Obamanomics? President To Tackle Tax Reform Next

Obamanomics? Maybe so, according to CNNMoney, which leads its news roll with another mega "to-do" that has been added to President Obama's list: tax reform. The president has announced that he will form a task force that will aim to do much of what President Reagan did with his own Tax Reform Act, which is closing loopholes and fundamentally simplifying the tax code. Another major focus will be "to reduce the estimated $300 billion-a-year tax gap—the difference between what individual and corporate taxpayers owe and what they actually pay." For the task force, Obama's only two requirements will be that there can be no tax increase this year or next year, and that afterward, there can be no tax increases for households making less than $250,000. The members of the task force will be culled from the Presidential Economic Recovery Board. They will be asked to present their reform ideas Dec. 4.

The Wall Street Journal tops its front page with a view from the glass-half-empty crowd, or money managers who think the recent 21 percent rally in the Dow Jones is being caused by short-term investors who will bail at the first sign of trouble. They are calling it a "Cinderella" bull market: "one that will turn out to be an illusion when the clock strikes midnight." The Dow finished yesterday up at up 2.25 percent at 7924.56, its first gain of at least 20 percent since the recession began. "The advance required a mere 13 trading days from March 9's 12-year low, making it the fastest 20 percent rebound from a bear-market low since 1938," according to the Journal.  Still, the Dow is down 44 percent from its 2007 high.

Obama is seeking to hug it out with the nation's biggest bank executives this afternoon at a meeting at the White House, where he will ask for support for his recovery plans, Bloomberg reports. "White House advisers said the meeting will focus on stabilizing financial markets, boosting lending to businesses and consumers, reducing foreclosures and imposing regulatory overhaul rather than specific issues at individual institutions." On the attendee list are: CEOS Vikram Pandit of Citigroup, Jamie Dimon of JPMorgan Chase, and Lloyd Blankfein of Goldman Sachs, in addition to at least 10 other bankers. The meeting will be "a measure of the ties between the government and the banking industry at a time of economic crisis," Lawrence Summers, Obama's top economic adviser, told Bloomberg.

While all may be hunky-dory between Obama and the bankers by this afternoon, Treasury Secretary Tim Geither has his work cut out for him for some time to follow, according to the New York Times. During a hearing yesterday with the House financial service committee, Geithner "fired the opening salvo," with his comment that the system failed in a fundamental way, kicking off what is likely to be a "marathon battle," the article said. Although lawmakers and lobbyists at the hearing "made it sound as if they completely agreed," some industry groups are "already mobilizing to block restrictions they oppose and win new protections they have wanted for years." What those are, the article fails to say.

What is clear, however, is that the Public-Private Investment Program will "drastically tighten" the restrictions on industry, including the "authority to scrutinize and second-guess" the operations of banks, insurance conglomerates, and other financial institutions that are deemed too big to fail, will for the first time boost oversight of hedge funds and private-equity funds, and would allow the government to seize troubled institutions that simply cannot fail. The Times reports that Geithner will unveil more detailed proposals "to set up a new regime for tighter regulation of most segments of the financial services industry" in coming months.

The Washington Post leads its business section with government data released yesterday that indicates the economy shrank even faster than previously thought at the end of last year as job losses continue to mount. "There were, however, some glimmers of hope behind the headline number; the report said that business inventories fell even more than originally thought. That means that if demand for goods rises, factories will have to get cranking again," the WP says. But, it continues, "yesterday's data was evidence that even if those signs of improvement continue, the outlook for American workers is likely to remain bad for many months to come, and the recession is likely to be recorded as one of the most severe since the 1930s."

GDP fell at a 6.3 percent annual rate in the last quarter of 2008, according to the Commerce Department, which had previously estimated a 6.2 percent rate, and another 652,000 people filed for unemployment insurance benefits for the first time last week, the Labor Department said. That number of Americans receiving unemployment continuously rose to an all-time high of 5.6 million.