Obama Readies Massive Tax Cuts

The Wall Street Journal and New York Times lead off their business coverage today with word that President-elect Barack Obama's economic recovery plan will include a larger-than-expected tax cut of roughly $300 million for companies and individual taxpayers. The tax breaks don't end there. Over the next two years, the cuts could reach $775 million, the WSJ calculates. The ambitious cuts are designed to win over congressional skeptics, particularly Republicans who want to see more tax breaks and less federal spending to revive the economy, both newspapers point out. While the president-elect is hoping this more palatable economic plan will sail through Congress, it's unlikely to be approved until mid-February at the earliest, the NYT writes.

Lest you think the Federal Reserve is out of bullets after cutting interest rates to nearly zero last month, some of its more vocal hawks are again urging a massive stimulus package to keep the economy from contracting further. This weekend, San Francisco Fed President Janet Yellen and Chicago Fed President Charles Evans urged even greater government spending to pull America out of a recession, a strategy that will no doubt spur further debate in Washington. Yellen, according to Bloomberg, says “it’s worth pulling out all the stops” with an economic recovery package.

Obama's economic recovery plan did hit one significant setback this weekend when Bill Richardson withdrew his name from consideration to head the Commerce Department as a grand jury investigation into a political donor winning a lucrative government contract in his home state of New Mexico continues. The Financial Times notes that the Richardson withdrawal comes at an inopportune time as Obama will be consumed this week with trying to get Congress to quickly approve his stimulus package. Richardson, in a statement printed in part in the Washington Post, said he is withdrawing because he believes a confirmation fight could prove detrimental to work carried out on an economic recovery package. "Given the gravity of the economic situation the nation is facing, I could not in good conscience ask the President-elect and his administration to delay for one day the important work that needs to be done," Richardson said in the statement.

Meanwhile across the Atlantic, the ongoing natural gas spat between Russia and Ukraine worsened this weekend as five European countries and Turkey are now reporting that they are experiencing a cut in fuel supplies as the two volatile neighbors continue to haggle over a billing dispute. Russia's Gazprom, Europe's principle supplier of natural gas, cut supplies to Ukraine on Jan. 1. "Since then, Poland, Hungary, Romania, Bulgaria, the Czech Republic and Turkey have reported slightly reduced supply," the WSJ writes. In a replay of a 2006 dispute, Russia and Ukraine again say the other is to blame for a shortfall that is affecting Europe in the dead of winter. Over the weekend Gazprom officials accused Ukraine of siphoning off 50 million cubic meters intended for European consumers, Reuters reports. That's about a sixth of what Russia pumps to Europe every day, the WSJ adds.

Back to the U.S. now, where new details continue to emerge about the alleged Bernie Madoff fraud. The WSJ breaks the news that regulators at the Securities and Exchange Commission and other agencies had probed Madoff a total of eight times over the past 16 years, but investigators "never came close to uncovering the alleged $50 billion Ponzi scheme that investigators now believe began in the 1970s." The revelation will no doubt add more tension to congressional hearings set for today into how the SEC failed to crack down on Madoff's shaky business dealings before he himself copped to the ruse last month, Bloomberg writes.

And, finally, Britons might find it hard to stick to their New Year's resolutions to hit the gym and not the pub. One of the country's largest pub chains, JD Wetherspoon, says it is cutting the price of a pint of beer to as little as 99 pence, or $1.44, "to cheer cash-strapped drinkers," the BBC reports. But already the offer is coming under fire from health officials who fear it will aggravate binge drinking, a recurring health issue in Britain.