.” Nadia Sakkaf, who was information minister in the government, announced via Twitter on Monday that Hadi needs to travel abroad “immediately” for medical treatment of a heart condition that has been aggravated by his detention.

The Security Council resolution, drafted by Britain and Jordan, “deplored the unilateral actions taken by the Houthis to dissolve parliament and take over Yemen’s government institutions” and reiterated calls for all factions to resolve their disputes through negotiation.

The soaring insecurity prompted the United States, France, Germany, Italy, Britain, Spain, Saudi Arabia, the Netherlands and the United Arab Emirates to close their embassies in Sana earlier this month. On Monday, Turkey and Japan announced that they too were relocating their diplomatic staffs out of the country until order is restored.

Yemen is home to Al Qaeda in the Arabian Peninsula, which U.S. security officials consider the most dangerous remnant of the global terror network developed by Osama bin Laden.

Yemen’s location along the narrow passage from the Red Sea into the Gulf of Aden also poses risks to oil shipments from the region if the Shiite militants gain control of the strategic overlooks and attempt to menace exports from Saudi Arabia, the Sunni powerhouse that is Houthi-allied Iran’s arch rival for power in the Muslim world.

*** But also in Yemen is Islamic State and al Qaeda Arabian Peninsula.  Thee is not much room left for the United States.

ISIS gaining ground in Yemen, competing with al Qaeda

The Syria-based terror group ISIS is active and recruiting inside the Middle Eastern state of Yemen, already a hotbed of terrorist activity, CNN has learned.

The disturbing information comes from a Yemeni official, who told CNN on Wednesday that ISIS has a presence in at least three provinces in southern and central Yemen, and there is now a “real competition” between ISIS and the Yemen-based terror group al Qaeda in the Arabian Peninsula, or AQAP.

That competition manifested itself in a gun-battle between the two groups in Yemen’s eastern provinces last month, the same official said, though he did not have specifics on the casualties that resulted from that incident.

CNN cannot independently confirm the claims.

American officials do think ISIS is trying to recruit in Yemen. But one U.S. counter-terror official stressed the view that AQAP remains the dominant force there. The American intelligence view is that while there may be a smattering of ISIS loyalists among Sunni extremists in Yemen, they are likely “mid-level AQAP militants who are sympathetic to ISIL’s vision but haven’t broken ranks.”

According to some experts, ISIS may be seeking a foothold in the Middle East’s poorest country because of its historical importance.

 

IMF Extends $17.5 Billion Credit To Kiev

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As the IMF bails our Kiev, the real winner is Russia, GAZPROM wants their money.

No sooner had the International Monetary Fund (IMF) extended $17.5 billion over four years in new credit to Ukraine, Russia’s private gas giant Gazprom was claiming $2.4 billion of it to settle Kiev’s gas debt.

That’s not exactly what the IMF had in mind. The international lender’s mission chief for Ukraine, Nikolay Gueorguiev, issued a statement on Feb. 13 saying the credit was meant to address “immediate macroeconomic stabilization as well as broad and deep structural reforms to provide the basis for strong and sustainable economic growth over the medium term.”

At the same time, Gazprom sent a letter to its Ukrainian counterpart, state-owned Naftogaz, seeking a payment of more than $2.4 billion, to cover $2.2 billion in debt, plus a penalty fee of about $200 million. The debt, which Kiev doesn’t acknowledge, will be the subject of hearings at the Stockholm Arbitration Institute in early 2016.

Discussing Gazprom’s demand on the Russian television station LifeNew, Kremlin Energy Minister Alexander Novak dismissed Ukraine’s stand on the status of the debt, saying, “Gazprom has every right to claim the funds” because the gas deliveries to Naftogaz are listed on invoices according to an active contract between the two gas companies.

So far, Naftogaz has been paying the $2 billion debt in installments. Now that Ukraine has received the IMF loan, Gazprom wants the entire debt paid now.

Ever since the autumn of 2013, when many Ukrainians were demanding closer ties with the European Union at the expense of Russia, its gross domestic product (GDP) has shrunk by about 7 percent, the IMF says. In February 2014, faced with a popular uprising, the country’s president, Viktor Yanukovich, fled to Russia, which responded by annexing Ukraine’s Crimean peninsula.

Since then, the Kremlin has been suspected of providing weapons and even personnel to pro-Russian separatists fighting to create their own state in eastern Ukraine. The EU and the United States responded with economic sanctions that have, along with low oil prices, damaged Russia’s economy as well. Russia’s GDP is expected to contract by between 3 percent and 5 percent in 2015.

Then there is Saudi Arabia

A network of gas pipeline in cities is the only viable solution to the cooking gas crisis that happened in Jeddah recently, according to Victor Zubkov, chairman of the board of directors of Gazprom in Russia.
In an exclusive interview, Zubkov, who is also the Russian president’s special representative for cooperation with Gas Exporting Countries Forum, told Arab News after his meeting with the Ministry of Oil that the price is expected to be higher than its current price. He said: “I cannot disclose the rate right now but it will be reasonable.”
To overcome the cooking gas problem in Jeddah, there is a need to build gas pipelines’ network in place of cylinders, which have become outdated. “A better way is to build network in order to supply much accessible gas available at their homes and accommodation,” he said.
The top Russian official was in the capital last Tuesday to address the International Energy Forum (IEF) at its headquarters in the Kingdom. He also had a meeting with the Ministry of Oil.
He said 90 percent of the people in Russia use the gasification network. With the pipeline network, gas will come directly to apartments and houses requiring the people to pay only the monthly gas bill.
Zubkov said Russia and Saudi Arabia need more cooperation not only in the energy sector but also the agricultural one. “While there are big efforts for water desalination here and such water has no use for agriculture, Russia can supply wheat and many other agricultural products. In this case Saudi Arabia can invest in Russia’s farm sector and get quality products.”
“Saudi people, especially businessmen, need sufficient knowledge about Russia. As such, we need to have many meetings and, maybe, hold a business forum as well. Russia is a stable and dependable partner. Of course, we guarantee that we will implement all our proposals,” he added.
During his meeting with Saudi officials, Zubkov briefed them on opportunities in Russia’s energy sector as well as on their short- and long-range plans that include stability and sustainable supply for the European market and the Asian Pacific market as well.


“Of course, we are all concerned about oil price as it affects us all because many of our long-term contracts are connected with the oil price. We want the price to be higher than what it is now,” he said.
Zubkov added: “It is not only because our budgeting is based on the oil price but also because a lot of investment plans are now doubtful not only inside Russia but also in different countries as well. The negative impact on this will be felt by consumers as they outnumber the producers by over 10 times.”
According to him, the price should not be either too low or too high. It should reflect the situation in producing and transporting expenses. It should be stable in the interest of economy and, of course, to also avoid creating social unrest.
“Our message to the Saudi government is price should be higher than the current level. And, of course, I will not disclose here the new figure that we have discussed,” he said.

 

Obama Approves Minsk Agreement, Great for Putin

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The new Minsk ceasefire agreement empowers Russia-backed separatists with a number of leverages over Ukraine. If implemented, the agreement could provide a functioning framework for a mutually acceptable political settlement. In the event of non-implementation, a re-eruption of hostilities is highly likely.

                          

In Minsk on 12th February, Ukrainian President Petro Poroshenko, Russian President Vladimir Putin, German Chancellor Angela Merkel and French President François Hollande managed to reach an agreement on the ceasefire in Eastern Ukraine, and the outlines of a conflict settlement.

Formally, the document was signed not by the heads of state, but by the Trilateral Contact Group (composed of representatives of Ukraine, Russia and the OSCE) as well as the leaders of the Donetsk and Luhansk separatists. This indirect scheme allowed Kyiv to reach an agreement with the separatists without formally recognizing them as legitimate partners.

The document, composed of thirteen points, refers to the separatist entities as “particular districts of Donetsk and Luhansk oblasts”, using the same wording as the September 2014 Minsk agreement. Hence, neither their self-proclaimed names, Donetsk and Luhansk People’s Republics, nor the Russian term Novorossiya are used, which is a strong signal that none of the parties questions that these regions belong to Ukraine.

                       

*** So what else needs to be known? Who is still supporting Putin and why….

The segments of the Russian population that, arguably, have the best chance to dissuade President Vladimir Putin from his actions in Ukraine are business leaders and the rich. But despite having lost millions of dollars because of sanctions against Russia , the falling ruble and low oil prices, they still rally behind their leader-both privately and publicly.

Despite a cease-fire announced Thursday , Western sanctions on Russia over its support of insurgents in neighboring Ukraine have already pushed Russia’s borrowing costs higher and crushed its currency (Exchange: RUBUSD=). The problems have been made worse by the price of oil, whose fall since September has further undercut the petro-state’s ability to fund itself. Yet Putin still enjoys broad domestic support, and experts tell CNBC that the country’s monied class is no exception. Timothy Ash, who heads emerging markets research at Standard Bank (Johannesburg Stock Exchange: SBK-ZA), summarizes the phenomenon in a few words: “Nationalism plays very well with many people,” he told CNBC

Alexander Kliment, director of Russia research at Eurasia Group, said the sanctions have actually strengthened elite support for Putin because they have bolstered the government’s position as a last-resort lender for them. “Also, sanctions have inflamed patriotic sentiment and been a convenient scapegoat for economic woes,” Kilment told CNBC.

“If you are an oligarch, it’s bad to suffer sanctions from the West,” he said, “but you’re still pretty well-off as part of the Russian system. It’s an awfully big leap to turn your back on that, which would risk literally everything you have.” Read More Total CEO: US will not become energy independent Edward Mermelstein, a New York-based attorney who works with Russian business clients, told CNBC that Putin’s popularity is no longer dependent on finance as much as the might of Russia.

“As long as the country is perceived as strong, he will continue to dominate domestically. The Russian citizen can withstand famine, but they cannot withstand the appearance of weakness,” he said.

While some companies are getting hit hard by what Russian Finance Minister Anton Siluanov has acknowledged is an economy in “dire straits,” others are finding ways to benefit.

*** Now comes the alternate banking system. Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia. It should be noted that Russia’s Central Bank initiated the development of the country’s own messaging system in response to repeated threats voiced by Moscow’s Western partners to disconnect Russia from SWIFT.

Russian Prime Minister Dmitry Medvedev meeting with miniters

SWIFT (The Society for Worldwide Interbank Financial Telecommunication) is a Belgium-based international organization that provides services and a standardized environment for global banking communicating that allows financial institutions to send and receive messages about their transactions. Earlier this month Russian Deputy Prime Minister Igor Shuvalov expressed confidence that Russia would not be disconnected from SWIFT. In her turn, Russian Central Bank First Deputy Chair Ksenia Yudaeva called upon Russian civilians and financial institutions not to dramatize the current situation.Russian experts point to the fact that Western businesses would face severe losses if they expelled Russia from the international SWIFT system. On the other hand, the alternative system launched by Russia might reduce the negative impacts caused by measures imposed by the West, including possible disconnection from SWIFT, and diminish Western financial dominance over Russia.

 

Ukraine has a Deadly History

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A cease fire was signed this week known as the Minsk Agreement. The ink was not dry and the hostilities continued. So looking back on Ukraine’s history is a look at today and tomorrow.

After hours of beatings, the men in black took Lutsenko into the woods, put a bag over his head, made him kneel in the snow and told him to say his prayers. Then they walked away.

Not long after Lutsenko emerged, Verbytsky was found in the same woods, bound in duct tape, his ribs broken, internal organs smashed. An autopsy showed he froze to death. What is a cause of Putin’s military aggression over Ukraine?

Oil.

Ukraine’s state gas and oil company Naftohaz has reported discovering a sizeable oil field on the country’s territory.

Nafothaz said late July 11 that the discovery was one of the largest oil fields found in Ukraine in some 15 years.

Naftohaz believes the Budishchansko-Chutovskoyefield in eastern Ukraine’s Poltava region, contains some 12.8 million tons of oil.

Naftohaz has been working the site since 2011 and the company’s public relations department said it was the first oil field owned solely by the Ukrainian company.

Ukraine’s government is attempting to wean the country off its dependence on Russian energy supplies. Kyiv has placed a priority on developing the country’s own energy resources and diversifying sources for importing energy supplies.

*** Yet Ukraine’s history is a look back at what is underway today.

Ukraine was formally incorporated into the USSR as the Ukrainian Soviet Socialist Republic (UkSSR) in 1922.
The Communists were aware that resistance to their regime was deep and widespread. To pacify the Ukrainian  people and to gain control, Moscow initially permitted a great deal of local autonomy to exist in the UkSSR. The
newly established Ukrainian Autocephalous (self-ruling) Orthodox Church and the new All-Ukrainian Academy of  Sciences, non-Communist national institutions of great importance, were both permitted to continue their work
until the end of the 1920’s.

All of this changed once Joseph Stalin came to power. Stalin wanted to consolidate the new Communist empire  and to strengthen its industrial base. Ukrainian national aspirations were a barrier to those ends because even
Ukrainian Communists opposed exploitation by Moscow. In Stalin’s eyes, Ukraine, the largest of the  non-Russian republics, would have to be subdued. Thus, the Ukrainian Autocephalous Orthodox Church was
placed under the jurisdiction of the Communist-controlled Russian Orthodox Church. Ukrainian bishops, priests  and thousands of Christian lay leaders were sent to Siberian labor camps, the so-called “Gulag.” Hundreds of
thousands, possibly over a million, of Ukraine’s intellectual leaders – writers, university professors, scientists,  and journalists – were liquidated in purges ordered by Stalin. Not even loyal Ukrainian Communists were exempt
from Stalin’s terror. By 1939, practically the entire (98%) of Ukraine’s Communist leadership had been  liquidated.

Hardest hit by Stalin’s policies were Ukraine’s independent landowners, the so-called “kulaks” (kurkuly in  Ukrainian). Never precisely defined, a kulak was a member of the alleged “upper stratum” of landowners but in
reality anyone who owned a little land, even as little as 25 acres, came to be labeled as a kulak. Stalin ordered  that all private farms would have to be collectivized. During the process, according to Soviet sources, which are
no doubt on the conservative side, some 200,000 Ukrainian families were “de-kulakized” or dispossessed of all  land. By the summer of 1932, 69.5% of all Ukrainian farm families and 80% of all farm land had been forcibly
collectivized.

Stalin decided to eliminate Ukraine’s independent farmers for three reasons:
(1) they represented the last bulwark of resistance to totalitarian Russian control;
(2) the USSR was in desperate need of foreign capital to build more factories and the best way to obtain
that capital was to increase agricultural exports from Ukraine once known as “the breadbasket of
Europe”;
(3) the fastest way to increase agricultural exports was to expropriate land through a process of farm
collectivization and to assign procurement quotas to each Soviet republic.
During the collectivization process, Ukrainian farmers resisted vigorously, often violently, especially when the  GPU (Soviet secret police) and militia forced them to turn their land over to the government. Thousands of
farmers were killed and millions more were deported to Siberia to be replaced by more trustworthy workers.

*** Fast forward to the 1980’s, were marked by increasing political impotence of Soviet leadership. The Chernobyl Nuclear Power Plant accident of April 26,1986, brings back painful memories for all Ukrainians. This disaster caused tens of thousands of deaths and health related problems, and inflicted enormous ecological and economic damage. Chernobyl served to rock the Communist Party establishment with political fallout as the facts behind bureaucratic ineptitude, negligence, disregard for the ordinary citizens, and cover-up emerged and began to stir the minds of the people.

On July 6, 1990, the legislature proclaimed Ukraine’s sovereignty. In August 1991, a failed three-day military coup of the Kremlin’s would-be dictators led to the Declaration of Independence by the Verhovna Rada (Parliament) on August 24. On December 1, in a nationwide referendum, 93% of Ukraine’s citizens voted for an independent Ukraine and chose Leonid Krawchuk, former communist ideologist, as their first democratically elected President. On July 10, 1994, Leonid Kuchma, former director of the world’s biggest rocket plant, defeated Leonid Krawchuk to become the second President of independent Ukraine.

Following the Orange Revolution, on December 26, 2004, after two rounds of falsified elections, Viktor Yushchenko beat the Kremlin-backed candidate in the third round. Under Yushchenko, Ukraine finally became free from Moscow’s 300-year domination. *** Can Ukraine survive the current Soviet loyalists aggression? Not without assistance from the West, but will that assistance come?

It’s Your Money and the Democrats Don’t Care

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Do you know how legislative bills begin and then what happens? Do you know what they may cost the taxpayers?

Sponsors of 700 bills in Congress didn’t put price tags on their proposals

Almost half of the bills introduced in the last Congress authorized spending tax dollars, but not specifically how many dollars. Instead, the proposals simply provided that “such sums as necessary” should be spent.All 20 congressmen who most frequently used the “such sums as necessary” formulation are liberals and among the most ardent proponents of expanding the federal government. House Republicans were advised by their leaders not to use the phrase, but some of them ignored the advice.Vermont Sen. Bernie Sanders, a self-proclaimed “Democratic socialist,” led the list as the sponsor of 19 such bills.

His 10 Million Solar Roofs Act of 2014, for example, would require “the Department of Energy (DOE) to establish a program to provide rebates for the purchase and installation of photovoltaic systems with the goal to install 10 million systems.”

The Sanders bill provided specific instructions for what the government would need to do, and the cost of the solar panels would be known to his staff. The goal of the bill — increasing alternative energy sources — has significant public support. But Sanders didn’t include how much his proposal would cost, thus depriving his congressional colleagues and taxpayers of the means to weigh benefits versus costs.Nowhere in the bill is there a cost figure. It simply says “there are authorized to be appropriated such sums as are necessary to carry out this Act.”Florida Democrat Rep. Alan Grayson’s Fiscal Sanity Act for Appropriations bill is another whose cost is simply as much “as necessary.”

“It shows they aren’t serious fiscal stewards — they aren’t concerned with how much it costs, often-times. If they were, they could write in offsets saying ‘this fund over here will be decreased by the amount necessary,’” said Demian Brady, who tracks individual congressmen’s spending propensities for the National Taxpayers Union.

“It could also be a way to avoid accountability. If they did say $20 million for a gun buyback program, media and everyone would say she wants to spend $20 million. If you leave it blank, it’s a shield you can hide behind, even if they know how much it’s going to cost,” he said.  Some were token efforts that sponsors never expected to go anywhere — they were introduced only so their sponsors could tell campaign backers that they tried. But occasionally those proposals wind up becoming policy anyway.“They say, ‘we didn’t bother to get an estimate because we didn’t expect it to go anywhere,’ but then soon we’ll find it as part of bigger legislation,” Brady said.When Rep. Maxine Waters wanted a “minority diabetes initiative,” the California Democrat didn’t care how much it cost, and didn’t attempt to measure it, craft a budget estimate or find a way to fund it. Instead, she asked colleagues to essentially vote for a blank check.

Pennsylvania Democratic Sen. Bob Casey’s Caregiver Corps Act of 2014 would require the Department of Health and Human Services to “contract with a nonprofit” and “[a]llows the Secretary to award grants for the operation of local Corps programs.”Yet there is no mention of cost anywhere. At the very end of the description of the proposed program, it says simply, “There is authorized to be appropriated to carry out this section, such sums as may be necessary.”“It’s very bad practice to put these things in place because they also lead to bloated appropriations. The authorizers have kind of punted,” said a senior Senate Republican aide. “We’d like to have all the authorizers be more accountable to things.”

Congress must first pass a bill “authorizing” money to be spent, and then another, separate appropriation bill officially funds it — generally one of a few major bills passed by the appropriations committee.

The handful of powerful congressional “appropriators” who meet in back rooms and until recently were able to dole out earmarks as favors have been the subject of significant ire as poster children for what is wrong with Washington.

But when lawmakers write bills that “authorize” funding without specifying amounts, they are ceding authority to the appropriations committees, who will have to fill in an amount, even though they’re much less acquainted with the purpose.

The Examiner analyzed legislation from the two-year congressional session that ended last month. Dollar amounts — or lack thereof — were extracted from the bill text by the Cato Institute as part of the libertarian think tank’s Deepbills project.

One reason for the Democratic dominance of the “such sums as necessary” list is that Democrats introduce more bills in general than Republicans. But another is that House Republican leadership cautioned its members not to use “such sums as necessary” at the beginning of last Congress, as one of nine “legislative protocols.” “Any bill or joint resolution authorizing discretionary appropriations shall specify the actual amount of funds being authorized,” the protocol says. “This protocol is designed to improve transparency and accountability in the authorization of discretionary programs.”

But it only discourages, not forbids, House Republicans from using the technique. The House Select Committee on Benghazi, formed to investigate Hillary Clinton’s State Department, was funded by “such sums as necessary,” leading Democrats opposed to the investigation to protest that it is irresponsible to allocate open-ended amounts of money with no end date.

And it doesn’t bind senators, who lead the list in bills introduced.

Sanders and Sen. Bob Menendez, D-NJ. the most frequent users, didn’t respond to the Examiner’s requests for comment.

WRITING THE MOST BLANK CHECKS

Name Bills
Sen. Bernard Sanders (I-VT) 19
Sen. Robert Menendez (D-NJ) 14
Sen. Tom Harkin (D-IA) 13
Sen. Mark Begich (D-AK) 13
Sen. Patty Murray (D-WA) 11
Sen. Richard Blumenthal (D-CT) 10
Sen. Tom Udall (D-NM) 10
Sen. Al Franken (D-MN) 10
Rep. Sheila Jackson Lee (D-TX) 9
Sen. Ron Wyden (D-OR)

But Barack Obama does not care either. His budget was presented last week and has zero chance of advancing with good reason.  Obama’s Budget Hikes Taxes by $1.6 Trillion   In his budget, Obama also proposes that over the next 10 years, tax cuts of $349 billion be accompanied by tax increases of $1.9 trillion, for a net 10-year tax increase of $1.6 trillion. 

The president’s budget would repeal, let expire or limit:

  • the Lifetime Learning Credit;
  • the student loan interest deduction (for new borrowers);
  • Coverdell accounts; and
  • 529 education savings plans.

The president’s budget would:

  • triple the maximum Child and Dependent Care Tax Credit (CDCTC);
  • expand the American Opportunity Tax Credit;
  • create an auto-enroll IRA for workers without an employer-based retirement plans (with an option to opt out);
  • create a new second earner credit of up to $500 for families where both spouses work; and
  • expand the Earned Income Tax Credit (EITC) for workers without children and for non-custodial parents.

The president’s budget would raise taxes in many ways. For example, it would:

  • increase the capital gains and dividend tax rate to 28 percent (inclusive of the net investment income tax);
  • end stepped-up basis by treating bequests and gifts as realization events that would trigger tax liability for capital gains;
  • raise estate and gift taxes;
  • limit the value of itemized deductions to 28 percent;
  • create an additional alternative minimum tax designed to ensure certain high income taxpayer pay at least 30 percent of income —after charitable contributions—in taxes;
  • impose a 19 percent on the foreign earnings of U.S. companies;
  • raise tobacco taxes; and
  • impose a tax on the debt of financial institutions.

In addition, Obama’s budget increases the corporate welfare provided through the tax code, with substantially higher subsidies for alternative energy and politically favored infrastructure.

The budget does contain a constructive provision that would permanently extend section 179 expensing allowing small business to deduct up to $1 million of capital expenses.