President Barack Obama welcomed a stronger than expected December unemployment report on Friday and urged Congress to extend a payroll tax cut until the end of 2012 to help the country’s economic recovery maintain momentum.

“We’re making progress. We’re moving in the right direction. And one of the reasons for this is the tax cut for working Americans that we put in place last year,” he said.

“When Congress returns they should extend the middle class tax cut for all of this year, to make sure we keep this recovery going,” he told workers at the Consumer Financial Protection Bureau to welcome its new director, Richard Cordray.

Obama appointed Cordray on Wednesday despite opposition from Republicans in the U.S. Senate.

Data earlier on Friday showed a 200,000 increase in December job creation that beat analyst expectations and helped bring the unemployment level down by a tenth of a percentage point to a still-historically high 8.5 percent.

The numbers are a boost for Obama as he seeks reelection in November. He must convince voters his policies are healing the economy after a savage recession, getting them to believe in a more promising future and forget the harsh recent past.

“We have made real progress. Now is not the time to stop, so I would urge Congress to make sure they stay on top of their jobs, to make sure that everybody else is able to enjoy hopefully an even more robust recovery in 2012,” Obama said.

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The Internal Revenue Service estimates that U.S. companies and individuals failed to pay $385 billion in taxes they owed in 2006, an increase from $290 billion five years earlier.

The agency said the rate of compliance remained almost unchanged at 85.5 percent, down slightly from 86.3 percent in 2001. The IRS announcement today is the first update to the so- called tax gap estimate in five years. The gap grew because the income base expanded between 2001 and 2006, the agency said.

“Despite what seems to be increasing complexity, Americans’ compliance remained steady,” Frank Keith, an IRS spokesman, said in a telephone interview today.

The U.S. recorded a $248.2 billion budget deficit (EHBBUS) in 2006, according to the White House Office of Management and Budget. If the IRS had collected all of the taxes owed that year, the U.S. could have had a surplus of as much as $136.8 billion.

The estimate is a comprehensive measure of the taxes the U.S. is owed and includes income taxes, the estate tax, employment and excise taxes.

The IRS uses computer models to estimate the amount owed by individuals and businesses who don’t pay their taxes or don’t pay their full tax bill. The agency said it is getting better at estimating the tax gap in part because of better data on small corporations.

The biggest chunk of money that goes uncollected — $235 billion — comes from individuals, the IRS said. Of that, $122 billion is estimated to be taxes owed on business income that would be reported on an individual return.

The IRS estimated that $67 billion in corporate income tax wasn’t collected in 2006. Most of that — $48 billion — was from large corporations with more than $10 million in assets, the agency said.

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Democrats are abandoning their demand for a surtax on millionaires to help finance payroll tax cuts in a sign that lawmakers are trying to broker a compromise on Congress’ highest-profile year-end dispute.

Even so, there is no clear path to quick bipartisan agreement on the legislation, which would prevent an automatic Social Security tax increase on 160 million workers and the expiration of jobless benefits for people out of work the longest. Both would occur Jan. 1 without congressional action.

Lawmakers are also embroiled in a squabble over a huge, separate spending bill, a dispute that would force a shutdown of most of the government on Saturday unless it is resolved. Neither party wants to risk the wrath of voters by shuttering government doors.

Republicans say they plan to try winning House approval for a $1 trillion measure financing dozens of agencies through next September.

But that means a conflict with the White House, whose communications director, Dan Pfeiffer, said President Barack Obama had problems with some social, environmental and other provisions in the legislation. Pfeiffer said Congress should approve a short-term bill to keep the government open while final disputes are resolved.

House Republicans officially unveiled the massive, bipartisan spending bill late Wednesday to fulfill transparency rules, but Senate Democrats had yet to officially sign on. However, the measure wasn’t expected to change much, if at all, before a vote Friday, despite White House protests and an explicit veto threat regarding provisions placing limits on the ability of Cuban immigrants to visit families on the island or send money back to them.

The pre-Christmas wrangling caps a contentious year in a capital hindered by divided government, with Democrats controlling the White House and Senate while Republicans run the House. Lawmakers have engaged in down-to-the-wire drama even when performing the most mundane acts of governing, such as keeping agencies functioning and extending federal borrowing authority, tasks that are only becoming more politically delicate as the calendar nears the 2012 election year.

That finger-pointing was reflected Wednesday in some of the back and forth between party leaders.

“My friend is living in a world of non-reality,” Senate Majority Leader Harry Reid, D-Nev., said of Senate Minority Leader Mitch McConnell, R-Ky., who had suggested that Congress quickly complete its spending work. Reid said unresolved disputes made that impossible.

“The House has done its work. It’s time for the Senate to do theirs,” said House Speaker John Boehner, R-Ohio, referring to House approval this week of payroll tax legislation.

That bill drew solid opposition from Democrats and Obama in part because it would force work on the Keystone XL oil pipeline from western Canada to Texas Gulf Coast refineries, which Obama would rather delay. They are also unhappy that the bill is financed by cuts to civilian federal workers, Obama’s health care overhaul bill and other programs that Democrats say would avoid meaningful contributions from the rich.

Senate aides said top Democrats are writing a new version of the payroll tax legislation that would exclude a 1.9 percent surtax on people earning more than $1 million a year, a levy Democrats relied on to pay for their previous payroll tax cut bills. Instead, they said, their new legislation’s savings would include higher fees that government-run Fannie Mae and Freddie Mac would charge to back mortgages and revenue from selling portions of the broadcast spectrum.

Republicans minimized the importance of the Democratic retreat on taxing high-income people.

“I don’t think it’s much of a concession,” said Boehner spokesman Michael Steel. “It never had any chance of passing the Senate, let alone the House.”

In one instance of cooperation, the Senate was expected to give final congressional approval Thursday to a $662 billion defense bill that would allow the administration to prosecute terrorism suspects in the civilian justice system.

The White House had initially issued a veto threat against the bill over language requiring the military to handle some terrorism suspects. An agreement was reached by including a provision ensuring that the role of domestic law enforcement agencies would be unchanged.

The bill, which the House approved Wednesday by 283-136, lays the groundwork for weapons purchases, U.S. military activity overseas and the Energy Department’s national security programs. Reflecting a period of tight budgets and diminishing U.S. involvement in Iraq and Afghanistan, the legislation envisions $27 billion less spending than Obama proposed — money that will be supplied in separate legislation.

Also Wednesday, the Senate rejected rival Republican and Democratic proposals to amend the Constitution to require a balanced federal budget.

On the dispute over the giant spending bill, GOP aides have said that as a backup plan, they might push a short-term bill through the House financing agencies into January if they can’t win enough support for the $1 trillion package.

Passage of the spending bill, by removing the threat of a federal shutdown, would take pressure off House Republicans to continue bargaining on the separate payroll tax legislation.

However, spotlighting the degree of disagreement between the two parties, they are even at odds over whether the $1 trillion measure is a bipartisan compromise or not.

Republicans and at least one Democrat said agreement had been reached earlier in the week. But the White House and Reid said disagreements remain, with Reid citing provisions relating to travel to Cuba and funding for the Commodities Future Trading Commission.

The spending bill would finance the Pentagon and nine other Cabinet-level departments, as well as scores of smaller agencies. It would trim the budgets of the Environmental Protection Agency, foreign aid and Congress itself while providing funds to combat AIDS in Africa, patrol the U.S.-Mexico border, operate national parks and boost veterans’ health care.

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According to a  recent report in the Huffington Post, Illinois ranks in only the eighth position of the top ten highest sales tax States in the United States.  That may come as a surprise to many residents of Cook County and perhaps even more of a surprise to residents of the City of Chicago where the local sales tax rate is 9.25% for general merchandise and can be even higher in restaurants and higher still in restaurants in special taxing zones.

The reason for the surprising eighth position is that the rankings are statewide averages.  If you look at a list of top highest sales tax cities in the United States, Chicago ranks more in keeping with where one would expect it.

Collections of Illinois Sales Tax, Retailers Occupation Tax (ROT), Use Tax (UT), Motor Fuels Tax, Service Use Tax (SUT) and Service Occupation Tax (SOT) are enforced by the Illinois Department of Revenue through Sales Tax Audits and Illinois Department of Revenue Collection Acts which could include Levy of bank accounts, levies on other property, revoke suspend, or hold a business certificate, and revoke a sales tax business certificate.

For more information on Illinois sales tax, the Illinois Department of Revenue, or other tax law concerns, contact the Chicago Tax Lawyers at Horowitz & Weinstein.

TAX LAWYER DIRECTORY

• IRS AUDITS – POST AUDIT LITIGATION
• IRS APPEALS – POST APPEAL LITIGATION
• SALES TAX & USE TAX AUDITS
• FEDERAL REFUND LITIGATION
• TAX COURT PETITIONS
• LITIGATION WITH ILLINOIS DEPARTMENT OF REVENUE

If you are in the need of civil or criminal tax attorney, check out the Tax Attorney Directory for top tax lawyers.

Los Angeles Mayor Antonio Villaraigosa proposed dismantling California’s Proposition 13, which helped begin a nationwide anti-tax movement, in favor of a “grand bargain” that would boost levies on business property.

The Democrat who leads California’s largest city called on Governor Jerry Brown not to shrink from making sweeping changes in state tax laws that Villaraigosa, 58, said could produce as much as $36 billion a year in new revenue.

Villaraigosa urged the removal of Proposition 13’s limits on commercial-property assessments while retaining its cap for homes. The mayor said boosting tax revenue in the most-populous state would shore up the University of California system, promote budget stability and restore public-school funds.

“It’s time to address the unfairness inherent in a system that allows Wall Street hedge-fund managers to devise complex real-estate investment trusts that give the super-rich a free pass on taxes every ordinary homeowner in California has to pay,” Villaraigosa said in a speech at the Sacramento Press Club. “Let’s apply, as an idea, Proposition 13’s protections to homeowners and homeowners alone.”

The 1978 referendum, which allows unlimited reassessments for tax purposes only when property is sold, excludes some commercial transactions in real-estate investment trusts, or REITs, according to the mayor.
Easier Overrides

Lower vote thresholds should apply when local communities seek to raise taxes and fees, Villaraigosa said, calling for passage of such measures by a simple majority, not the two- thirds required now. He also proposed extending the state’s 7.25 percent sales tax to service providers such as lawyers.

Proposition 13, which passed with 65 percent of the vote, inspired similar measures in Massachusetts, New York and New Jersey. It restricts tax assessments to 1 percent of a property’s purchase price, plus annual increases of no more than 2 percent, even if market values rise at a much faster pace.

Before its passage, cities, counties and school districts could set their own rates. In the first year under the law, property tax collections in California fell 52 percent to $4.9 billion from $10.3 billion in 1978, according to state data.

Since it became law, California public schools have fallen from seventh place among states to 27th in per-pupil spending, according to the U.S. Census Bureau, as the law curbed receipts from the biggest traditional source of education money.
Broadly Popular Law

The measure remains broadly popular, said Terry Christensen, who teaches politics at San Jose State University. Only by promising to keep residential property caps can Villaraigosa hope to persuade the public to support his proposal, Christensen said by telephone.

“You’ve heard it referred to as the Third Rail of California politics,” he said. “It’s still a very live rail. There’s a real knee-jerk reaction to any effort to change it. This conversation is going to be a very tough sell for many people.”

Brown, a 73-year-old Democrat who was governor when Proposition 13 passed, hasn’t publicly embraced changes in the measure. Gil Duran, a spokesman, declined to comment on the details of the mayor’s proposals.

“We appreciate the mayor adding his voice to the important debate about the future of California,” Duran said by e-mail.

The Howard Jarvis Taxpayers Association, named after Proposition 13’s late author, opposes exempting businesses from its limits, said Jon Coupal, the group’s president.
Struggling Businesses

“Right now small businesses and large businesses are struggling” in California, Coupal told reporters after Villaraigosa’s speech. “We have an effective unemployment rate above 20 percent. There is a correlation between taxes and the regulatory climate and economic development.”

Increasing taxes on commercial property would hurt small businesses disproportionately, said Rex Hime, president and chief executive officer of the California Business Properties Association, which represents owners and management companies.

“If anything homeowners have had an advantage in this marketplace,” Hime said by telephone. “Home values skyrocketed faster than everything else. Proposition 13 has created a certainty in terms of tax values.”

“Pension funds, insurance companies, retirement plans are invested in commercial property,” Hime said. “To undercut that has a significant economic impact.”

Villaraigosa, in his second term as mayor, also suggested reducing or eliminating levies “that don’t make economic sense.” He proposed credits for companies that hire workers; eliminating the state’s corporation tax, which is as high as 10.84 percent for banks; and studying an 11 percent across-the- board cut in income taxes. Villaraigosa also backed changes in pensions for California’s public employees.

“We can’t do it piecemeal,” he said in an interview after the speech. “We have to be bold.”

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U.S. taxpayers hiding income in undisclosed offshore accounts are running out of time to take advantage of a soon-to-expire opportunity to come forward and get their taxes current with the Internal Revenue Service.

The IRS today reminded taxpayers that the 2011 Offshore Voluntary Disclosure Initiative (OVDI) will expire on Aug. 31, 2011. Taxpayers who come forward voluntarily get a better deal than those who wait for the IRS to find their undisclosed accounts and income. New foreign account reporting requirements are being phased in over the next few years, making it ever tougher to hide income offshore. As importantly, the IRS continues its focus on banks and bankers worldwide that assist U.S. taxpayers with hiding assets overseas.

“The time has come to get back into compliance with the U.S. tax system, because the risks of hiding money offshore keeps going up,” said IRS Commissioner Doug Shulman. “Our goal is to get people back into the system. The second voluntary initiative gives people a fair way to resolve their tax problems.”

The 2011 OVDI was announced on Feb. 8, 2011, and follows the 2009 Offshore Disclosure Program (OVDP). The 2011 initiative offers clear benefits to encourage taxpayers to come forward rather than risk detection by the IRS. Taxpayers hiding assets offshore who do not come forward will face far higher penalties along with potential criminal charges.

For the 2011 initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties in certain narrow circumstances.

Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties. All original and amended tax returns must be filed by the deadline.

The IRS has made available the 2011 OVDI information in eight foreign languages for those taxpayers with undisclosed offshore accounts. The agency took this step to reach taxpayers whose primary language may not be English. These translations include the following languages: Chinese ( Traditional and Simplified), Farsi, German, Hindi, Korean, Russian, Spanish and Vietnamese.

The IRS decision to open a second special disclosure initiative was based on the success of the first program and many more taxpayers coming forward after the program closed on Oct. 15, 2009. The first special disclosure initiative program closed with about 15,000 voluntary disclosures regarding accounts at banks in more than 60 countries. Many taxpayers came in after the first program closed. These taxpayers were deemed eligible to take advantage of the special provisions of the second initiative.

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On August 5, 2011, the IRS published long-awaited guidance for executors of estates of people who died in 2010. Notice 2011-66 explains how these executors can opt out of the estate tax, and Revenue Procedure 2011-41 explains the special tax rules that apply to assets when executors opt out of the estate tax.

The estate tax and the generation-skipping transfer (GST) tax were repealed on January 1, 2010; but on December 17, 2010, President Obama signed a law that reinstated them retroactive to January 1, 2010.

This law gave people who died in 2010 a special tax break: executors of 2010 decedents can opt out of the default estate tax regime. The estate tax rate in 2010 was set at 35% and the exemption was $5 million. The estate tax regime has one benefit: assets received from a decedent are generally stepped-up to fair market value under Internal Revenue Code § 1014.

To remain in the estate tax regime, executors file the form they always filed for taxable estates: Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. On August 1, 2011, the IRS published draft instructions for form 706. These instructions inform that for decedent’s dying after December 31, 2009 and before December 17, 2010, the due date for Form 706 is September 19, 2011.

Executors of 2010 decedents can opt out of the estate tax regime by filing a special form: Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent.

Opting out of the estate tax regime also means opting out of the stepped-up basis rule under IRC § 1014 and opting into the modified carryover basis rule under IRC § 1022.

Carryover basis generally means that assets keep the same basis – the basis in the hands of the decedent “carries over” to the recipient. (Note, however, that when basis is greater than fair market value, the basis in the hands of the recipient is limited to that fair market value.)

IRC § 1022 modifies this carryover basis rule because it allows executors to step-up the basis of some assets. Executors can allocate a $1.3 million step-up in basis to assets passing to any person. Executors can allocate an additional $3 million step-up in basis to assets passing either in trust or outright to a surviving spouse. In Revenue Procedure 2011-41, the IRS provides a safe harbor for making these basis allocations.

The IRS estimates “that 7,000 executors of estates who died in 2010 will make the Section 1022 Election and thus will be required to file Form 8939, and that it will take approximately 8 hours to prepare the documentation.”

The guidance published by the IRS on August 5, 2011 also answers questions that executors and practitioners have about the GST tax in 2010.

In 2010, the GST tax was also repealed. The December 17, 2010 law reinstated this tax retroactive to January 1, 2010.

The new law gave wealthy taxpayers another tremendous tax break. The GST tax exemption in 2010 was set at $5 million. But the GST tax rate was an unbeatable 0%. Wealthy taxpayers had a brief opportunity to take advantage of this 0% tax break.

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Amazon.com Inc. is giving bricks-and-mortar retailers yet another reason to fume.

As the online giant begins its quest to overturn a new California law requiring it to collect sales taxes just like its Main Street competitors, it’s sending signature gatherers to popular shopping areas to obtain the 500,000-plus signatures it needs to get the measure on next June’s ballot.

Petition workers are swarming popular commercial hubs including Larchmont Village in Los Angeles, Colorado Boulevard in Pasadena and the Gaslamp Quarter in San Diego as well as Ralphs, Trader Joe’s, Target and other major retailers — many of which have lost sales to Amazon.

“It’s a particularly clever shot across the bows” of the big-box stores, said Bill Whalen, a research fellow at the Hoover Institution at Stanford University and a former speechwriter for Republican politicians. “It says that not only do we intend to fight you in the court of public opinion but actually we’re going to come onto your front porch.”

Signature gatherers have long been a familiar — if irritating — presence in malls and outside grocery stores and big-box retailers. The law gives these workers generous access to potential voters in commercial centers.

But that Amazon is using the foot traffic generated by conventional stores to fuel an effort to maintain its price advantage over them strikes some retailers as particularly egregious.

Sarah Hrejsa, manager of women’s clothing boutique Hardwear on Larchmont, said a signature gatherer recently entered the store with a petition and pitch defending Amazon’s position. She quickly shooed him on his way.

Collecting sales taxes is “something that we have to do,” she said. “So I don’t understand why [Amazon] can get away with not.”

Retailers nationwide have complained for years that Amazon undercuts them by selling identical merchandise free of state and local sales taxes that can amount to as much as 10% of the sales price.

The online giant has relied on a 1992 U.S. Supreme Court decision that said out-of-state companies were exempt from collecting taxes if they had no presence in the state, such as workers, stores or warehouses. Buyers are still responsible for paying equivalent taxes, but they rarely do.

Now several states have devised strategies to challenge Amazon’s exemption.

California recently passed legislation aimed at requiring the Seattle retailer to collect sales taxes from its Golden State customers because the company had advertising affiliates and related operations here. Amazon so far has refused, choosing instead to take its case to California voters with a proposed referendum that would overturn the California law and preserve its tax-free sales model.

Amazon has hired a top California political campaign consultant, Goddard Claussen West in Sacramento, which brought on National Petition Management, a signature-harvesting firm. Its signature gatherers are independent contractors who typically earn $1 to $2 per name, though some are getting as much as $3, according to Bill Dombrowski, president of the California Retailers Assn., which favors Internet sales tax collection.

As of July 29, Amazon reported contributing $3 million to the More Jobs Not Taxes referendum campaign. Dombrowski predicted the company would spend between $10 million and $20 million on the referendum campaign, which urges voters to repeal the online sales tax collection law.

“They’ve taken every step imaginable to try to avoid complying with law,” Dombrowski said of Amazon. “They appear to be going all out to preserve their business model.”

Bricks-and-mortar retailers and their allies, meanwhile, are defending the law. They’re waging a public relations blitz that’s sending out frequent press releases critical of Amazon as it collects the signatures before a Sept. 27 deadline. But the really big-money battle is yet to come. If the referendum qualifies for the ballot, which many retail industry veterans believe will happen, they’re prepared to spend millions for television, radio and direct mail advertising to counter Amazon.

Meanwhile, early electoral skirmishes are breaking out in places such as Colorado Boulevard in Pasadena. On a recent Saturday, the corridor was packed with shoppers when a signature gatherer made his way through the crowd, waving a petition in the air and repeatedly shouting, “Stop the Amazon tax! Stop online sales tax!”

When approached by a reporter, the signature gatherer refused to give his name, saying he was afraid of getting in trouble. A glance at his petition showed he had collected 10 signatures in about three hours; he said his usual rate was 12 signatures per hour.

Amazon’s political consultants said they expect their referendum to easily qualify for the ballot. Nevertheless, their top referendum specialist, Chip Nielsen, said he’s troubled by a labor-union-sponsored effort to scare registered voters by telling them they could become victims of identity theft if they sign a petition.

A group calling itself Californians Against Identity Theft has been running 60-second radio advertisements in Los Angeles, San Diego and Sacramento, warning about the risk of theft. The State Building & Construction Trades Council of California is listed on legal filings as a sponsor of the group.

The advertising is aimed at thwarting a different proposed initiative, one that would make it harder for labor unions to spend money on political activities. But the effort, said Amazon lawyers, could also affect Amazon’s petition drive.

The California secretary of State’s office is “not aware of any identity theft cases that grew from circulating petitions,” spokeswoman Shannan Velayas said.

Good-government advocates and initiative experts said they were shocked by the effort to deter voters from signing petitions.

“I’m outraged by the idea that you stop people from participating in politics when it’s their government,” said Shaun Bowler, an initiative expert at UC Riverside. “This is such an outrageous claim for them to make.”

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THE SIX-MONTH-long crisis over US debt ended yesterday when President Barack Obama signed into law a Bill raising the debt ceiling by $900 billion, just hours before the US would have defaulted on its $14.3 trillion debt.

There was little enthusiasm for the deal among US congressmen. The Senate nonetheless passed the Bill by a vote of 74 to 26 shortly after noon yesterday. The House of Representatives had endorsed it by 269 to 161 votes on Monday evening.

“Although you may not see it this way, you’ve actually won this debate,” Senator Mitch McConnell, the leading Republican in the upper chamber, told Tea Party conservatives. Alluding to unprecedented legal linkage between government borrowing and spending cuts, Mr McConnell said there was henceforward “a new way of doing business in Washington”.

Speaking for Democrats, Senate majority leader Harry Reid said most Americans “think the arrangement we’ve just done is unfair, because the richest of the rich have contributed nothing”. The Tea Party’s hold on Congress “has been very, very disconcerting”, Mr Reid said.

Before he signed the Bill, Mr Obama reviewed what he called “a long and contentious debate” in remarks in the Rose Garden. The president, who will celebrate his 50th birthday in his home town of Chicago today, appeared to have rebounded with the end of the debt crisis.

In the course of a combative eight-minute speech, Mr Obama defended the debt deal as “an important step to ensuring that as a nation we live within our means” and returned to his insistence – twice abandoned in negotiations with Republicans – that “the wealthiest Americans and biggest corporations pay their fair share”. The US must “get rid of taxpayer subsidies to oil and gas companies, and tax loopholes that help billionaires pay a lower tax rate than teachers and nurses,” he said.

To the consternation of Republicans, Democrats claim tax rises will be “back on the table” in negotiations by a special committee established to carry out provisions in the new Bill.

“We can’t balance the budget on the backs of the very people who have borne the biggest brunt of this recession,” Mr Obama said. “Everyone is going to have to chip in. It’s only fair. That’s the principle I’ll be fighting for during the next phase of this process.”

The next phase will be passage of another “continuing resolution”, or a 2012 budget, when the current resolution expires next month. There is certain to be further debate over government spending before the special committee delivers its findings on November 23rd, and before Congress votes on those findings by December 23rd. Republicans seem determined to monopolise the remainder of Mr Obama’s first term with the issue.

Mr Obama railed again the obsession with spending cuts yesterday, saying “new jobs, higher wages and faster economic growth” were “what the American people care most about”. When Congress returns from its holiday recess in September, he wants it to vote to extend tax cuts to middle class families, prolong unemployment benefits, “cut the red tape” in the patenting process and ratify trade deals with Asia and South America to enable the US to export more goods.

He called for an infrastructure bank to lend money to private companies hiring jobless construction workers “to repair our roads and bridges and airports”. Opinion polls show a hostile response to the debt crisis. Three-quarters of Americans questioned by Washington Post-ABC News pollsters used negative words to describe the debate, the top words being “ridiculous” and “disgusting”. Fifty-two per cent of respondents in a CNN/ORC poll disapproved of the debt-ceiling deal, and 77 per cent said elected officials behaved like “spoiled children”.

Mr Obama seemed to tap into this vein of dissatisfaction when he condemned the “manufactured crisis”. It showed, he said, “that Washington has the ability to focus when … there’s a looming disaster. It shouldn’t take the risk of default – the risk of economic catastrophe – to get folks in this town to work together and do their jobs. Because there’s already a quiet crisis going on in the lives of a lot of families, in a lot of communities, all across the country.”

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