Friday, October 9, 2015

Paying for Highway Programs Through Dividend Cut

The Treasury funds the Federal Reserve's 6% fixed-rates preferred stock dividend payments to member banks. Any reduction of this payment, a reduction in the net transfer of funds from the Treasury to the Fed, would increase Treasury resources to pay for highway programs. In other words, politicians get their money by taxing big banks which the public generally hates.

Of course, there's always unintended consequences. Janet Yellen recently expressed concerns that a backdrop of rising rates, a likely outcome in the coming decades, would reduce membership if dividends were reduced or eliminated.

Headline: Lawmakers Under New Pressure to Find Way to Pay for Highway Programs

Congressional leaders are under new pressure to find a way to pay for highway programs after the collapse of an ambitious House effort to use a business tax overhaul to fund a transportation measure over the long term.

They are also working under a tight timetable. The current highway authorization expires Oct. 29, and the issue is one that House leaders are expected to attempt to address before outgoing House Speaker John Boehner (R., Ohio) leaves on Oct. 30.



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