Obama Mexico Trip: Drug War, Trade At Center Of Meetings With Enrique Peña Nieto
Mexican President Enrique Pena Nieto hosts Obama on the first stop of a three-day trip that will also take him to Costa Rica for a summit with Central American leaders, with trade, US immigration reform and the battle against drug cartels high on the agenda.
After almost seven years of bloodshed by drug gangs that has left 70,000 people dead in Mexico, Pena Nieto and Obama have both made clear they want to turn the spotlight back on trade ties and other matters.
"We've spent so much time on security issues between the United States and Mexico that sometimes I think we forget this is a massive trading partner responsible for huge amounts of commerce and huge numbers of jobs on both sides of the border," Obama said on Tuesday.
Twenty years into the North American Free Trade Agreement (NAFTA), also including Canada, Mexico is Washington's third-ranked trade partner, with $500 billion exchanged every year.
Mexico and Washington want to "talk about the benefits and the need to re-balance and diversify the relationship," Sergio Alcocer, Mexico's deputy foreign minister for North America, told AFP.
Before Obama's departure, the United States announced the creation of a bilateral forum on higher education, innovation and research to broaden educational exchanges.
But the relationship has been marked by deep cooperation in the fight against powerful drug cartels that make billions of dollars by feeding cocaine, marijuana and heroin to US addicts.
The United States is providing $1.9 billion in aid, including police training and crime-fighting equipment, to help Mexico fight the drug gangs.
Pena Nieto, who visited Obama in Washington shortly before taking office in December, wants to refocus the drug war on reducing the wave of violence plaguing his country.
While he is keeping troops that were deployed in the streets by his predecessor for now, he has launched a new strategy that includes a crime prevention program and a shift in the way Mexico will work with US law enforcement.
His predecessor, Felipe Calderon, forged unprecedented security ties with Washington by allowing US agencies to deal directly with Mexican counterparts during his six-year administration.
But the new government wants to channel all security matters through a "one-stop window," the powerful interior ministry, which has been tasked with coordinating Mexico's fight against organized crime.
Obama said he was not yet ready to judge how Pena Nieto's strategy would change security relations until he had spoken to him.
"At this point, we're confident that we're going to have a good constructive and effective security relationship with Mexico, and we look forward to hearing from them about how they plan to go forward with it," said Obama's advisor for Latin America, Ricardo Zuniga.
Rights groups want Obama to address the high level of impunity in Mexico, with Reporters Without Borders urging the US leader to commit to helping "restore the rule of law and civil liberties" in a country where 86 journalists have been killed in the past 10 years.
Pena Nieto will hold talks with Obama at the historic National Palace, with tight security around the building famous for its Diego Rivera murals, before hosting a dinner at the Los Pinos presidential residence.
Obama then travels to San Jose on Friday for a summit with Central American leaders before returning to Washington the next day.
With 11 million undocumented migrants living in the United States two thirds of them from Mexico regional leaders will want to discuss Obama's push for comprehensive immigration reform.
ECB cuts interest rate to historic low
The European Central Bank cut its key interest
rate to a historic low and extended unlimited cheap loans to banks to try and
help the flagging European area economy climb out of a stubborn recession -
with ECB President Mario Draghi holding out the prospect more help was on the
way.
The bank's governing council lowered the benchmark refinancing rate
Thursday to 0.50% from 0.75%t and President Mario Draghi left open the
possibility of cutting rates even further.And the bank extended its all-you-want policies on its regular loans to banks. That means lenders can get as much funding as they feel they need at the bank's low rate, through at least July of next year.
Yet Draghi had only a sketchy proposal of how to solve what he and other bank officials say is the real problem: that the bank's low rates aren't being passed on to small and medium-sized companies in heavily indebted countries that could use such stimulus the most.
Draghi said that ECB officials were working with the European Union's executive commission and the European Investment Bank lending agency about creating a market for securities backed by loans to businesses, a step that could free up more money for lending. Small businesses are key because they provide most of the jobs in the eurozone.
Most economists had expected a cut after recent economic indicators gave alarming signs that the ECB's prediction for a recovery by year-end might not be coming true. Draghi stuck with that prediction but said there were risks that "could dampen confidence and delay the recovery."
Draghi only added the bank would "look at all the incoming data, monitor them closely, and stand ready to act if needed"language similar to that which preceded Thursday's cut.
He also warned that governments could derail the recovery if they fail to take steps to right their finances and make their economies more business-friendly, such as by cutting excessive regulation on hiring and firing.
Executive Pay Of Austerity Advocates Saves Companies More Than $1 Billion Via Tax Loophole
The four highest-paid executives at the firms received a total of $6.3 billion in pay over the period, according to the report. Federal tax law allows companies to deduct executive pay based on performance from the firm's tax bill as a business expense. This performance-based compensation includes stock options, stock awards and other types of incentive pay. These 90 companies qualified for tax perks totaling between $1 billion and $1.5 billion over the course of three years, depending on how many types of pay firms actually deducted.
Companies can choose to be more or less aggressive about their tax deductions, and some types of incentive pay exist in a gray area where certain companies choose to claim deductions and others do not. Firms do not make their tax filings public, although they release estimates of overall taxes paid in SEC filings. The IPS-CAF study was based on actual payments to executives that were taxable in the years 2009, 2010 and 2011 that would have qualified for deductions, but whether firms chose to take them is not a matter of public record.
Fix the Debt is one of several austerity advocacy groups tied to Wall Street billionaire Peter Peterson, who started a think tank devoted to deficit reduction in 2008 and has bankrolled multiple public relations campaigns on the issue.
A total of 125 CEOs are officially members of the coalition, including CEOs of 90 public companies. The IPS-CAF report only examined tax perks for public companies in the coalition. The same CEO pay loophole is available to private companies, but private firms do not have to disclose executive pay to the SEC.
The coalition urges a host of spending cuts and tax reforms, including benefit cuts for Social Security, Medicare and Medicaid, as a means to reduce the federal budget deficit. A spokesman for the group told that while the group doesn't advocate for specific policies, it does insist that comprehensive tax reform be part of any debt deal.
"It's a lot easier for groups like this to sit on the sidelines and throw stones than to talk about the 4 million meals that are going to be eliminated for seniors because Congress wouldn't pass a debt deal," Fix the Debt spokesman Jon Romano said. "All of our supporters understand that there is going to be pain associated with a comprehensive debt deal and that people are going to have to give something up to get a debt deal in place. But everything has to be on the table. We're a campaign about fixing the debt. This is not about protecting special interests, this about what's in the best interest of the American people."
The group is currently airing an online video pushing to cut Social Security benefits by using a more conservative measure of inflation to calculate annual cost-of-living increases.
The CEO pay loophole being used by Fix the Debt companies is extremely popular in corporate America. According to a report by Citizens for Tax Justice, Fortune 500 companies skipped out on $11.2 billion in taxes in 2011 alone thanks to this loophole.
"The stock option loophole is a major reason why corporations are paying record-low federal income tax rates," said Matthew Gardner, executive director of the Institute on Taxation and Economic Policy. "The worst of it is that there is no 'cost' to a corporation that uses stock options to pay its executives, so there's no justification for allowing them to deduct it as an expense. It's not an expense."
Sen. Carl Levin (D-Mich.) has introduced legislation that would eliminate the loophole, but the plan is rarely included in deficit reduction talks on Capitol Hill.
The highest-paid executive in the Fix the Debt coalition is UnitedHealth Group CEO Stephen Hemsley, who received $198.9 million from 2009 to 2011, which would have qualified his company for $67.7 million in tax breaks. UnitedHealth declined to comment for this article.
Some of the companies eligible for the biggest tax breaks from CEO pay are run by politically influential executives.
According to the IPS-CAF report, Honeywell could have lowered its tax burden by as much as $21.5 million based on CEO David Cote's $70.1 million in pay from 2009-2011 -- the fifth-highest break among the firms analyzed. Cote serves on Fix the Debt's steering committee, and is also close with President Barack Obama, who named him to the Simpson-Bowles Commission, where he served as the second-ranking Republican. (Alan Simpson and Democrat Erskine Bowles also co-chair Fix the Debt.)
Honeywell is very aggressive about minimizng its tax payments, paying nothing at all in federal income taxes between 2008 and 2010, and receiving $34 million in tax rebates from the federal government during that period.
"Mr. Cote's compensation is aligned with the company's strong growth and reflects our variable, at-risk and long-term compensation plan that’s based on sustainable, profitable growth and stock price appreciation," said Honeywell spokesman Rob Ferris. "Honeywell is in compliance with U.S. tax law for treatment of corporate tax deductions for CEO pay."
President Obama named former Verizon CEO Ivan Seidenberg to his Export Council in 2010. From 2009 and 2011, Verizon qualified for $29.9 million in tax breaks from Seidenberg's $94.2 million in pay, third-highest among the Fix the Debt CEOs. Seidenberg stepped down from Verizon in 2011 but remains a member of Fix the Debt. Verizon declined to comment for this article.
Verizon disputed IPS' methodology and told it only had $32.9 million in deductible CEO pay for Seidenberg during those years, which would have reduced the firm's tax bill by $11.5 million. Verizon said its deductions were the sum of $3 million in salary, $10.4 million in short-term incentive pay and $19.5 million in long-term incentive payments recognized during the years. Verizon did not provide documentation to verify the claims.
"We strongly dispute the IPS findings which are simply inaccurate with respect to Verizon," company spokesman Robert Varettoni told . "We fully comply with tax law, which makes performance-based compensation deductible provided we obtain the requisite shareholder approval."
The IPS-CAF report based its Verizon calculations on a 2012 SEC filing which stated that Seidenberg exercised $20 million in stock options from 2009 - 2011 in 2012 which were tax deductible. Seidenberg cashed in another $30 million in stock options from the period in 2011, and $25 million in 2010. In addition, Seidenberg received $10,434 in non-equity performance compensation, including $3.5 million in 2011, $3.0 million in 2010 and $3.9 million in 2009.
Although the scope of the federal budget deficit has been a major political issue over the past four years, it has faded in recent months as Congress has considered gun legislation and immigration reform.
The deficit itself is also shrinking rapidly. With no policy changes, Goldman Sachs economists expect it to fall from $775 billion in 2013 to $475 billion by the end of 2015 due to economic growth.
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