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Don McNay: Credit Cards May Not Be So Bad, After All

by Don McNay on January 19, 2012

Huffington Post…

Because these things will change, can you feel it now? — Taylor Swift In my book, Wealth Without Wall Street , and in my newspaper column I’ve had one constant mantra. Credit cards are evil. They are issued predominantly by “too big to fail” Wall Street banks. Some cards charge outrageous rates of interest and seem to have fees hidden everywhere. I’ve watched tons of people, especially college students and young people, get in serious trouble with them. I went over a decade without a credit card. I’ve proven you can live without them. I’ve bought a nice house, rented cars, traveled extensively and knocked down every argument about why a credit card is somehow necessary in American life. I’ve made my point. Now I am saying that some people, especially small business owners, might want to think about getting a card and using it wisely. Why the change? Have I morphed into Mitt Romney and started flip flopping based on opinion polls? It’s a little more complicated. I keep running into people who handle a credit card responsibly. They pay them off every month. They move their money to cards with zero interest rates or do things that make cards financially advantageous. In the words of the people at Budweiser, they know when to say when. If they can handle a card, maybe some of us can, too. I remain a staunch advocate of moving your money from a “too big to fail” Wall Street bank to a bank or credit union in your community. It will be a cold day in hell before you see me flashing a Bank of America or Citigroup credit card. The companies did a lot of things wrong, were bailed out by taxpayers when they should have been allowed to fail, and continue to look for ways to stick it to the consumers. The recent example of Bank of America trying to charge a five dollar a month fee for using a debit card is an example of why Wall Street banks are completely out of touch with Main Street. Don’t send them your money or use their products. Many local banks and credit unions offer credit cards with low interest and good terms. If someone wants a credit card, those are the places to start. At one point, I followed the model of radio commentator Dave Ramsey and Larry Burkett (a Christian financial writer who was a big influence on Ramsey) and took all debt all out of my life. Then I bought a house two years ago. I planned on buying a house that I would pay for in cash. A friend, who is a financial genius, explained to me how locking into a long term, low interest rate mortgage made sense. I made a good down payment and bought a house I could afford. I got a good deal on the house because previous owners had to sell quickly. Mortgages aren’t bad. Buying a house you can’t afford is the problem. With rates below four percent, anyone who can get a long term mortgage ought to be thinking about it. Also, it is a great time to refinance your home, if you qualify. It ought to be a great time for a small business to get a loan. Banks are flush with deposits. Unfortunately, they aren’t giving the money to small businesses. I hear horror story after horror story about how solid businesses, with solid track records, can’t get a loan at all, or the terms are absolutely draconian. I have a friend in the construction business. No one is throwing money at anyone in construction but he has survived and is doing well. When contractors are slow in getting him money, he has turned to running up his credit cards to make payroll. He doesn’t use the cards to go to fancy restaurants or take the family to Disney World. He uses them to keep the doors open and stay in business for another day. As soon as he gets paid, he immediately pays the cards off and they remain his “rainy day fund.” As I noted in my Wealth Without Wall Street book, I’ve been down on credit cards since I didn’t handle them well in my youth. I got seriously in debt and took several years to get out. That experience led me to my hard core stance against credit that I’ve kept for over 20 years. I’ve gotten hundreds of people to cut up their cards. I’m thrilled that they do. For me to “allow” people to use credit, even in a limited manner, is like when Nixon went to China or when Rod Stewart started doing disco albums, it goes against all my previous history. On the other hand, like Nixon made the trip to China, I see the big picture. The occasional use of credit might be advantageous. Although I open the door slightly on credit cards, I caution, again, with the words of Spuds MacKenzie, the Budweiser mascot from the late 1980′s. “Know when to say when.” Don McNay, CLU, ChFC, MSFS, CSSC is the bestselling author of the book Wealth Without Wall Street: McNay, who lives in Richmond Kentucky, an award-winning financial columnist and Huffington Post Contributor. You can learn more about him at www.donmcnay.com He is the Chairman of the Board for the McNay Settlement Group (www.mcnay.com) which provides structured settlement consulting for injury victims, lottery winners, and the families of special needs children. McNay founded Kentucky Guardianship Administrators LLC, which assists attorneys in as conservators and setting up guardianship’s. It is nationally recognized as an administrator of Qualified Settlement (468b) funds.

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Don McNay: Credit Cards May Not Be So Bad, After All

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Liz Ryan: Welcome to the Antique Shop Part Three: Will Granular Work Replace the Full-time Work Week?

by Liz Ryan on January 3, 2012

Huffington Post…

For ever, or at least as long as there have been Human Resources departments, employers have shipped talent (or at least manpower) into their factories and offices in one uniform container. That container is called the Forty-Hour Work Week, although it hasn’t been anywhere near as small as 40 hours a week in decades. That’s what employers love about full-time workers, of course, and the reason most of them are so reluctant to mess around with part-timers and job-sharers. They like the fact that the full-time worker container is almost infinitely elastic. You can stretch it. You can load people up with work and use the big stick to keep them in fear, and get sixty or seventy hours of work out of them every week. You can hire them as ‘permanent’ employees to pay them less than contractors, and lay them off at any moment. You don’t want to get me started on the harm this new paradigm has done, not only to individuals and their families but to the mental and physical health of working people and to the health of organizations, because that’s a topic for another column. Let’s just say that the full-time worker frame is very well established. We know how it works. You have a full-time job, and the job owns you. The threat of dismissal keeps you in fear and convinces you that your job is to please your boss at all times. If your social life, your health and your sanity suffer in the process, that’s just the breaks. At the same time that we’re groveling and panicked, we’re cynical. We can see that what HR people call the Old Social Contract lies in tatters. The corporate ladder is sawdust at our feet. We know that we’re not going to retire from wherever we’re working now, unless we’re collecting Medicare already. An HR friend of mine was leading a Monday-morning orientation session for new employees, and when she got to the point where she said “We’re going to talk about the retirement plan now” the group of newcomers burst out laughing. They thought it was hysterical. Oh please, they told her, do we really have to sit through that? If the idea of long-term employment with the same firm, or the notion that full-time employment has some connotation of stability or fixedness about it, are history — and they are — can the concept of a full-time, salaried work unit survive? I don’t see how. Employers are going to start paying for what they need, and letting the non-essential stuff go by the wayside. For every full-time job that an employer can wring sixty hours out of, there’s another full-time job somewhere in the organization where hours and hours are spent on work that has no point and no value to the employer or its clients. Now we have crowdsourcing, and employers are starting to be able to find vendors to complete critical projects without adding overhead or headcount (or office expenses or real estate taxes or carbon footprint or energy costs). We tend to think that when lots of people are available to perform work, prices must fall, but needs can be incredibly specific. I did a consulting project one time for a boutique strategy consulting firm, and it was a last-minute thing. This was in 1997, and the CEO needed me and the guru strategy guy to interview a bunch of his top execs within a few days and give him some insights back. The strategy guru told me to name my ‘inconvenience price.’ I didn’t have a number — I’d never had a project like that. I quoted him what felt like a sky-high rate: thirty-five hundred dollars a day for four days of work. He said “That’s fine.” After the project was done, I asked the guru “Did you mark up my rate the way you do for the associates?” He said “I charged the client twelve five a day for you.” He marked up my rate by nine thousand a day, and you know what? That’s fine with me. I love that he did that. He deserved that markup, because he knew he could deliver and he knew what his project was worth to the client. Welcome to the antique shop. Crowdsourcing lets companies piece out work to people who can do it on the buyer’s schedule and to the buyer’s specifications, and to learn what works for them and which providers work the way they like to work. I’m trying to see the evil in it, and I’m failing. We have a company here in Boulder that manages SEO optimization on a crowdsourced basis. The company is called Trada, and they put companies together with SEO optimizers who take on projects that make sense for them. There are something like 2000 ‘optimizers’ who work on Trada-enabled PPC and Facebook campaigns. Here’s what I see: 2000 people who are working when they want at rates and under conditions that work for them. That seems like a good thing, to me. What’s interesting too is that Trada is a company that values its employees like we used to do at U.S. Robotics — they tell them “We care about what you get done, not when you come in and when you leave.” If you were doing SEO optimization professionally, wouldn’t you want to work for a bunch of different clients, rather than being stuck with one management team (whose appetite for SEO innovation might wax and ebb over time) or one crazy boss, or one anything? Wouldn’t you want to hone your craft working on multiple projects over time? Sometimes, I talk to corporate people who say “Man, I’m glad I’m not a consultant. Too hard to drum up business all the time!” I worry about people who say that. Anybody who doesn’t know what s/he brings to the marketplace, who needs it, and what it’s worth is in trouble, if you ask me. (Welcome to the antique shop.) Any kind of work that can be done in a more granular way than the way it’s done now is ripe for crowdsourcing. That means legal work, administrative work, HR work, and tons of other things. You’re not going to crowdsource the installation of snow tires on your Jeep, but you can crowdsource almost anything that can be done in an office, and I’m sure there are folks already working on granularizing all kinds of work apart from SEO optimization. For a lot of different reasons, I like the trend, but because I acknowledge that it’s also likely to be massively disruptive to employers and to working people, I feel I should tell you why. For starters, I hate the container called full-time work; it’s not fair to employees. Companies use power and fear and guilt to get people to spend way too many hours and brain cells on jobs that don’t actually value or deserve them. I see crowdsourced work or granular work more generally as a way to re-balance the employer/employee equation. When you only get to take one full-time job and then you’re stuck with it for some period of time, you’re tying up your brand and your value with the employer’s brand, and that’s not always to your advantage. We need to manage our own brands, our own credibility and our own learning. No employer is ever going to value your career or your mojo as much as you do. I think it’s embarrassing and ridiculous that we still walk into big office boxes at eight-thirty in the morning and walk out of them at five or six or seven in the evening, believing that although we think all the time and have ideas all the time, the only time that ‘counts’ as work time is the time we spend in the box. That’s goofy. One hundred years from now, anthropologist/historians are going to look back and ask “What the heck was wrong with those people?” We know we don’t need the box. It’s fear that keeps managers keeping people in the box, and crowdsourcing has the potential to loosen that stupid, outdated leash . When I started to speak and write and consult on my own, I had to find my voice and find my value. Frankly, I couldn’t make a dime as a consultant doing the stuff I used to do as a corporate HR VP. The message to me, a decade later, is that there’s not a lot of value (to an employer or to its employees or shareholders or customers) in much, perhaps most, of what happens in corporate America on any given day. If we could separate the political posturing and wrangling and CYA garbage from the actual work and quantify it, the lost time and energy would be huge — incalculable. We know this, but we don’t acknowledge it, much less dig in to solve it. Crowdsourcing says “Work has value, and we’re going to pay what the market demands.” People who work as crowdsourced SEO optimizers don’t have to do corporate toady things because no one cares, and no one is paying them to. Now that I work for people who actually need what I can do for them, I’m closer to the need and to the market. Crowdsourcing helps you get there. The danger of being a corporate person is that you lose touch with the actual value of your work. That’s why so many of my clients are laid-off corporate people who say “I worked on several large cross-functional initiatives related to assimilating pan-divisional processes” while I scratch my head. That’s a dangerous way to live. What good does your work do? What pain does it solve? People whose work is granular always know those answers. Crowdsourcing is happening and it’s inevitable, but I think the shift to granular work deserves a higher-level perspective than “We’d better figure this out, since it’s coming whether we like it or not.” I think that getting comfortable with a mix of ‘regular’ old-fashioned staff people and crowdsourced workers builds muscles that every employer and every team needs to build. I think that losing our reliance on the phalanx of employees walking into the box at a certain hour and walking out one minute after the boss departs can only be a good thing. I think teaching people and enabling them and then ultimately requiring them to name their price can only be a good thing, for everyone.

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Soda Exec Sentenced To 15 Years In Prison For Massive Accounting Fraud

January 3, 2012

PITTSBURGH — The former chief revenue officer of defunct soft drink maker Le-Nature’s has been sentenced to 15 years in federal prison for his role in a massive accounting fraud. The sentence received Tuesday by Robert Lynn of Ligonier is second to that imposed earlier this year on former chief executive Gregory Podlucky who is serving 20 years in prison. Federal prosecutors contend that Podlucky, Lynn and other company officials overstated the company’s revenues in order to fraudulently receive more than $800 million in financing, which led to a loss of nearly $684 million to lenders, vendors and investors. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below. An accounting director-turned-government witness has been sentenced to five years in federal prison and five years on federal probation for creating fake financial records that fooled auditors of defunct Pennsylvania soft drink maker Le-Nature’s. Tammy Jo Andreycak, 44, asked for probation or house arrest because she has been cooperating with investigators since even before she pleaded guilty in April 2008 to wire fraud, bank fraud, conspiracy and filing a false tax return as part of fudging accounting records at the behest of former chief executive and company founder Gregory Podlucky. Podlucky pleaded guilty and is serving 20 years in prison for the scheme, which cost lenders and vendors about $684 million. Prosecutors contend Podlucky obtained $800 million in financing by fraudulently overstating the company’s revenues but spent much of the money on a lavish lifestyle while the company foundered, with sales a fraction of what he ordered Andreycak to report. She had faced between 12 and nearly 16 years in prison. Senior U.S. District Judge Alan Bloch said that, while he agreed that Andreycak deserved a break on her sentence, he disagreed with her defense attorney, who had hoped that she would receive only probation. “She was not a knave, low-level employee simply following orders she didn’t understand,” Bloch said. Rather, Block said, she was “one of only two people aware of the magnitude of the fraud,” referring also to Podlucky. Andreycak’s mother and son, who appeared to be in his late teens, were not initially in the courtroom, but were brought in after she was sentenced and handcuffed by U.S. marshals to say a brief farewell. They did not comment, but cried as they left the courtroom. “We are disappointed by the sentence, and it’s not what we expected,” defense attorney Edward Bilik said. “I think everybody in the courtroom was surprised.” Assistant U.S. Attorney James Garrett didn’t recommend a specific sentence, but stressed to the judge how crucial Andreycak’s cooperation was to his case. “She has worked diligently to try to set things right to the best of her ability,” Garrett said. He also said that, unlike Podlucky and some other company officials convicted in the scheme, Andreycak “did not do anything on her own initiative.” Bilik, who had asked the judge not to incarcerate his client, was asked afterward if he thought she did not get enough credit for her cooperation. “I think she received too much credit for what the CEO did,” Bilik responded. In a sentencing memorandum, Bilik described Andreycak as a single mother with a high school education and a secretarial certificate from a business school, with no accounting background, and as someone whom Podlucky called his “secretary” despite listing her as the company’s director of accounting. Among other things, Andreycak acknowledged inflating the company’s 2005 gross sales to $287 million – about $247 million of which were based on phony invoices and bank deposits, to defraud lenders. Andreycak reportedly used a computer program developed by Podlucky to keep two sets of books and “honestly believed the company would expand to profitability,” according to the memorandum filed by her attorney, Edward Bilik. When Andreycak learned otherwise as the company was forced into bankruptcy in 2006, she told a bankruptcy trustee everything she knew about the fraud. She continued to provide similar information to federal prosecutors, which is why Bilik has asked the court to consider probation or some form of home confinement, instead of federal prison. Also to be sentenced later Tuesday is Robert Lynn, former president of Le-Nature’s. Lynn, of Ligonier, was convicted of 10 counts of bank fraud, wire fraud and conspiracy in July despite claiming that he also was fooled by Podlucky and wasn’t part of the scheme.

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Occupy Protesters Disrupt Ron Paul Event

December 29, 2011

DES MOINES, Iowa — Some 20 protesters interrupted the start of a Ron Paul event at the Iowa State Fairgrounds just as the GOP candidate and Texas Representative began to speak, at about 7:30 p.m. local time. Three protesters, a man in his 20s and a pair of women — Heather Ryan, 39, and her 16-year-old daughter, Heaven — shouted from a prepared script. Their words were drowned out by the crowd of about 750, some of whom menacingly surrounded the protesters and then hustled them out. As the younger woman was being rushed out of the auditorium, this reporter asked her for her script. She handed it over with a wan smile. Here is what she had shouted: “Ron Paul You say you want to repeal Roe v Wade. What makes you think the state has the right to control a woman’s reproductive decisions? You say you want every child to have a chance to live. How will those children eat when you eliminate essential programs like WIC and food assistance? Where will those children live when you eliminate subsidized housing? How will those children receive healthcare when you eliminate Medicaid? How will those children get an education when you eliminate student aid? Mr. Paul, you do not care about the children of the 99 percent. You do not care about the rights of women. You are a servant of the Patriarchy. You are a servant of the 1 percent.”

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Occupy Protesters Successfully Save Retired Woman’s Home

December 8, 2011

Gloria Takla had just eight days before the bank was going to evict her from her home. But this afternoon, about 30 Occupy Redwood City, Occupy San Jose and other Bay Area residents marched from Takla’s foreclosed home to the Chase Bank across Courthouse Square to demand that the banks extend her loan. After an hour-long negotiation during which protesters occupied the bank’s interior, the bank agreed to extend the loan expiration from Dec. 14 to Feb. 14, 2012, a loan she first took in February 2010.

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Unemployment Extension: ‘What Are They Waiting On?’

December 8, 2011

Kim Bullock of Las Vegas, Nev., said she lost her job with a telecom company almost exactly one year ago after her employer went bankrupt. Now she’s worried her unemployment insurance will run out before she finds a new job. Bullock said her yearlong search for work has resulted in several interviews, but no offers. “It’s just crazy because it seems like you have to put in 50 or 60 resumes just to get one callback, and then you’re competing with hundreds of other applicants,” Bullock said. She’s one of 6 million whose federal unemployment compensation would be cut short next year if Congress doesn’t reauthorize the benefits. And Bullock is one of several dozen jobless who’ve written HuffPost in the past week to say they are anxiously watching lawmakers for signs of a deal. Unfortunately for those people, instead of an agreement, on Thursday it seemed Congress was headed for a holiday showdown. While Democrats want a renewal of the benefits without strings attached, House Republicans are crafting a proposal that will reauthorize federal benefits programs and simultaneously slash benefits. Rep. Sander Levin (D-Mich.), the top Democrat on the House committee that oversees jobless benefits, sharply criticized the nascent proposal. “While we don’t have all the details, in this case the devil is made plain in the general outlines of the Republican proposal,” Levin said in a statement. “The plan Republicans presented this morning would slash federal unemployment insurance by more than half, cutting by 40 weeks Americans’ eligibility for assistance — even as we continue to emerge from the worst recession in 80 years. Also very concerning are indications that Republicans may propose undermining access to regular state unemployment benefits in the future.” Spokesmen for key Republicans in the House declined to provide details to HuffPost, but CNN reported the benefits would be part of a package that includes both a continuation of a payroll tax cut that has provided an average of $1,000 for every working American this year and a so-called “doc fix” to prevent a 27 percent pay cut to doctors who treat Medicare patients. The measure would be paid for with a federal salary freeze, and it would also speed construction of the Keyston XL pipeline — provisions Democrats oppose. The GOP’s plan would shorten the maximum duration workers can receive federal unemployment benefits from 73 weeks to 33 weeks, CNN reported. Federal jobless benefits kick in for people who don’t find work before running out of state aid, which typically lasts 26 weeks. Part of that reduction presumably would come from allowing the federal “Extended Benefits” program — which supplies the final 20 weeks of aid for workers in states with high unemployment rates — to phase out in 2012, which will happen anyway unless Congress proactively changes federal law to allow states to remain eligible. The Republican plan could achieve further reductions by incorporating legislation passed by a House committee earlier this year that would allow states to redirect federal jobless funds from benefits to paying down state debt to the federal government. Also, according to reports, the GOP bill would allow states to drug test the jobless. Rep. Jack Kingston (R-Ga.) introduced standalone legislation to do just that , though evidence of a drug epidemic among the jobless is hard to find. Most jobless would be eligible for more weeks of benefits under the GOP proposal than with no bill at all, though it was unclear how the new scheme would treat workers who’ve already used up a portion of their federal compensation. Kim Bullock said she’s received $398 per week since she lost her billing job with the telecom company last December. She said she’s got four kids whose ages range from five to 16, and that if she can’t find work before running out of unemployment, another family member will have to absorb her household. She worries she’d have to transfer her kids to a new school system. Already, she said, she’s holding back on even a small amount of Christmas shopping because of the uncertainty. “If I lose my unemployment there’s no way I’ll be able to make it,” she said. “What are they waiting on? Why do we have to wait in distress?”

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What Do Employees Think Of Corporate Sustainability?

December 8, 2011

Do employees support and engage with corporate sustainability strategies? According to a new report, it depends. Brighter Planet, an organization which uses “hard numbers and raw data” to explore opportunities and trends in sustainability , has released the results of its second biennial survey on employee engagement with sustainability, and discovered several important trends. Brighter Planet states that since 2009, they have found that corporate sustainability programs are ” becoming less effective as they spread .” Their results suggest that “employee weariness at ineffective sustainability initiatives could undermine promising progress.” Additionally, they found that the most effective companies are those that promote a breadth of sustainability programs, especially in “emerging green issues like procurement, water use, and business travel,” and companies that make a point of collecting data on “their footprint, the impact of staff travel and commuting, and employee sustainability efforts.” The organization writes that its survey includes responses from almost 1,000 individuals in 47 states and 51 countries , including employees from “WalMart, Visa, UPS, Coca-Cola, Exxon, McDonalds, the U.S. Government, and many other leading organizations.” If you’re weary of companies that may be “greenwashing,” check out HuffPost blogger Candice Batista’s list of resources for sifting through companies’ environmental claims. Click here to view advertisements from companies that may have less than sustainable intentions. To read Brighter Planet’s full report on employee sustainability engagement, click here .

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‘Tax The Poor’ Becomes Conservative Rallying Cry

October 30, 2011

WASHINGTON — The nation’s ongoing economic downturn has sparked an odd response from a growing number of conservative and Republican leaders: a desire to blame the unfortunate and a demand for the poor to pay more. With the economy in its deepest crater since the Great Depression and the GOP pushed by the aggressively anti-tax Tea Party, the call to have the middle and working classes help the rich has reached levels not heard since Reagan-era attacks on the mythical “welfare queens.” It’s most often expressed in the growing complaint that about half the nation’s households pay no federal income tax — an accurate figure that varies from 46 percent to 51 percent, depending on which set of statistics are being used. Take Sen. John Cornyn (R-Texas), chairman of the National Republican Senatorial Committee, who complained over the summer about Americans who escape federal taxes — and worse, get help from the government. “A majority of American households paid no income tax in 2009. Zero. Zip. Nada. No income tax was paid by 51 percent of the households in America in 2009,” Cornyn said with derision in a Senate floor speech. “Actually, to show how out of whack things have gotten, 30 percent of American households actually made money from the tax system by way of refundable tax credits — the earned income tax credit, among others,” complained Cornyn, holding that fact out as evidence that the tax system needs to be fixed, presumably so those people pay more. Sen. Orrin Hatch (R-Utah) put it more bluntly. “I hear how they’re [Democrats are] so caring for the poor and so forth,” Hatch said in the same July debate. “The poor need jobs! And they also need to share some of the responsibility.” Again, the numbers are correct, but the argument ignores the fact that the median salary in the United States has fallen to just $26,364 , the lowest since 1999 , before the tax cuts of the George W. Bush presidency. It also ignores the fact that the half who pay no federal income tax do pay sales taxes, federal payroll taxes, state and local taxes, and — if they own a home — property taxes. Hatch and Cornyn were opposing a nonbinding Democratic resolution that would have done nothing more than declare that the wealthy should share the burden for digging the country out of its economic ditch and reducing the deficit. Yet they were hardly alone in the pushback against the poor. Sen. Jeff Sessions (R-Ala.) said the idea of even holding that vote was “rather pathetic.” The senators’ remarks came at the height of the debate over raising the nation’s borrowing limit, but the idea that the less well-off are somehow to blame for their circumstances — and ought to do more to share the responsibility — has not gone away since. Indeed, on the presidential campaign trail, the hot idea is instituting some sort of flat tax, from Herman Cain’s 9-9-9 plan to Rick Perry’s suggestion of a 20 percent income tax. Rep. Michelle Bachmann (R-Minn.) hasn’t offered her tax scheme yet, but she agrees the poor should pay more. “I believe absolutely every American benefits by this magnificent country. Absolutely every American should pay something, even if it’s a dollar,” Bachmann said at a recent debate. Economists on the left and right agree that such plans “broaden the base” of taxpayers. In practice, that means the poor and middle class pay more, while the wealthy pay less. Cain’s plan, for instance, would raise taxes by about 58 percent for the bottom 20 percent of earners, double them for the middle class, and cut them by 249 percent for the top fifth of the income ladder, according to the nonpartisan Tax Policy Center . With the income gap at Gilded Age levels — the income of the top 1 percent has jumped 275 percent since 1979, giving it more than 20 percent of the nation’s earnings — and with unemployment hovering at 9 percent, the Occupy Wall Street movement and its “We are the 99 percent” sentiment might seem to offer an antidote. But in some ways, Occupy Wall Street has inflamed the spread-the-pain side, with conservative blogger Erick Erickson launching a “We are the 53%” website . The name refers to the people who pay some federal income tax and implicitly belittles the less fortunate who don’t; more bluntly, the site describes itself as a statement from “Those of us who pay for those of you who whine about all of that.” The growing cry to push the tax bill further down the earnings curve is not just a rhetorical point either. It’s become an issue in the ongoing talks of Congress’ super committee as it tries to come up with a minimum of $1.2 trillion more in deficit reduction. Congress’ budget experts agree that if the taxpayer base can be made bigger, that would help cut deficits, which they say in turn could spur the economy and investment. They don’t address specifically what that would mean for the middle class. Sen. Pat Toomey (R-Pa.), the former head of the anti-tax Club for Growth and a member of the committee, made the same point in the committee’s most recent hearing with Douglas Elmendorf, director of the Congressional Budget Office. “Is it your view that if we were to pursue revenue-neutral tax reform that would have the effect of broadening the base on which taxes are applied and lowering marginal rates, that it is true both with respect to such corporate reform or individual reform, that that would have a pro-growth effect on the economy — which, of course, in turn generates more income for the government?” Toomey asked. “Yes, that’s right,” Elmendorf answered, with the caveat that “the amounts would depend on the specifics of the proposal.” For the Congressional Budget Office, broadening the base could also include closing corporate tax loopholes. Toomey’s office declined repeated requests to elaborate his vision of “broadening,” but the Club for Growth is adamantly opposed to raising taxes on corporations or high-income earners, and strong supports the flat tax. The right’s scapegoating of the poor has also grown, with food stamps serving as a target — even as disappearing jobs and falling wages have sparked a huge jump in the numbers of families needing help to get enough to eat . Yet leaders like Sessions still think the country is doing too much to help them. Sessions suggested the need is phony by pointing to a Michigan man who won a lottery but kept using food stamps, as well as noting a gun runner who received food stamps. “We cannot do this. We do not have the money,” said Sessions, declaring the rise in recipients shows not a need for food but a need for reform. Advocates for a progressive tax system hear in Sessions’ words a return to anti-welfare arguments that, while they were ultimately proved to be false , nevertheless had impact. “I think it’s the welfare queen theme all over again,” said the Tax Policy Center’s Isabel Sawhill. It might seem inconceivable that Congress would consider raising taxes on the middle and working classes, but Democrats on the super committee are already thinking about making Medicare beneficiaries pay more . And while poverty rates may be bad , they were equally bad when the welfare queen attacks helped bring about the Clinton administration’s welfare reform.

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Uniqlo starts U.S. expansion, eyes 200 stores

October 14, 2011

By Phil Wahba NEW YORK (Reuters) – Fast Retailing Co Ltd’s Uniqlo is launching its U.S. expansion this week with the opening of a flagship store in Manhattan that will anchor a global push to rely less on its home market of Japan. In addition to the Fifth Avenue location, opening on Friday, Uniqlo is also opening a store in New York’s Herald Square next week, bringing its U.S. total to three locations. The new stores will be the chain’s two biggest. The retailer’s goal is to eventually have 200 stores in the United States and U.S. sales of $10 billion by 2020. Uniqlo, run by Japanese billionaire Tadashi Yanai, is directly challenging rivals such as Spain’s Inditex SA , Sweden’s Hennes & Mauritz AB and U.S.-based Gap Inc with stores a stone’s throw away from theirs on Manhattan’s major shopping strips. All these chains are trying to tap the growing market for fashionable clothes, such as cashmere sweaters and lightweight down jackets, at lower prices among U.S. consumers who are likely to have a reduced purchasing power for some time. “Even people who don’t have much money have the same desire to wear something nice,” Yanai told Reuters on Thursday through an interpreter. Its rivals are well established in the United States. H&M opened its first U.S. location in 2000 and now has more than 100. In 2010, it had U.S. sales of some $1.3 billion. Zara has 49 stores here, including seven in New York. Uniqlo has had a single U.S. store, in New York’s SoHo district, since 2006. But H&M appeals to younger shoppers who change their wardrobe more quickly, while Zara’s shoppers are a bit older, leaving room for Uniqlo, an industry analyst said. “Uniqlo brings in a broader customer base and is a bit more classic and tailored,” said NPD Group Chief Industry Analyst Marshal Cohen. “They will appeal to a slightly more affluent shopper.” But the U.S. expansion is modest compared with Uniqlo’s plans for Asia, especially China, Southeast Asia and South Korea. Of the 4,000 stores it hopes to operate by 2020, up from 1,000 now, some 70 percent will be in those countries. Sales in Japan, which account for three quarters of Fast Retailing’s sales, fell 6 percent in the last business year. Uniqlo has 843 stores in Japan. “The (Asian) middle class will grow,” Yanai said. “It’s a gold rush.” The New York stores, which will attract U.S. and foreign tourists, as well as taste-makers, are central to its global strategy. “This is our showcase for the world,” Yanai added. (Reporting by Phil Wahba; editing by Andre Grenon)

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Donald Cohen: Junk Food Companies Contradict Themselves on Marketing to Kids

October 14, 2011

An apple a day and eating your peas used to lead to good health. Now, according to major food manufacturers, they are “job killers” that will devastate the American economy. In April of this year, the Federal Trade Commission, along with three other federal agencies (FDA, CDC and USDA), released a set of proposed guidelines for marketing food to children to reduce sugars, fats and salts and increase fruits, whole grains and vegetables in the diets of American youth. In 2008, led by Senators Sam Brownback (R-Kan.) and Tom Harkin (D-Iowa), Congress asked for the recommendations to address the nation’s growing obesity crisis among our nation’s youth. A coalition of major manufacturers of processed foods (including Froot Loops, Lucky Charms and SpaghettiOs), fast-food chains and the media industry that depends on their advertising dollars are spending millions on lobbyists to derail the proposed voluntary guidelines. In my opinion, the food lobby’s arguments are contradictory and wrong. They alternate between saying, on the one hand, that the voluntary marketing guidelines won’t make a difference in reducing obesity among American children, while, on the other hand, they are unnecessary government intrusions into an industry that is already reducing its advertising to children. Which is it? The children’s health crisis is real. Studies show that one-third of all children aged 10 to 17 are overweight or obese. In the past three decades rates have more than doubled among kids aged 2 to 5 and more than tripled among those ages 6 through 11. The incidence of “adult onset” diabetes in children and youth has more than doubled in the past decade. A number of marketing studies have confirmed the obvious: Advertising to kids increases purchasing and consumption. According to an analysis by the FTC, 44 food and beverage companies spent $2 billion in 2006 alone marketing to children. There’s a huge amount at stake for the junk food and media industries. James McNeal, a former marketing professor at Texas A&M University, estimates that children influence more than $100 billion food and beverage purchases each year. Youth today are immersed in more commercial advertising in more media than any time in history. Food companies understand that and have expanded their advertising to cover every corner of this new media-immersed world in what one communications scholar calls “360-degree marketing,” including Internet, video games, cellphones, sponsored Web games, marketing in schools and eye-level packaging with cartoon characters and popular kids movies. Food makers are denying the link between their ads and children’s health. According to comments submitted by General Mills (the makers of Reese’s Puffs, Honey Nut Cheerios and Lucky Charms), “[The proposed guidelines] would yield no discernible benefits in the battle against obesity.” They went even further to say that they “will do nothing to combat obesity.” But their rhetoric and their actions contradict each other. On the one hand, it’s implausible that sophisticated food conglomerates would spend nearly $2 billion dollars advertising to children if it didn’t generate more sales. Scott Faber, a vice president of the Grocery Manufacturers Association, said , “I can’t imagine any mom in America who thinks stripping tigers and toucans off cereal boxes will do anything to reduce obesity.” It doesn’t take an advertising expert to know that food companies put SpongeBob (or tigers and toucans) on the outside of the box to sell more cereal. A recent study by Johns Hopkins University says that cartoon characters play a key role in getting children to nag their parents for fatty foods. One study even showed that young children think food packaged with a cartoon character on the front actually tastes better . Another study showed that if you wrap carrots in a McDonald’s packaging, kids actually say that the carrots taste better. On the other hand, in 2006 a coalition of these same companies created their own industry guidelines — the Children’s Food and Beverage Advertising Initiative — to self-police their own marketing to kids of healthy foods. The original standards, while weak and allowing companies to apply their own definition of “healthy” (that conveniently always included their own products), did cause some companies to reduce their ads targeting children. This July they released a set of stronger and more consistent advertising standards In other words, major food manufacturers think that some of their products are unhealthy for kids, realize advertising impacts sales and have stopped marketing them. Which is it? Marketing influences our kids’ healthy eating habits, or it doesn’t? They can’t have it both ways. Then, of course, there are the facts. According to Ellen Wartella , a member of an Institute of Medicine committee that produced the seminal 2005 report on food marketing to children, “We can’t anymore argue whether food advertising is related to children’s diets. It is.” The Institute of Medicine reviewed the scientific evidence on the influence of food marketing on diets and diet-related health of children and youth. The report found that “current food and beverage marketing practices puts children’s long-term health at risk.” The food industry’s convoluted and contradictory arguments can only be intended to obscure a simple fact. According to noted food and nutrition expert Marion Nestle, “To satisfy stockholders, food companies must convince people to eat more of their products or to eat their products instead of those of the competitors.” It’s logical for them. Unfortunately, that mission runs up against good health in too many places.

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Keith Ecker: Mustache Day and Floor Crawls: Chicago Entrepreneurs Discuss Quirky Cultures

October 13, 2011

From Mustache Day to “floor crawls” — think a white-collar version of the pub crawl — several of Chicago’s top technology companies trumpeted their unique corporate cultures at the recent Entrepreneurs Unpluggd event, which took place Oct. 12 at the Chopin Theater. Presenters included Jellyvision Lab’s CEO Amanda Lannert, co-founder of Google’s Chicago office Kevin Willer, and founder and CEO of Total Attorneys Ed Scanlan. Entrepreneurs Unpluggd is a relatively new speaking series that currently takes place each quarter. Each event features several entrepreneurs discussing a particular facet of corporate and start-up life. Past topics have included “Turning Setbacks into Opportunity,” “The Funding Question” and “How to Find Your First Customers.” The theme for the most recent event was “Creating and Growing an Awesome Company Culture.” Lannert spoke first. Her interactive marketing company is the one with the “Mustache Day,” in which employees are encouraged to come to work sporting some hip facial hair. Besides fuzzy upper lips, Jellyvision prides itself on its adherence to two critical values: honesty and kindness. Of course, a bit of humor doesn’t hurt either, especially when you’re working for the same company that was behind the popular “You Don’t Know Jack” computer games of the ’90s. Next, Willer talked about the iconic bean-bag-chair atmosphere that Google fosters internationally. Willer was one of the first employees in Google’s Chicago offices back when the Midwest outpost was just a windowless broom closet. He described how Google has successfully exported the college-like atmosphere of its Mountain View, Calif. offices around the globe, a feat that was not without its hurdles. “You have challenges maintaining culture as you get larger,” Miller said. Finally, donning the entrepreneur uniform of sports coat, jeans and untucked button-up shirt, Total Attorney’s charismatic founder Scanlan took the stage. Scanlan talked about how he grew a multimillion-dollar enterprise as a 20-something-year-old college dropout with nothing more than a laptop and a credit card. He discussed how the corporate culture must emanate directly from its founder and that establishing a culture must be deliberate. He also mentioned that no matter how fun a company might be, work-life balance should be a priority. “My goal when I first started my company was to ski more days that year than the year before,” Scanlan said. Entrepreneurs Unpluggd is the brainchild of Stella Fayman and Tim Jahn. Fayman graduated from Northwestern University two years ago and set out to work for a start-up. She currently fulfills a number of roles at FeeFighters. Jahn formerly ran the website Beyond the Pedway before partnering with Fayman to produce live events. “Entrepreneurs Unpluggd is about sharing the stories behind successful entrepreneurs to inspire people to go after their dreams,” Fayman said. “We focus on one aspect of creating your business and growing it. Meanwhile, the online portal is a way to continue growing the brand and storytelling entrepreneurship.” The organization sources its speakers a number of ways. Many of the speakers for the first four events were discovered because of Fayman and Jahn’s involvement in the start-up scene. The two also rely on input from the local entrepreneur community when planning events. “We continue to seek out quality speakers, but we also have been getting a lot more inbound requests from prospective speakers as well,” Fayman said. There certainly is a hunger for these kinds of events. The Chicago entrepreneur and tech communities are rife with meet-ups, seminars and workshops. These gatherings enable entrepreneurs to mingle with developers who can mingle with designers who can mingle with marketers. Besides sharing tips and tricks of the trade, many are searching for their co-founder. “Three years ago, I went to the first Social Media Club Chicago event,” Jahn said. “Now they meet monthly, and there are hundreds of attendees.” All this activity is getting the attention of investors, who used to see the Midwest as complete flyover territory. “Venture capitalists used to laugh at you if you were in Chicago,” Fayman said. “They’d want you to move to the West Coast to get funding. Although that expectation is still there, in the past few years you’re seeing a lot of venture capitalists making trips to meet companies here.” And just like your typical entrepreneurs, Fayman and Jahn already have big plans for Entrepreneurs Unpluggd in 2012. Within the first quarter, they hope to spread the event to other cities, including Kansas City, Indianapolis and San Francisco. “We move fast,” Fayman said.

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Tepco reform plan calls for axing 7,400 jobs: Yomiuri

September 28, 2011

TOKYO (Reuters) – Tokyo Electric Power Co will be advised to cut 7,400 jobs, or about 14 percent of its full-time employees, by March 2014 as part of a plan to help it pay compensation for the Fukushima Daiichi nuclear disaster, the Yomiuri newspaper said on Wednesday. A government-appointed panel looking into the finances of the utility, known as Tepco, is also expected to call for it to raise 600 billion yen ($7.8 billion) in asset sales and cut pension payments among other measures to help it finance the aftermath of the world’s worst nuclear disaster in 25 years, the daily reported. It also wants government steps to encourage banks to continue lending to Tepco, the report said. The restructuring plan is due to be unveiled on October 3, the newspaper said, without citing the source of the information. Tepco will then draw up a business plan later in October and seek government approval to receive funding — which some experts have said could be 2 to 8 trillion yen ($26-104 billion) — financed by contributions from nuclear power operators and taxpayers’ money. ($1 = 76.655 Japanese Yen) (Reporting by James Topham; Editing by Edwina Gibbs and Michael Watson)

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Stockbrokers More Competitive, Willing To Take Risks Than Psychopaths: Study

September 26, 2011

Anyone who’s watched the wild fluctuations of the stock market this summer may have suspected that something other than cold, dispassionate rationalism dictates the rise and fall of the Dow. Stock traders are human, after all, and humans are sometimes irrational creatures — creatures of emotions and hormones and complex subconscious mechanisms. Various studies have suggested that a certain kind of psychological profile gravitates toward the fast-paced, high-pressure environment of the trading floor — and that this profile probably has more than a little in common with psychopathic personality, a clinical condition marked by gregariousness, impulsiveness, dishonesty and lack of empathy . A recent study from the University of St. Gallen, in Switzerland, goes one step further. The research, led by forensics expert Pascal Scherrer and prison administrator Thomas Noll, finds that professional stock traders actually outperform diagnosed psychopaths when it comes to competitive and risk-taking behavior. According to Der Spiegel , Scherrer and Noll had a group of 28 stockbrokers participate in various simulations and intelligence tests, and then compared their results to a group of psychopaths. They found that the traders showed a higher degree of competitiveness than the psychopaths — and that the traders were surprisingly willing to cause harm to their competitors if they thought it would bring them an advantage. It seems unlikely that recent market woes have been caused by an over-eagerness to take risks. Rather, the single-day market plunges of August and September appear to have been linked to widespread risk aversion among traders. In other words, fear, not boldness, has been the cause of the summer’s major sell-offs. Still, irrational risk-taking played a major role in the financial crisis of 2008, as thousands of questionable assets assumed greater and greater leverage in the market until they ultimately proved unsound. Scherrer and Noll are not the first to suggest a correlation between success on Wall Street and mental pathology. In 2005, a study found that traders who are unable to fully feel their emotions due to brain damage end up performing better on the market — possibly because they experience less anxiety about risky trades. At the time, one professor of neurology described such emotionally impaired traders as “functional psychopaths.” Another research project that concluded in 1996 found that some percentage of both stockbrokers and politicians display many traits characteristic of psychopathic personality, including a willingness to take risks and an interest in wielding power. And as Chris Barth at Forbes points out, Bret Easton Ellis was comparing stockbrokers with the seriously mentally ill as early as 1991, with his novel American Psycho . While the financial profession may attract and reward a certain kind of irregular personality, there’s evidence that the pressures of the job may also contribute to poor mental health. In 2001, a study found that many young Wall Street stockbrokers got little sleep, often reported for work even when suffering from the flu or a virus, and were much more likely to experience symptoms of depression than average Americans. In fact, the study found a 23 percent rate of major depression within the group of young male stockbrokers — significantly higher than the 7 percent depression rate among American men overall.

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Meet X.commerce, eBay’s Latest Creation

September 17, 2011

By Alistair Barr SAN FRANCISCO | Fri Sep 16, 2011 5:27pm EDT (Reuters) – Ebay Inc is building a new division to woo developers and attract more merchants as the company tries to emulate the success of Apple Inc’s iOS platform in the e-commerce world. Ebay’s main business is still its giant online marketplaces, which bring shoppers and sellers together. The company’s other big division is the payment business PayPal and it acquired GSI Commerce earlier this year to add a third division. But a fourth business has emerged in recent months called X.commerce. The website for the division, X.com, revives a name from the early days of PayPal, when it merged a competing online payments business called X.com started by Elon Musk. X.commerce is trying to persuade outside developers to create applications, or apps, for merchants looking to sell more online. The apps can be designed to work on eBay’s marketplaces. They may also include payment capabilities from PayPal and work with websites built on Magento, an open-source e-commerce company that eBay bought in June. The more useful apps that developers build through X.commerce, the more likely merchants are to use eBay’s marketplaces, PayPal’s payment technology or GSI’s e-commerce services. “The idea is to indirectly monetize eBay’s main assets PayPal, GSI and Marketplaces,” said Matthew Mengerink, the eBay veteran who runs the new division. “X.commerce is in a unique position. I don’t have to drive revenue, I have to drive traffic.” Ebay has about 725,000 developers registered with its various developer programs and there are roughly 4,600 Magento apps active on X.com, up from 3,800 at the start of the year, according to Mengerink. Omniture, a unit of Adobe Systems, Kenshoo, an online marketing software company, and Outright, which makes a financial-management product for small businesses, are among companies that have signed up to develop apps on X.com. “They’re pulling an Apple, calling on the collective power of the developer community,” said Bill Smead of Smead Capital Management, which counts eBay as one of its largest holdings. Apple iOS is the operating system for the iPhone and iPad. The company has a massive following of developers who churn out thousands of apps for those gadgets, making them much more useful for customers. Mengerink reckons X.commerce can be more attractive for developers than iOS because merchants are willing to spend more money on useful e-commerce apps. Mengerink said he will measure X.commerce’s success partly on how much money developers make selling apps. “Apple’s iOS isn’t profitable for most developers,” he said. “On Magento, for every $1 we make, the developer makes $15.” “If developers are making the money, you can’t shake the platform,” he added. “We believe we can create the largest ecosystem.” Smaller merchants will not have to hire lots of in-house developers if a wide variety of e-commerce apps are available to buy and plug into their online stores, Mengerink explained. The success of eBay’s new division will depend on how large and attractive the pool of end-users is to developers, according to Stephen O’Grady, principal analyst at Red Monk, a technology industry analyst group that focuses on developer communities. Other specialty online marketplaces have sprung up in recent years, such as Etsy, cutting into eBay’s dominant position, O’Grady noted. “But eBay is still a major center of gravity,” he said. “For developers that’s still attractive.” Another important ingredient for attracting third-party developers to a technology platform is ease of use. Dan Shahin, a former comic book store owner who has developed an online storefront management system, went with a Google Inc payment system a few years ago, rather than PayPal. That was because PayPal had several different application programing interfaces, or APIs. APIs are sets of rules and specifications that help different software programs communicate with each other. PayPal’s APIs were “scattered around,” making it more difficult for Shahin to develop payment features to include in his storefront management system, he said. Shahin told Mengerink about this and the eBay executive got to work fixing the problem. “Third-party developers had to register for each API,” Mengerink said. “The X.commerce goal is to have one place to register for developers and partners. There are security and other issues with this, so it takes a while.” X.commerce is promising a lot, but Shahin reckons eBay has the technological chops to pull it off. “If anybody can do it, they can,” Shahin told Reuters. “Matthew is not one of those suits. He’s the real deal.” (Reporting by Alistair Barr, editing by Matthew Lewis) Copyright 2011 Thomson Reuters. Click for Restrictions

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Gerry Nicholls: The Case For a Flat Tax

August 31, 2011

Finance Minister Jim Flaherty says when (if?) he balances the budget, he will move next to “flatten” taxes. As he recently put it , “I think we should be moving toward a flatter personal income tax system because it encourages economic activity … it encourages entrepreneurial activity in Canada.” More specifically, Flaherty is talking about reducing the number of personal income tax categories for federal taxpayers. And that would definitely be a move in the right direction. But Flaherty should consider going even further in his efforts to promote economic activity. Rather than simply reducing the number of tax categories, why not scrap our current tax system and replace it with a flat tax. What’s a flat tax? Well, essentially, under a flat tax instead of having different tax rates for different incomes, everybody (individuals and businesses) would pay the same marginal rate. In other words, everybody would pay the same proportion of their income (say 15 per cent) in taxes. There would be no tax credits, no special deductions, no complicated forms. And everybody would also claim the same basic personal tax exemption, which would mean if the exemption is made generous enough, many poorer families might pay little or no taxes at all. Flat tax experts, for instance, suggest single adults would claim a $13,000 deduction; married couples would receive a $26,000 deduction. Higher deductions could also be set for single-parent families. The bottom line is under a flat tax system, people would pay less in income taxes. (Some wouldn’t pay anything at all.) So a flat tax, with a generous exemption, is a lower tax. But what would the flat tax mean for government revenue? If people are paying less in taxes, would the government have to cut services for lack of money? No and here’s why. Our current tax structure is based on the idea that the more money you make, the steeper your income tax bill. Left-wingers and other pro-big government advocates call this sort of tax policy “progressive,” but in reality such taxes actually retard progress. Just think about it. A higher tax rate for higher incomes and profits essentially means the government is financially punishing success. Simply put, the government is making it harder for people to save money or to invest or to engage in wealth-producing entrepreneurial activities. In fact, the Fraser Institute , an economic think tank, says business and personal income taxes “are the most inefficient taxes because they penalize productive economic activities.” A flat tax, on the other hand, is more like a consumption tax. You pay based on what you take out of the economy. What you put back in the economy — in the form of investment and savings — would go untaxed. This would encourage more investment and more savings. This in turn would boost economic productivity and at the same time increase the money government collects. The Fraser Institute estimates that under a flat tax the government would collect just as much money as it does now. Now besides being a lower tax, a flat tax is also a fairer tax. It’s fairer because everybody would pay exactly the same rate, meaning the more you earn, the more you pay. If you earned $40,000 a year, a 15 per cent flat tax would mean you pay $3,000 in taxes; if you earned $100,000 you would pay $12,000. Sounds good, right? So a flat tax is lower and it’s fairer, but wait’s there’s more. The flax tax is also much simpler. Mind you, that’s not much of a trick since taxes now are extremely complicated. Every time you pay income taxes you must wind your way through a maze of complex codes and regulations, seeking deductions for this and credits for that. Then there’s all the time and effort we spend hunting down those crinkled, torn receipts hidden away in forgotten shoe boxes and let’s not forget the emotional trauma associated with the fear of tax audits. It’s no wonder so many of us pay good money to hire experts like accountants or tax lawyers. A flat tax would change all that. With a flat tax in place, figuring out your tax bill would be a simple three-step process. Step one: Figure out what percentage of your income you need pay. Step two: Write out a cheque to the government. Step three: Drop your cheque in a mailbox. Now that’s easy. Imagine the joy of filing your income tax return in less than 15 minutes. Imagine not having to hire an accountant to figure out your taxes for you. Nor is a flat tax a radical untried idea. Indeed, many countries in Europe and elsewhere are now employing a flat tax and it seems to be working quite well. Why not try it in Canada? What do we have to lose, except a tax system that’s hindering economic growth? Indeed, Ontario Progressive Conservative Leader Tim Hudak should make implementing a flat tax a part of his platform. Imagine telling Ontarians he would introduce a tax that’s lower, fairer and simpler. Sounds like a vote-getter to me.

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American Businesses Need More Of Steve Jobs’ Courage

August 31, 2011

Of all that Steve Jobs’ achievement has taught us, the importance of courage is especially relevant now.

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Benedict Clements: When Reality Doesn’t Bite — Misconceptions about the IMF and Social Spending

August 31, 2011

All too often we hear the claim that the programs the IMF supports in low-income countries hurt the most vulnerable by forcing cuts in social spending. This is a misconception. Our study concludes that, contrary to these claims, IMF-supported programs boost education and health spending in low-income countries for as long as countries are engaged with the IMF. Let the numbers do the talking We based our analysis on public spending on education and health in 140 countries between 1985 and 2009. The dataset is the most comprehensive ever assembled to assess this issue. The results show the beneficial effects for social spending in program countries in several respects. First, social spending increased at a faster pace in countries with programs compared to those without, particularly for low-income countries with programs (see chart). This is true for social spending in relation to GDP and as a share of total government spending, as well as increases in per capita social spending after adjusting for inflation. Second, the benefits for social spending have accelerated over time in low-income countries. The median annual increase in education and health spending in low-income program countries since 2000 was more than double the average increase during 1985-1999. The rate of increase since 2000 implies that education and health spending, as a share of GDP, would increase each decade by 0.7 percentage points and 0.6 percentage points, respectively. Because GDP is also growing rapidly in these economies, increases in spending relative to GDP imply large increases in spending per capita. The rate of spending growth since 2000 suggests that education and health spending per person, after adjusting for inflation, would rise by about 50 percent and 60 percent, respectively, over a 10-year period. Of course, IMF-supported programs are not the only determinants of a country’s social spending. Many other factors–age profile of the population, income levels, and macroeconomic conditions–come into play. A fair test of the impact of IMF-supported programs on this spending must take these factors into account. Using statistical techniques that distill the impact of an IMF-supported program, as distinct from these other factors, we again find that IMF-supported programs have a positive, and even stronger, effect on the rate of increase in social spending in low-income countries. For example, over a five-year period with IMF-supported programs, education spending increases in low-income countries by about ¾ percentage point of GDP; and by about 1 percentage point of GDP for health spending. Facilitating social spending The IMF is committed to help protect or increase social spending in the programs it supports in low-income countries. In this regard, there are numerous channels through which programs help spur higher spending in education and health, including: Reforms that increase government revenues–on average, program countries increase revenues at a brisker pace than non-program countries–help create “fiscal space.” IMF-supported programs help countries mobilize donor financing. To the extent that programs lead to higher growth, they can help generate greater fiscal space. Finally, the emphasis in these programs on using additional resources–including those generated by debt relief–to support poverty-reducing spending contributes to rising shares of education and health spending. The results suggest that IMF-supported programs are compatible with the efforts of countries to boost critical social spending to improve social outcomes. But, it will be equally important, as many scholars have emphasized, to improve the targeting and efficiency of public spending to make it a more powerful instrument for bettering the lives of the poor. From iMFdirect blog

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Walsh Slams Buffet’s Tax Hikes, Appears On Chicago Tonight Wednesday

August 31, 2011

U.S. Rep. Joe Walsh’s (R-Ill.) scheduled appearance on WTTW’s “Chicago Tonight” Wednesday will cover the economy, debt and revelations about his personal finances–and will no doubt mention his inflammatory appearance on the Bloomberg news show “Inside Track” Tuesday where he attacked billionaire businessman Warren Buffet for his recent op-ed calling for a tax hike on the super-rich Buffet’s August 14 article in the New York Times highlighted proportional tax discrepancies that give breaks to America’s millionaires and billionaires and volunteered himself, and other “coddled” wealthy businessmen, for higher taxes. “I think Mr. Buffet needs a day job. He’s got too much time on his hands,” Walsh said on “Inside Track” Tuesday. (Scroll down for video) “This is ridiculous. He’s so disingenuous. He’s heating up his rhetoric because his support for the President is so desperate.” The Tea Party politician slammed Buffet’s claims that lower- and middle-class Americans pay a larger percentage of their income in taxes than the wealthy, especially in the case of capital gains and dividend “loopholes,” arguing that there are too few millionaires and billionaires for a tax increase of that group to make a difference. When asked if the Tea Party’s inexperienced politicians could have impacted the nation’s credit downgrade, he insisted that Tea Partiers weren’t the problem. “We lost our credit rating because this country is in debt,” Walsh said. “We lost our credit rating because this President has increased the debt $4 trillion in two and a half years. He knows that. Warren Buffett knows that. And that’s what the credit agencies told us. Look, the American people understand that if these troublesome Tea Party Republicans hadn’t gotten here, we’d erase the debt ceiling without even thinking about it. And we’d be spending away our kids’ future every single day.” Walsh will be on “Chicago Tonight” on WTTW Wednesday at 7:00 p.m. CT. Watch Walsh’s rant against Warren Buffet’s tax proposal:

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Preeti Vissa: How Goldman Sachs’ Bet on Obama Paid Off

August 31, 2011

Goldman Sachs has made a lot of bets that paid off handsomely over the years — for example, its bet against the subprime housing market that gained the Wall Street giant $4 billion as the housing bubble imploded in 2007. One of the firm’s biggest bets has been on Barack Obama, and that bet seems to be paying off too. The “vampire squid” raised more money for Obama’s 2008 presidential campaign than any other bank or Wall Street firm, over $1 million from Goldman employees, officers, etc. If the goal was to gain access to the White House, the plan seems to have been wildly successful. As McClatchy Newspapers noted in 2010: Several former Goldman executives hold senior positions in the Obama administration, including Gary Gensler, the chairman of the Commodity Futures Trading Commission; Mark Patterson, a former Goldman lobbyist who is chief of staff to Treasury Secretary Timothy Geithner; and Robert Hormats, the undersecretary of state for economic, energy and agricultural affairs. Lawrence Summers, an Obama economic advisor during the early days of his administration, was reportedly paid $135,000 by Goldman Sachs for a one-day visit in 2008. And in the spirit of the revolving door I’ve complained about before, the same McClatchy article noted that “Goldman is retaining former Obama White House counsel Gregory Craig as a member of its legal team.” Of course, Goldman had powerful connections before, including Bush administration Secretary of the Treasury Henry Paulson, a former Goldman CEO. Maybe it’s just coincidence that the firm got a great deal during the TARP bailout, receiving some $23 billion in direct or indirect federal aid, according to McClatchy , along with actions that helped Goldman (like the bailout of AIG) and hurt rivals (such as Paulson’s refusal to rescue Lehman Brothers). But it sure looks like it helps to know the right people, and to have helped them get into office. And now, in a story that got pretty much lost amid all the other breaking news in late August, Goldman honcho Lloyd Blankfein just hired a new lawyer to help him through the ongoing Department of Justice investigations of possible wrongdoing. According to the New York Times , that lawyer, Reid Weingarten, was once a Justice Department employee, where he worked “with another young prosecutor, Eric H. Holder. Mr. Holder, now the attorney general of the United States, remains one of Mr. Weingarten’s closest friends.” Nice move. Oh, and it was recently revealed that the Securities and Exchange Commission has been shredding documents related to past investigations, making it vastly harder for present or future investigators to connect the dots between past and present misconduct. Maybe this is all just coincidence, but it sure looks like Goldman’s bet on Obama is paying off.

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Jane D. Wurwand: Dreaming Is Fine, but Doing Is Better

August 31, 2011

The first day of school definitely inspires optimism for the future. Speaking as the mother of a young woman who will soon begin her freshman year in college, of course we have high hopes. And no guarantees. Americans have always been dreamers. For generations, Americans have promised their children that they can be brain-surgeons and rocket-scientists, cowboys and ballerinas, astronauts or the president of the United States. Part of this optimism springs from the faith of immigrants who flooded into America a century ago, and did, indeed, create success in ways which never would have been possible in their native lands. British people like myself tend to regard this level of optimism as a bit naïve — a cultural difference, perhaps. But given the current state of the world economy, we must temper “Dream big!” optimism with pragmatism. I have spent my entire career — 30 years — encouraging and motivating young women to achieve. My specific expertise is in professional skin care, and the creation and running of a skin care business. My skills are very tangible, and my approach has always been practical. And I have used my skills to help literally thousands of women succeed in this profession. Was I a dreamer? Dreaming sounds abstract to me now, and I was always more of a doer. I began working at 13, after being told by my own hard-working mother — she raised me and my three sisters on her own — that I needed to be able to “do” something to make money, so that I would never, ever have to rely upon a man for a place to live and something to eat. My upbringing was not especially future-minded, although Mum did teach me to save money for a rainy day (we certainly have plenty of those in the UK). The focus was on the here-and-now. Not lofty, and not so very dreamy. I quickly learned there is no shortcut around sweat-equity. As a “Saturday Girl” in the neighborhood salon, my sweat-equity began with sweeping up hair cuttings and sterilizing hair-pins. Although I consider myself a perpetual student, I did not pursue an academic education. I was trained and licensed in the craft of professional skin care, which is comparatively short-term. When I had my license, I went right to work, and I’ve never stopped. This feeling of hands-on, here-and-now is what drove me to launch joinFITE.org in January of this year. The women — we’re aiming for 25,000 — we will be empowering with microloans funded through this initiative may talk about dreams. These are dreams of putting food on the table, and creating a better life for their children in very immediate terms. I recently encountered a remarkable woman who represents both the dream and the willingness to work tirelessly to make it real. Her name is Rosa, and she is the owner of a shop called Native Hand by Hand in San Francisco. Rosa grew up in a family of gifted artisans in Ecuador, and her shop is filled with exquisite silver jewelry and clothes made by artisan cooperatives in her country. But in 2009, when she wanted to expand, she was deemed “unbankable” by major lending institutions, since she had no credit history. Her first microloan from Opportunity Fund allowed her to invest in inventory, and establish herself as a business. Now joinFITE has funded her second microloan, allowing her business to expand. Rosa’s so proud that her daughter has just graduated from high school, and you can get a glimpse of this success story here . Maybe it’s semantics, but I don’t know that I would call Rosa a “dreamer.” Instead, I see unrelenting doing, working, and sacrificing for a clear objective, which is to give her daughter the tools she needs for success. I am relentlessly upbeat, but I am about to send my oldest daughter off to college with this caveat: wishing and wanting will not make it so. The vision and the dream are just the first step. The sweat-equity is as important, maybe more so. For entrepreneurs like myself in particular, this sweat-equity means 12, 14, 16-hour days, and the potential of literally years without profit. The dream and vision, the wanting and the wishing, are what allow you to persist spiritually through the hardship. But I place wishing and wanting into the same category as Snow White warbling “Someday my Prince will come.” Maybe in a 1937 Disney cartoon, but I don’t advise any of this as a strategy for success. I was reminded of this by Susana, another woman I also met on my recent trip through Northern California. Susana received a joinFITE microloan for her daycare center called Happy Faces in San Jose, and word-of-mouth in the community has enabled her business to quickly grow to maximum-capacity. In fact, she is now sought out by mothers-to-be, who place their names on a waiting list. It’s worth mentioning that Susana, like Rosa –and like myself, at age 13 — had made her living sweeping and cleaning, before being licensed as a professional in her chosen field. For everyone starting a new school year, starting a new business or just looking for a job: there is no “secret.” Americans love the word “visualization” these days, and it’s the theme for countless books, seminars, success-coaches and self-professed entrepreneurism gurus who tell willing believers that if they just want something badly enough, it will happen. But the success of Rosa, and Susana, and of Dermalogica, too, are proof that this simply isn’t so: you just can’t skip the heavy lifting. Learn more about my recent trip to Northern California to meet Rosa and Susana .

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Dr. Sasha Galbraith: The Debate Continues: Do You Prefer Superstar Individuals or Effective Teams?

July 26, 2011

The blogosphere has been all abuzz lately over whether the super-smart individual contributor is better than a great team. Mark Zuckerberg, CEO of Facebook, was quoted in a New York Times article saying, “Someone who is exceptional in their role is not just a little better than someone who is pretty good. They are 100 times better.” This prompted Bill Taylor, co-founder of Fast Company , to argue in a recent HBR blog that superstar individuals are overrated. How paradoxical since Bill heads up a magazine that encourages people to build their own brand and standout among the crowd. Taylor’s post sparked a down and dirty discussion over the relative value of a stellar software engineer, for example, versus 1,000 mediocre engineers. It also prompted a rebuttal from Jeff Stibel who argued he would take the stellar engineer any day over a mediocre team, and that there’s a reason why CEOs of giant corporations are paid so handsomely. What I found most interesting, however, was that it was men who posted the majority of the comments in response to these two blogs and a follow-on post by Taylor. The discussion is a living example of the point that men — or certainly many of these men — are indeed from Mars: combative, argumentative and desperately wanting to establish their own dominance in the pecking order. The whole argument is a little bizarre. The use of teams versus individual contributors is completely dependent on the nature of the work. If the work can be done singularly and efficiently by a talented individual, then why set up a team? But if the work is dependent on a number of people playing their part on a larger stage and ensuring that other disparate groups are in on the final product, then you want to assemble the best team. Let’s look at this from a female perspective. All of the women entrepreneurs I’ve studied embrace teamwork and absolutely depend on it to run their organizations. But more importantly, they know that in order to ignite the creative spark that gets teams to produce value, they must build a culture and value system that treats the individual with respect. This means not blindly applying rules to all in an equal, unbending and algorithmic fashion. It means focusing on removing barriers to effective communication. It means recognizing people have lives outside of work and allowing them the flexibility to manage both worlds — often one in the context of the other. It means expecting each person to produce results above and beyond what he or she thinks is possible. It means creating an organization that respects and celebrates differences in people and leveraging those differences to achieve a superior product or service. It means hiring primarily for “cultural fit” rather than skills, which can be trained. And it means being the humble, emotionally intelligent leader who is not afraid to get her or his hands dirty in the trenches. So what does women’s penchant for teamwork boil down to from a performance perspective? A growing body of research indicates that when there is a critical mass of women in the senior management team, companies are more profitable , share prices are higher , R+D teams are more innovative and new ventures are less likely to fail . Moreover, an article in the June edition of Harvard Business Review summarized research indicating a team’s collective intelligence rises when more women are included. But if you’re still considering hiring that star, you might want to think again. Boris Groysberg , Professor of Business Administration at Harvard Business School, found that male stars who were hired away by another firm suffered nearly a one percent performance drop after moving. In contrast, female stars experienced a modest performance boost at their new firm. However, entire teams that were hired away intact experienced no performance decline. As the research shows, here’s yet another reason to bank on women — whether it’s the superstars or female-populated teams.

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Church-state Groups Slam Obama On Hiring Issue

July 26, 2011

By Adelle M. Banks Religion News Service WASHINGTON (RNS) President Obama’s status-quo stance on the controversial issue of faith-based hiring has drawn criticism from atheists and church-state watchdogs. Responding to an atheist at a town hall last week at the University of Maryland, College Park, the president discussed whether religious groups receiving government funds should be permitted to make religion-related hiring decisions. “I think that the balance we’ve tried to strike is to say that … if you have set up a nonprofit that is disassociated from your core religious functions and is out there in the public doing all kinds of work, then you have to abide generally with the nondiscrimination hiring practices,” he said Friday (July 22). “If, on the other hand, it is closer to your core functions as a synagogue or a mosque or a church, then there may be more leeway for you to hire somebody who is a believer of that particular religious faith.” The Rev. C. Welton Gaddy, president of the Interfaith Alliance , called Obama’s response “a departure from the opposition to such discrimination he unequivocally stated while on the campaign trail” in 2008. The person who questioned the president, Amanda Knief of the Secular Coalition for America , also criticized Obama’s comment. “Unfortunately, the president didn’t address the most egregious aspect of this policy — that religious discrimination is occurring on the taxpayer’s dime,” she said. A coalition of two dozen leaders who support the current policy recently sent a letter to Obama asking him to retain it. Stanley Carlson-Thies of the Institutional Religious Freedom Alliance , one of the signatories, was pleased with the president’s defense of some faith-based hiring. “That’s allowed government partnerships with religious groups to flourish, for the good of those served and the good of our society,” he said.

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Reid Cramer: Taking Asset Building to Scale in Federal Housing Policy

July 26, 2011

Today, we spend roughly $30 billion dollars a year in rental housing assistance to benefit almost 5 million households . It is a primary part of our social safety net. But millions of eligible families don’t receive any support. To get the most out of our resources, we should be looking for more effective ways to encourage those receiving assistance to increase their earnings and transition toward self sufficiency. Housing assistance should be a foundation for this process, especially if it can be re-made to more effectively promote income and asset growth. Currently, families that receive housing assistance are required to pay 30 percent of their income for rent. This means that for every extra $100 they earn, their rent goes up $30 automatically, which is not a very good incentive structure to maximize work effort. But what if this additional rent could be diverted into a savings account that the recipient could eventually gain access to if they pursued a program focused on gaining long-term independence. We actually know that this approach holds promise, thanks to a small program HUD runs in select housing authorities across the country. The Family Self Sufficiency Program offers a model for reforming the larger housing assistance delivery system. My colleague, Jeffrey Lubell of the Center for Housing Policy , and I argue that we can use this model to take asset building and earnings incentives to scale in HUD-assisted rental housing. In a recently-released paper , we present the case for developing and evaluating the next generation of economic security policies that would incorporate earnings incentives and asset-building objectives into the basic structure of rental housing assistance. We believe this can work for all families in subsidized housing. Central to this approach would be to offer every recipient of housing assistance the ability to build assets through a Rental Assistance Asset Account (RAAA) that would grow as the family’s earnings rise. The papers explains how this approach might work and explores various ways to implement this policy that could make it cost neutral or even save money for the government and local housing authorities. In today’s political climate, this should be an especially attractive approach for a wide range of stakeholders.

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Peggy McColl: Are You Serving Time Instead of Serving Yourself?

July 26, 2011

When you think about launching a product, venturing out on your own as an entrepreneur or even trying to lose those last 10 pounds, what holds you back? It’s not simply a lack of willpower or fear of taking risks that stands in your way. I would challenge you by asking the question, “Are you serving time?” When I say “serving time” I am referring to the prison you have put yourself in. Let me explain. 33 years ago I was in prison. I know if you’ve read any of my books or been through any of my programs, I share the story of how I was locked away in an emotional prison, and I didn’t even know I was in one. Chances are you haven’t recognized it about yourself either. What was going on for me 33 years ago is I was a very insecure, unhappy, angry, frustrated, broke young woman. I was in my late teens and I was going through this incredibly challenging time, to the point where I lost the will to live. I was working for this company that hired a gentleman by the name of Bob Proctor to be a keynote speaker at a company event. I was not into personal development at the time. I had never read a personal development book in my life. I didn’t even understand the whole concept that we are creative beings and that we’ve got the ability to create. Because I had never even been open to any of this material, I had an attitude about it. So when Bob Proctor came in to address the company, I looked for a seat in the back of the room because I thought it was a waste of time. Of course, as fate would have it, the only seat left was in the front row, directly in front of him. That day Bob Proctor said something that changed my life forever. “You cannot escape from a prison unless you know you’re in one.” Just as I was back then, and many people are right now, you could be serving time in a prison of emotions that are holding you back from manifesting or creating the life that you desire. I didn’t even realize it, and the first step to all of creation is really becoming aware. Becoming aware that we are creative, that we have the ability to make changes in our life, and that we can choose to do something about it. So are you in an emotional prison? Do you put limitations on yourself because you believe things about yourself that are untrue or unfounded? Perhaps you think you need to know how your goals will be accomplished, and if you don’t know the how, you don’t believe it’s possible. That’s not true at all. Not every desire you have or goal you set has a logical, organized method of accomplishment tied to it. Many times it is more about setting the intention than it is about knowing what steps to take at each stage. Remember the old adage, “Where there is a will (desire, intention) there is a way.” Another lesson I learned from Bob Proctor was the only reason why someone who makes $50,000 a year isn’t making $50,000 a month is because they haven’t chosen to do that. I thought, “Whoa!” Now, there’s a stretch, right? Maybe that’s a goal that you’re going to set for yourself. It’s possible. It starts with the desire. The first thing you have to do is set the intention, using only positive language to describe your desires and then believe you deserve it and that’s already yours. The rest will come. God (the Universe) will acknowledge your beliefs and will help you put your intentions into actions. If you are aware that you are in an emotional prison and you would like to do something about it, join me on my Manifestation Creation Program . I have created a 10-week program that may change your life forever. We will do it together. We will co-create taking your life to the next level. You have the ability within you to create whatever it is you want for your life, for your family and for your business. I hope you will join me in the Manifestation Creation Program .

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Tim Geithner Warns On Debt: ‘We Are Running Out of Time’

July 14, 2011

WASHINGTON — With members of Congress stuck squabbling over a debt agreement, Treasury Secretary Tim Geithner bluntly warned them Thursday that time is nearly up. “We have looked at all available options, and we have no way to give Congress more time to solve its problem,” Geithner said at a Capitol Hill news conference. “We are running out of time.” The Treasury secretary has warned that the United States won’t be able to pay all of its bills after Aug. 2 if Congress doesn’t raise the cap on its $14.3 trillion debt ceiling. And the consequences would be catastrophic, Geithner has warned, starting with interest rates spiking on U.S. debt and the government having to decide who it won’t pay, from senior citizens to the unemployed, to government contractors and whole branches of government. Many economists fear it would spark a new recession. “The eyes of the country are on us, and the eyes of the world are on us and we need to make sure we stand together and send a definitive signal” that the nation will avoid default, Geithner said, adding that the nation also has to “take advantage of this opportunity to make some progress in dealing with our long-term fiscal problems.” Geithner’s words of warning came as the rhetoric on each side ticked up , and hope for a bigger deal seemed to be fading. Negotiators seemed to be shifting more towards an offer by Senate Minority Leader Mitch McConnell to leave matters in the hands of the White House, at least for shorter-term debt hikes, with Congress exercising limited veto authority. Senate Majority Leader Harry Reid told reporters those talks were going forward, but stood by the Geithner line on time. “We are already feeling consequences,” Reid said, pointing to threats of bond raters to downgrade the U.S. debt and increasing anxiety among the population. “This debate is not about new spending. This is about bills that are due for pre-existing obligations,” Reid said, citing funds for troops, seniors and kids. “If we don’t reach an agreement, we’ll have less than two-thirds of the funds we need.” “There is no wiggle room,” Reid warned, blaming a small cadre of ideologues in the GOP for blocking a deal. Democrats have particularly singled out House Majority Leader Eric Cantor. Republicans argue that there can be no tax hikes in a debt deal, and have insisted on deficit reduction solely through cutting spending. Talks are set to resume at the White House Thursday afternoon, but Speaker John Boehner has already indicated he will not go to Camp David over the weekend to move the process forward. The administration has warned a deal needs to be done by July 22 to get it through Congress in time.

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CA Supreme Court Upholds Manhattan Beach Plastic Bag Ban

July 14, 2011

SAN FRANCISCO — The California Supreme Court says Manhattan Beach can ban retailers from using plastic bags without going through a lengthy environmental study on the increased use of paper bags. The unanimous court said Thursday that “substantial evidence and common sense” show that the ban wouldn’t harm the environment. The ruling overturns an appellate court decision. An industry group calling itself the Save the Bag Coalition filed a lawsuit to overturn the ban enacted in July 2008. The coalition argued that paper bags have a greater negative effect on the environment than plastic bags and demanded an in-depth environmental study be done before the ban went into effect. Justice Carol Corrigan, writing for the court, rejected that argument and concluded there would be no environmental harm caused by the ban.

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Harlan Green: Starving the Beast of Government Starves U.S.

June 30, 2011

Bloomberg Businessweek recently highlighted under the banner, “The Most Feared Man in Washington is…” a profile of Grover Norquist, the chief “Enforcer” of the ‘no new taxes’ pledge taken by 233 of the 240 House Republicans crafted during House Speaker Newt Gingrich’s era of the Contract for America. The pledge binds all of its takers to oppose “any and all efforts” to increase marginal income tax rates and to protect tax deductions and credits, according to Businessweek . But in fact this pledge has not succeeded in its stated goal of lowering government spending. In fact it has mainly succeeded in starving the main engine of economic growth, consumer spending. For each time Republican administrations have cut taxes in the name of shrinking government, this has instead shifted wealth from the lower and middle income classes to the top income brackets, which lowers the overall demand for goods and services. As former Reagan Budget Director David Stockman said in an April 23 New York Times op-ed : While not the stated objective of policy, this reverse Robin Hood outcome cannot be gainsaid: the share of wealth held by the top 1 percent of households has risen to 35 percent from 21 percent since 1979, while their share of income has more than doubled to around 20 percent. Why hasn’t the ‘no new taxes’ pledge succeeded? Because Republicans are no better at cutting government spending than Democrats — in fact, worse. Republican administrations since Ronald Reagan have chosen to borrow to pay for their hot and cold wars, rather than sharing the sacrifice, driving us ever deeper into debt. There are other reasons for slower growth, of course. A slower growing population with more seniors and saturated consumer markets (more than 2 cars in a garage?) are two of the reasons. But during the period 1951-63, when marginal rates were at their peak — 91 to 93 percent — the American economy boomed, growing at an average annual rate of 3.71 percent. “The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm — just the opposite”, wrote Eliot Spitzer in Slate , “Whereas during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent.” Which brings us back to the federal deficit, the reason we are debating methods to starve the beast of government spending, in the first place. The latest surge in deficit spending was caused first and foremost by the Bush-era tax cuts to the highest marginal tax rates, and on dividends and capital gains earned by the investor class. This in addition to the 2 wars has cost us more than $3 trillion in borrowed money to date, and the reason our deficit is still growing. Grover Norquist is not an economist, though he has a Harvard MBA business degree. So he chose to do his economic jousting without even the most basic knowledge of economics, it seems. Macroeconomic demand theory teaches that taking money from the pockets of those who spend most of it and transferring it to those who save most of it doesn’t increase demand for products. Economic historians in particular know that tax cuts without spending cuts do not lower deficits, since it chokes off the revenues needed to pay down the deficit. The two largest expansions of debt as a percentage of GDP were during the Reagan and GW Bush presidencies — from a low of 47 percent in the 1970s to its current some 80 percent. They were also the administrations that would not make comparable spending cuts. Nor do tax cuts — particularly to the highest marginal tax rates — stimulate more growth. In fact, we have seen a historical drop in GDP growth since the decline in highest marginal rates that prevailed during the Eisenhower administrations. Whereas, the only time we have seen a real decline in the federal budget deficit was during the Clinton presidency, when Clinton and Congress agreed to maintain Pay as You Go budget rules that said spending had to match revenues. The highest marginal tax rate was raised to 39 percent while government spending as a percentage of GDP fell, so that the annual deficit was actually erased from 1997 to 2001. Alas, President Reagan wanted to outspend the Russian military, while GW Bush wanted to invade Iraq without spreading the pain. Instead, he made the call after 9/11 for everyone to go shopping. The problem was that shifting so much wealth to the wealthiest shortchanged consumers, who had to borrow beyond their means to take his advice. When will we learn the lessons of history? Grover Norquist may be “the most feared man in Washington…” only because we are doomed to repeat our historic mistakes, if we do not begin to understand how and why the federal deficit was created. This post originally appeared in Popular Economics Weekly .

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Brad Harrington: 1,000 Caring Fathers Counter Media Stereotypes

June 24, 2011

Last week, the Boston College Center for Work & Family released the results of a study we completed on nearly 1,000 American fathers. ” The New Dad: Caring, Committed and Conflicted ” explores the experience of mainly “white collar” fathers who work in large American companies. The results present a clear picture of fathers who care deeply about their work and their families but who are struggling to be active, engaged parents while investing significant energy in successful careers. At work, these new dads are succeeding by traditional measures: they work for highly respected companies, many are in leadership positions, and they are well paid. They are also succeeding in other important career aspects as well: 90 percent said they find the work they do meaningful, 87 percent said that they feel respected in their organizations, and more than 80 percent said they “really feel a part of the group of people they work with.” By any measure, this sounds like success. At home, these men put a strong premium on good partnering and good parenting. They report spending more than 2.5 hours per work day with their children and more than three-quarters say they would like to spend even more time with the kids. They enjoy high levels of support from their spouse. When asked to rate six aspects they felt would define them as good fathers, being a breadwinner was important, but it ranked behind other roles including providing their children with love and support and being involved and present in their children’s lives. These are not the absent fathers of days past who saw their role as simply bringing home a paycheck. Dividing their attention between work and family seems to be paying off for them and their employers. Four out of five fathers reported that their role as family members had a positive spillover for their employers. They reported that fatherhood puts them in a good mood and the happiness they derive from being fathers makes them better workers. Conversely, the support they received from their employers and their managers to live balanced lives led to higher levels of work-life alignment but also higher levels of job satisfaction, greater commitment to their employer, and a lower likelihood to look for jobs elsewhere. What has proved difficult of course is their effort to “do it all” — to meet high career aspirations and to fulfill their expectations of being a good father. It was also challenging to be present in their children’s lives while they worked 45, 55, or more hours per week. And they were cognizant of the fact that their intentions to share equally with their spouse or partner in parenting responsibilities did not match with the reality: while 65 percent of the fathers said caregiving should be shared 50/50 with their spouse, only 30 percent said that was actually the case. Just as it is important to take stock of the challenges faced by working moms, it is important to see the challenges that confront working dads reflect a significant shift in attitudes and expectations that’s been taking place over the last generation. What these fathers report offers concrete data that runs counter to some of the old stereotypes of workaholic, absent fathers who focus on career above all else. While television shows and the media seem intent on casting fathers as inept, clueless caregivers, this national sample of working fathers suggests otherwise and perhaps will help change outdated or inaccurate mindsets. Based on what fathers are telling us, it’s clear that they carry an appreciation of the important role that fatherhood plays in their lives and the lives of their family members. A steady string of high-profile men behaving badly – a sit-com actor, a former governor, an international banking executive, a one-time Vice Presidential candidate and a former Congressman – may grab the majority of media attention. But from our research, we see American men who are striving to be good workers, good fathers, and good men.

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Americans Have Never Been More Distrustful Of Banks: Poll

June 24, 2011

The recession might be officially over, but American views toward the institutions that brought the economic system close to collapse have never been worse. According to a new poll by Gallup , 36 percent of Americans now say they have “very little” or “no” confidence in U.S. banks, the highest percentage on record since Gallup first started tracking that data. Those saying they have a “great deal” or “quite a lot” of confidence in banks has also stagnated, stuck at 23 percent for the second straight year, after falling to a low of 22 percent in 2009. Safe to say it’s been a tough year in the banks’ public relations departments. U.S. banks have spent much of the past year aggressively lobbying against the implementation of Dodd-Frank financial reform. This week, Treasury Secretary Timothy Geithner called out banks for the “huge amount of money [spent by banks] to erode, weaken, walk back” financial reform. Indeed, the largest-lobbying institutions of last year spent 2.7 percent more in the first months of this year in an attempt to combat rules including higher capital requirements and restrictions on swipe fees. The nation’s five largest mortgage servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — have also been the focus of a federal investigation into whether the banks defrauded taxpayers in their handling of foreclosures, first reported by The Huffington Post in mid-May. In addition, in April, Goldman Sachs, the nation’s first-largest bank by assets, was accused in a Senate report of systematically misleading clients by selling them assets known to be junk and then subsequently betting against that junk. So this year’s Gallup results only further emphasize the growing animosity toward banks in America. Never before 2009 had more Americans expressed more distrust than trust in banks. That has not only been the norm for three years now, but the gap is widening. Gallup, who has been tracking confidence in banks for over thirty years now, notes the steady decline of confidence in their release, pointing out that 60 percent of Americans had at least “quite a lot” of confidence in banks in 1979. That fell to 30 percent in the early 1990s, but then steadily rose to 53 percent in the mid-200s. The percentage of Americans with a good deal of trust in banks has been nearly halved since 2007: Although levels of confidence have fallen in all regions since the first years of the financial crisis in 2007, confidence is again on the rise in the Midwest and West. This year, it is the East that has the least confidence in banks, at 20 percent. The below graph charts levels of confidence since the financial crisis:

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David Isenberg: PMC und Drang in the Persian Gulf

June 24, 2011

This post was originally written June 5. It’s now been three weeks since the New York Times published its story on the United Arab Emirates business doings of Erik Prince, the man that lefty critics of private security contracting love to berate. So now that the reflexive PMC und Drang, to coin a phrase, has died down a bit, it is a good time to take a step back, draw a breath, and try to consider some the pros and cons of this latest development. Note, however, PMC und Drang is actually a useful phrase to keep in mind, as the protagonist in a typical Sturm und Drang stage work or novel is driven to action — often violent action — not by pursuit of noble means nor by true motives, but by revenge and greed. If you substitute free market enterprise or good old fashioned capitalism for greed — remember, as Gordon Gecko said, greed is good — then it seems entirely appropriate. For those who need their memories jogged, the May 14 NYT article ” Secret Desert Force Set Up by Blackwater’s Founder ” by Mark Mazzetti and Emily B. Hager detailed how Prince was hired by Sheik Mohamed bin Zayed al-Nahyan, the crown prince of Abu Dhabi and the de facto ruler of the United Arab Emirates, to put together an 800-member battalion of foreign troops for the U.A.E. The force is intended “to conduct special operations missions inside and outside the country, defend oil pipelines and skyscrapers from terrorist attacks and put down internal revolts, the documents show. Such troops could be deployed if the Emirates faced unrest in their crowded labor camps or were challenged by pro-democracy protests like those sweeping the Arab world this year.” While it is impossible to say for certain since I’ve not seen its documentation so far, the NYT story has, factually, stood up pretty well. Apart from using words like mercenaries, the worst thing that can be said about was an incorrect and somewhat derogatory reference to the old South African based Executive Outcomes. See the details here on Eeben Barlow’s blog So Prince has formed a new company called Reflex Responses (any resemblance to a malady like acid reflux is, I’m sure, entirely coincidental), complete with a nifty logo. He has reportedly hired Colombians, along with South African and other foreign troops that are trained by retired American soldiers and veterans of the German and British special operations units and the French Foreign Legion. Hmm, trained by Legionnaires; this could be the first Legion/PSC hybrid in history as Feral Jundi noted . What should we make of all this? Well, first, evidently Erik Prince has decided that of all the things he might or could do in the post Blackwater/Xe Services era, teaching history and economics to high school students is not one of them. Remember that was one of the things he said in early 2010 he might be doing when it was announced that he was leaving the United States and moving to the UAE. Somehow I think the UAE education establishment will weather this loss. Second, let’s consider some of the positives of this. Generally speaking, doing business in the Persian Gulf is a good thing. Why is that? For the same reason Willie Sutton robbed banks; because it is where the money is. Also, Erik has learned something from his past BW contracts in Iraq. BW, along with all the other PSC contractors, took a lot of PR grief for being protected by the old Coalition Provisional Authority immunity provision covering contractors. Although it was never the one hundred percent get out of jail free card critics claimed, it was enough to cast a cloud of suspicion and doubt over their activities. But that was then, this is now. RR’s contract with the UAE states: Article 17 Compliance with the Laws, Regulations and Bylaws The Second Party undertakes to comply with all the laws, regulations and bylaws in force in the State, and all provisions of the Decision of the Deputy Supreme Commander of the Armed Forces referred to hereinabove shall apply to this Contract, provided that the general legal principles in force in the State concerning contracts and contracting methods of the administration shall apply to any matter regarding which there is no specific provision in the said Decision or in this Contract. So if something wrong does happen you will have to take it up with the UAE legal system. Although it is unclear how responsive the UAE system will be to redressing any human rights violations. The latest annual State Department human rights report notes: Section 5 Governmental Attitude Regarding International and Nongovernmental Investigation of Alleged Violations of Human Rights The government generally did not permit organizations to focus on political issues. Two recognized local human rights organizations existed: the quasi-independent EHRA, which focused on human rights issues and complaints such as labor rights, stateless persons’ rights, and prisoners’ well-being and humane treatment; and the government-subsidized Jurists’ Association Human Rights Committee, which focused on human rights education and conducted seminars and symposia subject to government approval. And as Feral Jundi astutely noted , if things work this could be the start of a new financial empire for Prince. Call it Moycock II: Persian Gulf. Emirati military officials had promised that if this first battalion was a success, they would pay for an entire brigade of several thousand men. The new contracts would be worth billions, and would help with Mr. Prince’s next big project: a desert training complex for foreign troops patterned after Blackwater’s compound in Moyock, N.C. So will R2 be opening it’s doors for training to the world, much like how BW operated in the US? If true, I could see something like this becoming a multi-billion dollar project for Prince and company. Just because it would be located in the middle east and cater to all the OPEC nations. Furthermore, qualitatively speaking it is hard to accuse Prince of doing something new. As Strategy Page observes , just about all Persian Gulf states have, for decades, been using foreigners, either working directly for foreign governments or private sector civilians with that government’s approval to equip and train their military security forces. If one wants to accuse Prince of doing something bad one has to similarly accuse firms like Vinnell which has been training the Saudi National Guard for decades. On the negative side it is hard to see the initial force that RR is training as being for any other purpose than to deal with future internal unrest and dissent, as in cracking down on protesters. Training a force of 800 men to deal with a threat from perennial boogeyman threat Iran is farcical. The Iranian military may have its problems but it is clearly capable of overwhelming so few. Though as Nation reporter and perennial Erick Prince critics Jeremy Scahill noted : In a speech Prince delivered in late 2009, a copy of which was obtained by The Nation, Prince spoke of the need to confront Iranian influence in the Middle East, charging that Iran has a “master plan to stir up and organize a Shia revolt through the whole region.” At the time, Prince proposed that armed private soldiers from companies like Blackwater be deployed in countries throughout the region to target Iranian influence. If Prince, Sheik al-Nahyan, or U.S. State or Defense Department officials think a battalion is going to help with that, they are smoking something far more potent than Bill Clinton ever inhaled. In fact, the State Department probably deserves more blame than the Pentagon on this. Even though RR is a UAE majority owned company, Prince is still a U.S. citizen and subject to the International Traffic in Arms Regulations (ITAR) the regulation, and the law is the Arms Export Control Act (AECA). As such he needs to be registered as a Broker or as an Exporter of Defense Articles or Defense Services and would need approval from the Directorate of Defense Trade Controls (DDTC) at the State Department. Even commentators like military historian and foreign-policy analyst Max Boot, who has staunchly defended the use of PSC in the past, wrote : I am nevertheless slightly discomfited by news that Erik Prince, the former SEAL officer and founder of Blackwater, is now in the process of assembling a mercenary battalion for the United Arab Emirates. The UAE is a close American ally and by Middle Eastern standards relatively liberal. But there is no mistaking it for a democracy. It is run by a small number of ruling families which keep a tight lid on dissent–especially among the vast underclass of foreign-born workers who keep the emirates running but are denied citizenship or any of the other benefits that native Emiratis receive. Many of these workers belong to a more or less indentured class of laborers from the Indian subcontinent who live in squalid, miserable conditions. They are deported at any hint of labor organizing or any other attempt to redress their numerous grievances. If the New York Times account of Prince’s dealings can be trusted, he is recruiting Latin Americans and other foreigners, because Arabs cannot be trusted to fire on other Arabs. This suggests that his force is designed to be used for internal repression among other, more legitimate tasks. If that is the case then this is morally dubious undertaking. Again there is nothing inherently wrong with mercenaries but like any other military force they can be used for good or ill. It is not hard to imagine disreputable uses to which this new force could be put by the unelected rulers of the UAE. Likewise 800 men are also clearly inadequate to protect the UAE’s oil infrastructure. And when one looks at the UAE’s human rights record it seems, that while it is hardly the worst in the region, it is also not one inclined to tolerate things like freedom of speech and association. Thus training a force that could be used for “crowd control” doesn’t sound good if the United States wants to be on the side of democratic forces in the future. This raises an interesting potential question as the New Yorker pointed out : A document obtained by the paper describes “crowd-control operations” where the crowd “is not armed with firearms but does pose a risk using improvised weapons (clubs and stones).” After the Arab Spring, and what we have seen in Libya, that is an interesting business to be in. … If the U.A.E.’s R2 battalion ends up killing civilians, might we intervene? And would we do so with the support of private contractors from companies like Blackwater? Interestingly, but perhaps not surprisingly, Reflex Responses does not appear to be a signatory to the International Code of Conduct For Private Security Service Providers that came into effect last November. Perhaps it is because of provisions like this: 21. Signatory Companies will comply, and will require their Personnel to comply, with applicable law which may include international humanitarian law, and human rights law as imposed upon them by applicable national law, as well as all other applicable international and national law. Signatory Companies will exercise due diligence to ensure compliance with the law and with the principles contained in this Code, and will respect the human rights of persons they come into contact with, including, the rights to freedom of expression, association, and peaceful assembly and against arbitrary or unlawful interference with privacy or deprivation of property. Having to comply with UAE law, which doesn’t offer that much in the way of guaranteeing basic civil liberties, is one thing; having to incorporate basic international humanitarian law standards might be something else entirely. So what kind of grade do we give this? Actually, I see three. First, for Prince it is an A plus. Give him credit for knowing where to go to make a profit. For the United States it is a B minus. As long as nothing goes wrong, as in using the future force for breaking up a demonstration of oppressed workers or a continuation of Arab Spring protests in the UAE, the U.S. can sit back and twiddle its geopolitical thumbs and say Erik Prince, who’s that? But if and when some civilian gets killed by a RR employee it can forget about that attempt at plausible deniability. As for the PMSC industry itself, I give it a C. In recent years the PMSC industry has invested considerable effort and some resources to depicting itself as a highly ethical peace and stability operations industry. While a lot of it is rhetorical, some of it has been very real. It is not clear that Prince and RR are doing much to bolster the image that companies and trade groups have tried so hard to cultivate.

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Former Egypt Bank Chairman Pleads Guilty To Sexually Abusing Maid

June 24, 2011

NEW YORK — A prominent Egyptian businessman admitted Friday to kissing and groping a hotel housekeeper who didn’t welcome his advances, pleading guilty as the woman sued him for $5 million. Mahmoud Abdel Salam Omar pleaded guilty to a misdemeanor sexual abuse charge, acknowledging he kissed the woman on the lips and neck and touched her breasts after she brought tissues to his room at the posh Pierre hotel. The 74-year-old chairman of state-run salt production firm El-Mex Salines Co. already has completed five days of community service in a soup kitchen, and his case will be closed without jail time or probation if he stays out of trouble for a year. After softly answering “yes” in English to questions from a judge and prosecutor, Omar declined to comment as he left a Manhattan courthouse. Arrested while in New York to pick up a salt-industry award for El-Mex Salines, he spent about four days behind bars before being released on bail earlier this month. His lawyer, Lori Cohen, called the case the result of a “big miscommunication” between the 44-year-old maid and Omar. While he acknowledged in court that he knew he didn’t have the woman’s consent for his advances, Cohen said he thought the housekeeper was receptive. “I believe he thought something was happening that wasn’t,” she said. “I think his lack of a great understanding of English, and her desire to file a multimillion-dollar lawsuit, led to these accusations.” The woman’s lawyer bristled at the suggestion that she embellished the encounter to try to reap money from the former bank chairman. “That’s just not true,” said the attorney, John P. Grill. “She didn’t know who he was.” Omar initially faced a felony sexual abuse charge that carried up to seven years in prison. After interviewing numerous witnesses and reviewing surveillance video and forensic evidence, prosecutors concluded the incident “did not rise to the level of forcible compulsion,” which would have to be proven for the felony charge, Manhattan assistant district attorney Nicole Blumberg said. Whatever his plea deal, the woman’s lawyer said, “it doesn’t change what happened.” The woman’s federal assault and false-imprisonment lawsuit says Omar also rubbed his groin against her legs and groped her buttocks. It was filed Friday so Omar could officially be served with a copy before he left the country, Grill said. Police Commissioner Raymond Kelly had said the case could be complicated to prosecute. Although the maid told a superior immediately that she had been attacked, the supervisor waited until the next morning to alert the hotel’s security director, who then told police. The hotel suspended the supervisor and promised to buy “panic buttons” for maids to alert managers if they are attacked. A spokeswoman for the hotel’s owner, Mumbai-based Taj Hotels Resorts and Palaces, didn’t immediately return a telephone call Friday. Omar’s lawyer said he might well have chosen to go to trial but was eager to get home to his wife, who has recently had surgery. “This was the most expeditious way for him to return home,” she said. Besides chairing the salt company, Omar has served as chairman of Egypt’s Bank of Alexandria, the Egyptian American Bank and the Federation of Egyptian Banks, according to a biography on his company’s website. He has led El-Mex Salines since 2009. Omar’s arrest came little more than two weeks after then-International Monetary Fund leader Dominique Strauss-Kahn was arrested on charges of attempting to rape a maid at a different hotel, charges Strauss-Kahn denies. Together, the cases drew attention to the potential dangers of hotel maids’ jobs. The New York Hotel and Motel Trades Council plans to call for panic buttons as part of its contract negotiations with 150 hotels next year, and a state legislator has proposed to require the devices statewide. ___ Associated Press writer Tom Hays contributed to this report. ___ Jennifer Peltz can be reached at http://twitter.com/jennpeltz

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South Carolina Republican: Obama, Labor Board Engaged In ‘Regional Warfare’

June 17, 2011

WASHINGTON — Republicans escalated their attacks on the federal labor board under Obama Friday afternoon, as House Oversight Committee Chairman Darrell Issa (R-Calif.) called a special field session in South Carolina to probe a recent complaint brought by the labor board’s acting general counsel against the Boeing Company. Issa took the unusual step of urging the National Labor Relations Board (NLRB) general counsel, Lafe Solomon, to appear before the committee to answer questions regarding a case that he’s currently in the midst of litigating. “I am here reluctantly,” Solomon said under questioning from Issa, “not because I have anything to provide but because I have a lot to protect.” While Solomon appeared before the committee voluntarily, he mostly dodged Republicans’ heated questions about his complaint against Boeing , saying he didn’t want to jeopardize his case. The toughest inquiry came from Rep. Trey Gowdy (R-S.C.), who effectively accused the Obama administration and the labor board of having a grudge against the South. “This administration is no longer content with class warfare,” Gowdy charged. “It’s going to inject regional warfare.” A spokesman for Gowdy could not immediately be reached for comment. In a complaint filed in April, Solomon alleged that Boeing violated labor law when it moved to establish a production line for its 787 Dreamliner in South Carolina. The company, Solomon said, was retaliating against its unionized workers in Washington state for having exercised their legally protected right to strike in the past. The complaint could potentially scuttle the aerospace manufacturer’s plans in South Carolina and force the company to bring the assembly line to Washington. Along with his Democratic defenders, Solomon, who functions as a prosecutor for the quasi-judicial labor board, has said he brought the complaint only because he has a responsibility to enforce labor law. Although Solomon and many law scholars have said there is nothing unique about the complaint, over the last few months Republicans have held it up as proof that the labor board and the Obama administration have a pro-union agenda and an axe to grind with right-to-work states. Such states, which tend to be in the South and West, prohibit laws that make union membership a condition of working for particular companies. Republican leadership chose to locate the special hearing in North Charleston, S.C., the community most impacted if the production line ends up going to Washington state. The hearing was dramatically entitled “Unionization Through Regulation: The NLRB’s Holding Pattern on Free Enterprise,” an indication that Republicans are eager to turn the Boeing case into an ideological battle as well as a campaign issue. A host of Washington lawmakers, including four Democrats, traveled to South Carolina for the hearing. Among those who testified were South Carolina Gov. Nikki Haley (R), South Carolina Attorney General Alan Wilson, and Cynthia Ramaker, an employee at the local Boeing plant, who testified that “thousands of people will be unemployed if the NLRB complaint is successful.” But on Friday Solomon said that he filed the complaint reluctantly, only after he was unable to bring Boeing and the International Association of Machinists and Aerospace Workers to an agreement. He said that three months of negotiations ultimately proved fruitless. “Workers in North Charleston are feeling vulnerable and anxious because they are uncertain as to what impact any final decision may have on their employment with Boeing,” testified Solomon, a career NLRB lawyer. “These are difficult economic times, and I truly regret the anxiety this case has caused them and their families. The issuance of the complaint was not intended to harm the workers of South Carolina, but rather, to protect the rights of workers, regardless of where they are employed.” Republicans have used the Boeing controversy to paint the president and fellow Democrats as job killers — a point of attack they continued on Friday. Rep. Joe Wilson (R-S.C.) called Solomon’s complaint “an unprecedented expansion of big government determining where companies can locate,” and “an assault on Boeing which kills jobs.” Striking a similar note, Haley accused both the labor board and the Obama administration of encouraging employers to send jobs overseas. “The reason [Boeing] came to South Carolina is the cost of doing business is low,” Haley said. “As governor, my job is to do whatever I can to create jobs. I never thought the president and his appointees would be one of the biggest opponents we would have.” But Julius Getman, a law professor at the University of Texas, testified that Solomon’s complaint was “fairly routine” and had been greatly politicized. “This is not by any means an earth-shaking case,” he said. “It’s a traditional case which should be decided in accordance with principles of law that are over 50 years old.” The case against Boeing got underway before an administrative law judge in Seattle earlier this week. If the parties still don’t manage to settle, the five-member labor board will ultimately decide whether Boeing broke labor law by establishing its production line in South Carolina. The case will mostly likely last several weeks and can then be appealed. Solomon said Friday that he would like to avoid long and costly litigation. Rep. Bruce Braley (D-Iowa), who attended the hearing Friday, told HuffPost afterwards that the “circus-like” proceedings amounted to little more than “political theater” meant to stoke the Republican base and donors. Braley also bristled at the idea of lawmakers compelling Solomon to testify on a case that just got underway this week. “It’s the same thing we saw under the Bush administration: Lawyers who forgot what they learned in law school, who forgot what due process is,” Braley said. “They don’t care because they’re all about doing this for political purposes.”

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What The I.M.F. Hackers Were After

June 12, 2011

By Jim Wolf and William Maclean WASHINGTON/LONDON (Reuters) – A major cyber attack on the IMF aimed to steal sensitive insider information, a cyber security expert said on Sunday, as the race to lead the body which oversees global financial system heated up. The U.S. Federal Bureau of Investigation is helping to investigate the attack on the International Monetary Fund, the latest in a rash of cyber break-ins that have targeted high-profile companies and institutions. “The IMF attack was clearly designed to infiltrate the IMF with the intention of gaining sensitive ‘insider privileged information’,” cyber security specialist Mohan Koo, who is also Managing Director, Dtex Systems (UK), told Reuters in London. A June 8 internal memo from Chief Information Officer Jonathan Palmer told staff the Fund had detected suspicious file transfers and that an investigation had shown a desktop computer “had been compromised and used to access some Fund systems.” “At this point, we have no reason to believe that any personal information was sought for fraud purposes,” it said. The New York Times cited computer experts as saying the IMF’s board of directors was told of the attack on Wednesday, though the assault had lasted several months. The IMF says its remains “fully functional” but has declined to comment on the extent of the attack or the nature of the intruders’ goal. News of the hack came at a sensitive time for the world lender of last resort, which is seeking to replace former managing director Dominique Strauss-Kahn, who quit last month after being charged with the attempted rape of a hotel maid. French Finance Minister Christine Lagarde remains the frontrunner to replace him, although Stanley Fischer, the Bank of Israel Governor and a former IMF deputy chief, has emerged as a late candidate, and Mexico’s central bank chief, Agustin Carstens, is another contender. EMBOLDENED Jeff Moss, a self-described computer hacker and member of the Department of Homeland Security Advisory Committee, said he believed the attack was conducted on behalf of a nation-state looking to either steal sensitive information about key IMF strategies or embarrass the organization to undermine its clout. He said it could inspire attacks on other large institutions. “If they can’t catch them, I’m afraid it might embolden others to try,” said Moss, who is chief security officer for ICANN. Tom Kellerman, a cybersecurity expert who has worked for both the IMF and the World Bank, said the intruders had aimed to install software that would give a nation state a “digital insider presence” on the IMF network. That could yield a trove of non-public economic data used by the Fund to promote exchange rate stability, support balanced international trade and provide resources to remedy members’ balance-of-payments crises. “It was a targeted attack,” said Kellerman, who serves on the board of a group known as the International Cyber Security Protection Alliance. The code used in the IMF incident was developed specifically for the attack on the institution, said Kellerman, formerly responsible for cyber-intelligence within the World Bank’s treasury team and now chief technology officer at AirPatrol, a cyber consultancy. “LIFE-THREATENING” Koo of Dtex Systems (UK) said the recent spate of attacks on large global organizations was worrying because they were targeted, well-organized and well-executed, not opportunistic. “Perhaps most frightening of all is the fact that these type of attacks could quite easily be directed toward Critical National Infrastructure (CNI) organizations, for example Energy and Water, where the impact of such a breach would have severe, immediate and potentially life-threatening consequences for everyday citizens.” Cyber security experts said it might be difficult for investigators to prove which nation was behind the attack. “Even developing nations are able to leverage the Internet in order to change their standing and ability to influence,” said Jeffrey Carr, author of the book, “Inside Cyber Warfare.” “It’s something they never could have done before without gold or without military might,” Carr said. CIA Director Leon Panetta told the U.S. Congress on June 9 that the United States faced the “real possibility” of a crippling cyber attack on power systems, the electricity grid, security, financial and governmental systems. Lockheed Martin Corp, the Pentagon’s No. 1 supplier by sales and the biggest information technology provider to the U.S. government, disclosed two weeks ago that it had thwarted a “significant” cyber attack. It said it had become a “frequent target of adversaries around the world.” Also hit recently have been Citigroup Inc, Sony Corp and Google Inc. (Reporting by Lesley Wroughton, Jim Finkle, Jim Wolf, Jim Vicini and William Maclean in London; Editing by Jon Boyle) Copyright 2011 Thomson Reuters. Click for Restrictions

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Kansas Poised To Pass Controversial Anti-Abortion Measure

May 13, 2011

TOPEKA, Kan. — Kansas legislators approved a ban Friday on insurance companies offering abortion coverage as part of their general health plans except when a woman’s life is at risk, capping a string of for abortion rights opponents in the four months since sympathetic Gov. Sam Brownback took office. Brownback, an anti-abortion Republican, is expected to sign the bill sent to him by the state House a mere 15 minutes before lawmakers adjourned their annual session. The House’s early-morning vote was 86-30 in support of a larger bill that included the abortion coverage restrictions. The state Senate had approved it Thursday night, 28-10. If the bill becomes law as expected, starting in July, individuals and employers who want abortion coverage would have to buy supplemental policies that cover only abortion. Supporters of the bill argue that it will protect employers who oppose abortion rights from having to pay for policies that cover the procedures. The legislation also says that no state or federally administered health-insurance exchange in Kansas established under last year’s federal health care overhaul law can offer coverage for abortions, other than to save a woman’s life. “This bill includes very crucial pro-life language,” said House Judiciary Committee Chairman Lance Kinzer, an Olathe Republican. “I would view this as an important conscience protection for Kansas business owners.” After taking office, Brownback called on the GOP-dominated Legislature to create a “culture of life.” He’s already signed legislation to tighten restrictions on late-term abortions and require doctors to obtain written permission from parents before terminating minors’ pregnancies. Legislators also have sent him a bill to impose new health and safety standards specifically for abortion clinics, which Brownback is expected to sign. And the state budget approved by lawmakers contains a provision diverting $300,000 in federal family planning dollars away from Planned Parenthood to public hospitals and health departments. Those measures are part of a wave of anti-abortion legislation across the nation, as abortion opponents have been encouraged by the election of new Republican governors last year and conservative legislators. Several states have considered insurance coverage restrictions similar to Kansas’ legislation. Democratic Govs. Kathleen Sebelius and Mark Parkinson, who held the office before Brownback, blocked most major changes in Kansas abortion laws, vetoing legislation that is becoming law this year. “There’s clearly a message here that women are dispensable,” said state Rep. Annie Kuether, a Topeka Democrat and one of the Legislature’s shrinking number of abortion rights supporters. “I’m sick and tired of being treated like a second-class citizen.” But Kathy Ostrowski, legislative director for the anti-abortion group Kansans for Life, said the state’s new laws will protect women who seek abortions from dangerous clinics and provide more accurate reporting by doctors about their activities. The tighter restrictions on late-term procedures are based on a notion disputed by abortion rights supporters and the American College of Obstetricians and Gynecologists that a fetus can feel pain by the 22nd week of pregnancy. “It has obviously been a good session,” Ostrowski said after lawmakers adjourned. “We have established a beachhead of protection for the developing unborn child.” Supporters of the restrictions on health insurance coverage for abortions noted that Missouri has long had such restrictions. Blue Cross Blue Shield of Kansas City, which operates in 30 Missouri counties and Johnson and Wyandotte counties in Kansas, carries its Missouri practices into Kansas. The company has said consumers rarely ask for abortion-only policies. “The fundamental issue here is not – although I wish it were – the ability to further limit legal access to abortion, but rather who pays,” Kinzer said. Abortion rights supporters are skeptical, believing the bill’s backers want to cut off a way for women to cover the cost of terminating pregnancies. And Rep. Barbara Bollier, a Mission Hills Republican who supports abortion rights, questioned whether women would buy abortion-only policies long before they have crisis or unwanted pregnancies or are rape victims. During the House’s debate, Rep. Pete DeGraaf, a Mulvane Republican who supports the bill, told her: “We do need to plan ahead, don’t we, in life?” Bollier asked him, “And so women need to plan ahead for issues that they have no control over with a pregnancy?” DeGraaf drew groans of protest from some House members when he responded, “I have spare tire on my car.” “I also have life insurance,” he added. “I have a lot of things that I plan ahead for.” ___ The insurance legislation, including the abortion restrictions, is in HB 2075. The original version of the abortion measure is HB 2292. ___ Online: Kansas Legislature: http://www.kslegislature.org Kansans for Life: http://www.kfl.org Planned Parenthood: http://www.plannedparenthood.org/kansas-mid-missouri/

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Judge Refuses To Block Indiana Law Stripping Funds For Planned Parenthood

May 11, 2011

INDIANAPOLIS — Indiana won a key victory in its fight to cut off public funding for Planned Parenthood Wednesday when a federal judge refused to block a tough new abortion law from taking effect, a move that could boost Republican Gov. Mitch Daniels’ image among social conservatives as he considers running for president. U.S. District Judge Tanya Walton Pratt denied Planned Parenthood of Indiana’s request for a temporary restraining order despite arguments that the law jeopardizes health care for thousands of women. Planned Parenthood wanted to keep funds flowing while it challenges the law signed this week by Daniels. The judge’s decision allows the cuts to take effect immediately. Pratt said the state has not had enough time to respond to Planned Parenthood’s complaint and that the group did not show it would suffer irreparable harm without a temporary restraining order. A hearing was scheduled June 6 on the request for a preliminary injunction, and Pratt said she will rule on the matter before July 1, when new abortion restrictions included in the law are set to take effect. “We are deeply disappointed that the judge decided not to stop this unconscionable law from impacting Hoosiers seeking preventive, reproductive health care,” said Betty Cockrum, president of Planned Parenthood of Indiana, in a statement released Wednesday. “The ruling means that Hoosiers who rely on federal funding have lost access to their crucial and lifesaving preventive health care at Planned Parenthood of Indiana.” Sue Swayze, legislative director for Indiana Right to Life, said she was thrilled with the judge’s decision not to issue a temporary restraining order. “This isn’t about health care services,” she said. “This is about abortion.” The funding cuts are part of a new law that also bans abortions after the 20th week of pregnancy unless there is a substantial threat to the woman’s life or health. The law could improve Daniels’ status among social conservatives as he considers standing for president in 2012. Advocates are touting Indiana as the one of the most “pro-life states in the nation” and have praised Daniels for signing the law. The measure wasn’t part of Daniels’ legislative agenda and he didn’t advocate publicly for it. But he said he supported the abortion restrictions all along and that the move to defund Planned Parenthood hadn’t changed his mind. The bill was originally intended to cut all public funding, but Planned Parenthood of Indiana spokeswoman Kate Shepard said the state conceded in court Tuesday that some family planning funds would not be affected. The total amount of funding at issue now is about $1.4 million, Shepard said. Cockrum said Wednesday’s court ruling means that 9,300 Medicaid patients at Planned Parenthood’s 28 locations will lose services from their preferred provider. Planned Parenthood also said it will have to stop providing disease intervention services to hundreds of people in 22 counties. But state Sen. Scott Schneider, a Republican from Indianapolis who sponsored the measure to defund Planned Parenthood, said there are other clinics around the state that can provide health services. “The case made by Planned Parenthood is nothing more than a false alarm and their claims that women will go without health services are false,” Schneider said in a statement Wednesday. “Our new law will allow Planned Parenthood to continue to receive taxpayer funding if they simply stop performing abortions. The decision is now theirs to make.” Indiana’s law may also put the state at risk of losing $4 million a year in separate federal family planning grants. It also bans abortions after the 20th week of pregnancy unless there is a substantial threat to the woman’s life or health. That’s four weeks less than previously allowed. The abortion provisions would take effect July 1.

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Republican ‘Pledge To America’ Centers On Spending Freeze, Tax Cuts

September 22, 2010

WASHINGTON — Six weeks before midterm elections, House Republicans vowed to cut taxes and federal spending, repeal President Barack Obama’s health care law and ban federal funding of abortion as part of a campaign manifesto designed to propel them to victory in November and a majority in the next Congress. The “Pledge to America,” circulated to GOP lawmakers Wednesday, emphasizes job creation and spending control, as well as changing the way Congress does business. It steered clear of controversial issues such as Social Security and Medicare, big drivers of deficit spending. It pairs some familiar Republican ideas – such as deep spending cuts, medical liability reform and stricter border enforcement – with an anti-government call to action that draws on tea party themes and echoes voters’ disgruntlement with the economy and Obama’s leadership. “Regarding the policies of the current government, the governed do not consent,” reads a preamble to the agenda. “An arrogant and out-of-touch government of self-appointed elites makes decisions, issues mandates, and enacts laws without accepting or requesting the input of the many.” Republicans are favored to add substantially to their ranks, perhaps enough to seize control of the House. Details of their plan emerged as President Barack Obama tried to reintroduce voters to his health care overhaul law, a signature issue of his first two years that Americans don’t much like or understand. Democrats, who pursued overhaul for decades, have been surprised by its unpopularity. GOP leaders are set to go public with their plan Thursday at a hardware store in suburban Virginia, choosing a location outside the nation’s capital that’s in keeping with the plan’s grassroots emphasis. It calls for every bill to cite its specific constitutional authority, a vote on any government regulation that costs more than $100 million annually and a freeze on hiring federal workers except security personnel. It also has a “read the bill” provision mandating that legislation be publicly available for three days before a vote. Officials have described the agenda as the culmination of an Internet- and social networking-powered project they launched earlier this year to give voters the chance to say what Congress should do. The “America Speaking Out” project collected 160,000 ideas and received 1 million votes and comments on the proposals, they said. Much internal debate ensued among party leaders, rank-and-file lawmakers and GOP activists about the contents of the agenda, including whether it should include a reference to “family values” – which some strategists argued could alienate the independent voters Republicans are courting. They agreed to include the abortion provision and a vaguely worded statement on social issues: “We pledge to honor families, traditional marriage, life, and the private and faith-based organizations that form the core of our American values.” The plan recalled Republicans’ 1994 “Contract With America,” a list of heavily poll-tested proposals they unveiled about six weeks before the GOP gained 54 House seats and seized control of the House for the first time in 40 years. But the rollout reflects a national mood far different from the one 16 years ago, and an electorate that national surveys show is fed up with its representatives and disillusioned about government. “The Contract was done at a time when it was acceptable for a relatively small number of elected officials and trusted aides to go behind closed doors, come up with some ideas, test them in polls and then announce them on the steps of the Capitol,” said Michael Franc of the conservative Heritage Foundation, who was a House aide during those days. “If you did that now, you’d see yourself being hung in effigy most places. … (Republicans) can’t afford to come across as another case of ‘government knows best,’” Franc said. Republican strategists advising House leaders have told them that presenting their own ideas for governing – laser-focused on jobs and recharging the economy – is crucial to their electoral chances. “It is not enough for the Republican Party just simply to point out that President Obama and the Democrats have failed,” said pollster David Winston. “What Americans are looking for is a plan that they have confidence in that will work.” Democrats dismissed the GOP plan as recycled ideas that would further exacerbate the nation’s problems. “Republicans want to return to the same failed economic policies that hurt millions of Americans and threatened our economy,” said Nadeam Elshami, a spokesman for House Speaker Nancy Pelosi. The plan proposes creating jobs through tax cuts, including permanently extending George W. Bush’s reductions for people at every income level, now slated to expire in January, and a 20 percent deduction for small businesses. It also calls for repeal of an unpopular new provision enacted to help pay for the health care law that requires nearly 40 million businesses to file tax forms for every vendor that sells them more than $600 in goods. It offers an array of proposals to limit spending, including cutting back to 2008 levels and placing a hard cap on future government expenditures. Republicans are calling for replacing the health care law by letting people buy health care coverage outside their states, expanding state programs that cover high-risk patients who can’t otherwise get insurance and expanding the use of tax-advantaged savings accounts to cover medical costs. And the plan also focuses on security, including calling for denying terrorists so-called “Miranda rights,” opposing the release of Guantanamo Bay detainees into the United States and full funding for missile defense programs.

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5-Day Emergency Contraceptive ‘Ella’ Approved By FDA

August 13, 2010

WASHINGTON (AP) — Federal health officials on Friday approved a new type of morning-after contraceptive that works longer than the current leading drug on the market. The pill ella from HRA Pharma reduces the chance of pregnancy up to five days after sex. Plan B, the most widely used emergency contraceptive pill, begins losing its ability to prevent pregnancy within three days of sex. The Food and Drug Administration approved the drug Friday as a prescription-only birth control option. The ruling clears the way for U.S. sales of the drug, which is already approved in Europe. Morristown, N.J.-based Watson Pharmaceuticals will market the drug in the U.S. under an agreement with HRA. Watson said it will launch the pill in the fourth quarter. Studies of ella by its manufacturer showed the drug prevented pregnancies longer and more consistently than Plan B. In a head-to-head trial between the two drugs, women who took ella had a 1.8 percent chance of becoming pregnant, while women who took Plan B had a 2.6 percent chance. Experts tracked nearly 1,700 women who randomly received one of the two pills within three to five days of having unprotected sex. Plan B is made by Teva Pharmaceuticals and is also marketed in several generic versions. Unlike ella, Plan B and other generic versions are available without a prescription for women 17 years and older. HRA Pharma did not request over-the-counter status for its drug. Ella uses the hormone progesterone to delay ovulation, a key step in the fertilization process. Despite this, the drug has drawn criticism from anti-abortion groups who say it is closer to an abortion pill than an emergency contraception pill. Groups including the Family Research Council argue the drug is chemically similar to the abortion drug mifeprestone, which can be taken to end a pregnancy up to 50 days into the gestation period. That drug has been associated with severe infections and bleeding after abortion. However, FDA reviewers reported no life-threatening medical side effects with ella. The most common side effects with the drug included headache, nausea and abdominal pain, according to an FDA release. Abortion rights groups hailed the approval as an important step for the FDA, which was criticized in 2006 for its handling of Plan B’s approval. Last year a federal judge ruled that the FDA deliberately delayed making a decision on whether to permit over-the-counter sales of Plan B to teenage girls, at the behest of the Bush administration. ”Approval of ella is another indication that the FDA is committed to restoring scientific integrity in its decisions,” said Kirsten Moore, president of the advocacy group Reproductive Health Technologies Project. Privately held HRA Pharma is based in Paris and specializes in women’s health products.

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Obama Rallies Democrats as House Leaders Predict Health Overhaul Will Pass

March 20, 2010

By Ryan Donmoyer and Catherine Dodge March 20 (Bloomberg) — President Barack Obama rallied House Democrats to back health-care legislation that he called “the toughest insurance reforms in history” as party leaders said they would have the votes to pass the overhaul tomorrow. “We have been debating health care for decades,” Obama told lawmakers today at the U.S. Capitol . “It is time to pass health-care reform for Americans, and I am confident you are going to do it.” On the eve of the vote on the biggest revamp of U.S. health care in more than four decades, House Democrats abandoned plans to avoid a direct up-or-down ballot on Senate-passed legislation after days of accusations from Republicans that they were ducking a politically difficult vote. House Majority Leader Steny Hoyer said “we believe we have the votes” as leaders resolved a dispute over Medicare payments to states and moved to defuse a row over abortion. He said Democrats dropped the idea of holding an indirect vote on the Senate bill and simply “deeming” it approved because “we determined we could do this, and it was a better process.” The House will vote on both the Senate bill and compromise legislation that amends parts of the Senate measure that House Democrats don’t like. The compromise bill then goes back to the Senate, where Majority Leader Harry Reid said today he had the “commitment of a significant majority” of Democrats to approve it. ‘Quiet Crisis’ Obama, who has had more than 60 conversations with lawmakers since March 15 to help Speaker Nancy Pelosi round up the 216 House votes she needs, said today many Americans are living a “quiet crisis” because of health-care concerns. “Now, we’re on the threshold of doing something about it,” said Obama, who has made the issue the centerpiece of his domestic legislative agenda. “We’re a day away.” “Is this the single most important step that we have taken on health-care since Medicare ? Absolutely,” Obama said of the 10-year, $940 billion measure. Republicans universally oppose the legislation, arguing that Democrats are underestimating the cost and pushing though changes that polls show Americans don’t like. “They do not want the federal government involved in their personal health care, and they do not want a bill that spends over $1 trillion,” Representative Dave Camp of Michigan told the Rules Committee today, which was meeting to set the rules for tomorrow’s floor debate. ‘Kill the Bill’ Outside the Capitol, more than 2,000 people gathered to protest the legislation, chanting “kill the bill.” Kristie Greco , a spokeswoman for Representative James Clyburn of South Carolina, said demonstrators called Representative John Lewis of Georgia, who is black, a racial epithet and spat on another black lawmaker, Emanuel Cleaver , of Missouri. “I heard people saying things today I have not heard since March 15, 1960, when I was marching to try to get off the back of the bus,” said Clyburn, who is black. Democrats headed off the dispute in their ranks over Medicare payments by agreeing to ease geographic disparities in doctor and hospital payments. Party leaders also said they were confident they can overcome complaints by some members that language restricting federal funding for abortion isn’t strong enough. Hoyer said Democrats are considering asking the Obama administration to issue an executive order that would expressly say “there will be no use of public funds for abortion” to allay some lawmaker concerns. No Separate Vote Representative Bart Stupak of Michigan, a leading critic of the abortion language in the legislation, had asked for a separate floor vote to add a stricter ban on such funding. Pelosi ruled that out. “We’re in the final stretch here,” said Representative Chris Van Hollen, a Maryland Democrat. Asked whether Democrats need to reach an agreement on an executive order or some other way of appeasing pro-life Democrats before a vote, he said “I’m not sure we do.” The original House bill passed 220-215. Since then, Democrats lost four “yes” votes because of vacancies and a switch by the one Republican who backed the bill. Democrats say the legislation will cover 32 million uninsured Americans and curb medical costs . The Congressional Budget Office said it would also reduce the federal deficit by $138 billion in the first 10 years. Insurance Mandate The legislation requires Americans to get insurance, offering government aid and new purchasing exchanges to help. Insurers such as Indianapolis-based WellPoint Inc. would get millions of new policyholders, while being required to accept all customers, even with pre-existing conditions. All told, 37 sitting Democrats voted “no” on the original bill. Another 40 supported the measure while voting “yes” on an amendment calling for stricter controls on abortion funding that Stupak offered at the time. Representative Dan Lipinski , an Illinois Democrat, said he’s switching his vote to “no” because of the abortion issue. New York Representative Michael Arcuri , who voted for the original House bill, said he’s now a “no” because the new measure doesn’t do enough to control costs. Massachusetts Representative Stephen Lynch is also switching to “no,” the Boston Herald reported . ‘Yes’ Votes On the other side, Democrats John Boccieri of Ohio, Allen Boyd of Florida, Bart Gordon of Tennessee, Dennis Kucinich of Ohio, Suzanne Kosmas of Florida, Betsy Markey of Colorado and Scott Murphy of New York all now plan to vote “yes” after voting “no” in November, according to statements from the lawmakers or their offices. Two more lawmakers said today they would back the bill. Representative Harry Mitchell , an Arizona Democrat, issued a statement saying he will vote “yes,” as did another undecided lawmaker, Representative Adam Smith , a Washington Democrat. To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net ;

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Obama Heads to U.S. Capitol Today as Health-Care Measure Hangs in Balance

March 20, 2010

By Kristin Jensen and Ryan J. Donmoyer March 20 (Bloomberg) — President Barack Obama will travel to the U.S. Capitol today to appeal to House Democrats to back sweeping changes in health care on the eve of a vote on legislation that will help define his presidency. Obama has held 64 meetings or phone conversations with lawmakers since March 15 to help House Speaker Nancy Pelosi round up the 216 votes she needs to win the vote set for tomorrow. At least seven Democrats who voted “no” on a House version of the bill in November have switched sides to support the measure. At least three others have switched to oppose it. Obama has also taken his case to the people, holding campaign-style rallies to promote a plan that is opposed by all Republicans in Congress and, polls have shown, by much of the public. “You’ve got to help us finish this fight,” Obama told a crowd at a rally in Fairfax, Virginia, yesterday. “You’ve got to stand with me just like you did three years ago and make some phone calls and knock on some doors, talk to your parents, talk to your friends. Do not quit.” As of last night, Democrats were still working to sway the last few lawmakers they needed, even as disputes over abortion funding and Medicare payments threatened to undermine support for the legislation. Obama will continue the lobbying effort in his trip to the Capitol this afternoon. The 10-year, $940 billion measure would mark the biggest overhaul of health care since the 1965 creation of the Medicare program for the elderly. Republicans say the Democrats are underestimating the cost and say the plan amounts to a government takeover of the system. ‘Arrogance of Power’ “The American people are upset about the process, they’re upset about the bill and the arrogance of power that’s going on here, from the president of the United States to the speaker of the House,” House Minority Leader John Boehner , an Ohio Republican, said on Fox News. Obama is asking House Democrats to approve a Senate bill passed in December along with another measure that makes changes to it under a budget process called reconciliation. The Senate will then take up the reconciliation bill as well. The two-step process is necessary because House Democrats object to some provisions in the Senate bill . The original House bill passed 220-215. Since then, Democrats lost four “yes” votes because of vacancies and a switch by the only Republican who supported the bill. And they are facing defections by Democrats concerned about issues that include the bill’s cost and ensuring restrictions on abortion funding. Cutting the Deficit Democrats say the legislation will cover 32 million uninsured Americans and curb medical costs . The Congressional Budget Office said it would also reduce the federal deficit by $138 billion in the first 10 years. “This changed a few votes in the last few days,” said Representative Bill Pascrell , a New Jersey Democrat who plans to vote for the bill. The legislation requires Americans to get insurance, offering government aid and new purchasing exchanges to help. Insurers such as Indianapolis-based WellPoint Inc. would get millions of new policyholders, while being required to accept all customers, even with pre-existing conditions. Insurers gained yesterday, with the Standard & Poor’s 500 Managed Health Care Index climbing 2.3 percent. Business Lobbying Business groups mounted a lobbying campaign against the legislation, and Peoria, Illinois-based Caterpillar Inc. sent a letter to Pelosi, a California Democrat, and Boehner saying it would raise its costs by $100 million in the first year alone. “We can ill afford cost increases that place us at a disadvantage versus global competitors,” wrote Gregory Folley, chief human resources officer at Caterpillar. All told, 37 sitting Democrats voted “no” on the original bill. Another 40 supported the measure while voting “yes” on language calling for stricter controls on abortion funding put forth by Michigan Democrat Bart Stupak . Their votes may shift because they say the Senate language isn’t strong enough. Stupak has said he can’t support the new legislation unless the abortion language is changed. Likewise, Representative Dan Lipinski , an Illinois Democrat, said he’s switching his vote to “no” because of the issue. New York Representative Michael Arcuri , who voted for the original House bill, said he’s now a “no” because the new measure doesn’t do enough to control costs. Massachusetts Representative Stephen Lynch is also switching to “no,” the Boston Herald reported . Switching to ‘Yes’ On the other side, Democrats John Boccieri of Ohio, Allen Boyd of Florida, Bart Gordon of Tennessee, Dennis Kucinich of Ohio, Suzanne Kosmas of Florida, Betsy Markey of Colorado and Scott Murphy of New York all now plan to vote “yes” after voting “no” in November, according to statements from the lawmakers or their offices. Democrats are trying to hold onto another group of lawmakers who are protesting the deletion of a provision designed to ease geographic disparities in Medicare payments. Oregon Representative Peter DeFazio , a “yes” vote in November, said he would be a “no” this time unless the provision, affecting 17 states, is reinstated. The House Rules Committee will meet this morning to set ground rules for the vote. The No. 2 Senate Democrat, Dick Durbin of Illinois, said if the House approves the legislation tomorrow, the Senate may finish its work on the matter by March 26. “When Speaker Pelosi and the leaders that I respect say publicly that they will have the votes, I feel good and positive about the outcome in the House,” Durbin told reporters in Chicago. To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net ; Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net ;

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U.S. House Leader Hoyer Says Chamber Will Pass Health Measure This Month

March 13, 2010

By Catherine Dodge March 13 (Bloomberg) — U.S. House Majority Leader Steny Hoyer predicted his chamber will approve the Senate health-care overhaul this month along with a package of changes, and said public support is gaining for the legislation. “That’s our objective, and I think we will,” Hoyer said of the passage prospects in an interview on Bloomberg Television’s “Political Capital with Al Hunt ,” airing this weekend. Lawmakers are trying to finish work on the legislation before going on an Easter break March 26. Hoyer cited a recent poll by The Economist magazine that found 53 percent of Americans support President Barack Obama ’s health-care proposals and 47 percent oppose them. The poll was conducted after Obama’s televised bipartisan summit on health- care on Feb. 25. Polls leading up to the summit showed more than half of Americans were against the Democrats’ plans. Hoyer, a Maryland Democrat, said voters support individual parts of the legislation, including the elimination of lifetime caps on insurance plans, a ban on insurers denying people coverage because of pre-existing medical conditions, and exchanges to shop for the best insurance policies. “When you ask people about that, they say, ‘Yes, I’m for that,’” he said. “We win the pieces.” Obama, who is pushing Democrats to pass health-care legislation before the Easter recess, decided to delay by three days a scheduled trip to Asia to help with efforts to pass the health-care measure. He now will depart for Indonesia and Australia on March 21. House Vote House Speaker Nancy Pelosi , a California Democrat, signaled she would seek a vote in her chamber on the legislation next week. Pelosi, speaking to reporters yesterday after the delay of Obama’s trip was announced, said she was “delighted the president will be here for the passage of the bill.” One potential roadblock to passing the measure for House Democrats is how to prevent a defection of some party members concerned about federal funds being used to cover abortion. Michigan Representative Bart Stupak has said about a dozen fellow Democrats, who supported the original House bill in November when it won by five votes, might oppose the legislation over the abortion issue. “I don’t think we’ll lose a dozen votes,” Hoyer said in the Bloomberg interview. “I think we may lose some.” Hoyer, 70, didn’t rule out that Stupak may support the legislation. “He very much wants to see a health-care bill pass,” Hoyer said of Stupak. Stupak’s Stance Stupak spokeswoman Michelle Begnoche said she wouldn’t respond to Hoyer’s comment, saying only that her boss “has not changed his position that he will not vote for the Senate bill on the promises that it will be fixed afterward.” Obama wants House Democrats to approve the bill the Senate passed in December, while approving another measure that would make negotiated changes. Those fixes are designed to ease concerns House members have about the Senate’s 10-year, $875 billion version. Hoyer said House members “want to trust” the Senate to pass the package of changes. “But as Ronald Reagan said, you want to verify,” he said, referring to a comment the former president made about negotiating with the Soviet Union. “I expect at least 51 members of the United States Senate to sign on as cosponsors of the legislation” that makes the changes, he said. That will “clearly represent that they intend to support it.” The changes would be passed under a budget procedure called reconciliation that requires a simple majority vote in the Democratic-controlled, 100-member Senate, rather than the 60 that often is needed for major legislation. Jobs Measure Hoyer also said he hopes to have an agreement with the Senate on jobs legislation to extend unemployment benefits, provide aid to the states and other measures to help boost the economy “very quickly, within perhaps the next couple of weeks.” The Senate approved its version of the bill March 10. Hoyer said a proposal to fund the jobs bill in part by raising taxes paid by private equity executives on carried interest wouldn’t likely be included in the measure. “I don’t think the Senate shows much of an inclination to support carried interest,” he said. To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net

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Hoyer Predicts House Will Pass Senate’s Health-Overhaul Measure This Month

March 12, 2010

By Catherine Dodge March 12 (Bloomberg) — House Majority Leader Steny Hoyer predicted his chamber will pass the Senate health-care overhaul this month along with a package of changes and said public support is gaining for the legislation. “That’s our objective, and I think we will,” Hoyer said in an interview on Bloomberg Television’s “Political Capital with Al Hunt ,” airing this weekend. Lawmakers are trying to finish the legislation before going on an Easter break March 26. Hoyer cited a recent poll by The Economist magazine that found 53 percent of Americans support President Barack Obama ’s health-care proposals and 47 percent oppose them. The poll was conducted after Obama’s televised bipartisan summit on health- care on Feb. 25. Polls leading up to the summit showed more than half of Americans were against the Democrats’ plans. Hoyer, a Maryland Democrat, said voters support the individual parts of the legislation, including the elimination of lifetime caps on insurance plans, a ban on insurers denying people coverage because of pre-existing medical conditions, and exchanges to shop for the best insurance policies. “When you ask people about that, they say, ‘Yes, I’m for that,’” he said. “We win the pieces.” Obama, who is pushing Democrats to pass health-care legislation before the Easter recess, is delaying next week’s scheduled trip to Asia by three days to work on the measure. Abortion Fight One potential roadblock for House Democrats is how to prevent a defection of some party members concerned about federal funds being used to cover abortion. Michigan Representative Bart Stupak has said about a dozen fellow Democrats, who supported the original House bill in November when it won by five votes, might oppose the legislation over the abortion issue. “I don’t think we’ll lose a dozen votes,” Hoyer said. “I think we may lose some.” Hoyer also didn’t rule out that Stupak may support the legislation. “He very much wants to see a health-care bill pass,” Hoyer said of Stupak. Obama wants House Democrats to approve the bill the Senate passed in December, while passing another measure that would make negotiated changes. Those fixes are designed to ease concerns House members have about the Senate’s 10-year, $875 billion version. Trust and Verify Hoyer said House members “want to trust” the Senate to pass the package of changes. “But as Ronald Reagan said, you want to verify.” “I expect at least 51 members of the United States Senate to sign on as cosponsors of the legislation” that makes the changes, he said. That will “clearly represent that they intend to support it.” The changes would be passed under a budget procedure called reconciliation that requires a simple majority vote in the Democratic-controlled, 100-member Senate, rather than the 60 that often is needed for major legislation. Hoyer also said he hopes to have an agreement with the Senate on jobs legislation to extend unemployment benefits, provide aid to the states and other measures to help boost the economy “very quickly, within perhaps the next couple of weeks.” The Senate approved its version of the bill March 10. Hoyer said a proposal to fund the jobs bill in part by raising taxes paid by private equity executives on carried interest wouldn’t likely be included in the measure. “I don’t think the Senate shows much of an inclination to support carried interest,” he said. On budget issues, Hoyer said he wouldn’t go along with a vow by Republicans not to attach money for pet projects to budget bills during an election year. “It’s a little hypocritical for the Republicans,” who Hoyer said doubled the number of earmarks from 1995 to 2006, when they controlled the House. “Now they’re crying crocodile tears.” To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net

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Democratic Defections on Abortion Issue May Imperil Health-Care Overhaul

March 5, 2010

By Laura Litvan March 5 (Bloomberg) — U.S. House leaders are facing the possible defection of about a dozen anti-abortion Democrats from a health-care bill just as lawmakers enter their final push for the landmark legislation in Congress. Representative Bart Stupak of Michigan said Senate-passed language on abortion isn’t acceptable to him and the other lawmakers in the bloc, and that if the issue isn’t resolved they will vote against the broader health legislation. “We’re prepared to take responsibility” for the defeat of the bill, Stupak said yesterday on ABC Television’s “Good Morning America” program. “I want to see health care, but we’re not going to bypass some principles and belief we feel strongly about.” His comments underscore the risk the abortion issue poses as congressional Democrats seek to pass a measure overhauling the nation’s health-care system with no Republican support. “It’s probably the biggest challenge we have,” said Representative Bill Pascrell , a New Jersey Democrat. The legislation passed the House on Nov. 7 with just 220 of 435 votes, and the potential loss of support over abortion may be enough to sink the bill. Some House Democrats who favor abortion rights have said their votes also may hinge on how the matter is addressed. Echoes of Past Abortion policy has delayed — or killed outright — past legislation ranging from a rewrite of bankruptcy law to foreign aid and military spending measures. To avoid that fate last year, Democratic leaders in both chambers let anti-abortion lawmakers attach tougher restrictions to the health legislation, President Barack Obama’s top domestic priority. Stupak took the lead in the House, while Senator Ben Nelson of Nebraska provided Democrats in that chamber with the 60th vote needed to clear the health measure after he negotiated abortion language. House Speaker Nancy Pelosi said yesterday the Senate language should satisfy those who oppose federal funding for abortions. “If you believe that there should be no federal funding of abortions and if you believe there should be no change in the policy and if you believe we need health care for all Americans, then we will pass the bill,” she told reporters. Democratic leaders say they’ll try to approve health legislation by first pushing the Senate bill through the House. Then each chamber would address a host of changes through separate legislation via a parliamentary maneuver called budget reconciliation, which would allow the Senate to pass it with just 51 votes, sidestepping Republican opposition. Up to Pelosi Democratic leaders said because reconciliation is designed for matters that relate to the federal budget, not social policy, it can’t be used to resolve abortion differences. Senate Majority Whip Richard Durbin , an Illinois Democrat, said it will be up to Pelosi to find the votes in her caucus for the Senate language. “She’s got to deal with this,” Durbin said. The broader legislation, which will cost about $1 trillion over 10 years, is intended to ratchet down health costs and extend coverage to tens of millions of uninsured Americans, offering government subsidies to low-income people. The president, who this week called on Congress to have an up-or-down vote on health care in the next few weeks, met yesterday at the White House with members of the House Progressive Caucus to shore up their support. He pledged to push in the future for ideas championed by the group, including a government insurance option to compete with private insurers, said Representative Raul Grijalva , an Arizona Democrat, who co-chairs the group. Same-Day Signing “Down the road, we’ll continue to work on these issues,” Grijalva said. Grijalva said Obama told the lawmakers he intends to sign both the Senate-passed bill and the reconciliation bill on the same day. The abortion issue may get in the way. Richard Doerflinger, the top lobbyist for the U.S. Conference of Catholic Bishops , agreed with Stupak that a dozen House Democrats will oppose a final measure if the Senate abortion language is in it. They include Representative Brad Ellsworth of Indiana and Representative James Oberstar of Minnesota, he said. “Those members are standing firm,” said Doerflinger. The House health bill restricts federal dollars from being used to pay for insurance plans that include abortion coverage. The Stupak amendment would bar the use of new federal subsidies to pay the costs of any plans covering abortion offered through a new insurance-purchasing exchange. ‘Ban on Abortion’ In the Senate bill, the federal Office of Personnel Management would oversee at least two multistate insurance programs in the exchange. At least one would provide abortion coverage and one wouldn’t. States could opt out of having any plan with abortion coverage. Groups such as the National Right to Life Committee say the Senate language is unacceptable because it would let one plan in each market allow abortion coverage. Pro-choice groups are lobbying against abortion provisions in both the House and Senate bills. Nancy Keenan , president of NARAL Pro-Choice America, said the Stupak language would effectively block private plans on the exchange from offering abortion coverage for many lower-income women. “It is a ban on abortion in the exchange,” she said. To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net

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Lawmakers See Quick U.S. Health-Care Agreement Without Government Program

January 5, 2010

By Kristin Jensen and Terrence Dopp Jan. 5 (Bloomberg) — U.S. Democrats will likely drop the idea of setting up a new government-run insurance program as they try to quickly resolve differences between House and Senate health-care bills, party members in both chambers said. Democratic leaders may also bypass a House-Senate conference, the normal route for reconciling legislation, in favor of more informal talks to wrap up in a “few weeks,” said New Jersey Representative Frank Pallone , who heads the House Energy and Commerce panel’s health subcommittee . “I don’t think the public option survives,” Pallone told state lawmakers in Trenton yesterday. “There is nowhere near 60 votes on that.” Democrats control 60 votes in the Senate, exactly the number needed to pass major legislation. Not all the party’s lawmakers support the idea of a new insurance program, or public option, and Senate Majority Leader Harry Reid , a Nevada Democrat, had to jettison it from the measure his chamber passed Dec. 24. It’s “not likely” the public option will make the final bill, said Illinois Senator Dick Durbin , the No. 2 Senate Democrat. While leading Democrats including House Speaker Nancy Pelosi have championed the idea as a cost-saving measure, critics said it would unfairly tilt the market against private insurers such as Indianapolis-based WellPoint Inc. “The Senate has pushed this to the limit of 60 votes,” Durbin said yesterday. “We have to be careful that whatever we change doesn’t jeopardize that 60-vote margin.” Compromise Timing House and Senate negotiators are already discussing how to combine the bills and may reach an agreement “by the end of the month, if we’re fortunate, or the first part of next month,” Durbin told reporters in Chicago. One goal is to finish before President Barack Obama’s State of the Union address in late January or early February. After aiming for bipartisan votes in each chamber by August, Democrats managed to pass the House bill on Nov. 7 with one Republican’s backing. No Republicans supported the Senate plan. The overall legislation is designed to extend coverage to tens of millions of uninsured Americans while curbing rising medical costs . House and Senate Democrats also have to reach agreement on how to pay for the measure and how strictly to bar federal money for abortion. Tax Battle Both the House and Senate would require Americans to get insurance or pay a penalty, offer expanded government aid and online purchasing exchanges to help people buy policies, and impose new requirements that insurers accept customers regardless of pre-existing conditions. The House opted to use a surtax on the wealthiest Americans to pay for its 10-year, $1 trillion bill. Pallone said that idea will probably fail in talks with the Senate, which would partially fund its bill through a tax on high-end insurance plans. That plan that has drawn fire from labor unions. Lawmakers will also forge some compromise that satisfies both sides of the abortion debate and prohibits the use of federal funds for the procedure, Pallone said. “Everyone understands we can’t have federal dollars used in any way, or subsidies in any way, to pay for abortions,” said Pallone, an abortion-rights supporter. Pelosi, of California, is scheduled to confer today with the heads of the three committees with jurisdiction over health care to discuss strategy. Durbin said he’s not “assuming a thing,” and said leaders would work hard to keep the 60 votes controlled by Senate Democrats together. “We’ll never have another chance like this in my political lifetime,” Durbin said. “This is it.” To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net ; Terrence Dopp in Trenton at tdopp@bloomberg.net

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Lawmakers See Quick Health-Care Deal Without Public Option, Formal Talks

January 4, 2010

By Kristin Jensen and Terrence Dopp Jan. 5 (Bloomberg) — U.S. Democrats will likely drop the idea of setting up a new government-run insurance program as they try to quickly resolve differences between House and Senate health-care bills, party members in both chambers said. Democratic leaders may also bypass a House-Senate conference, the normal route for reconciling legislation, in favor of more informal talks to wrap up in a “few weeks,” said New Jersey Representative Frank Pallone , who heads the House Energy and Commerce panel’s health subcommittee . “I don’t think the public option survives,” Pallone told state lawmakers in Trenton yesterday. “There is nowhere near 60 votes on that.” Democrats control 60 votes in the Senate, exactly the number needed to pass major legislation. Not all the party’s lawmakers support the idea of a new insurance program, or public option, and Senate Majority Leader Harry Reid , a Nevada Democrat, had to jettison it from the measure his chamber passed Dec. 24. It’s “not likely” the public option will make the final bill, said Illinois Senator Dick Durbin , the No. 2 Senate Democrat. While leading Democrats including House Speaker Nancy Pelosi have championed the idea as a cost-saving measure, critics said it would unfairly tilt the market against private insurers such as Indianapolis-based WellPoint Inc. “The Senate has pushed this to the limit of 60 votes,” Durbin said yesterday. “We have to be careful that whatever we change doesn’t jeopardize that 60-vote margin.” Compromise Timing House and Senate negotiators are already discussing how to combine the bills and may reach an agreement “by the end of the month, if we’re fortunate, or the first part of next month,” Durbin told reporters in Chicago. One goal is to finish before President Barack Obama’s State of the Union address in late January or early February. After aiming for bipartisan votes in each chamber by August, Democrats managed to pass the House bill on Nov. 7 with one Republican’s backing. No Republicans supported the Senate plan. The overall legislation is designed to extend coverage to tens of millions of uninsured Americans while curbing rising medical costs . House and Senate Democrats also have to reach agreement on how to pay for the measure and how strictly to bar federal money for abortion. Tax Battle Both the House and Senate would require Americans to get insurance or pay a penalty, offer expanded government aid and online purchasing exchanges to help people buy policies, and impose new requirements that insurers accept customers regardless of pre-existing conditions. The House opted to use a surtax on the wealthiest Americans to pay for its 10-year, $1 trillion bill. Pallone said that idea will probably fail in talks with the Senate, which would partially fund its bill through a tax on high-end insurance plans. That plan that has drawn fire from labor unions. Lawmakers will also forge some compromise that satisfies both sides of the abortion debate and prohibits the use of federal funds for the procedure, Pallone said. “Everyone understands we can’t have federal dollars used in any way, or subsidies in any way, to pay for abortions,” said Pallone, an abortion-rights supporter. Pelosi, of California, is scheduled to confer today with the heads of the three committees with jurisdiction over health care to discuss strategy. Durbin said he’s not “assuming a thing,” and said leaders would work hard to keep the 60 votes controlled by Senate Democrats together. “We’ll never have another chance like this in my political lifetime,” Durbin said. “This is it.” To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net ; Terrence Dopp in Trenton at tdopp@bloomberg.net

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Health-Care Bill’s `Public Option’ Is Likely Dead, U.S. Party Leaders Say

January 4, 2010

By Kristin Jensen and Terrence Dopp Jan. 4 (Bloomberg) — Democrats are likely to abandon the idea of setting up a new government-run insurance program as part of final health-care legislation being crafted by the U.S. House and Senate, top party members in both chambers said. “I don’t think the public option survives,” New Jersey Representative Frank Pallone , the chairman of the House Energy and Commerce panel’s health subcommittee , told state lawmakers in Trenton today. “There is nowhere near 60 votes on that.” Democrats control 60 votes in the Senate, exactly the number needed to pass major legislation. Not all the party’s lawmakers support the idea of a new insurance program, or public option, and Senate Majority Leader Harry Reid had to jettison it from his chamber’s measure, which passed Dec. 24. It’s “not likely” the public option will make the final bill, said Illinois Senator Dick Durbin , the No. 2 Senate Democrat. While House Speaker Nancy Pelosi and other leading Democrats have championed the idea, critics said it would unfairly tilt the market against private insurers such as Indianapolis-based WellPoint Inc. “The Senate has pushed this to the limit of 60 votes,” Durbin told reporters in Chicago today. “We have to be careful that whatever we change doesn’t jeopardize that 60-vote margin.” Both Pallone and Durbin said Democrats are seeking a quick compromise. House and Senate negotiators already are discussing how to combine the bills and may reach an agreement “by the end of the month, if we’re fortunate, or the first part of next month,” Durbin said. Bypassing Conference Pallone said he expects Democratic leaders to bypass a formal House-Senate conference, the normal route for reconciling legislation, in favor of more informal talks. “I believe this will be wrapped up within the next few weeks,” he said. One goal is to finish before President Barack Obama’s State of the Union address in late January or early February. House and Senate leaders originally planned to pass bills by August. The House passed its measure on Nov. 7 with the backing of one Republican. No Republicans supported the Senate bill. The overall legislation is designed to extend coverage to tens of millions of uninsured Americans while curbing rising medical costs . House and Senate Democrats also have to reach agreement on how to pay for the measure and how strictly to bar federal money for abortion. No Surtax Both the House and Senate would require Americans to get insurance or pay a penalty, offer expanded government aid and online purchasing exchanges to help buy policies, and impose new requirements that insurers accept customers regardless of pre- existing conditions. The House opted to use a surtax on the wealthiest Americans to pay for its 10-year, $1 trillion bill. Pallone said that idea will probably fail in talks with the Senate, which intends to tax high-end insurance plans and raise money in other ways. Lawmakers will also find some compromise that satisfies both sides of the abortion debate and prohibits the use of federal funds for the procedure, Pallone said. “Everyone understands we can’t have federal dollars used in any way, or subsidies in any way, to pay for abortions,” said Pallone, an abortion-rights supporter. Pelosi is scheduled tomorrow to confer with the heads of the three committees with jurisdiction over health care to discuss strategy. Durbin said he’s not “assuming a thing” and said leaders would work hard to keep the 60 votes controlled by Senate Democrats together. “We’ll never have another chance like this in my political lifetime,” Durbin said. “This is it.” To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net ; Terrence Dopp in Trenton at tdopp@bloomberg.net

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Democrats Show Signs of Disunity as Senate Health-Care Bill Debate Looms

November 23, 2009

By Laura Litvan Nov. 23 (Bloomberg) — Democrats who united last week to bring a sweeping health-care plan to the U.S. Senate floor still need to settle disagreement in their own ranks to pass President Barack Obama’s top domestic initiative. Majority Leader Harry Reid won over two holdouts in his party hours before a 60-39 vote Nov. 21, ending questions about whether Democrats could stick together to clear the first hurdle to passage. The $848 billion, 10-year plan would make the biggest changes to the U.S. health-care system since the Medicare insurance program for the elderly was created in 1965. “Our plan saves lives, saves money and saves Medicare,” Reid told reporters after the vote. While acknowledging challenges in the coming weeks, he said, “we can see the finish line” and predicted the bill will pass the Senate. Senators Mary Landrieu of Louisiana and Blanche Lincoln of Arkansas, the last two Democrats to agree to allow the start of debate, are among those in the party who say big changes must be made to get their vote for the final bill. “My vote to move forward on this important debate should in no way be construed by the supporters of this current framework as an indication of how I might vote as this debate comes to an end,” Landrieu said. “Much more work needs to be done.” No Defections Republican George Voinovich of Ohio didn’t vote. Every Senate Republican opposes the legislation, so Reid can’t afford any defections from his 60-member caucus when the Senate begins debate after the Thanksgiving recess. Reid aims for a final vote by the end of the year. White House spokesman Robert Gibbs said in a statement the vote “brings us one step closer to ending insurance company abuses, reining in spiraling health-care costs, providing stability and security to those with health insurance, and extending quality health coverage to those who lack it.” The legislation is intended to cover 31 million uninsured people and curb medical costs. Like a bill passed Nov. 7 by the U.S. House, the Senate plan would require all Americans to get health coverage. It would set up online insurance-purchasing exchanges and provide subsidies for those who can’t afford to buy coverage. Republicans predicted the measure will explode the U.S. budget deficit, cause rationing of health care and fail to produce the cost savings that are a chief goal. Republican leaders say the plan’s true cost is about $2.5 trillion over a decade. ‘Spending Binge’ A vote for the bill would support “the spending binge that is leading to a massive and unsustainable long-term debt that will shackle our children to a future they can’t afford,” said Senate Republican leader Mitch McConnell of Kentucky. Still, McConnell sounded doubtful Republicans will offer an alternative. “What we don’t think the American people want is another 2,000-page bill,” he said on CNN yesterday. “Senator Reid’s claim that the cost is $848 billion is the ultimate Washington gimmick, at taxpayers’ expense,” said Senator Charles Grassley of Iowa, the top Republican on the Finance Committee. In debating the 2,074-page bill , senators will focus on issues including how to pay for the legislation and how to prohibit the use of federal money to fund abortions. Public Option Debate One key sticking point: the Senate bill would create a government-run insurance program, the so-called public option, to compete against private insurers such as Hartford, Connecticut-based Aetna Inc. The measure would let individual states choose not to offer it. Senator Joe Lieberman , a Connecticut independent who caucuses with Democrats, said on NBC’s “Meet the Press” program yesterday that the public option may be more expensive than private insurance and that one thing he’s sure of is that “it’s going to run a deficit, and it’s only the taxpayers who are going to pay for it.” Another issue is whether to help finance the plan with a 40 percent tax on high-value insurance policies. Labor unions object to the tax, saying their members would be hit too hard. Senate Democrats Ben Nelson of Nebraska, Lincoln and Landrieu oppose the public option and also want adjustments in the abortion language and more aid for small businesses. Snowe’s Position Lieberman has said he won’t support a bill that includes the government-run plan, as has the only Republican who supported a health bill in a committee vote, Olympia Snowe of Maine. She said she hasn’t decided whether to offer an amendment, supported by some Democratic centrists, to create a public option only if private insurers aren’t offering enough affordable policies. Reid said Landrieu told him she is working with other Democrats, including Tom Carper of Delaware and Charles Schumer of New York, to try to find a compromise on the public option issue. On “Meet the Press” yesterday, Dick Durbin , an Illinois Democrat and the Senate majority whip, said the public option remains negotiable. “There are many variations on the theme,” he said. “At the end of the day, we want insurance to be more affordable.” Abortion Issue In a sign that abortion remains a stumbling block, the U.S. Conference of Catholic Bishops sent a letter last week calling the Senate measure an “enormous disappointment” that did not “live up to Obama’s pledge to bar the use of federal dollars for abortion.” Senate Democratic leaders say the measure keeps existing restrictions on the use of taxpayer money for abortion services. It requires state insurance purchasing exchanges to offer at least one policy with abortion coverage and one that doesn’t. The House legislation goes further, barring the public plan from covering abortions and banning use of federal money on the exchange to buy a private policy that covers abortion. If the Senate passes a bill, it would work toward a compromise with the House that would be voted on in both chambers before a measure could go to Obama. To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

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Senate Begins Debate Next Month on $848 Billion U.S. Health-Care Overhaul

November 22, 2009

By Laura Litvan Nov. 21 (Bloomberg) — Democrats united to bring sweeping health-care legislation to the U.S. Senate floor in a 60-39 party-line vote that kept Republicans from blocking debate on President Barack Obama’s top domestic initiative. Senate Majority Leader Harry Reid won over two holdouts in his party today after weeks of questions about whether Democrats could stick together to clear the first hurdle to passage. The $848 billion, 10-year plan proposes the biggest changes to the U.S. health-care system since the Medicare insurance program for the elderly was created in 1965. “In the coming weeks, we’ll finally put people, not insurance companies, in charge of their lives,” Reid said on the Senate floor. He said the vote is merely to get the debate started, adding, “Don’t try to silence debate over a grave crisis.” Every Senate Republican opposes the legislation, so Reid can’t afford any defections from his 60-member caucus when the Senate begins weeks of debate after the Thanksgiving recess. Reid aims for a final vote by the end of the year. “It is time for us to face the crisis,” said Senate Finance Committee Chairman Max Baucus , a Montana Democrat. “It is time for Congress to show mature leadership. It is time for us to reform health care, once and for all.” 31 Million Uninsured The legislation is intended to cover 31 million uninsured people and curb medical costs. Like a bill passed Nov. 7 by the U.S. House, the Senate plan would require all Americans to get health coverage. It would set up online insurance-purchasing exchanges and provide subsidies for those who can’t afford to buy coverage. Louisiana Senator Mary Landrieu and Arkansas Senator Blanche Lincoln , the last two Democrats to agree to allow the start of debate, are among those in the party who say big changes must be made to get their vote for the final bill. “My vote to move forward on this important debate should in no way be construed by the supporters of this current framework as an indication of how I might vote as this debate comes to an end,” Landrieu said. “Much more work needs to be done.” Republicans predicted that the measure will explode the U.S. budget deficit, cause rationing of health care and fail to produce the cost savings that are a chief goal. Republican leaders say the true cost of the legislation is about $2.5 trillion over a decade. ‘Spending Binge’ A vote for the bill would support “the spending binge that is leading to a massive and unsustainable long-term debt that will shackle our children to a future they can’t afford,” said Senate Republican leader Mitch McConnell of Kentucky. “Senator Reid’s claim that the cost is $848 billion is the ultimate Washington gimmick, at taxpayers’ expense,” said Senator Charles Grassley of Iowa, the top Republican on the Finance Committee. In debating the 2,074-page bill , senators will focus on issues including how to pay for the legislation and how strictly to prohibit the use of federal money to fund abortions. One key sticking point: the Senate bill would create a government-run insurance program, the so-called public option, to compete against private insurers such as Hartford, Conn.- based Aetna Inc. The measure would let individual states choose not to offer it. High-Value Policies Another issue is whether to help finance the plan through a 40 percent tax on high-value insurance policies. Labor unions object to the tax, saying their members would be hit too hard. Senate Democrats Ben Nelson of Nebraska, Lincoln and Landrieu oppose the public option and want other changes such as adjustments in the abortion language and more aid for small businesses. One independent who caucuses with Democrats, Connecticut Senator Joe Lieberman , has said he won’t support a bill if it includes the government-run insurance plan. The only Republican who supported a health bill in a committee vote, Olympia Snowe of Maine, said she won’t vote for legislation that includes a government option. She said she hasn’t decided whether to offer an amendment, supported by some Democratic centrists, to create a government insurance plan only if there is evidence that private insurers aren’t offering enough affordable policies. White House Urging In a statement late yesterday, the White House urged lawmakers to back the bill, saying it meets the criteria for an overhaul costing less than $900 billion over 10 years. The legislation “includes critical reforms to the insurance industry, so that Americans will no longer have to worry that they will be denied coverage, or that their coverage will be dropped or watered down when they need it most,” the statement said. In a sign that abortion remains a stumbling block, the U.S. Conference of Catholic Bishops yesterday sent a letter calling the Senate measure an “enormous disappointment.” The bishops said the bill did “not live up to Obama’s pledge to bar the use of federal dollars for abortion.” Senate Democratic leaders say the measure maintains existing restrictions on the use of taxpayer dollars for abortion services. It requires state insurance purchasing exchanges to offer at least one policy that offers abortion coverage and one that doesn’t. Private Policy The House legislation goes further, barring the government insurance program from covering abortions and prohibiting federal money from being used on the online exchange to buy a private policy that covers abortion. If the Senate passes a bill, it would work on compromise legislation with the House for a new round of votes in both chambers before a measure could go to Obama. While the Senate vote tonight was simply on whether to keep Republicans from blocking consideration of the bill, it’s rare for a broader measure to fail after it clears such an obstacle. A Congressional Research Service analysis found only one instance between 1999 and 2008 when Senate legislation failed after clearing the hurdle to begin debate. That was a measure designed to protect gun manufacturers from lawsuits that was rejected in 2004. After agreeing to begin debate, the Senate “almost always proceeded to a final vote on the measure and passed it,” CRS analysts wrote. To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

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Pelosi Caves to the Right to Get Health-Care Bill: Ann Woolner

November 12, 2009

Commentary by Ann Woolner Nov. 12 (Bloomberg) — Single-focus, litmus-test social conservatives took a hit last week after they chased a moderate Republican out of a special U.S. House election in upstate New York and backed a right-wing independent instead. Their guy lost, handing a Democrat a district that had gone Republican for more than a century. It looked like a clear lesson in the danger of demanding ideological purity. Liberals and Democrats had themselves quite a chuckle watching the right wing destroy the Grand Old Party . But the moral to that story faded quickly in the face of a far more substantial victory for single-issue zeal four days later. So potent had anti-abortionists become that even with a Democratic majority, House Speaker Nancy Pelosi felt the need to bow to them to scrounge enough votes to pass a health-care reform bill. It turns out that, while the Democratic Party had been welcoming one and all under its tent, far-right social conservatives were having their sway during election seasons, too. There are plenty of anti-abortionists with a D next to their names. So by the time it came to vote on health reform, which had already taken a beating from the Tea Partiers, too many Democrats said they wouldn’t go for it unless its anti-abortion language was tightened. They weren’t sufficiently assured by the fact that federal funding of abortion is already illegal. New Bar They got their way, and Pelosi got a health bill passed containing a public option. That would be available alongside private insurance plans in a health exchange where people can compare and select a policy if they don’t like their current insurance. Now the bill would bar even privately funded, privately insured abortions for many women who are now covered. It says you can’t enroll in a private plan with abortion benefits if you also receive a tax credit that the bill would create. Tax money wouldn’t go for abortions. But the provision would create a whole new bar to jump for some women in need of abortions. With 240 ayes, that amendment proved more popular than health reform itself, which barely squeezed through by 220 to 215. As for Democrats, 64 of them voted for the new abortion restrictions. See what a nice, big tent the party has now? It wasn’t the usual anti-abortionists pulling the strings this time around, as the Wall Street Journal pointed out. Most of them opposed the health bill regardless of abortion language and are so often aligned with Republicans as to be less relevant this time around. More Power No, the anti-abortionists with greater credibility and therefore greater potency are those who support health reform of the sort that Congress is trying to pass and who are less partisan. That would be the Catholic church, the main force behind the anti-abortion amendment sponsored by Michigan Democrat Bart Stupak . Pelosi found herself negotiating with the U.S. Conference of Catholic Bishops, whose members had been lobbying Congress for health reform and against abortion and building support for their position through churches around the country. Let us pause to remember that abortion is legal in this country. In Roe v. Wade, the U.S. Supreme Court forbade states and the federal government from barring abortions outright. Restrict them, yes, up to a point. Defining that point has served as the abortion battleground ever since the 1973 ruling. Making abortions as difficult to get as possible is the fallback strategy until anti-abortionists get a Supreme Court willing to reverse Roe. They have been quite good at it, too. E Pluribus Unum It’s also worth recalling that those who oppose a public policy on religious or any other grounds are free to do so in this pluralistic country of ours. But forcing others to adhere to specific religious beliefs who don’t share them by writing them into law is un-American. That’s especially true since the Supreme Court has said that it’s unconstitutional for government to violate the individual’s right to make personal, medical decisions to end a pregnancy. Early term abortion isn’t murder under the law, however fervently many religious adherents believe it is. Catholics have company in that belief. If it weren’t for that belief and the activism of its advocates, access to safe abortions wouldn’t keep shrinking as states impose more restrictions . For example, a smattering of states require face-to-face anti-abortion counseling with health providers forced to give out falsehoods, such as claiming a link between breast cancer and abortion. Some make a woman wait 24 to 48 hours after counseling to return for an abortion, a special hardship on women who must miss work or who live far from the an abortion provider. Private Insurance Some states already limit private health-insurance coverage, according to the Guttmacher Institute, an international reproductive health research and education group based in New York. Restrictions like these combine with harassment and threats that abortion providers face (not to mention actual murder) from radical “pro-lifers” have made it impossible for some women to abort, even if they have been raped or sexually abused by family members. That the House bill would impose yet another barrier to abortion isn’t the final word. With pro-choice senators and House members threatening revolt if the language remains in the package, with promises from President Barack Obama that the ban on federal funding for abortions will remain intact, compromise will be sought. Even the bishops say they never meant to expand current restrictions but merely ensure that federal funds don’t indirectly fund abortion. One more thing: Congress’s newest member, Democrat Bill Owens of New York’s 23d District, voted against the Stupak anti- abortion amendment. As it turned out, his vote didn’t matter much. The amendment passed, anyway. ( Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: Ann Woolner in Atlanta at awoolner@bloomberg.net .

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Abortion Fight Looms as Potential Obstacle to U.S. Health-Care Legislation

November 10, 2009

By Kristin Jensen and Laura Litvan Nov. 10 (Bloomberg) — Democrats are hardening their stances on both sides of the abortion issue in a battle that may threaten plans to overhaul the U.S. health-care system. More than 40 party lawmakers vowed to vote against a final bill if it contains language the House agreed to on Nov. 7 adding restrictions on the procedure as part of broader health legislation. The issue may also disrupt work in the Senate, which has yet to unveil a bill. Abortion “is going to be a major issue,” Illinois Senator Dick Durbin , the No. 2 Senate Democrat, told reporters yesterday. “I hope we can find a way around it.” There’s little margin for error. Democrats control 60 votes in the Senate, just enough to pass legislation if they stick together. House Democrats have 258 votes and need 218 for passage. The amendment restricting abortion got 64 Democratic votes and the support of the lone Republican who voted for the overall bill, Louisiana Representative Ahn “Joseph” Cao . The health-care legislation is President Barack Obama’s top domestic priority and he’s pushing Congress to get it done this year. In an interview with ABC News yesterday, Obama said there’s “more work” to be done to make sure the legislation doesn’t change the status quo on abortion funding. “This is a health-care bill, not an abortion bill,” Obama said . Nelson Stand Senator Ben Nelson , a Nebraska Democrat, said he may not even vote to allow debate to proceed unless the abortion issue is addressed. He said he would like tougher abortion restrictions in his chamber’s bill than the House included. “If it isn’t clear that government money is not to be used to fund abortions, I won’t vote for it,” Nelson told reporters yesterday. At stake is a plan by lawmakers to cover tens of millions of uninsured Americans while curbing medical costs. Their proposals for new purchasing exchanges, subsidies and a requirement that all Americans have insurance would cost more than $800 billion over 10 years and represent the biggest changes to U.S. health care in four decades. Former President Bill Clinton will seek to rally Senate Democrats on health care today. Clinton, a Democrat, will speak at the party’s weekly policy luncheon to rally support for the effort, according to two people familiar with the schedule. Representative Bart Stupak , a Michigan Democrat, initiated the House abortion amendment, saying he wanted to ensure that federal dollars didn’t support the procedure. The result, abortion rights activists say, is an unprecedented restriction because insurers might not cover abortions for women using the exchanges even if they tap their own money to buy a plan. ‘Outrageous Blow’ More than 85 percent of private plans cover abortions, according to Naral Pro-Choice America , which called the House provision an “outrageous blow to women’s freedom and privacy.” The group got support from Democrats who signed a letter to House Speaker Nancy Pelosi released yesterday by Representatives Louise Slaughter of New York and Diana DeGette of Colorado. “We will not vote for a conference report that contains language that restricts women’s right to choose any further than current law,” the group of more than 40 lawmakers said, referring to the eventual House-Senate compromise legislation. In the Senate, Majority Leader Harry Reid is waiting for Congressional Budget Office cost estimates before unveiling his health-care bill and pushing to begin debate. Senator Kent Conrad , a North Dakota Democrat, said no one has found the “right formula” on abortion that would be acceptable in both chambers. “We have to be able to assure people that taxpayer funds won’t be used,” said Conrad. Senate Versions Other senators said they are happy with their chamber’s current proposals. “We have pretty good provisions in our bill,” said Connecticut Senator Christopher Dodd , a Democrat who shepherded one version through the health committee. Maine Senator Susan Collins , an abortion-rights supporter and one of the few Republicans who might back health legislation, said she believes the plan that came out of the Senate Finance Committee “did a good job putting up a firewall that would prevent federal funds from going to abortions.” The committee’s bill prohibits abortion services from being required as part of a minimum benefits package offered through the exchange. It also segregates public subsidy funds from private premium payments for insurance plans that provide abortion services. The issue will play a role in the House-Senate negotiations that would follow a Senate vote. Lawmakers from each chamber would reconcile their plans and then vote again. Some Overreaching The negotiators may go back to a compromise that dissolved in the House the night before the vote. Stupak told reporters he had a deal with Pelosi and Catholic bishops that would have included less-restrictive language and fell apart because “some groups overreached and can’t count” votes. Stupak said the final amendment was stronger because it has permanent restrictions on abortion funding for any policies sold on the exchange. The compromise would only have applied permanently to a government-run insurance program and subjected other restrictions to a year-to-year review, he said. “We were trying to find a common ground with those who would describe themselves as pro-life,” Pelosi said at a news conference in Seattle yesterday. “We can’t stop trying to find common ground.” To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net ; Laura Litvan in Washington at llitvan@bloomberg.net ;

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