Congress still has a lot to accomplish in the last weeks of 2011. Unfortunately, last week they didn’t make much of a dent. A cut in payroll taxes passed last year is set to expire, but the Senate  rejected proposals to extend it. Lawmakers are also still negotiating an omnibus spending bill for fiscal year 2012.

A full list of bills and resolutions passed last week are below.

What you paid
Last week taxpayers spent roughly $100 million on Congress.

Salaries of Members of Congress and their allowances/week:

Speaker of the House: $223,500/52 = $4,299
House and Senate Majority and Minority Leaders: ($193,400/52) x 4 = $14,877
Other Representatives and Senators: ($174,000/52) x 530 = $1,773,462

Average weekly budget for all House offices: ($1,446,009/52) x 435 = $2,096,421

Average weekly budget for all Senate offices: ($3,409,093/52) x 100 = $6,555,958

Non-salary money allocated for Congress: $4.656 billion/52 = $89,538,462

What you got
The House voted to pass fours bills or resolutions that cost taxpayers at least $10 million over five years:

H.R. 1633, Farm Dust Regulation Prevention Act of 2011. COST: $10 million over five years

H.R. 1254, Synthetic Drug Control Act. COST: “No significant cost”

H.R. 10, To amend chapter 8 of title 5, United States Code, to provide that major rules of the executive branch shall have no force or effect unless a joint resolution of approval is enacted into law. COST: CBO “could not determine”

H.R. 2471, To amend section 2710 of title 18, United States Code, to clarify that a video tape service provider may obtain a consumers informed, written consent on an ongoing basis and that consent may be obtained through the Internet. COST: $0

In addition to voting down two attempts to debate an extension of the 2010 payroll tax cut, the Senate confirmed Edgardo Ramos to be a U.S. district court judge for the Southern District of New York.

Here’s a roundup of this morning’s must-read budget and economic stories:

The Wall Street Journal says the U.S. government wants Europe to take more aggressive action to get control of its debt problems. The New York Times has more.

According to Politico and The Washington Post, lawmakers are close to reaching a deal on an omnibus spending bill for fiscal year 2012. The New York Times looks at remaining differences.

The Wall Street Journal says the Senate minority leader believes lawmakers will be able to reach an agreement on extending the 2010 payroll tax cut.

Politico discusses when Congress might pass a “doc fix” for Medicare.

On the opinion pages: Chuck Blahous on the payroll tax cut’s impact on Social Security while The New York Times discusses how to cut defense spending.

At the conclusion of a summit held by European leaders this week, it was announced that they had reached a deal to place the euro on firmer ground. 26 of the 27 European Union member countries indicated that they were agreeable to the resolution with Britain as the lone hold out.

Though many leaders showed support for the plan, some countries may encounter parliamentary resistance. According the Associated Press, a document circulating indicated that 9 of the 10 participating countries that don’t use the euro planned to consult their respective parliaments.

Bloomberg reports that the fundamentals of the plan include “add[ing] 200 billion euros ($267 billion) to the war chest and tighten[ing] rules to curb future debts. [It speeds] the start of a 500 billion-euro rescue fund to next year and dilute[s] a demand that bondholders shoulder losses in rescues.”

The deal received mixed reactions from markets. The New York Times noted “Asian markets remained noncommittal, with the Nikkei 225 down about 1.4 percent, about where they were before the news.” Bloomberg reported that “European stocks climbed and the euro strengthened versus the yen and the dollar.”

While the treaty is a sign of progress, with some specifics still unclear, it leaves many immediate concerns unaddressed.

5

“Joe Biden visited Greece last week on the debt crisis. I don’t want to say the vice president doesn’t know much, but he kept asking for John Travolta.” – Jay Leno

4

“I can’t believe Barney Frank is stepping down. I wonder where he’ll tax and spend his retirement years.” – Stephen Colbert

3

“Due to the bad economy, the Queen of England’s salary will be frozen for the next four years. In fact, to make ends meet the queen is thinking of having a yard sale. Getting rid of a lot of stuff they don’t use anymore, like Canada.” – Jay Leno

2

“Congress will have a Secret Santa exchange involving both parties. The Democrats will give Republicans a gift. And that’s it.” – Seth Meyers

1

“After Congress makes Corzine explain how he lost people’s money, they should do the same.” – Andy Borowitz

Here’s a roundup of this morning’s must-read budget and economic stories:

The Associated Press and The Washington Post report that the Senate voted down a Democratic proposal to extend the 2010 payroll tax cut. Bloomberg, Politico and The Wall Street Journal look at what’s coming next in terms of the tax cut.

The Hill’s “Floor Action” blog reports the House passed a bill designed to weed out unnecessary regulations.

The Hill reports some lawmakers want to stop cutbacks at the U.S. Postal Service.

The Associated Press, Bloomberg and The New York Times have the latest on the EU’s efforts to come up with a new plan to tackle the continent’s debt problems.

Today we released an infographic likening costly expiring economic policies to expiring provisions in your refrigerator. (Click here to check it out.)

Most of these policies are high stakes discussions with billions of dollars on the line. To give you a little more context, we put together a fact sheet with some background of each expiring policy. Below is a summary of each one. Click here to view the full version.

FY12 Government Funding
Not only has Congress failed to pass a budget, but they have also passed only three of the 12 annual government spending bills needed to ensure the government remains open. For the nine spending bills that haven’t been signed into law, Congress has passed temporary Continuing Resolutions (CRs). The current CR will expire on December 16.

Medicare’s Payment to Doctors
The 1997 Balanced Budget Act outlined a “sustainable growth rate” (SGR) for Medicare payments to doctors. SGR limited the reimbursement to doctors so “total pay for physicians could not exceed the growth rate of the rest of the economy.” However, SGR hasn’t been implemented as the law scheduled it to be. Congress routinely blocks the SGR formula on a “temporary basis.” If Congress doesn’t act and SGR is allowed to go forward in 2012, payments to doctors for certain Medicare services would fall by nearly 30 percent.

Emergency Unemployment Insurance
Unemployment insurance is distributed jointly by federal and state governments. Before the recession, a person in a state with low unemployment generally could receive unemployment benefits for about 26 weeks. Because of the recession, the 2009 stimulus bill extended this benefit for up to 99 weeks. The amount of time a person can be on unemployment varies from state to state. The emergency benefits created in the stimulus will expire December 31, which would reportedly affect 1.8 million people.

Payroll Tax Holiday
A temporary measure that reduced what employees pay in Social Security taxes will expire at the end of this year. Currently, employees pay two percentage points less in Social Security payroll taxes than what is traditionally paid. If this provision expires, it “…means low-income workers will pay several hundred dollars more than they’re paying now, while high-income workers will pay roughly $2,340 more.” Republican and Democrat leaders in Congress agree this tax holiday should be extended for another year, but they disagree about how to pay for it.

Tax Extenders
Many tax code provisions will also expire at the end of this year. Some of these provisions may not be renewed but many are likely to be, including the research and development tax credit. These expiring provisions generally “…fall into a group of tax deductions, credits and provisions — now known as ‘extenders’ — which Congress has repeatedly renewed, but never makes permanent, simply because it doesn’t want to acknowledge their true costs.”

Alternative Minimum Tax (AMT)
In 1969, Congress created the AMT.  The stated goal of the AMT was to make sure the wealthiest Americans owed some income taxes. In 1967, the Treasury secretary reported 155 people with incomes more than $200,000 owed no income tax because they were able to use tax code deductions and credits to bring their tax liability to zero.

The AMT isn’t indexed for inflation, which means more and more middle class families now fall under the AMT. To limit the impact of the AMT, Congress traditionally passes a “patch.” “Patching” means raising the income level automatically exempt from the AMT, usually for one year or two. For 2011, the AMT exemption for a single person is $48,450.Like tax extenders, the AMT is not permanently addressed because Congress simply doesn’t want to acknowledge its true cost.

Our economy is like your refrigerator. How? If you’re not careful certain important provisions will expire. Fundamentals of most diets like milk and eggs don’t last forever and need replacing every so often. Similarly some costly policies have expiration dates – even those as fundamental as funding the government.

Our latest infographic takes a closer look at these expiring provisions. Click the image below to view.

Want more info? Click here to see our accompanying fact sheet for a rundown of each expiring policy.

According to a study by the Institute on Taxation and Economic Policy, 68 large companies paid no state income taxes in at least one of the last three years. The study further revealed that of the 265 profitable Fortune 500 companies, 20 had a tax rate of zero or less over the last three years. The 265 corporations were subject to a state income tax of 3 percent, half of the average state rate. Bloomberg reports that this has cost “$42.7 billion in forgone revenue to those states in the past three years.”

Reuters notes that Florida has reduced its debt load by $500 million. The state took out $900 million in new debt last fiscal year, but paid off $1.4 billion of it. The state expects to keep chipping away at its obligations as borrowing rates continue to fall and assuming “current spending trends endure.” FL Governor Rick Scott commented, “I don’t want to burden future generations with debt that we should be controlling in our state.”

Add it to the list of consequences of past overspending. Because of budget constraints, states have had to reign in spending on courts. USA Today reports that “twenty-six states have stopped filling judicial vacancies” and “fourteen have reduced hours or closed courts for entire days.” States must work to get their finances in order so that important operations like the justice system can continue to work as its intended to.

According to the latest information, unemployment dropped in most large metropolitan areas. The Associated Press explains that “unemployment rates fell in 281 metro areas, rose in 57 and were unchanged in 34” marking the “largest number of cities to report a drop since April.” The numbers are encouraging, but it’s important to keep in mind that metro area unemployment rates aren’t adjusted for “seasonal variations.”

Here’s a roundup of this morning’s must-read budget and economic stories:

The Congressional Budget Office reveals that the federal government has now run a monthly deficit for 38 months in a row.

The New York Times and Roll Call take a general look at all Congress has yet to get done this year.

Politico says Congressional leaders are close to reaching a deal on a final omnibus spending bill for fiscal year 2012.

Bloomberg, CNN, Politico and The Wall Street Journal have updates on negotiations to extend the payroll tax cut that expires at the end of this year.

USA Today looks at how often “temporary” tax cuts are actually temporary.

Reuters reports the S&P might downgrade the European Union’s debt rating.

Politico - The president's top tech lieutenants work to shield a digital-era sacred cow from the budget ax.

We can all appreciate the efforts states and counties around the country are making to keep us safe. We all can recognize that threats are ever-present and evolving. So you can imagine our relief when we heard that snow cone machines were being employed in the anti-terrorism effort.

Wait. What?

That’s right. According to The Daily News in Michigan, the West Michigan Shoreline Regional Development Commission (WMSRDC) recently purchased 13 snow cone machines at a cost of $11,700. The WMSRDC “is a federal- and state-designated agency responsible for managing and administrating the homeland security program” in 13 Michigan counties. The grant funding the purchase came from the Michigan Homeland Security Program.

The Daily News continues:

The request for a snow cone machine came from another county, but all 13 counties received them.

The Michigan Homeland Security Grant Program’s Allowable Cost Justification document, dated May 9, 2011, says the snow cone machines can make ice to prevent heat-related illnesses during emergencies, treat injuries and provide snow cones as an outreach at promotional events.

WMSRDC Executive Director Sandeep Dey said one county requested a popcorn machine, but that request was denied. He said the snow cone machine request would not have been granted by itself, but was approved because it came with other homeland security equipment.

The amount, frankly, is less than a drop in the bucket when you consider the scope of our problems. But it all comes back to being in the right mindset. That taxpayer resources are scarce and that every spending decision, large or small, should be made carefully and deliberately. If the current mindset of spending now and worrying later continues to be acceptable, we’ll never get out of this mess.

AP - At a meeting with college leaders this week, President Barack Obama was looking for ideas. Amid record budget deficits, can Washington actually do anything to help make American colleges less expensive and more productive?

Here’s a roundup of this morning’s must-read budget and economic stories:

U.S. News & World Report’s blog takes a look at all Congress has yet to do this year.

Bloomberg, The Hill, Politico and The Wall Street Journal say Congress is still working on a compromise to extend expiring tax provisions, including a cut in the payroll tax. NPR explores how the payroll tax cut would affect Social Security’s future.

USA Today reports President Obama is prepared to veto a bill aimed at making it harder to impose regulations.

According to The Wall Street Journal, the Obama Administration is continuing to push Europe to solve its debt problems. Meanwhile, Reuters reports Greece has passed another austerity budget.

Bloomberg says international investors are bullish on the U.S. economy.

On the opinion pages: Clarence Otis, CEO of the company that owns several restaurant chains, says regulations are killing the U.S. economy while Alex Brill argues the payroll tax cut is a bad idea.

Later today, the House of Representatives will seize the opportunity to bring some common sense to the outdated regulatory system in America. It will pass the Regulations from the Executive in Need of Scrutiny Act (REINS Act) and send the Senate yet another bipartisan bill that we should pass and send to President Obama, who should sign it. A veto, which the president has threatened, would send another job-stifling chill through the American economy.

The REINS Act, introduced by Rep. Geoff Davis and Sen. Rand Paul, would require that Congress approve every new “major” rule proposed by the executive branch before it is enforced. A “major rule” is any rule that is determined by the Office of Management and Budget (OMB) to result in an annual effect on the economy of $100 million or more.

Keep reading this post . . .

Alan Reynolds, Wall Street Journal
A recent report from the Congressional Budget Office (CB0) says, "The share of income received by the top 1% grew from about 8% in 1979 to over 17% in 2007."This news caused quite a stir, feeding the left's obsession with inequality. Washington Post columnist Eugene Robinson, for example, said this "jaw-dropping report" shows "why the Occupy Wall Street protests have struck such a nerve." The New York Times opined that the study is "likely to have a major impact on the debate in Congress over the fairness of federal tax and spending policies."

December’s Agenda:
Costly Expiring Policies

Christmas is just around the corner — 2011 is quickly coming to an end, which means many federal policies are set to expire. Congress will have to debate most of these policies in the coming weeks before lawmakers can head home for the holidays.

Renewal, Cancelation, or Deferment?

- Fiscal Year (FY) 2012 Government Funding

- Medicare’s Payment to Doctors

- Emergency Unemployment Insurance

- Payroll Tax Holiday

- Tax Extenders

- Alternative Minimum Tax

FY12 Government Funding

This fiscal year Congress failed to fulfill one of its most basic responsibilities: passing a budget. Not only that, but Congress also failed to complete the annual government spending bills by the start of the current fiscal year (October 1). So far Washington has only passed three[1] of the 12 spending bills needed to ensure the government remains open. For the nine spending bills that haven’t been signed into law, Congress has passed temporary stopgap funding bills, also known as Continuing Resolutions  (CRs). The current CR will expire on December 16[2].

Reports indicate Congress will combine the remaining nine spending bills into one gigantic bill[3] called an “omnibus.”  This bill must be signed into law by December 16 to ensure certain areas of the government remain operational.

Medicare’s Payment to Doctors

In an effort to reduce the budget deficit in 1997 Congress passed the Balanced Budget Act. This law outlined a “sustainable growth rate” (SGR) for Medicare payments to doctors. SGR restricted doctors’ reimbursements for certain Medicare payments. Specifically, the law limited the reimbursement to doctors so “total pay for physicians could not exceed the growth rate of the rest of the economy.”[4]

However, SGR hasn’t been implemented as the law scheduled it to be. Congress routinely blocks the SGR formula on a “temporary basis.” The current block lasts until the end of the year. Why does Congress only enact temporary fixes? Because it “costs” too much to eliminate the SGR on a permanent basis.[5] Last June, the independent Congressional Budget Office estimated that for a ten-year period, it would cost $275 billion to “maintain physician pay at current levels over the next ten years.”[6]

Therefore, Congress prefers blocking SGR on a short-term basis. If Congress doesn’t act and SGR is allowed to go forward in 2012, payments to doctors for certain Medicare services would fall by nearly 30 percent. If this were to happen, many believe that a large amount of doctors would stop seeing Medicare patients altogether.[7]

Last year, Congress passed a bill that addressed this issue for one year.  This measure cost $14.9 billion.[8]

Emergency Unemployment Insurance

Unemployment insurance is distributed jointly by federal and state governments. Before the recession, a person in a state with low unemployment generally could receive unemployment benefits for about 26 weeks. Because of the recession, the 2009 stimulus bill extended this benefit for up to 99 weeks.[9]

The amount of time a person can be on unemployment varies from state to state. The emergency benefits created in the stimulus will expire December 31, which would reportedly affect 1.8 million people.[10]

Last year’s one-year extension of the emergency unemployment benefits cost $56.5 billion[11].

Payroll Tax Holiday

A temporary measure that reduced what employees pay in Social Security taxes will expire at the end of this year. Currently, employees pay two percentage points less in Social Security payroll taxes than what is traditionally paid. If this provision expiries, it “…means low-income workers will pay several hundred dollars more than they’re paying now, while high-income workers will pay roughly $2,340 more[12].” Republican and Democrat leaders in Congress agree this tax holiday should be extended for another year, but they disagree about how to pay for it.

Last year, the payroll tax holiday was not paid for.  The one-year tax holiday cost $111.7 billion.[13]

Tax Extenders

Many tax code provisions will also expire at the end of this year. Some of these provisions may not be renewed but many are likely to be, including the research and development tax credit. These expiring provisions generally “…fall into a group of tax deductions, credits and provisions — now known as ‘extenders’ — which Congress has repeatedly renewed, but never makes permanent, simply because it doesn’t want to acknowledge their true costs.”[14]

Last year, Congress passed tax extenders for two years; however, one of these years was retroactive. Last year’s tax extenders for 2010 and 2011 came at a cost of $55.3 billion.[15]

Alternative Minimum Tax (AMT)

In 1969, Congress created the AMT. To understand the AMT, it’s helpful to view it as an entirely separate federal tax structure. Generally speaking, tax rates and deductions under the AMT are not as generous as those under the regular income tax system.[16] In other words, it is not good news if a taxpayer falls under the AMT.

The stated goal of the AMT was to make sure the wealthiest Americans owed some income taxes. In 1967, the Treasury secretary reported 155 people with incomes more than $200,000 owed no income tax because they were able to use tax code deductions and credits to bring their tax liability to zero.

The AMT isn’t indexed for inflation, which means more and more middle class families now fall under the AMT[17]. To limit the impact of the AMT, Congress traditionally passes a “patch.” “Patching” means raising the income level automatically exempt from the AMT, usually for one year or two.”[18] For 2011, the AMT exemption for a single person is $48,450.Like tax extenders, the AMT is not permanently addressed because Congress simply doesn’t want to acknowledge its true cost.

Last year, Congress passed a two-year patch for the AMT; however, one of these years was retroactive. This AMT patch for 2010 and 2011 was estimated to reduce revenue to the federal government by $136.7 billion[19].

It should be noted that Congress could wait to retroactively address the tax extenders and AMT issues until next year. They’ve done it before. However, “such delays are a pain for a lot of taxpayers. For example, for most of 2010, families subject to, or possibly subject to AMT, were unsure of how much in estimated taxes to pay. Meanwhile, because the Internal Revenue Service’ computers had to be reprogrammed for late changes, 2010 tax refunds were delayed for 6.6 million taxpayers….” Additionally, retroactively changing the tax code caused some public companies to restate their earnings.[20] Some believe that having to retroactively change the tax code creates uncertainty.

It’s a well-known fact that this Congress has had its shares of petty disagreements, hurting its ability to be effective. It seems that nearly every measure brought to the floor spurs partisan attacks and magnifies lawmakers’ unwillingness to work together toward a solution – to whatever problem needs addressing.

So just how unproductive has this Congress been? The Washington Post takes a closer look:

Through Nov. 30, the House had passed 326 bills, the fewest in at least 10 non-election years, according to annual tallies in the Congressional Record. The Senate had approved 368 measures, the fewest since 1995.

By comparison, the House approved 970 bills in 2009 and 1,127 in 2007. The Senate totals for those years were 478 and 621, respectively.

And the White House need not fear an ink shortage — Obama had signed only 62 bills into law through November. The last time there was a new Republican majority in the House and a Democrat in the White House, 1995, President Bill Clinton signed 88 measures.

To be clear, we certainly don’t think Congress should be passing bills just for the sake of passing bills. As an expensive taxpayer funded body, Congress should take their time considering important legislation. However, the point is that our economy faces unprecedented challenges and Congress has thus far been unable to put aside their political interests and formulate solutions.

The supercommittee fell short of even producing a plan for the full Congress to consider. As The Post also points out, “the House has passed only six of 11 regular appropriations bills for fiscal 2012, well behind the usual pace in that chamber. The Senate has moved just two annual stand-alone spending bills…”

Republicans came into power with the intention of stripping down the less impactful proposals that come to the floor. As Eric Cantor (R-VA) wrote, “The goal for this Congress is to stress quality over quantity in terms of the flow of legislation on the House floor. I intend to lengthen the time for consideration of bills in order to improve quality and deliver results. Gone are congratulatory resolutions. Post office namings will be handled on a less frequent basis.”

That sounds great. But we’ll hold our applause until Congress actually does something to reduce our long-term deficit and put Americans back to work.

After the 1929 stock market crash, Wall Street was perceived as being inadequately regulated. As a result of that perception, the administration of Franklin Delano Roosevelt created the Securities and Exchange Commission (S.E.C.). Its purpose was to protect Wall Street investors from the firms that handled their money.

The S.E.C. was created as an independent agency to be free from political control, but that is never entirely the case when Congress controls an agency's budget. The fear of increasing political control of the agency was the subject of an op ed article by Arthur Levitt, Jr. in the New York Times on August 7, 2011. Levitt, chairman of the S.E.C. from 1993 to 2001, pointed out there are bills pending that would micromanage the S.E.C. and that "we are witnessing a pattern of Congress grabbing the steering wheel of an independent agency."

The S.E.C. has been given huge new powers of regulation under landmark legislation passed in July 2010 known as Dodd-Frank, the result of the debacle on Wall Street involving banks and other financial institutions which caused losses in the trillions of dollars to investors. The era will always be joined at the hip with the phrase referring to many of those institutions as "too big to fail." I have done my best to add an additional phrase to the description, "too big to jail."

The New York Times and other media have covered the excesses of the financial institutions involved and the S.E.C.'s efforts to carry out its statutory obligation to pursue those institutions that have culpability generally as a result of fraud committed on investors. The S.E.C.'s authority is limited to civil fraud cases; if criminal fraud is alleged, the S.E.C. must turn the matter over to the Department of Justice for prosecution.

Many critics of the S.E.C. and the Department of Justice have pointed out that no CEO or CFO or members of a board of directors have been charged with criminal fraud for having abused the trust of their investors in the Great Recession. According to Edward Wyatt in the Times of November 30, 2011, when the S.E.C. has pursued a financial institution for civil fraud, as a matter of practice it allows the financial institution to "neither admit nor deny the commission's charges in return for a multimillion dollar fine and a promise not to do it again." The description was that of Judge Jed Rakoff, to whom a settlement entered into with Citigroup requiring a payment by the latter of $285 million was submitted, which he rejected.

The charge against Citigroup reported by Wyatt on November 29, 2011, was:

According to the Securities and Exchange Commission, Citigroup stuffed a $1 billion mortgage fund that it sold to investors in 2007 with securities that it believed would fail so that it could bet against its customers and profit when values declined. The fraud the agency said was in Citigroup's falsely telling investors that an independent party was choosing the portfolio's investments. Citigroup made $160 million from the deal and investors lost $700 million.

Some observers will ask why no restitution was required of Citigroup to protect the investors. The S.E.C. has no power to require restitution, so each investor must sue on his own to recover losses. Further, the S.E.C. is generally limited in its fining authority to the profit made by the securities firm, plus an additional amount for punitive damages.

All these fines go into the U.S. Treasury. The S.E.C. defended its decision to proceed this way -- an agreed settlement -- stating, "S.E.C. officials say they allow these kinds of settlements because it is far less costly than taking deep-pocketed Wall Street firms to court and risking the case," a reference by the S.E.C. to its lack of funding.

James B. Stewart of the Times reported on July 15th how the Congress, "the Republican-controlled Appropriations Committee" which "cut the Securities and Exchange Commission's fiscal 2012 budget request by $222.5 million to $1.19 billion (the same as this year's) even though the S.E.C.'s responsibilities were vastly expanded under the Dodd-Frank Wall Street Reform and Consumer Protection Act."

Stewart went on to point out the Congressional committee's comments on reducing the taxpayers' burden were a charade. The S.E.C.'s entire budget is funded totally by assessing the Wall Street firms. Stewart reported, "cutting the S.E.C.'s budget will have no effect on the budget deficit, won't save taxpayers a dime and could cost the Treasury millions in lost fees and penalties. That's because the S.E.C. isn't financed by tax revenue, but rather by fees levied on those it regulates, which include all the big securities firms."

Now to the ruling of Judge Rakoff, which has caused consternation on Wall Street. A New York Times editorial of November 29 summed it up:

Judge Jed Rakoff is furious. He should be. We all should be. On Monday, the Federal District Court judge rightly rejected a plan by the Securities and Exchange Commission to settle a securities fraud case against Citigroup, saying that the $285 million deal was 'neither fair, nor reasonable, nor adequate, nor in the public interest.' It's not only that the money was not enough, though it certainly seems puny compared with the damage done. The S.E.C. charged that Citigroup had not adequately disclosed to investors its role and interest in creating and selling -- and betting against -- a mortgage-backed investment that was intended to fail. When the investment did, indeed, tank, the bank made $160 million, according to the S.E.C., while investors lost $700 million.

The editorial continued:

It's not even that the S.E.C. only accused Citigroup of negligence, when Judge Rakoff said that his understanding of the matter indicates that a tougher charge of knowing or intentional fraud was probably warranted. Serious as all that is, Judge Rakoff's fundamental concern is that the S.E.C. did not provide any facts for the court to use to vet the settlement. Like most S.E.C. settlements with Wall Street firms, Citigroup was being allowed to settle without admitting or denying wrongdoing.

The S.E.C. and Citigroup will now have to decide whether to appeal or try the case. If another submission for settlement is made to the Judge, it is clear that Citigroup will have to admit guilt. If it admits guilt, it is possible -- I have not seen this discussed elsewhere -- that officers and others with direct responsibility for the alleged fraud could be personally pursued with respect to revoking their licenses to conduct business and perhaps even more.

The culprits here are not only the securities firms that committed fraud, civil or criminal, but the Congress that seeks to protect the industry from appropriate scrutiny by refusing to provide an adequate budget for the S.E.C. which would allow it to properly monitor the industry and sue violators. The Congress -- by its protection of the industry -- is losing fines that would go into the U.S. Treasury if those who brought the U.S. and its citizens to their knees economically by engaging in activities that violated the law were pursued by the S.E.C. Judge Rakoff is a light unto his fellow jurists. Let's hope they follow his lead.

The Chairman of the S.E.C., Mary L. Schapiro, wrote a letter on November 28th to Senator Jack Reed, chair of the Senate Subcommittee on Securities, Insurance and Investment, requesting changes in the law providing the S.E.C. with authority to impose greater monetary penalties for serious violations and for recidivists. Hopefully, her requests will be granted. Based on past performance, I doubt it. The House and Senate have been handmaidens for the Wall Street securities industry, seeking to protect them from any responsibility for the damages they have caused.

Pollsters took the Thanksgiving holiday off so with new public polling a bit sparse last week, we thought we would come up with our own – very unscientific – poll. Let us know what you think!

Members of Congress are looking for ways to reduce the automatic spending cuts that were triggered because of the supercommittee failure.

Congress is contemplating whether to extend the payroll tax cut that expires at the end of this year. Some argue this would harm Social Security.

The U.S. economy is clearly affected by the European debt crisis and the federal government is becoming more involved in planning a solution.

Last week the House passed a bill to end the public financing of presidential campaigns.

Here’s a roundup of this morning’s must-read budget and economic stories:

The Financial Times reports the S&P has put 15 European countries on negative credit watch. The Financial Times also reports France and Germany have reached a new deal on revised fiscal rules for the EU.

According to The Associated Press, The New York Times and The Washington Post, Democrats are scaling back their plan to extend the 2010 payroll tax cut, which expires at the end of this year. Politico takes a look at each party’s plan. The Hill says the two parties are inching closer to a deal. The Wall Street Journal thinks not.

Politico examines cuts to discretionary spending. The Washington Post says Congress hasn’t passed much legislation this year.

CNN Money reports the federal government has spent more than $184 billion on unemployment benefits over the last four years.

The Associated Press and Reuters reveal the U.S. Postal Service’s plan to reduce costs and cut its budget deficit.

Politico asks whether the debt supercommittee will release its documents and notes on proceedings.

Rep. Ron Paul may not be leading in any of the major presidential polls. But he arguably is setting the pace when it comes to the 2012 presidential campaign ads.After unleashing a fiery anti-Newt Gingrich ad in which he accused the former House speaker of "serial hypocrisy," Paul on Monday went up with a catchy new ad in Iowa in which he portrays himself as the real budget cutter.

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Late last month brought the collapse of the supercommittee and a renewed sense of uncertainty over how Washington is going to handle our economic crisis. What they’ll do next is really anyone’s guess. But while our problems go unsolved, some top government officials have turned their attention across the Atlantic.

Vice President Joe Biden is in Greece as a show of support for the country that has been on the front lines of the world’s financial collapse. And while the Vice President may try to make light of the situation, the problems are very serious.

On Friday, Treasury Secretary Timothy Geithner will participate in a major euro zone summit that will attempt to formulate a solution to Europe’s debt crisis. The result of Friday’s meeting will be very significant. In Politico’s Morning Money, James G. Rickards, author of “Currency Wars,” explains: “Geithner will basically be lobbying the Europeans in advance of the summit to do something definitive … and to include ECB monetary ease as part of the mix. Markets should be relatively calm awaiting the Friday outcome, but any sign that Geithner is not making progress or that the summit will fail will result in turmoil and a market sell-off. Friday is the crunch. If a credible Grand Bargain is announced, markets will be relieved.”

With Greece’s problems well documented, much of the focus will be on Italy. With a new prime minister, the country must make a credible attempt to close its budget deficit. If Italy is unable to make progress on a debt plan, Europe’s core economies like France and Germany could be affected by the spreading crisis.

The most concerning part of all this? It’s now becoming increasingly clear that Europe’s struggles are preview of awaits the U.S. economy if we don’t take decisive action. In an op-ed in The Washington Post yesterday, Robert Samuelson makes the argument that at the core of the problems in Europe and the United States is a promise to provide benefits that governments simply can no longer afford to keep. “We Americans fool ourselves if we ignore the parallels between Europe’s problems and our own,” Samuelson writes. “Both economics and demographics have moved adversely….Facing the hard questions of finding a sustainable balance between individual protections and better economic growth, the Europeans have spent years dawdling. The parallel with our situation is all too obvious.”

The House and Senate were back in session last week. It appears lawmakers are looking for ways to cut back on the automatic spending cuts mandated since the supercommittee failed to come up with a deficit reduction plan. Politico reported the House Majority Leader is working on a proposal that would roll back some of the cuts while The Hill said Democrats are trying to find a way around the triggered Medicare cuts.

Additionally, Politico reported Democrats have said they are unwilling to negotiate on reducing spending caps any further than what was set in last summer’s debt ceiling compromise.

A full list of bills and resolutions passed last week are below.

What you paid
Last week taxpayers spent roughly $107.8 million on Congress.

Salaries of Members of Congress and their allowances/week:

Speaker of the House: $223,500/52 = $4,299

House and Senate Majority and Minority Leaders: ($193,400/52) x 4 = $14,877

Other Representatives and Senators: ($174,000/52) x 530 = $1,773,462

Average budget for Members of Congress: ($1,600,000/52) x 535 = $16,461,538

Non-salary money allocated for Congress: $4.656 billion/52 = $89,538,462

What you got
The House voted to pass seven bills or resolutions that cost taxpayers more than $150 million over five years. Also included is a bill that would include $200 million for deficit reduction.

H.R. 3010, Regulatory Accountability Act. COST: $70 million over 5 years

H.R. 527, To amend chapter 6 of title 5, United States Code (commonly known as the Regulatory Flexibility Act), to ensure complete analysis of potential impacts on small entities of rules. COST: $80 million over 5 years

H.R. 3463, To reduce Federal spending and the deficit by terminating taxpayer financing of presidential election campaigns and party conventions and by terminating the Election Assistance Commission. SAVINGS: $200 million in deficit reduction

H.R. 3094, Workforce Democracy and Fairness Act. COST: “No budgetary effect”

H.R. 1801, Risk-Based Security Screening for Members of the Armed Forces Act. COST: Less than $500,000 annually

H.R. 2192, National Guard and Reservist Debt Relief Extension Act. COST: “Insignificant”

H.R. 3012, Fairness for High Skilled Immigrants Act. COST: “Insignificant”

The Senate passed the fiscal year 2012 defense spending bill. The bill authorizes $662 billion for the current fiscal year for defense-related activities. The House has already passed the measure so now it will go to conference committee so House and Senate appropriators can hammer out the differences between their two versions of the bill.

The chamber also confirmed Christopher Droney to be a U.S. Circuit Judge for the Second Circuit and rejected Republican and Democrat plans to extend the payroll tax cut that expires at the end of this year.

Here’s a roundup of this morning’s must-read budget and economic stories:

The Associated Press looks at the budget and tax legislation Congress still has to deal with this year.

The New York Times and The Washington Post say Republicans are split on whether they should support extending the payroll tax cut passed last year and set to expire at the end of this year. Bloomberg, CNN, The New York Times, The Wall Street Journal and The Washington Post report Democrats are preparing a new plan to extend the payroll tax cut.

Will extending the payroll tax cut harm the long-term health of Social Security? According to Bloomberg, some allies of the President say yes. Politico speculates who will “pay for” a payroll tax extension.

Politico says lobbyists are scampering to preserve special tax breaks for their clients.

The Hill reveals Defense Secretary Leon Panetta takes a government plane “home” to California every weekend – and members of Congress don’t blink at the cost.

The Wall Street Journal reports the Obama Administration is poised to become more involved in negotiations about how to solve the European debt crisis.

On the opinion pages: Judd Gregg says it’s time the U.S. gets serious about tackling its debt problems and Robert Samuelson says the U.S. is beginning to look a lot like Europe.