Reverse Spin: Veep comes through on tax cut vote

So the vice president really is alive!

Dick Cheney cast the tie-breaking vote in the Senate on Friday morning to pass the $350 billion tax cut bill. The final tally was 51 to 50.

Passage in the Senate follows a similar House vote, and the bill now goes to President Bush, who has said he will sign it into law. The tax cut package is less than half of what Mr. Bush initially requested.

Among other things, the bill temporarily cuts some individual taxes on dividends, reduces some marginal tax rates, expands child tax credits and gives $20 billion in aid to ailing state governments.

“This is a great victory for the American people,” Senate Majority Leader Bill Frist, R-Tenn., reportedly said.

Cheery Fed head

* Just call him Pollyanna.

In his semiannual remarks to Congress on Wednesday, Federal Reserve Board Chairman Alan Greenspan reiterated his belief that the economy is headed toward better times.

He added, however, that there is a teensy-weensy risk of deflation.

The economy “continues to be buffeted by strong crosscurrents,” he said. “Looking ahead, the consensus expectation for a pickup in economic activity is not unreasonable, though the timing and extent of that improvement continue to be uncertain.”

Mr. Greenspan called the threat of deflation “minor” but said the Fed is monitoring the possibility very closely and will act if it has to.

Court butts in

* Put that in your pipe and smoke it.

Tobacco stocks rallied last week, following a legal victory Wednesday, when a Florida appeals court threw out a $145 billion judgment against the five largest U.S. companies in the industry.

The original award, made in 2000, was the largest damage award in U.S. history. It had held the tobacco firms liable for the illnesses of 700,000 smokers.

The eagle eye

* The mutual fund industry just can’t catch a break.

On Thursday, the Securities and Exchange Commission said it is examining the way brokerage firms sell mutual funds to investors.

“We are engaged in a fact-finding inquiry into how broker-dealers distribute mutual fund shares,” Paul Roye, director of the SEC’s division of investment management, told Reuters.

At a congressional hearing on hedge funds, SEC chairman William H. Donaldson said the commission is concerned about “special incentives” for broker-dealers to sell certain mutual fund shares.

Not enough information about these incentives is disclosed, Mr. Donaldson said.

The industry has been under lawmakers’ and regulators’ microscopes recently, amid the three-year down market and the recent scandals on Wall Street.

At a standstill

* The eagerly anticipated economic recovery is still proving elusive.

On Thursday, the Department of Labor said another 428,000 Americans filed for unemployment benefits in the week ended May 17. That’s up from the 421,000 jobless claims filed the previous week.

And just in case you hadn’t already surmised this, “the number shows the labor market is still quite weak,” Drew Matus, an economist for Lehman Brothers Inc. of New York, told Reuters.

The weekly unemployment claims reading hasn’t dipped below 400,000 since mid-February. Some economists see the 400,000 level as a benchmark for labor market weakness.

Closing Quote

“I’m prone to putting my foot in my mouth, and that’s part of the job.”

– Bill Gross, chief investment officer of Pacific Investment Management Co., on his willingness to make straightforward recommendations despite the risk of having to eat crow. Page 24