As global warming as a threat moves closer to reality, one of the more difficult questions facing President Clinton in 1997 is what the nation should be sacrificing now to buffer itself against the global warming threat in the future. With the knowledge that proposing something as modest as a 25-cent-a-gallon gasoline tax for this purpose wouldn't suit the American public with it's penchant for gas-guzzling sports vehicles, prospects for resolution are dim. The two choices of doing nothing or paying $100 to $200 billion a year in higher energy costs (considered costly) presents a dilemma for the White House.

Global warming isn't just a fear, it's a fact. Average global temperatures have risen about one degree Fahrenheit during the past century. Moreover, research suggests there is a strong connection between average temperatures and carbon dioxide in the atmosphere. Over the next century, the carbon dioxide in the atmosphere is projected to double. As a result, the Earth's average temperature probably will rise by two to six degrees Fahrenheit.

Some effects of global warming can be predicted. For instance, the melting of the polar icecaps would put a beachfront property in Florida in danger, and plant life indigenous to certain regions of the U.S. would disappear. Certain soothsayers carry predictions to more drastic extremes. Ross Gelbspan's book The Heat is On , predicts hurricanes, droughts, waves of disease-carrying vermin, a general breakdown of the ecosystem and a general breakdown of other organized systems.

The White House is considering a plan that would reduce carbon-dioxide emissions in the U.S. to 1990 levels by as early as 2010. The efforts to make that happen, White House economists believe, could raise gasoline prices by 25 cents to 50 cents a gallon and electricity bills by 20% to 40%. The total effect would be equivalent to a tax increase of $100 billion to $200 billion a year. Economists argue the cost is too high, given the uncertain benefits. Environmentalists reject cost-benefit analysis as a tool of the oil industry, and dispute cost estimates noting the government's success in reducing sulfur-dioxide emissions at lower-than estimated costs.

President Clinton's primary concern over the issue is regarded as one of posterity. However, Vice President Gore bears greater weight from this since he has built his reputation on environmental issues and can't afford to go into the 2000 election with environmentalists feeling he has betrayed them. At this juncture, President Clinton has committed to stabilizing emissions at 1990 levels by either 2010 or further into the future, but remains vague about the costs. Instead of a tax he will talk about an emissions-trading system but play down the effect of such a system on energy prices.


-- Posted the week of October 14, 1997

Source: The Wall Street Journal The Outlook October 13, 1997 pg. A1


In 1997 as the jobless rate hovers below 5% nationally and sometimes at 3% in some places, the scarcity factor for top talent is getting serious. In an economy with ever-tighter labor markets such as this, some merger and-acquisition deals are being driven for quick access to scarce talent. As start-ups proliferate, executive talent is harder to find. And as the pace of change accelerates and teams become the device of choice for product development, more and more companies may decide to apply the "buy vs. build" concept to "buying" teams of people.

Mostly small high-tech companies are on top of this trend. Some are acquiring bankrupt companies mostly for hard to find engineers and programmers. Some of these buyers are not at all interested in product lines, plants, equipment or real estate, merely human talent.

"Acquisitions are going to be an alternative to normal recruiting that people really haven't considered before," says James O'Donnell, a Coopers & Lybrand partner in Minneapolis." As the economy continues to boom and as talent gets harder and harder to find, it's increasingly important to acquire the talent."

Once the purchase is made, buyers are trying much harder to hang onto the acquired staffers. They see more "golden handcuff" contracts and more lures of lucrative stock options, a big change from years ago when buyers often swept out the former managers and installed their own.

Historically, in fields such as management consulting or temporary staffing, acquisitions have long been done largely for the people. For many merger-and-acquisition specialists though, the question is whether work force driven combinations are likely to spread beyond the chronically labor-short world of high tech and its related fields. Experts respond that teams of specialists are in short supply across a variety of industries and occupations, from mechanics to customer-service representatives to large telemarketing teams.

Despite all these factors, lots of mergers and acquisitions are still driven by geographic expansion, a quest for market dominance, and many are still driven by the opportunity to eliminate duplication, resulting in payroll cuts and lost jobs.



-- Posted the week of October 7, 1997

Source: The Wall Street Journal The Outlook October 6, 1997 pg. A1



In the first major tax reductions since 1981, the White House and Republican leaders in both chambers have agreed to give investors a break on profits from the sale of stocks, bond, property, and most other assets. Under the tax-cut agreement, most investors will pay capital gains taxes at a new 20% rate on assets held for at least 18 months (or one year if the investment was sold after May 6 and before July 29 of this year). That's down from a top rate of 28% under current law. Profits on assets purchased after 2000 that are held at least five years will be taxed at a top rate of 18%.

Investors in the lowest income-tax bracket (singles with taxable income of $24,650 or less, and couples with $41,200 or less) will pay a 10% capital-gains tax, down from 15%. These investors will also get an 8% tax rate for gains on investments held five years or more.

On each $100 in capital gains, a high-income investor will pay as little as $18, less than half the $39.60 he would owe on the same amount of wages, dividends, interest or other income taxed at the top rate on ordinary income. Low-income taxpayers save also. On each $100 in gains, they would pay $8 to $10, compared with $15 on ordinary income.


'97 Tax Agreement Benefits to Investors and Savers

Capital Gains

Lowers top capital-gains tax rate on profits from sale of stocks, bonds and most other investments to 20% from 28%, and creates a new 10% capital-gains tax rate for taxpayers in the 15% tax bracket, effective retroactively to May 7, 1997. Holding period to qualify for capital-gains treatment lengthens to 18 months from 12 months, effective July 29, 1997. Beginning in 2001, a new top rate of 18% takes effect for assets purchased after 2000 and held at least five years. Gains on sale of collectibles continue to be taxed at top rate of 28%.

Home Sales

Exempts from taxation profits up to $500,000 for married couples filing jointly and $250,000 for singles on the sale of a principal residence effective retroactively to May 7, 1997.

Estate Planning

Increases the amount exempt from federal estate taxes by gradually raising the exclusion from estate and gift taxes to $1 million from $600,000 over 10 years. Adds $1.3 million estate-tax exemption for small businesses and family farms, effective January 1, 1998.

Retirement Savings

Creates new individual-retirement account option called the IRA-Plus, contributions are not tax-deductible, but earnings are tax-free after five years, eligibility phases out for upper-income taxpayers ($150,000 to $160,000 for couples; $95,000 to $110,000 for individuals). Gradually raises income limits for those eligible to make tax-deductible contributions to traditional IRAs (to $80,000 from $40,000 for full contribution for couples; to $50,000 from $25,000 for full contribution for singles). Adds penalty-free withdrawals before age 59 1/2 for educational purposes and first-time home purchases.

Education Savings

Creates new-IRA for education to which parents under certain income levels will be able to contribute up to $500 per child. Contributions are not tax-deductible but earnings are tax-free. Money must be withdrawn by the time the child turns 30.



-- Posted the week of August 25, 1997

Source: The Wall Street Journal July 30, 1997 pg. C1



Beginning September 30, 1997 new regulations concerning credit reports goes into effect providing consumers with protection from inaccurate information. As the law already allowed consumers to see their credit reports, it now provides a systematic way for them to get redress over concerns to have inaccurate information removed from their reports under a deadline for credit bureaus to respond.

Under the rules, to be issued by the Federal Trade Commission under legislation passed a year ago, credit bureaus must:

  • Respond to consumer complaints about inaccurate information within days.
  • Provide a toll-free consumer service number, staffed with live personnel.
  • Tell consumers, on request, who has asked for copies of their credit history within the past year.
  • Get the subject's permission before giving a report to an employer, or before releasing a report containing medical information.

The new law also allows consumers to sue not only credit bureaus over false information but also companies that provide the information to the bureaus, such as banks and mortgage companies.

The act governs credit bureaus that sell information about consumers -- where they live and work, how they pay their bills, and whether they have been sued, arrested or filed for bankruptcy -- and those who furnish that data.



-- Posted the week of October 1, 1997

Source: The Wall Street Journal September 29, 1997 pg. B2


The U.S. Small Business Administration and the Department of Agriculture installed a program in 1997 that will guarantee hundreds of millions of dollars worth of small-business loans in 35 specially selected areas where Nafta has led to job losses. When Nafta was signed in 1994, the U.S. Government set aside $22.5 million for this loan program. The loans, spread over 19 states, are designed to create new jobs. The areas affected will include cities such as Syracuse, N.Y., and small towns such as Hawkins, Wis.

The North American Development Bank, an international financial institution jointly capitalized and governed by the U.S. And Mexico, will coordinate the program. Small businesses also can apply for loans directly from NADBank.

To get their loans through the SBA, small businesses must meet the standards of the SBA's conventional 7(a) loan-guarantee program designed for small businesses that cannot receive credit through normal channels. The small businesses also must prove that they will create or retain one job for every $35,000 of the total loan amount.

Companies in the affected areas could also receive their loans through the Department of Agriculture's Business and Industrial loan-guarantee program. It mainly guarantees loans in rural areas.



-- Posted the week of August 11, 1997

Source: The Wall Street Journal August 7, 1997 pg. B2