Boxer's tax break proposal; Economic stimulus plan; 2010 midterms

Jack Shaw of Market News International discusses a proposal by Sen. Barbara Boxer to stimulate the economy; Boxer has harsh words for a Republican critic of the economic stimulus bill; and Congressman Kevin McCarthy may take an active role for Republicans in the 2010 midterm elections.

Steve Julian: On Mondays we take a look at the California delegation in Washington with Jack Shaw. He's a reporter with Market News International. Jack, we've been hearing about Congress's deep divide over a nearly $900 billion stimulus bill. Tell us about Senator Barbara Boxer's controversial plan to jump start the economy.

Jack Shaw: Well the Senate is going to be voting on the stimulus bill this week, with lots of amendments, and Senator Boxer's offered one, is offering one, excuse me, with John Ensign, a conservative Republican from Nevada.

And the plan would allow multinational corporations a one time tax break to bring earnings from foreign subsidiaries back to the U.S. And under her plan, the tax rate for companies bringing these earnings back would be slashed from the current rate of 35 percent to 5 percent.

Keep up with LAist.

If you're enjoying this article, you'll love our daily newsletter, The LA Report. Each weekday, catch up on the 5 most pressing stories to start your morning in 3 minutes or less.

Subscribe

And Boxer said this would bring hundreds of billions of dollars back into the U.S. economy, where they would generate growth, and jobs, and so forth. But critics are a little bit cool to it.

They note that this idea was tried several years ago, and huge sums of capital did come back to the U.S., but these companies used very little of it to hire people. They used it for internal purposes, a lot of debt buybacks, and so forth.

And it's interesting, the head of the Senate Budget Committee, Ken Conrad, a fellow Democrat, has called Boxer's plan a, quote, "snare and delusion," saying it rewards companies for parking money overseas, and then waiting until tax rates are cut before returning it to the U.S.

So this is going to be something that's part of the debate this week – it's going to be very controversial. A lot of passion will be in evidence as they, as the Senate considers Boxer's plan.

Julian: And, speaking of Boxer, Jack, she's been a very public champion of passing stimulus legislation and she's been forceful in challenging her Republican colleagues. Perhaps too much so?

Shaw: Maybe so. She was actually on MSNBC last week, and someone had cited the comments of Mitch McConnell, the Senate Republican leader, who's been very critical of how Congress has been developing the stimulus legislation.

McConnell argued that actually Congressional Democrats are breaking away from President Obama and putting together a plan that's very different than the one he championed, and Boxer, after hearing that, just kind of lost it and said, you know, McConnell is just, quote, "making stuff up," which is not exactly how you usually refer to your colleagues in the Senate.

Senate Republicans found Boxer's comments unhelpful, they said, and said it wasn't consistent with the new tone that Obama is trying to bring to Washington. Boxer said she was just telling the truth, that McConnell has been saying stuff that just ain't so.

Julian: And Jack, the Republican leadership wants Congressman Kevin McCarthy of Bakersfield to take a very active role in their 2010 mid-term elections. What do they want him to do?

Shaw: Right. This is Washington, so the next campaign is already in sight.

Julian: Sure.

Shaw: And what they've done is ask McCarthy to head up the job, the recruitment effort. The party needs to find candidates to compete in the 435 races across the country, and this is a tough job. Particularly in a minority party, people are less interested in running for Congress and being part of the minority.

In the minority it's harder to raise money, it's very difficult to challenge incumbents, so he's going to be traveling the country, trying to get strong Republicans to run against Democrats, and it's going to be tough work.

Republican fortunes are at a low ebb, and he's really going to need to put on the strong pitch to get some people to run against Democrats who are getting comfortable with being in power.

Julian: All right, Jack. Thanks very much.

Shaw: Thank you, Steve.

Julian: Jack Shaw is a reporter for Market News International, and he joins us on Mondays with news of the California delegation.