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Eric Larnick: Disney & Marvel Act Like Villains Toward ‘Ghost Rider’ Creator

by Eric Larnick on February 16, 2012

Huffington Post…

Whether you’re excitedly planning on seeing “Ghost Rider: Spirit of Vengeance” this weekend or scoffing at the absurdity of paying to watch Nic Cage urinate fire (in 3D), there’s an ugly publicity battle going on behind-the-scenes between the Disney corporation and a 68-year-old former comic book writer in ill health. It concerns the complicated field of U.S. Copyright Law and is a clear example of the lack of ethics that exist in both the comic book industry, an artform that touts its super-heroics and moral inspiration, and the Walt Disney Company. Gary Friedrich, former writer for Marvel Comics has been involved in a long dispute over his claim as the creator of “Ghost Rider,” the motorcycle-riding, flaming-skullhead monster that made a worldwide gross of $228 million when Sony Pictures adapted the character for the big screen in 2007 . He brought a lawsuit toward Marvel, in an attempt to get royalties he felt he was due. After a protracted legal battle — during which Marvel became under the employ of the Disney Corporation and its massive defense team — the court has settled the dispute and Friedrich now finds himself owing the billion-dollar media empire more money than he has. The Facts of the Case Friedrich claims that he developed the character independently in 1968, and sold it to Marvel for publication, writing the first appearances of the character in 1972. However, according to Friedrich’s legal team, Marvel failed to register “Ghost Rider” with the U.S. Copyright Office, and as such, the copyrights returned to him in 2001. Friedrich filed suit with the company when the first movie came out to obtain royalties he felt belonged to him; during that time he sold “Ghost Rider” merchandise at comic book conventions, with the reasoning that it was his property to exploit. The case was finally resolved in December of 2011, with the court ruling that when Friedrich endorsed his paychecks for the freelance writing gig, he was consenting to handing over the ownership of the character to Marvel. At that time, Marvel’s regular practice was to include copyright language on the paycheck — meaning you had to hand over the copyrights when it was time to get paid. Marvel, now backed by Disney, countersued Friedrich for selling unlicensed merchandise of their property, and last week, Marvel/Disney (let’s call them Misney) agreed to drop the suit if Friedrich pays $17,000 . Currently Friedrich is unemployed and suffering from various health ailments. Many writers and artists in the comic community have rallied to set up a donation plan for him to help fight his legal fees , hoping that some of the people who are going to pay to $17 to see a 3D screening of “Ghost Rider” this weekend, are willing to set aside a few dollars toward one of the people who actually made the movie possible. ( And if you feel so inclined to donate a few dollars, do it HERE. ) Now there are a couple of important details to take into consideration: 1.) Friedrich’s level of complete ownership is disputed by both “Ghost Rider” artist Mike Ploog and editor Roy Thomas. Unfortunately, there aren’t accurate records from forty years ago, so it’s a mater of hearsay. However, no one disputes that Friedrich is at least co-creator. 2.) Selling merchandise before the copyright case was settled was not a wise move, and was going to provoke the ire of the big corporation. 3.) Misney had every right to counter-sue to protect their property. Here’s Why Marvel and Disney Are the Villains Because they’re making an example out of Gary Friedrich to scare away generations of comic creators from attempting to fight for a share of profits from the work they provided. In this case, a cease-and-desist would have been enough to prevent Friedrich from stepping out of bounds moving forward. Whether you side with Friedrich’s specific claim or not, it’s indicative of unfair business practices that have plagued the comics industry since the first appearance of Superman. Comic companies want to scare away men — now reaching their retirement age — from trying to collect on work they did as freelancers. That work now generates millions of dollars of revenue in movie sales and merchandising. Misney are hypocrites because they present themselves as a “universe of heroes.” They’re not. They’re a brand of merchandise. Marvel is a brand like Ed Hardy or Hasbro or Mcdonald’s are a brand. It’s not about artistic integrity. Misney want you to buy their Ghost Rider comics, buy their Ghost Rider action figures, buy their Ghost Rider Slurpee cups, buy their Ghost Rider t-shirt, buy their Ghost Rider video games. They don’t care about your loyalty to the character, they care about your dependence as a consumer. They don’t care if you defend them or not; they merely want you to buy their stuff and look the other way, when they drive competitors out of business (the competitor in this case is: the co-creator of the new toy they’re trying to sell you, 68 years old, struggling to make ends meet and foolishly signed a contract 40 years ago that never accounted for new forms of media presentation like a movie.) Comic companies like Marvel and DC display no ethical responsibilities to the creators who are generating the content they are trying to sell to Hollywood. And to be fair, that’s their prerogative. We shouldn’t be shocked at a corporation’s inhumanity because corporations aren’t people; with the national focus on the depressed economy, people should know by now that it’s up to the audience (as voters, consumers, etc.) to change a system they think is fundamentally broken or willingly accept working under a system where the only aim can be staying on a corporation’s good side. The History of Comic Creators Getting Screwed It wasn’t until relatively recently that contracts in the comic book industry became reasonably professional. Movie royalties were never a consideration for many years because comic book movies were never a thing that seemed possible. So there are decades worth of bad business deals where artists and writers had no leverage. Whether you’re a fan of the original comics or have come to discover Batman and the Avengers through their massive box office success, there’s a responsibility to be aware of the complicated and unethical history of the men who gave you Superman, Captain America and many more. PHOTOS:

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Eric Larnick: Disney & Marvel Act Like Villains Toward ‘Ghost Rider’ Creator

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Boehner Prepares To Do End-Run Around Tea Party

by APThe Huffington Post on January 13, 2012

Huffington Post…

By Richard Cowan and Thomas Ferraro WASHINGTON–House Speaker John Boehner, hoping to spare fellow Republicans a second embarrassing defeat over payroll tax cuts, is prepared to navigate around rebellious Tea Party-aligned lawmakers to get a deal, according to congressional aides. Republicans in the House of Representatives got a public drubbing from critics within and outside the party in December for initially refusing to approve a Senate plan to extend the tax break for 160 million Americans through February. The party of lower taxes was left on the defensive, countering a barrage of criticism that its unwillingness to compromise threatened an effective tax hike on workers, potentially damaging the fragile economic recovery. Now, with Democratic and Republican negotiators preparing for a new round of talks in the coming days to extend the payroll tax cut for the rest of the year, Republican leaders are anxious to move quickly to get a deal, aides said. Party leaders fear another battle could distract from the more important task at hand – ousting President Barack Obama from the White House and winning majority control of the Senate in the November elections. They also want to neutralize an issue that Democrats already are using to their advantage in the presidential and congressional campaigns. “I think Boehner will seek a more accommodating approach to get a good percentage of Democrats to vote for it – even if it costs him a lot of House Republican freshmen,” one House Republican leadership aide told Reuters. “His instincts will be not to be so reliant on House Republican freshmen,” the aide added, referring to the 85 first-term congressmen. The freshmen, many of whom are aligned with the populist budget-slashing Tea Party movement, helped the Republican Party win control of the House in 2010 and have since proven stubbornly uncompromising in the debate over taxes and spending. Congress has until February 29 to agree on extending the tax cut, which would give the average middle-class family about $1,000 extra a year. Support has always been soft among Republicans for the payroll tax cut championed by Obama. They question its effectiveness in stimulating the economy and the wisdom of using revenues intended for the Social Security retirement program. But the political fallout from the December showdown with Democrats was so unpleasant for Republicans that some congressional aides now speculate that Republicans might push to accelerate a deal by January 24, when Obama gives his annual State of the Union address to Congress. BIGGER BILL/BIGGER PROBLEMS? Many Tea Party-aligned lawmakers in the House are bitter that Boehner ultimately caved to pressure and agreed to the two-month extension in December. When Boehner informed his caucus of his decision in a conference telephone call, rank-and-file members’ phone lines were muted in an effort to quell dissent. Some Tea Party lawmakers, however, see round two of the payroll tax cut negotiations as another opportunity to press their demands for cuts to unemployment benefits and some federal healthcare programs and a freeze on federal workers’ pay. Those are unlikely to be accepted by Democrats who feel they have the political upper hand. But in the end, Boehner is expected to settle for a deal that gets the job done even if he loses the support of scores of Republican freshmen. A senior Senate Republican aide said December’s drama might have even strengthened Boehner’s hand. Given that a conservative groundswell in late December to block the two-month payroll tax cut, against Boehner’s advice, “backfired in a big way,” some of those conservatives might now conclude that “Boehner knows what he’s doing” and fall into line with him. Boehner spokesman Kevin Smith would not address the potential divisions among Republicans. Instead, he noted “bipartisan support for extending payroll tax relief for a full year, extending and reforming unemployment benefits, and offsetting the cost with spending cuts, while there is bipartisan opposition to tax hikes.” Freshman Republican Representative Jeff Landry, a Tea Party favorite, said that while he favors cutting workers’ taxes, the payroll tax cut is “a terrible idea” because it taps revenues that are supposed to be dedicated to Social Security. Asked about Boehner’s strategy for getting the full-year extension through the House by February, Landry said: “I don’t know how he’s going to play it. I hope he does a better job than the last time.” Landry said he will look closely to see if and how the next payroll tax cut is paid for. That is where Tea Party-aligned lawmakers could again make things more complex on Capitol Hill. Many in Congress think this could be the first and last major bill to pass Congress in this election year, except for must-do spending measures to keep the government operating. Lobbyists are bombarding Congress for requests to add pet projects onto the payroll tax cut bill – mainly extending about $35 billion worth of tax breaks for businesses that expired on December 31. Those include a research and development tax credit and a shorter depreciation period retailers enjoyed for business improvements. While these tax incentives typically enjoy broad support in Congress, the lost revenues, amid huge budget deficits, likely will spark a loud debate over whether they must be paid for. Republicans have long argued that the cost of these kinds of tax breaks do not have to be offset, as they spur economic growth over the long run and pay for themselves. It is an idea many Democrats and economists have challenged as unfounded. Now, some fiscally conservative Republicans are joining in. “I think everything has got to be fully paid for. We can’t afford to increase the debt more or rob more money out of Social Security,” freshman Representative Jeff Denham told Reuters. (Editing by Eric Walsh) Copyright 2012 Thomson Reuters. Click for Restrictions .

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Pro-Gingrich Super PAC Airs Ads Attacking Romney’s Business Career

January 12, 2012

WASHINGTON — A super PAC supporting Newt Gingrich began airing TV and radio ads Thursday attacking Mitt Romney for his career in the private equity world. The 30-second and 60-second TV ads label Romney, the former Massachusetts governor, a “corporate raider” and calls his company, Bain Capital, “more ruthless than Wall Street.” It quotes a number of people who claim to have lost their jobs after their companies were acquired by Bain, which Romney led from 1984 through 1998. “He pulled the rug out from under our plant,” one man says. Another man says, “Mitt Romney and them guys, they don’t care who I am.” And the 30-second ad closes with a woman saying, “I feel that is the man that destroyed us.” Some had speculated that the super PAC, Winning Our Future, might not run the ads, given the enormous backlash that had come from all corners of the conservative movement against the criticisms. But Winning Our Future spokesman Rick Tyler, a former Gingrich aide, said that the ads began running at 11 a.m. in South Carolina, which holds its primary on Jan. 21. Winning Our Future has set aside $3.4 million to spend on TV ads in South Carolina, but Tyler would not say how much of that is going toward running the ads hitting Bain. View other advertising below:

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Jobless Claims Drop To Lowest Level In More Than Three Years

December 22, 2011

WASHINGTON – New claims for unemployment benefits dropped last week to its lowest in more than 3-1/2 years, suggesting the labor market recovery was gaining speed. Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 364,000, the Labor Department said. That was the lowest level since April 2008. The economy has shown signs it is gaining steam as the year ends, although the recovery still could be derailed by any big flare up in Europe’s debt crisis. The economy also faces risks from the fight in Congress over extending special unemployment benefits and a payroll tax cut. The prior week’s claims data was revised up to 368,000 from the previously reported 366,000. Economists polled by Reuters had forecast claims rising to 375,000 last week. The level of unemployment claims has fallen in recent weeks, and analysts say fewer layoffs means employers are probably more likely to hire. Economists at Goldman Sachs said earlier in the week that weekly claims below 435,000 pointed to net monthly gains in jobs. Their research was based on figures available through October. In November, the jobless rate dropped to a 2-1/2 year low of 8.6 percent. The Federal Reserve last week acknowledged an improvement in the jobs market, but said unemployment remained high and left the door open for further measures to help the economy. A Labor Department official said claims were not estimated for any states, and that there was nothing unusual in the data. The four-week moving average of claims, considered a better measure of labor market trends than the headline number, fell 8,000 to 380,250 — the lowest since June 2008. The number of people still receiving benefits under regular state programs after an initial week of aid fell 79,000 to 3.546 million in the week ended December 10. Economists had forecast so-called continuing claims holding steady at 3.6 million. As of Dec 3, a total of 7.150 million people were claiming unemployment benefits under all programs, down 299,738 from the prior week. (Reporting by Jason Lange; Editing by Neil Stempleman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Dems Find Silver Lining In GOP Opposition To Payroll Tax Deal

December 19, 2011

WASHINGTON — Many Democrats think House Republicans have given them an early political Christmas present by opposing the Senate deal to extend the middle-class payroll tax cut for two months . “Without a doubt, this is a gift,” a senior Democratic aide told HuffPost, predicting that if the House GOP kills the compromise, Democrats will hammer them relentlessly through the holidays and beyond for hurting the middle class. “If Republicans block this vote,” the aide said, “we are going to spend a month back in every member’s state talking about how we reached an overwhelming compromise to extend unemployment benefits and a middle-class tax cut, but that it was blocked by House Republicans, whose only concern all year has been keeping millionaires and billionaires from paying a penny more in taxes.” The Democratic Congressional Campaign Committee is so certain that GOP opposition to the deal is a political loser that it is already campaigning on that opposition, launching a website and a round of robocalls targeting 20 Republicans in swing districts. “If House Republicans block this bipartisan compromise it will be a middle class mugging of $1,000 from 160 million middle income Americans,” said DCCC Chairman Steve Israel in a statement. Democrats feel they are on especially strong ground because most of the GOP senators voted for the two-month extension of the 2 percent payroll tax break for salaries up to $110,000. Republicans in the Senate backed it because they’ve asked for all the measures in the deal, including language about the controversial Keystone XL pipeline that they insisted on. Republicans and Democrats in the Senate settled on a two-month deal because they could not agree on how to pay for a longer-term package that would cost about $200 billion. They figured that at least taxes wouldn’t immediately rise for middle-class workers, and lawmakers would have gained more time to deal with their disagreements over funding. But House Republicans have rebelled. They’re threatening to vote down the deal on Monday evening, arguing that it should have done more and run longer — a full year. “After 39 Republicans in the Senate voted for this compromise, House Republicans have the chance tonight to stop this $1,000 middle income tax hike from happening on January 1,” said Rep. Israel (D-N.Y.). “If they fail, their extreme partisanship will have cost Americans money.” For some of the robocalls, the DCCC employed opinionated Democratic strategist James Carville, including for a spot rolling out in the district of Rep. Bob Gibbs (R-Ohio). “Something remarkable happened this weekend — Democrats and Republicans in the Senate worked together to stop a $1,000 payroll tax hike on 160 million middle class families,” Carville says. “Sounds too good to be true? It is, if Representative Bob Gibbs doesn’t do the right thing and support it.” Also singled out are GOP Reps. Elton Gallegly (Calif.), Jerry Lewis (Calif.), Mike Coffman (Colo.), Bill Young (Fla.), Tom Rooney (Fla.), Kevin Yoder (Kan.), Tim Walberg (Mich.), Renee Ellmers (N.C.), Jon Runyan (N.J.), Michael Grimm (N.Y.), Mike Kelly (Pa.), Pat Meehan (Pa.), Mike Fitzpatrick (Pa.), Tim Murphy (Pa.), Kristi Noem (S.D.), Stephen Fincher (Tenn.), Joe Barton (Texas), Jaime Herrera Beutler (Wash.) and David McKinley (W.Va.). One senior Democratic aide, who would have preferred to have the issue resolved, nevertheless couldn’t believe Democrats’ political good fortune. “This is a great message in small markets throughout the country, where a $1,000 a year means something and where everyone knows someone who’ll be dropped off the unemployment rolls,” the aide said. “House Republicans are letting their egos cloud their judgment on this one.” Still, the DCCC’s counterpart, the National Republican Congressional Committee, tried to spin the argument its way, sending out a statement entitled, “Vacation, All House Dems Ever Wanted.” “House Democrat Leader Nancy Pelosi is leading her fellow Democrats to oppose any effort to prevent a tax increase on middle class families for one full year,” the NRCC argued, although voting down the Senate’s two-month deal actually raises the chance that taxes will go up Jan. 1 if the sides cannot agree. “It seems that while America’s families suffer in record poverty, all House Democrats want to do is take the easy way out and vote for a Senate-passed bill that raises taxes on middle class families in two months, just so they can go on vacation,” the NRCC argued.

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Canada Withdrawing From Kyoto Protocol

December 12, 2011

TORONTO — Canada’s environment minister said Monday his country is pulling out of the Kyoto Protocol on climate change. Peter Kent said that Canada is invoking the legal right to withdraw and said Kyoto doesn’t represent the way forward for Canada or the world. Canada, joined by Japan and Russia, said last year it will not accept new Kyoto commitments, but renouncing the accord is another setback to the treaty concluded with much fanfare in 1997. No nation has formally renounced the protocol until now. The protocol, initially adopted in Kyoto, Japan, in 1997, is aimed at fighting global warming. Canada’s previous Liberal government signed the accord but Prime Minister Stephen Harper’s Conservative government never embraced it. Kent’s announcement comes a day after marathon climate talks wrapped up in the South African port city of Durban. Negotiators from nearly 200 countries agreed on a deal that sets the world on a path to sign a new climate treaty by 2015 to replace the Kyoto Protocol, which expires at the end of next year. “The Kyoto Protocol does not cover the world’s largest two emitters, United States and China, and therefore cannot work,” Kent said. “It’s now clear that Kyoto is not the path forward to a global solution to climate change. If anything it’s an impediment.” Kent said the Durban agreement does represent a path forward. Canada faced international criticism at the recent climate talks in South Africa amid reports it would pull out of Kyoto. Harper’s Conservative government is reluctant to hurt Canada’s booming oil sands sector, which is the country’s fastest growing source of greenhouse gases and a reason it has reneged on its Kyoto commitments. Canada has the world’s third largest oil reserves, more than 170 billion barrels. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025. Only Saudi Arabia and Venezuela have more reserves. But critics say the enormous amount of energy and water needed in the extraction process increases greenhouse gas emissions.

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Fox News: The Muppets Are Communist, Captain Planet Evil

December 5, 2011

It ain’t easy being green, but according to Fox Business, Kermit the frog and his Muppet friends are reds. Last week, on the network’s “Follow the Money” program, host Eric Bolling went McCarthy on the new, Disney-released film, “The Muppets,” insisting that its storyline featuring an evil oil baron made it the latest example of Hollywood’s so-called liberal agenda . Bolling, who took issue with the baron’s name, Tex Richman, was joined by Dan Gainor of the conservative Media Research Center, who was uninhibited with his criticism. “It’s amazing how far the left will go just to manipulate your kids, to convince them, give the anti-corporate message,” he said. “They’ve been doing it for decades. Hollywood, the left, the media, they hate the oil industry,” Gainor continued. “They hate corporate America. And so you’ll see all these movies attacking it, whether it was ‘Cars 2,’ which was another kids’ movie, the George Clooney movie ‘Syriana,’ ‘There Will Be Blood,’ all these movies attacking the oil industry, none of them reminding people what oil means for most people: fuel to light a hospital, heat your home, fuel an ambulance to get you to the hospital if you need that. And they don’t want to tell that story.” Indeed, there was no mention of the benefits of oil drilling in the Muppets, but there was also no discussion of any other aspect of the industry. Richman, played by Chris Cooper, was out to destroy the Muppets theater. Kermit and his friends, then, were not committed environmentalists (though one must imagine the frog is concerned with his swampy homeland) but simply puppets looking to save a place they once loved. Still, Gainor blamed the film, and its predecessors, for Occupy Wall Street and the environmental movement. “This is what they’re teaching our kids. You wonder why we’ve got a bunch of Occupy Wall Street people walking around all around the country, they’ve been indoctrinated, literally, for years by this kind of stuff,” Gainor said. “Whether it was ‘Captain Planet’ or Nickelodeon’s ‘Big Green Help,’ or ‘The Day After Tomorrow,’ the Al Gore-influenced movie, all of that is what they’re teaching, is that corporations is bad, the oil industry is bad, and ultimately what they’re telling kids is what they told you in the movie ‘The Matrix’: that mankind is a virus on poor old mother Earth.” The Teletubies were unavailable for comment. Mahna-Mahna.

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Japanese Prime Minister: Asia Must Protect Itself From Euro Zone Crisis

November 19, 2011

NUSA DUA, Indonesia (Yoko Nishikawa) – Japanese Prime Minister Yoshihiko Noda said on Saturday Asia needs to consider further steps to avoid a financial crisis as the euro zone’s debt problems could spill into the region. While Asia has become more resilient due to its economic management since the region’s own financial crisis in 1997/98, it is not immune to Europe’s problems, Noda said. “I don’t think Asia is necessarily vulnerable to external shocks (from Europe),” Noda told a news conference after the East Asia Summit on the Indonesian resort island of Bali. “Given efforts to conduct sound economic policy, the region generally enjoys a current account surplus and its foreign reserves are at high levels, so it has become more resilient to external shocks.” “Having said that, there is no doubt that we could face adverse impact if we cannot build a firewall against the European crisis.” Policymakers around the world are worried that Europe’s inability to unify around a debt strategy could hurt their economies. Greece, Ireland and Portugal – all small, peripheral euro zone economies – have already been forced to accept EU/IMF bailouts as they can no longer afford to borrow commercially. Now Italy’s borrowing costs have reached unsustainable levels, while Spain’s are nearing this point and the crisis is even starting to affect triple-A rated France. While giving no details on what kind of further steps Asia should take, Noda said boosting regional financial cooperation is basically the way to go as Asia tries to prepare itself for possible meltdowns in Europe. Japan, China and South Korea lead a $120 billion emergency fund, under the so-called the Chiang Mai Initiative, with the 10-member Association of South East Asian Nations (ASEAN) – part of a move to strengthen ties and avert the repeat of the 1997-1998 Asian financial crisis. In a move to beef up its foreign exchange defenses in the wake of global uncertainties, South Korea last month signed an agreement with China to double the value of their bilateral currency swap pact after securing a similar deal with Japan. In addition to such efforts, Asia needs further crisis prevention measures, Noda said. “Japan is leading discussions on how to prevent crisis and on introducing further steps to avert crisis at a regional level. We need to quickly wrap up those and I proposed that at the summit of ASEAN+3 (ASEAN plus China, Japan and South Korea).” (Editing by Jason Szep) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Obama: ‘We’ve Been A Little Bit Lazy’

November 13, 2011

Speaking to a group of CEOs this weekend President Barack Obama said the U.S. has “been a little bit lazy” about performing in the global marketplace. We haven’t been hungry enough about “selling America” oversees in order to attract new businesses and foreign investment, the president said . There are a lot of things that make foreign investors see the U.S. as a great opportunity — our stability, our openness, our innovative free market culture. But we’ve been a little bit lazy, I think, over the last couple of decades. We’ve kind of taken for granted — well, people will want to come here and we aren’t out there hungry, selling America and trying to attract new business into America. Some Republicans have jumped on the comment , claiming the president blames Americans for the country’s economic troubles. The president spoke this weekend at the annual Asia Pacific Economic Cooperation (APEC) meeting in Hawaii. Obama said his administration has set up an organization focused on making it easier for foreign investors to build in the U.S., but there is still much more to do.

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Top Regulator Decides Against Participating In MF Global Review

November 5, 2011

WASHINGTON (Christopher Doering) – The head of the U.S. futures regulator working on a sweeping review into the business practices of failed futures brokerage MF Global has said he will not be participating in any further parts of the inquiry, a source told Reuters on Friday. Gary Gensler, the chairman of the Commodity Futures Trading Commission, and Jon Corzine, who recently resigned as MF Global’s chief executive, worked at Goldman Sachs Group Inc at the same time and held prominent positions. They both left the investment bank in the late 1990s. “I don’t know if there is an official recusal but he’s said he’s not going to participate in the MFG inquiry. He’s done with it,” said a source who has participated in meetings on MF Global. Gensler has not participated in meetings during the last few days, and has chosen to not participate in the review because he doesn’t want to create an appearance of a conflict of interest, the source said. U.S. regulators have launched an investigation into MF Global as they search for more than $600 million in missing customer money. The FBI also has shown a preliminary interest in regulatory probes looking into the missing funds. MF Global filed for bankruptcy protection on Monday after risky trades on European debt triggered its collapse. The decision by Gensler comes as Republican Senator Charles Grassley on Friday called on the CFTC chief to recuse himself from matters related to MF Global. “MF Global’s case is a big collapse that requires a lot of work from the commission to try to figure out what went wrong and minimize further investor losses if possible,” Grassley said in a statement. “It’s hard to see how the commission chairman could be completely objective in looking out for wronged investors when he has such strong ties to the principal of the failed firm,” he said. (Additional reporting by Karey Wutkowski in Washington; Editing by Sanjeev Miglani) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Obama: Health, Economic Factors Will Be Taken Into Account In Keystone Decision

November 2, 2011

By Jeff Mason and Matt Spetalnick WASHINGTON (Reuters) – President Barack Obama said Tuesday health and economic factors would be taken into account when he decides whether to approve TransCanada Corp’s Canada-to-Texas Keystone XL pipeline proposal. Speaking in a television interview, Obama said the State Department would give him a report on the issue “over the next several months.” That could indicate a delay in the decision, which the State Department had previously targeted for the end of this year. Obama’s inclinations about the pipeline are being closely watched by environmentalists, who oppose the project, and proponents, who say it would create jobs. “My general attitude is, what’s best for the American people? What’s best for our economy both short term and long term? But also what’s best for the health of the American people?” Obama said in an interview with Nebraska television station KETV, discussing the criteria he would judge when making a final decision. The White House has made clear that the State Department is handling the review process, but activists believe the final call will be made by the White House, and Obama’s discussion of the criteria indicated he would have the final say. “We need to make sure that we have energy security and aren’t just relying on Middle East sources, but there’s a way of doing that and still making sure that the health and safety of the American people and folks in Nebraska are protected,” Obama said. “And that’s how I’ll be measuring these recommendations when they come to me.” Opposition is crystallizing in Nebraska, where the pipe would cross the Ogallala Aquifer and the Sand Hills region, home to whooping cranes and other endangered species. Obama, whose re-election in 2012 depends largely on his ability to bring down high U.S. unemployment, said the potential for job creation would factor in to the decision, but health and environmental factors would also weigh. “I think folks in Nebraska, like all across the country, aren’t going to say to themselves, ‘we’ll take a few thousand jobs’ if it means that our kids are potentially drinking water that would damage their health or if … rich land that is so important to agriculture in Nebraska ends up being adversely affected,” he said. (Editing by Eric Walsh) Copyright 2011 Thomson Reuters. Click for Restrictions .

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State Rep Rick Perry Voted Against Divesting In Apartheid-Era South Africa

October 14, 2011

WASHINGTON, D.C. — Conservatives concerned about Texas Gov. Rick Perry’s Democratic past may have one less reason to worry. From Perry’s past comes a crucial rebellion: a vote against a Democrat’s proposal to sanction Apartheid-era South Africa. In 1985, another member of Perry’s former party put forth an amendment in the Texas State Legislature that would have outlawed the state’s investments in the South African government. South Africa had been widely condemned for its vicious racial segregation, and economic sanctions were considered a popular — and ultimately successful weapon — against its Apartheid government. As proposed, the rule was explicit: “Investments of the Permanent University Fund and other funds available for investment may not be invested directly in the Republic of South Africa.” The amendment was killed, with state Rep. Perry voting with the majority, according to Texas Legislature voting records. A subsequent bill included a similar amendment to ban state investments in any business incorporated in South Africa. Again, Perry voted against the measure. That measure ultimately passed. A recent Washington Post exposè has provoked an examination of Perry’s handling of race issues. The Post reported that the Perry family had leased a hunting camp with the name “Niggerhead” emblazoned on a rock. Perry has insisted that the name had been painted over as soon as his father leased the property. But the paper found Perry associates that countered the GOP presidential candidate’s claim. Other incidents in Perry’s past have caused controversy in his home state, whether it was standing up for an underling who was accused of using the n-word during a meeting , or referring to immigrants as “Jose” during a press conference. Perry’s vote against a Texas ban on investments in Apartheid-era South Africa, amongst these incidents, has led some to accuse Perry of insensitivity on race issues. Peck Young, director of Austin Community College’s Center for Public Policy and Political Studies and a former political consultant, explained Perry’s vote. “I wish I could say Perry was unique,” said Young. “The conservative Democrats weren’t going to vote for that stuff because, for one thing, Texas had major financial activities in South Africa, and Texas in terms of its business attitudes was a conservative state … He was voting like every other right-wing Democrat and Republican.” In this case, a Democratic Perry fell to the right of Republican President Ronald Reagan. The president favored a watered-down, limited set of sanctions against the Apartheid regime. Members of Perry’s own party in Texas Congress pushed for a far more stringent embargo. Perry’s campaign spokesperson did not return a request for comment.

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Richard Kirsch: We are the 99 Percent: A Progressive Narrative in One Powerful Phrase

October 14, 2011

Cross-posted from New Deal 2.0 . One of the most common criticisms of progressives is that, unlike the right, we don’t have simple messages that tell our story. Our young leaders at Occupy Wall Street have come up with a powerful answer: We are the 99 percent . For the past several months, I’ve been working with a group of progressive leaders and communicators on the development of a ” progressive economic narrative” — a way of telling our story about the roles of the individual, business, and government in creating shared prosperity. The right has a well-developed view, to the point where after several decades it can now be summarized in three brief phrases: free markets, limited government and individual liberty. If we as progressives do our job well, we will also get to the point where we have three such phrases that are widely recognized. But that actually takes a long time. (Here are three candidates, but the fact that you may not nod your head readily when you read them is because you can’t shorten the process: shared prosperity, government that works for all of us, and liberty and justice for all.) For now, I’m celebrating the fact that we now have one phrase that tells much of our story: “We are the 99 percent.” This phrase’s power is in the emotions it elicits. It is triumphant, not defeatist. It says, “We have the power and the moral authority, not you!” It conveys action — we’re standing up for ourselves and occupying your turf. It declares our common humanity. It is hopeful. The progressive economic narrative I’ve been helping to draft has five conceptual pillars, and understanding them helps illustrate why “we are the 99 percent” also works intellectually. The first pillar of the narrative defines the progressive view of our economic problem: the crushing of the middle class by the rich and by corporate America. “The 99 percent” is a great unifying expression of inequality, as it avoids the separations that come from labels like “the middle class,” “working class” and “poor.” It says we’re all screwed together by rising inequality and highlights those who are responsible: the super-rich and big corporations. The second pillar defines what makes a successful economy: the well-being of our families in a big middle class and the productivity of our nation, not the stock market and corporate profits. “The 99 percent” is a simple declaration that our economy is driven by the vast majority of people, not a few super-rich. The fourth pillar (I’ll come back to the third) defines the political problem: our government has been captured by the super-rich and corporate America, corrupted by big money and politics. “We are the 99 percent” affirms that we have to take our democracy back to ensure that our economy works for all of us, not just the richest few. This has been a consistent message from the Occupy Wall Streeters, who seamlessly link inequality, corporate power and corruption. The fifth pillar is a call to action. And here’s where the triumphant power of “We are the 99 percent” works so well. It’s no accident that the phrase took root in an action that people could easily do –  posting a picture of themselves with their story — and was adopted instantly by a movement. The third pillar explains the role of government in building a successful economy and the relationship of public action to individuals and business. It can be summarized thus: We build a large and prosperous middle class through the decisions we make together, investing in our people, expanding opportunity and security, paving the way for business to innovate, and doing business in ways that create prosperity and economic security for Americans. This third pillar is essential to explaining how we should solve our problems and refuting the conservative view that the economy is driven by natural forces, best left on its own without government interference. “We are the 99 percent” opens the door for us to tell that story, but we need to fill in the blanks. When people say that Occupy Wall Street doesn’t have demands, we should look at that not as a criticism, but as an invitation to complete the story. Everything about the phrase establishes the point that we build an economy that works for all of us when we make decisions that benefit the 99 percent. Helping the American public understand a progressive worldview about the economy starts with our being clear on what we believe and telling that story consistently and widely. The best evidence that we’re on the right track is when a simple message captures the hearts and minds of us — the 99 percent.

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SEC Says Public Companies Must Disclose Cyberattacks

October 14, 2011

The Securities and Exchange Commission on Thursday issued new guidelines that said publicly-traded companies must disclose when they suffer cyberattacks and describe intellectual property stolen by hackers. Previously, publicly-traded companies were not required to report computer intrusions or whether they had fixed the problem in their SEC filings. But starting next year, they must acknowledge those cyberattacks to regulators and explain measures they plan to take to close their cybersecurity gaps, according to the SEC guidance. “This is a huge paradigm shift,’” said Tom Kellermann, chief technology officer of mobile security company AirPatrol Corp. In May, a group of Democratic lawmakers, including Senate Commerce Committee Chairman Jay Rockefeller, sent a letter to the SEC asking regulators to clarify whether companies must disclose cyberattacks or data breaches or the risk of them occurring. The committee’s review of SEC filings found that companies did not reveal measures they took to improve cybersecurity and were vague about their cyber vulnerabilities. “In light of the growing threat and the national security and economic ramifications of successful attacks against American businesses, it is essential that corporate leaders know their responsibility for managing and disclosing information security risk,” the letter said. The SEC guidance issued Thursday expands the list of things subject to disclosure to include computer intrusions or theft of data that could affect investor decisions. For example, if malware infiltrates a company’s computer network, the company “may need to discuss the occurrence of the specific attack and its known and potential costs and other consequences,” the SEC guidance said. It also says companies should disclose the risk of cyber incident if they are “among the most significant factors that make an investment in the company speculative or risky.” “A registrant may need to disclose known or threatened cyber incidents to place the discussion of cybersecurity risks in context,” the guidance said. Before Thursday’s release, only certain segments of the economy were required to report cyberattacks. Banks are required to report intrusions to the Department of Treasury and the health care sector is required to report data breaches to the Department of Health and Human Services. Some states have mandatory reporting requirements for companies, but only regarding theft of customer information and not about the theft of intellectual property or cyberattacks in general. Google has been one of the rare public companies to reveal they have been hacked, claiming in June that Chinese hackers tried to steal hundreds of Gmail passwords belonging to journalists, Chinese activists and senior U.S. government officials. But most public companies choose to keep quiet about computer intrusions to protect their reputations. In a survey of more than 1,000 global companies, only three in 10 said they reported all data breaches, according to a report released earlier this year by Science Applications International Corporation and the security firm McAfee. The rest of the companies said they only reported some incidents or only what they were legally required to. “Today a public company can lose a top-secret recipe, a go-to-market plan or other key secret and they are reluctant to report it given the potential backlash from customers, shareholders, and the market,” the report said. While calling for more disclosure, the SEC guidance said regulators were “mindful” of concerns that revealing too much would provide a “roadmap” for hackers to infiltrate a company’s cybersecurity. Kellermann said publicly-traded companies will not be pleased about the SEC guidance. “They’re going to freak out,” he said. “They would rather live in a land where they can hide behind the veil of plausible deniability.” Now, the value of a company’s stock can be directly impacted by the new reporting requirements, and if the company sweeps cyberattacks under the rug, it will face penalties from the SEC, he said. The SEC is “saying go to the doctor and get tested,” Kellermann said. “And don’t just tell me everything is cool.”

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Perry’s Political Rise Began With Opposition To Pesticide Regulations

October 10, 2011

Jason Cherkis contributed reporting to this story. WASHINGTON — More than two decades ago, there was a bitter fight within Texas’ agricultural community, one that pitted low-wage farm workers and their advocates against large growers and chemical companies. The dispute was over how much field workers should know about the often-dangerous pesticides they were handling. And there are those in Texas who believe Gov. Rick Perry wouldn’t now be a leading candidate for the Republican presidential nomination had he not taken up the cause of the growers and sprayers in this fight. “This became how Perry rises in politics,” claims Jim Harrington, director of the Texas Civil Rights Project , a public interest law group. “Perry is the weathervane, pure and simple. He saw where the money was and where the politics were drifting.” In the 1980’s, agricultural workers in Texas didn’t enjoy many of the workplace protections that were taken for granted in other industries. So in 1987, after Harrington’s group had sued the state on behalf of farm workers, the Texas agriculture department developed a law called the Agricultural Hazards Communications Act , known colloquially as Right to Know. In addition to requiring that field workers be trained on the dangers of pesticides, the law required farmers to maintain a list of the chemicals they used on their crops — known as the “crop sheet” — and to provide it to farm workers, along with a notice of their rights as workers. The law also stated that workers couldn’t be forced to handle chemicals that came unlabeled, nor could they be fired or disciplined for filing a complaint against an employer with regards to Right to Know. The crop sheet was important because Texas’ heavily Latino farm workforce tends to migrate, handling different crops in different regions during different seasons. A detailed listing of chemicals used and their dangers could help workers pinpoint the cause of an illness. According to Vaughn Cox, who worked in the agriculture department in the late 80’s, Right to Know was a sensible law designed specifically to help the farm worker and the doctors in the event of a pesticide-related emergency. “If it says cabbage in South Texas is treated with these chemicals this time of year, then the doctor can say, ‘Oh, they used this kind of chemical.’ It could speed up the process of treating them,” says Cox. “So many farm workers were being exposed to chemicals in unsafe ways. They had no training, no protective clothing or anything that common sense would say you should have.” Right to Know was one step in a string of farm worker protections advanced during the late 80’s, according to Nora Linares-Moeller, who also worked in the agriculture department at the time. “It was an incredibly nasty fight with the ranchers and growers,” Linares-Moeller says. “It all had to do with the ability for farm workers to be safe in the field. They were literally being sprayed with pesticides.” Despite its relatively modest requirements, many growers and chemical companies weren’t fans of Right to Know, which would bring more transparency to the effects of pesticides and potentially slow down production when farm workers raised concerns. The agriculture department had long borne a reputation for being laissez-faire on regulatory matters, and opponents of Right to Know argued that such new regulations were burdensome, costly, and paternalistic. “The farm bureau and the chemical industry in particular, which is a very powerful lobby, went apoplectic and just fought the regulations tooth and nail,” recalls Harrington. “They didn’t want to have any accountability.” The state’s then-agriculture commissioner, populist Democrat Jim Hightower , says he faced pushback from corporate interest groups and their allies in the state legislature as he tried to craft an enforcement program. The way Hightower remembers it, one of his fiercest opponents on the pesticide matter was Rick Perry. As a state representative who was then a Democrat, Perry had already demonstrated what some considered an ambivalence toward farm workers’ rights. In 1985, lawmakers and worker advocates had pushed a bill that would bring agricultural workers into the state’s workers compensation system, after a state judge had deemed their exclusion a denial of equal protection under the law. Like the growers’ lobby, Perry opposed the bill. It eventually passed. That same year, Perry had supported an unsuccessful bill that would have stripped the agriculture commissioner of much of his regulatory power as it pertained to pesticides. That support had put him in the camp of trade groups representing farmers, cotton growers, cattlemen, and chemical producers. “He was pretty much a preacher [for] the chemical lobby,” says Hightower, an outspoken Perry critic. Perry’s stance on the pesticide issue revealed “a willingness … in fact, an eagerness” to shill for the industry, he says. Perry’s campaign did not respond to requests for comment for this article. Perry apparently had no more allegiance to his Democratic Party than he did to farm workers. In 1989, he declared himself a Republican in order to challenge Hightower for the agriculture commissioner seat, Perry’s first crack at statewide office. (“I intend to vote the same convictions,” Perry said of his political conversion. “The only difference is there will be an R beside my name.”) None other than renowned Republican strategist and Texas political operative Karl Rove claimed at least partial credit for Perry’s party switch. “Perry had planned to retire from the legislature until his best friend, David Weeks, and I talked him into switching parties and running for the GOP nomination for agriculture commissioner,” Rove wrote in his memoir , published in 2010. With Rove’s help, Perry won the election, bringing an end to Hightower’s eight-year tenure as commissioner. According to Rove, “Perry swept rural counties because, as a rancher, he actually knew something about agriculture; he won the suburbs because of his marquee good looks and conservative values.” Perry was the son of a cotton farmer and had majored in animal science at Texas A&M University . Others argue that Perry’s victory had less to do with his ranching knowledge or appearance than with the robust financial backing he received from corporate interests, many of whom wanted to see Hightower unseated. Indeed, campaign contribution records from the 1990 race, provided to The Huffington Post by the Texas State Library and Archives Commission, indicate that Perry routed Hightower in the weeks leading up to the election, his war chest bolstered by donations from farmers, ranchers, developers, and oil and gas executives. But Gene Hall, current spokesman and longtime official at the Texas Farm Bureau, says the role that pesticide regulations played in Perry’s support during the 1990 campaign has been overstated. “It would be inaccurate to say it was all about pesticides,” says Hall, noting that Perry and the bureau didn’t always agree on matters. He says Perry enjoyed wide support among the bureau because Hightower’s vision of small, organic farms was “so clearly at odds with farmers and ranchers.” “We were determined to defeat him,” Hall says of Hightower. “I’ve heard some describe it as a holy war. He had to be beaten. We allied with Rick Perry.” “I think it would be unfair to say that Rick won that campaign because of pesticides,” adds Ken Luce, who worked on Perry’s campaign for agriculture commissioner. “There was a hugely dissatisfied electorate within the agriculture community … Hightower and his people, they underestimated him.” Whatever the reason, the money poured in from deep-pocketed donors. In a one-month period just before voters headed to the polls, Perry raised $318,454.92, while Hightower’s committee netted a mere $108,802.57, according to records. (Some Hightower aides were later indicted for allegedly using state money for political purposes.) Many of Perry’s larger checks came courtesy of donors who owned large farms or had ties to groups like the Rio Grande Valley Sugar Growers. On the expenditures side, Perry’s camp made payments to a PAC affiliated with the Cattle Feeders Association, for money apparently spent on campaign events. They also made large advertising buys and sent at least $39,000 to Karl Rove & Co. for “printing” expenses, according to the disclosure forms. On the campaign trail, Perry flayed Hightower for his endorsement of Jesse Jackson in his 1988 presidential bid. Hightower also claims that Perry’s camp also ran attack ads on Texas television. It didn’t take long after the election for department employees to realize that the agency was about to change under Perry, particularly with the work related to pesticide regulation, according to Vaughn Cox. It had been Cox’s job to inform farmers about Right to Know and to “slap you on your hand” in cases of non-compliance, he says. “Soon after the election results were clear, his local campaign manager made a visit to the local office where I was working,” Cox recalls. “He explained in very clear terms that there were a list of folks that should be gone by the time the commissioner took office in January. Dang if my name wasn’t at the top of the list. They made it clear to a pretty large segment of the workforce that they were no longer welcome. All Hightower people.” A few months after the election, Perry let 52 department employees go, including Dale Burnett, the head of pesticide enforcement and a career agriculture department employee, according an Austin American-Statesman article at the time. Rebecca Flores, the former longtime head of the United Farm Workers union in Texas, says the enforcement of pesticide regulations changed with the personnel. Whereas the union had met routinely with Hightower to voice workers’ concerns, she found it nearly impossible to get the ear of Perry or his staff. “He got rid of all the staff that was doing the educating and training,” she says. “He didn’t enforce one thing.” “Rick Perry is no friend of farm workers,” she goes on. “He’s an opportunistic parasite.” But Hall says that pesticide enforcement by no means disappeared under Perry, though as commissioner he seemed to have a lighter regulatory touch than his predecessor. “The rules were not then and not now lax,” says Hall. Under Perry they were “not prohibitive, not onerous, which was the direction Hightower was moving in.” Within ten months of Perry taking office, the U.S. Environmental Protection Agency had to order the agriculture department to reduce its backlog of pesticide enforcement cases. The backlog had reached 300. The EPA attributed the problem to excessive vacancies in the area of enforcement, according to the American-Statesman . Perry’s team partly blamed Hightower for the pileup of cases; Hightower attributed it to Perry firing knowledgeable officers and replacing them with what Hightower described as political appointees. The department had had a similar backlog under Hightower years earlier, the article noted. By 1995, the farm workers union — along with seven environmental organizations — went so far as to ask the EPA to strip Perry of his pesticide regulation powers, citing a serious drop in enforcement. In a letter to the agency, the groups said that fines related to pesticide use had slid from $61,000 in 1989 under Hightower to $31,000 in 1994 under Perry, according to a Houston Chronicle story at the time. Though Perry dismissed the claims as “outrageous,” he had carved out a reputation as a lax enforcer catering to growers rather than workers, with little political price to pay. As the Chronicle story noted, “Perry’s farmer-friendly agency is sailing through the Legislature with hardly a note of controversy.”

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Wall Street CEOS May Be Held Accountable If Their Bank Breaks Rule

October 8, 2011

WASHINGTON (Dave Clarke) – Regulators are considering holding Wall Street chief executives legally liable if they allow certain types of proprietary trading on their watch. Regulators due to reveal the Volcker rule proposal next week are expected to ask whether CEOs should have to certify, or “attest,” that their bank has put in place the proper systems to make sure no proprietary trading is taking place. The idea is that holding CEOs personally accountable will add a strong deterrent effect to the Volcker rule. The rule, called for in last year’s Dodd-Frank financial oversight law, bans banks from trading for their own profit in securities, derivatives and some other financial instruments. The bank industry is already balking at the legal burden and compliance headache that would come with a CEO certification. “The whole Volcker rule proposal envisions having an army of nannies overlooking the work of the people who actually work with customers,” said Wayne Abernathy, a senior official with the American Bankers Association. “How much more does an attestation bring that that doesn’t bring?” A CEO certification approach may be similar to 2002′s Sarbanes-Oxley law. That law, put in place after major accounting scandals at Enron and Worldcom, has the power to send executives to prison and make them pay multimillion-dollar fines for submitting false certifications on corporate disclosures. It is unclear if regulators will seek CEO imprisonment or hefty fines as potential penalties for violating the Volcker rule. Whatever regulators might put in place, fines would be a far more likely punishment if any are ever doled out, banking lawyers said. Supporters of the proposal contend it would force the CEO to be more involved and accountable. “Placing personal and legal responsibility directly with a corporation’s top executive is key to ensuring financial firms comply with the Volcker Rule and stop engaging in the risky activities that led to billion-dollar taxpayer bailouts,” Sen. Carl Levin said in a statement to Reuters. The crackdown on proprietary trading, which has some exemptions, is known as the Volcker rule after former Federal Reserve Chairman Paul Volcker, who championed the reform. The rule will mostly impact large banks including Goldman Sachs, JPMorgan Chase and Citigroup. Supporters contend that large banks whose customers receive deposit insurance from the government should not be engaging in risky trading activities that could put these deposits in jeopardy. Despite banks’ concerns, regulators may go easier on the issue of CEOs’ legal liability than the industry’s worst fears. In January the Financial Stability Oversight Council, the panel of regulators headed by the Treasury Department, released recommendations for enforcing the Volcker rule. Included in this list was requiring a CEO to certify their compliance efforts’ “effectiveness.” A draft of the rule to be considered next week by regulators does not explicitly call for a CEO certification and instead solicits feedback on whether it should be in a final rule. The draft, first posted online by the American Banker on Wednesday, could be changed before the Federal Deposit Insurance Corp meeting on Tuesday and the Securities and Exchange Commission meetings on Wednesday on the proposal. Banking lawyers say the certification could work similarly to Sarbanes-Oxley. “The idea is they want to have a human being on the line saying it is true,” said Bradley Sabel, a partner with Shearman and Sterling law firm. But even some critics of the banking industry who argue the government has not done enough to respond to the 2007-2009 financial crisis question whether upping a CEO’s legal responsibility will make much of a difference. “I count myself among those who would like some CEOs’ heads on a stick but I don’t think this is the right way to go about it,” said Cornelius Hurley, director of Boston University’s Morin Center for Banking and Financial Law. “At the end of the day he is going to rely on the representations of his advisers anyway and all this does is make sure he doesn’t sleep at night.” (Reporting by Dave Clarke, Editing by Matthew Lewis) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Soren Petersen: Designing New Financial Instruments

September 29, 2011

Cowritten by Mads Plasvig Our current financial system, with its high dynamic and detail complexity is sensitive to manipulation and prone to herd-behavior. The outcome is often creative destruction, leading to the poorly tolerated periodic bubbles and bursts. Increased understanding of behavioral economics, the study of the irrational context dependent decisions we all make daily, has taught us that the rational human self-interest model is wrong. For over two hundred years, we have increasingly used this flawed and dangerous model to plan our societies. Now that pure Capitalism or Socialism has been shown to fail miserably, could a blend of these as exemplified by the Scandinavian Model, which allows for balancing growth with sharing, be our best chance of sustainable progress? If so, how could the flow of our transactions become as reliable as the air on which we all depend? How do we transform our current perverse opportunistic accounting into a truly creative opportunity for all living beings? You might be surprised to learn that the current financial packages securing our daily lives, our children’s futures and our well-deserved retirements are not subjected to the same rigorous product development process, as are automobiles, spaceships and LEGO bricks. Financial services are either incremental developments of existing offerings or the result of computer model generated business schemes, using models based on faulty assumptions of human behavior. To provide useful, life enhancing offerings, financial institutions would have to understand and design for the fundamentals of human behavior. All human behavior and interaction is based on trust and humans are designed and optimized to function in tribes, not in societies that consist of millions of individuals. When groups grow beyond 50,000 individuals, it becomes too large to know and reliably judge the trustworthiness of everyone else. It is at this point, that it becomes necessary to enact democratic government institutions with effective financial systems and enforceable agreements. Often, the originally designed solutions are the root cause of future problems. For example, institutions have an inherent tendency to grow beyond their effectiveness while centralizing decision-making in an attempt to stay in control. Organizations are not human and they do not have any emotions with regards to human beings. The system will simply continue to expend capital without thought of human misery, eventually collapsing under its own weight and this disregard of human nature is the root cause of our society’s inherent and continued financial disasters. To address these inherent human limitations, organizations might be required to remain smaller in ways that respect people’s ability to understand, relate and reliably manage trust, creating dynamic legal definitions of organizations to avoid conflict of interests and perverse incentives. To prevent systemic instability, no one group of organizations can be allowed to monopolize a business to the extent that they distort competition and then simply become “too big to fail.” An example might be separating out all retail or private investments, so as to protect them from anyone powerful enough to lobby and to receive loans for speculative purposes. Human tribal nature has a natural built-in tendency to seek control and approval. Unaware of our cognitive limitations to analyze and make decisions, society’s leaders believe more centralized control makes us safer and this may have worked when the world’s population was smaller and resources more plentiful. However, for the past five hundred years, every generation has started its own war and the definition of insanity is continuing to repeat the same thing over and over and to expect a different result. By utilizing cooperative, creative thinking we have a chance to finally change the game plan. Special thanks to Mads Plasvig for researching and co-writing this article.

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Jeff Sweat: Five Questions for Simon Mainwaring

September 26, 2011

We First author on how brands and agencies can create positive change Branding consultant author Simon Mainwaring was an agency star, but his work as worldwide creative director for Motorola at Ogilvy and other agencies didn’t exactly point to his latest venture — a book and social branding firm that aim to help create a more equitable world. Mainwaring’s book, We First: How Brands & Consumers Use Social Media to Build a Better World, lays out a new model for corporations and consumers to do good. I caught up with Mainwaring to find out more about such concepts as “contributory consumption” and how agencies can help brands re-invent themselves in a troubled world. Jeff Sweat : Why do you think a book like yours is necessary? Simon Mainwaring : A book like We First is necessary right now for three reasons. The first is the fact that we now live in an intimately connected global community. There are many individuals, companies and even countries operating in what I call a “me first” mentality, which is effectively a purely competitive approach to life, treating the planet as if it has infinite resources and pitting one country against another for supremacy. But, as we discovered on Wall Street, as we see through the internationalization of currency, as we see through the effects around the world of various disasters, we are intimately connected. As such, we need a book that reframes business and the role of companies. The second is that, as a function of the information provided by the Internet, consumers and business leaders are more aware than ever of the trouble that we are in, whether it’s poverty, disease, climate change or environmental degradation. And so there’s a greater need than ever to respond to these challenges with fresh thinking. And third, it’s because of the arrival of social technology and its transformative potential. I believe the true power of social media is its ability to scale and accelerate these connections. JS : In your book you say that there are changes that corporations need to make. What are some of those? Mainwaring : The challenges for corporations are three-fold, and they affect every tier of the hierarchy within the corporation. First, the C-level: Executives can no longer hide behind the corporate veil. They need to be accountable for what their companies do, because entities are responsible for socially irresponsible behavior. Second, companies are challenged to position themselves as places where people want to work. One of the most powerful ways they can do that is to align their social outreach around their core values and make a positive contribution to the marketplace. And third, in terms of organizational structure, it’s enormously challenging for companies that in the past have privately held a monopoly to realign themselves in a way to take advantage of the social business marketplace. Traditionally, companies are structured around a hierarchy. Now various people, including Charlene Li, who wrote a wonderful book called Open Leadership, have examined in detail what this reorganization might look like, whether it’s hub-and-spoke, whether it’s a dandelion, whether it’s some form of distributed organization that does away with the hierarchy but still allows for centralized control. JS : Why does social media make this change possible? Mainwaring : Consumers now have a voice. And the fact that consumers can be creators, producers and distributors means they can push back against brands to punish them for their socially irresponsible behavior or reward them for their responsible behavior. We already see consumer adoption of new technology moving faster than brand and agency adoption. In a sense, consumers are more sophisticated in their use of these tools than brands or agencies. And as consumers become more aware of the power they have, their sway over companies will increase. JS : You mentioned one concept in the book, “contributory consumption.” Tell us a little about that. Mainwaring : The engine of capitalism, like any engine, needs to be serviced. And the way that we’ve been running the engine of capitalism has been to think profit for profit’s sake and really damn the consequences, even to the point where Wall Street largely came unstuck in 2008. Contributory consumption at its broadest level is a way of servicing that engine, because brands, companies and institutions cannot survive in societies that fail, in which case we need to make a proportional contribution to the maintenance of the well-being of the entire business ecosystem on which all these companies depend. And if you look at the reality in the United States, where you have more than 40 million people below the poverty line and 42 million on food stamps, and then you look at poverty around the world, clearly the way we’re running the engine of capitalism is not serving us well. Contributory consumption builds on some amazing work done by other people, including the “(Product)Red” campaign and “1% for the Planet” [and others], all of which give consumers the opportunity to make a proportional contribution to something they care about. JS : What role do you think the advertising community plays in this new system or this new world? Mainwaring : The advertising industry is facing several challenges. One is that their traditional intermediary role is being challenged because consumers are talking directly to brands. And a lot of brands are therefore taking their social business units in-house, which robs an agency of its stewardship role. Even though social technology is powerful, it is not an end in itself. The marketplace is still driven by a timeless currency of emotion. And the way you leverage emotion is in your storytelling, and that’s where advertising agencies are completely relevant and essential to the future. JS : Your book talks about the idea that businesses need to recognize that working for the social good benefits them, too. Do you think that they’re capable of recognizing that? Mainwaring : I think companies are waking up. Any one of us at any given time is a parent, an investor, an employee, a shareholder. And as we’re becoming increasingly aware of the global crises that we all face, we’re realizing that each of us need to play a more contributory role in what we do.

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How Important Are Vacations?

September 14, 2011

Against the backdrop of high unemployment and an economy that some fear has already slipped back into recession, President Obama recently came under fire for taking a summer vacation with the first family in Martha’s Vineyard. Seems the guy can’t catch a break, literally. While his conservative critics seemed to overlook the fact that President Bush had taken three times as many vacation days after the same amount of time in office , images of the commander in chief — any commander in chief — hitting golf balls at a luxury resort while everyday Americans are struggling may not have sent the best message politically. But politics, as we know, rarely reflect reality. Which got us thinking: How important is it for everyone, even the president, to pause, recharge the proverbial batteries and take a little well-deserved rest? The presidency, of course, is as much a 24-7 job as they come, and even while “on vacation,” the president continually receives briefings, meets with advisers and remains on alert should a major incident unfold. Entrepreneurship is a close second. Running a business comes with enormous responsibility, and there is no real “off” switch, even for those who have assembled a solid supporting cast. How many times have you seen someone camped out in a beach chair — feverishly typing away on a BlackBerry? Probably an entrepreneur. But vacations — even if you never leave home — are all but essential, the research tells us. Not just for unwinding and de-stressing, but because they often serve as a time to regroup and generate new ideas, making us even more productive when we return. And Americans already take far less vacation time than people in nations around the world. So we decided to ask the hardest-working group we know — our Board of Directors — how important they think vacations are, both for themselves and their staffs. Sir Richard Branson Founder and Chairman, Virgin Group “Dr. Yes” “I get quite angry about companies in America, including some of our own, who give people such short vacations. I think you can say it’s an absolute disgrace and especially for people that have families. I really do think — and especially when you’ve got such high unemployment — the jobs could be shared around amongst everybody in America. Those people that want to job-share would have longer time off with their family without being made to feel guilty by the company. You should be allowed to do so. It’s a much better balance of life. “I know how difficult it is to change that attitude, because I get the chief executives of our companies from America down to Necker to talk to them occasionally and tell them that if people want to take leave for six months, they should be able to do so. If they want to share jobs with somebody else, they should be able to do so. It’s just so difficult to get people to change their attitudes. But, it’s time that parents need to find time with their children and occasions like that are very important for recharging the batteries, getting healthy and coming back to work even harder.” JJ Ramberg Co-Founder, GoodSearch and Host, MSNBC’s Your Business “The Host” “Vacations are incredibly important. Running a small business is hard work and the risk of burnout is high. Taking a little time off allows you a moment to breathe, recharge your batteries and come back to work excited and motivated. (Not to mention, it’s important to spend some uninterrupted quality time with your significant other, kids, parents, etc.). In addition, taking a vacation gives you a chance to see how well your team works without you. If your company cannot run while you’re gone for a few days, you’ve either not done enough training or have put together an incomplete team. “All of that said, I’m both horrified and proud that I did some work every single day while on my honeymoon. (Thank goodness I married another entrepreneur who understood!) My company was still pretty new and I was critical to its daily operations. When you have a startup, all rules are thrown out the window. But now that my company is more mature, a work-free second honeymoon is in the making!” Bob Parsons Founder and CEO, The Go Daddy Group “The Renegade” “Vacations are very important. Time off gives you the opportunity to clear your mind, relax and rejuvenate, which can make you even more effective at work. To this, add the fact that the vast majority of us ‘work to live’ instead of ‘live to work.’ “We abide by this philosophy at Go Daddy. We give our employees three weeks off in their first year with us, four weeks the second year and six weeks in the fifth year. It’s important to enjoy life. Remember Rule No. 16 — we’re not here for a long time, we’re here for a good time!” Elizabeth Busch, Anne Frey-Mott and Beckie Jankiewicz Co-Founders, The Event Studio “The Clipboard Queens” “Vacations are extremely important and the only way to truly relax, rejuvenate and focus on the vacation itself and those you are sharing it with — and to completely unplug from work. If you are half in and half out, you lose the benefit of the time away.” Clint Greenleaf Founder and CEO, Greenleaf Book Group “The Cowboy” “Vacations are critical. Time away helps not only the mind and spirit, but is good for the office to be without you. I don’t begrudge presidents for taking time off — that job seems pretty stressful.” Julie Jumonville Co-Founder and Chief Innovation Officer, UpSpring Baby “The Mad Scientist” “Vacations are extremely important. I come back energized and refueled and some of my best innovation either happens on vacation or immediately following because I have left my stress at the office.” Rob Adams Director, Texas Venture Labs at the University of Texas “The Validator” “First, they are very important. Secondly, no one really disconnects any more in this wired world. So is he really on vacation if he’s the leader of the free world and available by every electronic means available?” Lexy Funk Co-Founder and CEO, Brooklyn Industries “The Contrarian” “I just returned from my first vacation in a year and a half — driving across Turkey to the east to see my partner’s family. I feel refreshed, ready for the challenge of retail and raring to go. But no way would this happen without having Internet access for seven days. Without vacations, we all become droids on network steroids, perhaps the president included.” Rieva Lesonsky Founder and CEO, GrowBiz Media “The Beacon” “This is clearly ‘do as I say and not as I do advice’ but vacations are vitally important. True, I haven’t taken one since shortly after launching my business more than three years ago. Vacations help us change the view, which can spark an idea or kick start creative thinking. “It’s also important, if you have a family, that you spend time with them. They need to know that you are as invested in them, as you are in your business (which, of course, you are, but sometimes forget to show it.) “All that said, vacations in the year 2011, much like business, have evolved. You’re in charge. You can choose to go off the grid, disconnect and leave your business in the capable hands of your staff. If you’re a solo entrepreneur, the very idea of taking a week off likely paralyzes you. So substitute long weekends for a week off. On the other hand, with today’s technology, you can essentially bring your work with you, keeping you as in touch with your business as you want to be. (Kind of like presidents do.) “Seriously, people just need to chill — and I mean that in every sense of the word.” Tom Szaky Founder, TerraCycle “The Eco-Capitalist” “Very important. People need time to recenter and regroup. Burnouts are real and usually impact your best employees.” Phil Town Investor and Author of Rule #1 And Payback Time “Rebelman” “If you’re doing what you love, your whole life is a vacation. You never go to work. You just go play all day. Vacations are for people who work for a living and I think if you’re one of those, you should absolutely vacate for at least six weeks a year minimum. Teachers have it about right — 12 weeks off for the summer, a week at Thanksgiving, three weeks at Christmas, a week at Easter and various other days here and there. But really, cowboy up and get your own thing going so you look back at your life and it wasn’t about a series of two-week breaks getting drunk on a beach.”

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Controversial Perry Remarks Spark Backlash From Rival GOP Campaign

September 9, 2011

(AP/The Huffington Post) The GOP presidential contest has quickly narrowed to a two-man race. As Rick Perry and Mitt Romney jockey over their ability to defeat President Barack Obama, there are deepening fault lines between the two on Social Security, immigration, jobs and more that could shape the contest. Their stylistic differences are as stark as their disagreements on substance. Romney, the former Massachusetts governor, also is a former venture capitalist who is at his best when he’s talking about how to help businesses help the economy grow. Perry, the Texas governor, is a fiery, red-meat conservative who has already shown he loves to go on the attack – and isn’t afraid to go after his chief GOP rival. Those contrasts have driven Romney’s campaign to fundamentally change a strategy that was previously aimed squarely at Obama. Until Perry jumped into the race and almost immediately displaced Romney as the front-runner, the former Massachusetts governor focused his public appearances and messaging on the president. Now, instead of running a general election campaign in primary season, Romney will spend the early months trying to convince Republicans that Perry can’t beat Obama in November. It will start with Social Security, an issue Romney’s campaign has decided is Perry’s biggest liability. Aides privately say they plan to make it a singular focus in the coming weeks. “You say that by any measure, Social Security is a failure. You can’t say that to tens of millions of Americans who live on Social Security and those who have lived on it,” Romney said in Wednesday night’s debate, after he and Perry had already traded jabs over their jobs records earlier in the debate. The Romney campaign has followed that with a steady stream of press releases, background material and on-the-record quotes assailing Perry as a career politician who is unelectable. “If (Perry) were to win the nomination, the most interesting thing that it would prove is that God is a Democrat,” said Stuart Stevens, a top Romney strategist. Republican strategist Alex Castellanos, who served as an adviser for Romney’s 2008 campaign, told the Washington Post , “What Rick Perry implied [in the debate] was that if he could go back 70 years and undo Social Security, he would.” He added, “Rick Perry may have reassured the base with some very fiery rhetoric, but what he didn’t do … was prove in any way that he could win independents or seniors or soccer moms. And, in fact, he shot an arrow into the heart of seniors. He set grandma’s hair on fire.” Romney has also started to take on Perry’s immigration record. Advisers say that could be the next front in the fight, largely because it could hurt Perry with the conservative base he relies on. As governor of a border state with problems related to illegal immigration, Perry has said a physical border fence isn’t necessary. Texas universities also allow the children of illegal immigrants to pay in-state tuition rates. Romney used a recent immigration address to emphasize his support for a fence on the southern border – and to highlight his veto of an in-state tuition bill in Massachusetts But putting so much focus on such issues carries risks: They’re a distraction from the central, disciplined jobs-and-economy message that Romney has been pushing steadily for months. The economy is the issue most likely to drive voters in 2012. Perry has already made clear that he will run primarily on his jobs record – Texas gained more than 1 million jobs during his tenure as governor. And he has taken almost every opportunity to go after Romney on the issue. “Michael Dukakis created jobs three times faster than you did, Mitt,” Perry jabbed on the debate stage. And after Romney unveiled a 160-page economic recovery plan earlier this week, Perry’s campaign immediately put out a statement slamming it. Speaking of his GOP opponents, Perry told Republicans in California on Thursday, “We got our differences and we’ll talk about them and what have you and hopefully in a very respectful way.” Most important, he said, “is we need to have a nominee that doesn’t blur the lines between themselves and the current resident of the White House.” Perry’s message is aimed squarely at an angry GOP base that’s clearly hungry for a candidate who isn’t afraid of a fight. He’s willing to deliver strong rhetoric on issues like the death penalty, a subject that drew applause at the debate. Romney, by contrast, is positioning himself as the technocratic, business-friendly candidate in the race. He is clearly most excited when he’s talking about what he calls his “business plan” for the country. The last time he was confronted with questions about Social Security, he ended up talking about corporations. “Corporations are people, my friend,” he exclaimed in August at the Iowa State Fair, staring down a heckler in the crowd who wanted to know how Romney was going to protect citizens on Social Security instead of looking out for companies. These contrasts are set to shape a primary race that’s still in its early stages, with more than four months before voters go to the polls in Iowa, New Hampshire and South Carolina. And the dynamic is likely to push out the myriad of other candidates who have spent brief periods in the spotlight in recent months. Chief among them is Minnesota Rep. Michele Bachmann, whose campaign has wobbled since she won a key test vote in Iowa in August. She’s lost top members of her campaign team – and the media attention that had raised her political profile. Perry clearly eclipsed her onstage on Wednesday, and his expected attractiveness in Iowa, where she must win, threatens to doom her candidacy. Instead, Perry’s entry could turn Iowa, the leadoff caucus state, into a two-person showdown. Romney has been relatively quiet there so far, but aides say he could up the ante in the state. “Perry has to win here,” said Doug Gross, who is undecided but was a top Romney supporter in 2008. “What Romney needs to do right now in Iowa is make sure that Perry can’t get a big win early.” And Perry could find a footing in New Hampshire, as well, where Romney had been running largely unopposed but where many conservatives are still looking for an alternative candidate. “People were really hungry for an alternative, and no one has filled that niche,” said Rich Killion, a New Hampshire-based strategist who was working for former Minnesota Gov. Tim Pawlenty until he dropped out of the race. “With Perry getting into the race, he’s completely filled that vacuum. And it is a two-man race.” Still, there are months before the first votes are cast, and there are still two debates coming up in September alone. That leaves plenty of room for mistakes, and for Romney to start spending millions of dollars in an attempt to define Perry for voters who are just getting to know him. “It’s important to remember that the first contest is five months away and anything can happen,” said Mike Dennehy, a longtime GOP strategist. “We shouldn’t write anyone off until the first votes are cast.”

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U.S. Expecting To Be Downgraded By Standard And Poor’s

August 5, 2011

The U.S. government reportedly expects the rating of U.S. debt to be downgraded by credit rating agency Standard and Poor’s, according to ABC News . U.S. debt currently holds a triple-A credit rating, the highest possible. On Tuesday, President Barack Obama signed an agreement to raise the debt ceiling of the U.S., after a political dispute that lasted for months. UPDATE 7:10 p.m.: S&P is reconsidering its position on a potential U.S. credit downgrade after the Obama administration challenged the credit rating agency’s economic model, CNN reports, citing a senior Obama Administration official, who said the analysis was off by “trillions” of dollars. Politico’s Ben White tweets the supposed errors are said to display “incompetence.” This is a developing story.

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Gabrielle Giffords Returns To Congress To Vote On Debt Ceiling Deal

August 2, 2011

WASHINGTON — Seven months after she was shot in the head by a gunman in Tucson, Ariz., Rep. Gabrielle Giffords (D-Ariz.) made a surprise and emotional return to the House floor on Monday, casting a vote in favor of a bill to raise the nation’s debt ceiling. Giffords entered the chamber to sustained, standing applause, shaking hands with colleagues whom she had not seen since that January day. Her vote, a sideshow to the far more important and compelling personal drama, was in favor of the bill, which passed through the chamber by a margin of 269 to 161. “I have closely followed the debate over our debt ceiling and have been deeply disappointed at what’s going on in Washington,” Giffords said, in a statement from her office. “After weeks of failed debate in Washington, I was pleased to see a solution to this crisis emerge. I strongly believe that crossing the aisle for the good of the American people is more important than party politics. I had to be here for this vote. I could not take the chance that my absence could crash our economy.” Giffords’ office tweeted word of her return to Washington after the vote had begun. And as she showed up on the floor — smiling and with her hair cut short — the attention of lawmakers drifted from the vote tally to her presence. Her office, in a statement, noted that in December 2009 and again in February 2010, she had objected to raising the nation’s debt limit. This vote, the statement added, “was substantially different, with the strength of the U.S. economy hanging in the balance.” After the vote was cast, Giffords received multiple additional rounds of applause, as House Minority Leader Nancy Pelosi (D-Calif.) called her “the personification of courage.” “Her presence here in the chamber as well as her service throughout her career in Congress, brings honor to this chamber,” Pelosi said. “Thank you, Gabby.” Pelosi said she knew a Giffords visit “was possible” for a couple of days, but she urged the Arizona Democrat not to come unless she felt up for it. “I did not encourage her to,” Pelosi told reporters. “I told her first things first. But she was very eager to come.” Pelosi said she found out for sure that Giffords was returning from her chief of staff, John Lawrence, who is close with Giffords’ husband Mark Kelly. When she saw Giffords come in, she said no words were exchanged as they greeted each other. Just “girl hugs,” Pelosi said. “Suffice it to say, it was one of the most thrilling moments to see this heroine return home, to the House. And to do so at such a dramatic time.” Rep. Debbie Wasserman Schultz (D-Fla.), one of Giffords’ closest personal friends and one of the people who escorted Giffords into the chamber, said she was beside herself when she heard the House erupt into cheers as Giffords walked in for the first time since the January 8 shooting. “The reaction in the chamber was the most enthusiastic, exuberant, exhilarating — I mean we were all crying — thrilled — you know, we just knew she would make a triumphant return,” Wasserman Schultz said, becoming visibly upset. “It always felt like there were so many doubters and skeptics, but never doubt Gabby Giffords’ determination. This is the first of many votes she’s going to pass.” Wasserman Schultz, who is also the Democratic National Committee chairwoman, said she knew “sometime yesterday” that Giffords’ visit was happening. She said she spoke late last night to Giffords’ husband, Mark Kelly, about the plan. Giffords had been following the debt limit vote from Tucson and “was ready to come and do the pivotal vote if she needed to,” Wasserman Schultz said. “At the end of the day, it was probably the most important vote we’re going to cast this Congress. She wanted to make sure that her constituents were represented.” Vice President Joe Biden came to the Capitol to see Giffords, after being tipped off by Pelosi that she would be in attendance. “I told her she was now a member of the cracked-head club like me, with two craniotomies,” Biden told reporters. “You know what I mean? It was just so good to see her. But that’s a private conversation.” Speaker of the House John Boehner (R-Ohio) found out about her return about an hour before the vote and helped to escort her into the chamber. Assistant Democratic Leader James Clyburn (D-S.C.) said he found out that Giffords would show for the vote when he saw her, hinting that Pelosi and others in the know played it close to the vest. “I just said, ‘I love you, glad to have you back, great to see you,’” he said. “I only found out when I saw her. [It was] a little emotional.” Below, a picture of the congresswoman on Capitol Hill from HuffPost’s Jen Bendery: Below, two additional photos via C-Span: Video of Giffords’ return: This is a developing story. More details to follow.

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Verizon Wireless To Pay $10 Billion Dividend To Owners

July 28, 2011

NEW YORK — Verizon Wireless on Thursday said it will pay a dividend of $10 billion in January to its owners, Verizon Communications Inc. and Vodafone Group PLC, ending a strategy of reducing debt that has frustrated Vodafone. Vodafone, a British cellphone company with wide international interests, owns 45 percent of Verizon Wireless, yet hasn’t received any cash from the U.S. carrier in years. Vodafone shares initially rose $1.40, or 5.2 percent, in aftermarket trading in New York. Verizon gained 20 cents to $35.86. New York-based Verizon owns the other 55 percent of Verizon Wireless and controls its operations. It will receive $5.5 billion of the dividend while Vodafone will get $4.5 billion. Analysts have seen Verizon’s strategy denying Vodafone a dividend as a way to squeeze the British company into selling its stake in the wireless carrier to Verizon. But no deal has materialized, and Verizon itself started getting squeezed. Without dividends from Verizon Wireless, it would soon have run out of cash for its own dividend to shareholders, according to analysts. Verizon spends about $5.5 billion a year on its dividend.

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Clifford Winston: The U.S. May Need More Lawyers!

July 28, 2011

“The trouble with law is lawyers,” famous civil rights lawyer Clarence Darrow once said of his profession. Lawyers have been derided since the dawn of time, for many reasons. What most people don’t realize is that lawyers have cleverly created many restrictions on their industry’s size and services through their governing organization, the American Bar Association (ABA). Thus, the solution to the “trouble with lawyers” is counter-intuitive: we may need more of them — or, at least, we must spur more competition among them by busting the lawyer monopoly! ABA occupational licensing requirements have allowed lawyers to create a club with a limited membership that is able to raise prices to consumers, which is how top lawyers can get away with charging upwards of $1000 per hour for their time. In addition to licensing rules, the ABA accredits law schools, keeping the number of slots available artificially low. In turn, all but a few states today require would-be lawyers to graduate from those ABA-accredited law schools, and all but one state require would-be lawyers to pass the bar exam. In its natural lawyer-like way, the ABA also uses a very loose interpretation of terms to prevent non-lawyers from selling such services as simple, standard-form wills. It hasn’t always been this way. Abraham Lincoln, who neither attended college or law school, practiced law for nearly 25 years, and he turned out to be a good lawyer and a great president. Clarence Darrow also did not graduate from either college or law school, and he is regarded as one of the greatest criminal defense lawyers in American history. But neither Lincoln nor Darrow, nor countless other great legal minds of the past, would likely be allowed to practice today. While the supply of lawyers has been constrained, the demand for lawyers in the public and private sector has experienced continual growth, thanks in part to government policies that require private firms to retain legal counsel or encourage them to engage in litigation. Many of those policies are drafted and administered by lawyers themselves in Congress and the Executive Branch. For example, environmental standards governing pollution are determined by teams of lawyers in various administrative agencies and by additional private-sector lawyers. The demand for lawyers to write patent applications and to adjudicate the resulting patent conflicts increased dramatically following the establishment in 1982 of a new U.S. Court of Appeals for intellectual property disputes. State laws, such as consumer protection acts, which in practice have greatly expanded the scope of consumer litigation beyond well-established avenues of consumer protection, have also increased the demand for lawyers. And government policy has done little to stem the excessive growth in the past few decades of liability suits, particularly class-action suits that largely benefit lawyers. Clearly this supply and demand mismatch has caused wage distortions. With $200 billion spent on lawyers every year in America, the cost to consumers from those inflated prices is in the tens of billions of dollars. Regulations that impede competition and restrict operations have also curtailed potential innovations in legal products and services, such as publications of legal analyses, contracts, and software codes, which could assist middle-income consumers. One firm, LegalZoom.com, which sells simple legal documents like do-it-yourself wills, uncontested divorce documents, patent applications and the like — documents that should not require pricey lawyers to prepare — has just been accused of illegally practicing law in the state of Missouri in a class-action lawsuit . Do LegalZoom and firms like it represent more of a threat to consumers or lawyers? Let’s open up the legal field. Non-lawyers and LegalZoom-type companies should be allowed to provide simple services, just as physician’s assistants are capable of stitching up a wound so that doctors can focus on more complicated cases. And private corporations that have been prevented from competing with law firms should be allowed to establish their own legal services divisions to offer advice along with, for example, financial and accounting services. The price of a lawyer can indeed be reduced without sacrificing the quality of legal services. The argument that occupational licensing protects consumers from being harmed by unlicensed practitioners is weak during an era where information is so readily disseminated. A lawyer-specific Angie’s List or other places on the internet could easily give consumers information about a practitioner’s track record, level of experience, education, and certification, allowing potential customers to quickly and efficiently determine that individual’s competence. Instead, today’s licensure requirements may create only the perception of quality, thus increasing the demand for credentialed lawyers even in situations where the credential does not add value. The states could lead the way in a lawyer revolution. A few have already had the audacity to rebuff the ABA and have started to make it easier to enter into the legal services industry. If some states formally eliminate the licensure requirement, and if they express their support for all types of businesses to offer legal services, then the potential benefits to consumers of deregulating lawyers would become transparent and eventually spread nationally. Lawyers themselves, the subject of jabs over millennia — from the Bible to Shakespeare to Will Rogers — may even gain from an improved reputation with the public. ### Winston is a Senior Fellow and Crandall a Non-Resident Senior Fellow in the Economic Studies Program of the Brookings Institution. They are co-authors, along with Vikram Maheshri, of the new book First Thing We Do, Let’s Deregulate All the Lawyers (2011, Brookings Press).

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Fed Will Provide Banks With Guidance If Country Defaults

July 28, 2011

(Mark Felsenthal) – The Federal Reserve plans to provide guidance to banks soon on how to handle the potentially turbulent financial waters if the United States exhausts its borrowing authority. “We have been engaged in operational planning with the Treasury,” Fed spokeswoman Barbara Hagenbaugh said on Thursday. “We expect to be able to give additional guidance to financial institutions when there is greater clarity from the Congress and when Treasury outlines its specific operational plans.” The Treasury has said it will not be able to borrow more funds after Tuesday if Congress does not raise the nation’s $14.3 trillion debt ceiling by then, raising the prospect of a government default. Lawmakers on Thursday were still deadlocked over how to move forward. Officials say a debt default would damage both the U.S. and global economy for years to come and would likely provoke a severe financial crisis, but they have been hesitant to discuss contingency planning. “No one in Washington wants to do anything to relieve the pressure on lawmakers to get this done by the deadline,” said Chris Low, chief economist for FTN Financial in New York “If the Fed starts to say we’re going to do things to mitigate the financial repercussions, you’re giving them some leeway you don’t want to give.” Low said a Fed contact had been unable to provide details about what the central bank’s plans are. U.S. officials said on Wednesday that the Treasury would lay out a plan in the next few days about how the government will operate if it appears Congress may miss the August 2 deadline. This would pave the way for the Fed, which acts as the government’s bank, to make its plans clear. “We haven’t heard much from the Fed,” said Ray Stone, an economist at Stone & McCarthy in Princeton, New Jersey. “A default has such severe consequences for the financial markets and the real economy that they have to do something.” Fed officials have acknowledged preparations have been taking place behind the scenes on operational issues to be ready for any financial breakdown. Philadelphia Federal Reserve Bank President Charles Plosser told Reuters last week the Fed has been locked in discussions with Treasury about cash management and other technical issues that would arise in the event of a default. The Treasury needs to decide who would get paid if the government runs out of enough cash to meet all its obligations, and analysts expect it would seek to ensure holders of U.S. government debt are first in line. While the Fed would likely step in to provide liquidity if financial markets appeared at risk of seizing up, the guidance for banks is likely to be more mundane. The Office of the Comptroller of the Currency said it plans to advise the national banks it regulates that when assessing customer overdrafts, they should consider whether a customer failed to receive a government check due to the debt ceiling impasse. The Fed could be expected to follow suit. However, the central bank would likely face some momentous decisions if a default sparks a crisis. For one, they may need to decide whether to continue to accept Treasury debt as collateral for emergency bank loans if the United States loses its vaunted AAA credit rating. Richmond Fed President Jeffrey Lacker said on Thursday the Fed may need to reevaluate how it values government debt it accepts as collateral, possibly making banks take steeper “haircuts” on the debt. Some analysts have speculated the Fed could step in to keep government checks flowing in the event the Treasury runs out of cash. However, Fed officials have sought to quash that notion. The Fed is the fiscal agent and the depository for the Treasury. It receives bids for Treasury securities sold at auctions, issues the securities and clears government checks. Fed Chairman Ben Bernanke told a hearing on July 13 the Fed would do what it could to keep the financial system functioning. However, he said it would not be a financial backstop to help the government pay bills if it cannot borrow. “We would do what we could to preserve the operationality of the system,” Bernanke said. “But I want to eliminate any expectation that the Fed through any mechanism could offset the impact of a default on the government debt.” (Additional reporting by Emily Flitter in New York; Editing by James Dalgleish) Copyright 2011 Thomson Reuters. Click for Restrictions .

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10 Things That Are Getting Cheaper

July 28, 2011

We live in a time when the costs of things like gas and gold have soared, just as a laundry list of everyday expenses such as coffee, rent, health care, used cars, and bacon are approaching or have already reached all-time high prices. But not everything’s getting more expensive. Here are 10 things that are actually getting cheaper.

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Tea Party-Backed Congressman Fights His Own Party Over Debt Ceiling Deal

July 27, 2011

WASHINGTON — When President Barack Obama complains about House Republicans unwilling to compromise on a deficit reduction package, he’s talking about Rep. Jim Jordan, a former wrestling champion from Ohio who is becoming a driving force in the debt debate on Capitol Hill. Jordan’s district is right next to Speaker John Boehner’s in the western part of Ohio, but ideologically, he is miles apart from the Republican leader. As Boehner and his lieutenants scrambled Tuesday for votes for the speaker’s latest debt bill, Jordan announced at a news conference that he opposed the package, and he boldly predicted the speaker didn’t have enough Republican votes to pass it. Tuesday night, GOP leaders postponed a vote planned for Wednesday as they worked to rewrite the package. “If you look at this, it’s about a $7 billion reduction in spending from what we’re currently at,” Jordan said. “We advocated something much more than that.” Boehner’s plan promised spending cuts in excess of $1 trillion over the next decade in exchange for raising the debt ceiling by a slightly smaller amount. It also would establish a committee of lawmakers to recommend additional budget savings next year in exchange for extending the government’s borrowing authority through 2012. “We also have real concerns about the commission, the idea that on a 12-member commission, six Democrats and one Republican decide they want to raise taxes, you can’t keep that off the floor,” Jordan said. “It comes to the floor, and then there’s a potential tax increase.” A member of the House for only four years, Jordan, 47, won the chairmanship of the Republican Study Committee, the conservative voice of the GOP caucus, after the party wrested control of the House from Democrats in last November’s election. With more than 175 members, the group includes a majority of House Republicans. Jordan has never been shy about pushing his party to the right. He gets high marks from conservative groups for his strong record of opposing abortion and higher taxes, stretching to his days in the Ohio Legislature. “It’s what Ronald Reagan is all about, it’s what our party’s all about: a strong defense, lower taxes, less spending, traditional values,” Jordan said in an interview. “That’s what we fight for every day.” He sees his role as helping Boehner and the entire House GOP stay true to conservative values. “I want to help the speaker,” Jordan said. “I think he’s got a tough job, and like a lot of Americans, we’re praying for him.” House Majority Leader Eric Cantor, R-Va., is often cited as the leader of the conservative wing of the House Republican caucus. His power, however, is bolstered by members like Jordan, who work daily to rally other conservatives, including an 87-member freshman class that is eager to make its mark. Jordan and his compatriots were a driving force behind the bill that the House passed last week that would slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states in exchange for averting a threatened government default after Aug. 2. The Democratic-controlled Senate quickly killed the measure with a procedural vote. Jordan’s unwillingness to compromise, however, rubs some fellow Republicans the wrong way. “My experience with things that don’t bend is that they break,” said Rep. Steven LaTourette, a fellow Republican from Ohio, who represents the northeastern corner of the state. LaTourette, who supports Boehner’s debt plan, said he admires Jordan for standing up for what he believes in. But, he added, “I think it’s harmful to the country and it’s certainly harmful to the speaker’s attempt to move legislation.” Jordan grew up in western Ohio and was a four-time state wrestling champion in high school, losing only a single match in four years. He went on to wrestle at the University of Wisconsin, where he won two NCAA titles. He’s not a big man – Jordan wrestled in the 134-pound weight class in college and doesn’t look like he weighs much more than that now. He’s outwardly friendly and quick with a smile, but he doesn’t back down from a political fight. “The reason I got into politics was to affect the things I care about, the things I think the families I get the privilege to represent care about,” Jordan said. “I’m going to fight for those things. I’m going to do it with a smile on my face, I’m going to do it in way that helps our party, but most importantly, I’m going to do it because I think it helps the country.” Obama says Republicans like Jordan are why the government is in danger of defaulting on its obligations next week. “History is scattered with the stories of those who held fast to rigid ideologies and refused to listen to those who disagreed,” Obama said in a national address Monday night. “But those are not the Americans we remember. We remember the Americans who put country above self and set personal grievances aside for the greater good.” Jordan shrugs off Obama’s attempts to vilify House conservatives. “I would look at it this way: If standing firm for a common-sense plan, if the president’s got a problem with that, we’ll, I don’t know how I’m going to help him,” Jordan said.

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Obama: Debt Ceiling Talks Fell Apart, Boehner Walked Out

July 23, 2011

WASHINGTON — Social Security and Medicare may have been saved by the Tea Party’s refusal to accept President Barack Obama’s “grand bargain.” On Friday evening, Speaker John Boehner (R-Ohio) walked away from the latest offer on the table by Obama, who is now summoning congressional leaders back to the White House on Saturday to figure out an eleventh-hour plan. The most viable option left for addressing the debt crisis, crafted by a bipartisan pair of Senate leaders, calls for much smaller cuts than the ones the president was willing to make. “No one wants to punt until default is the only other option,” a Democratic aide said Friday morning, before the Senate voted down a House offer that coupled a debt ceiling raise with a radical constitutional amendment. With the “Cut, Cap and Balance” bill out of the way, the lone obstacle to the debate’s conclusion was the talks between Boehner and Obama. The collapse in those grand bargain negotiations paradoxically move the broader debt ceiling negotiations closer to an end. And not a moment too soon: The White House has repeatedly said that July 22nd was the day by which Congress must have identified a path forward and begun work toward its passage. During a hastily called press briefing on Friday night, Obama said Boehner called him half an hour earlier and “indicated he was going to be walking away” from the compromise the two of them had been privately working on. A Democratic source told The Huffington Post that the president had called Boehner on Thursday evening to discuss the deal, but never heard back. The president tried again Friday afternoon. He finally got a return call at 5:30 p.m. The speaker, the source added, briefed the press about his decision to pull out of the deal before telling Obama. Speaking to a half-filled room of reporters, the president laid out just how dramatic the cuts to the social safety would have been in the deal he was trying to give Republicans. He said that he couldn’t believe Boehner walked away from the proposal he was offering: $3.5 trillion in spending cuts over 10 years, smaller tax increases than those laid out in a bipartisan Senate plan and cuts to entitlement programs, something Democrats have pushed hard against. It also didn’t include revenues that Obama has insisted be in a final package, namely via closing tax loopholes and ending subsidies for the oil and gas industry. “In other words, this was an extraordinarily fair deal,” Obama told reporters. “If it was unbalanced, it was unbalanced in the direction of not enough revenue.” Obama: Boehner Withdraws From Debt Talks The president appeared genuinely flummoxed at the talks falling apart, saying there “doesn’t seem to be a capacity for [Republicans] to say yes.” He said he couldn’t believe Congress would “end up being that irresponsible” as to impose a “self-inflicted wound on the economy at a time when things are so difficult.” The New York Times also played a major part in the breakdown of talks between Boehner and the White House, reporting Thursday that the pair had moved very close to a deal. Both sides spent the rest of the day knocking down the report, while Senate Democrats fumed that the White House was caving. Privately, Senate Republicans charged Sen. Charles Schumer (D-N.Y.) with orchestrating the debacle in an attempt to blow up the negotiations. The latest breakdown comes with about a week left until the Aug. 2 deadline, at which point the government is expected to run out of money to pay its bills. Even if a default is averted, the protracted debate over raising the debt limit has left the U.S. government dangerously close to having its credit rating downgraded. In that event, Americans could expect a spike in interest rates on their credit cards, student loans and mortgages, with ramifications felt through the U.S. and global economy. “We have now run out of time,” the president said. He said he told congressional leaders to come back to the White House at 11 a.m. on Saturday “to explain to me how we are going to avoid default.” In a press conference later Friday night, Boehner accused the White House of having “moved the goal post” in negotiations. “The president demanded $400 billion more” in revenues when the two of them met Thursday, Boehner said, which is “nothing more than a tax increase on the American people.” He said he and House Majority Leader Eric Cantor (R-Va.) were “very disappointed” by that demand. Boehner also sent a letter to House Republicans on Friday night explaining why he pulled out. “It has become evident that the White House is not serious about ending the spending binge that is destroying jobs and endangering our children’s future,” the GOP leader wrote. “A deal was never reached, and was never really close.” Boehner: No One Wants a Government Default At a briefing with reporters shortly after the president spoke, three senior White House officials laid out in detail their version of where the discussions fell apart. On the discretionary spending front, both sides had “identical offers,” said one of the officials. There would be $1.2 trillion in cuts over the course of ten years; $1 trillion in savings that would come from the draw-down of the wars in Afghanistan and Iraq; and $250 billion in savings in Medicare over the course of 10 years. Both sides had also agreed to attach a second piece of legislation, to be decided via the reconciliation budget process, that would have changed the retirement age for Medicare and changed the premium structure for Medicare Part B and D, while eliminating certain kinds of supplemental insurance. That bill would also contain changes to the way Social Security benefits were paid starting in 2015, with buffers put in to protect the lowest-income beneficiaries. There was, in addition, an informal agreement to try and extend Social Security’s solvency by an additional 75 years. How they would get there, however, remained a point of contention, with the president wanting a package of benefit and premium changes and Republicans focusing just on the benefit side. Unable to overcome that impasse, the two sides settled on vague language requiring them to meet that 75-year goal with future reforms. Where the two sides remained apart were on Medicaid cuts, with Republicans demanding tens of billions of dollars more in cuts than the president was comfortable making. White House officials described that difference as possible to overcome, however. The revenue component, in the end, remained unbridgeable. According to senior White House officials, each side had agreed to pass tax reform down the road that would result in $800 billion in revenue generated — the equivalent amount of savings that would be achieved if the top-end Bush tax cuts were simply allowed to expire. The administration wanted $400 billion in revenues on top of that. Republicans wanted zero, and in statements on Friday night GOP leadership aides insisted that the White House had changed the contours of the negotiations by making that demand in recent days. Obama offered to move off that $400 billion mark should GOP leadership lessen the type of cuts to entitlement programs they were demanding, White House aides said. In addition, the two sides could not figure out what to do if that aspirational tax reform package wasn’t achieved. The White House, at various points, proposed that the fallback option be the actual expiration of the Bush tax cuts for the wealthy. Republicans demanded that they have something as bluntly frightening to Democrats. On Thursday, GOP leadership proposed that the penalty for inaction on tax reform be the repeal of the health care law’s individual mandate as well as the newly created Independent Advisory Board, which has been set up to find cost savings in Medicare. The White House balked at the offer. “Our view was we are not going to put the individual mandate in a deficit reduction package,” said a senior White House official. “But we were open to other ideas and there are any number of formulations for us.” All of which does not mean that the big deal is now dead. In fact, White House officials made it abundantly clear that they would welcome GOP leadership back into those discussions. “The speaker withdrew from the talks. This offer is still available,” said one of those officials. Boehner, at his briefing, said he didn’t think his relationship with Obama, or debt talks, are beyond repair. He said he planned to go to the White House on Saturday with other leaders. At this stage, the most viable proposal left on the table appears to be a far less ambitious debt plan put together by Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.). Their proposal, dubbed a “fallback option,” calls for $1.5 trillion in cuts, generates no new revenues and would put the onus fully on Obama to raise the debt limit, without Congress. It would also require the president to raise the debt ceiling in three increments over the next year and a half — a politically driven requirement by McConnell aimed at making Obama take responsibility for all debt ceiling hikes ahead of the 2012 elections. The other potential remedy — for the president to exercise the so-called constitutional option and invoke 14th Amendment powers to raise the debt ceiling himself — was ruled out, once again, during the White House briefing. “There are no options other than a legislative solution,” said a senior White House official. A Democratic staffer familiar with Hill negotiations concurred that the Reid-McConnell plan appears the most likely resolution. The fight now heads to the trenches: The leaderships of both parties will cobble together coalitions in the House and Senate that can move the package through. In both parties, the wings will generally oppose leadership and the center will hold, if history is any guide. The same coalition passed the Wall Street bailout and the Obama-GOP tax cuts. “We are prepared to compromise consistent with our values,” House Minority Leader Nancy Pelosi (D-Calif.) said in response to the news. “Speaker Boehner’s ‘adult moment’ is long overdue. Our economy, our children’s education, our seniors’ security and our nation’s fiscal soundness require that we act without further delay.” Of course, there’s also the bipartisan Senate Gang of Six proposal, which would slash $3.7 trillion in deficits over 10 years and raise up to $1 trillion in new revenues through tax code reform. But that proposal has critics in both parties, and some say there isn’t enough time to turn it into a bill, send it to various committees for debate and pass it by Aug. 2. Frustrations are clearly high on both sides of the aisle. As Twitter blew up at the news of the Obama-Boehner talks crumbling, Cantor spokesman Brad Dayspring chimed in with a tweet knocking Obama for making it seem as if Republicans thwarted the process. “As if there’s really a question whether President Obama threw a tantrum at the White House last week – same guy just appeared,” Dayspring tweeted. Rep. Peter Welch (D-Vt.) said Congress had to move fast now that things have gotten hairy. He warned that the situation is nothing like the government shutdown narrowly averted earlier this year. “If you’ve got the speaker walking away from the White House — astonishing in and of itself — the next step is meltdown in the markets,” Welch said. “This is tempting the markets to turn, and when they do, it will be sudden and savage, then things will be out of control and the damage will be huge and irreversible.”

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Horror Stories Flying About Damage That Could Ensue If Debt Deal Unreached

July 16, 2011

WASHINGTON — Horror stories are flying about the damage that might be wreaked should Congress and President Barack Obama fail to cut a deal by the Aug. 2 deadline to increase America’s borrowing limit. Nearly every American is in harm’s way, either directly or indirectly. Absent a deal by then, the government would find itself tight on cash and unable to borrow – and have to start deciding which of the 80 million bills due in August it should pay and which it should put off. Tough decisions would come immediately: On Aug. 3, some $23 billion in Social Security benefit payments are due to be processed. On Aug. 4, the Treasury Department must pay $87 billion to investors to redeem maturing Treasury securities. On Aug. 15, more than $30 billion in interest payments come due. In addition to those costs, the government normally pays $5 billion to $10 billion daily to defense contractors, Medicare providers, federal employees and others. Obama has said he can’t guarantee Social Security checks and payments to veterans and the disabled will go out on schedule in the absence of a deal: “There may simply not be the money in the coffers to do it.” He could be challenged on that, however, because some legal and congressional budget experts question whether he can unilaterally decline to pay Social Security benefits if there are still assets in the program’s trust fund. Regardless of how that issue is resolved, there’s no question that government services, programs and benefits could take an enormous hit. No one knows exactly what choices Obama and his top officials would make if the crisis comes. The White House Office of Budget and Management is the agency charged with reviewing possible cuts in benefits and payments while the Treasury Department handles cash flow. All have been mum about their crisis plans, apparently to avoid market speculation or panic. But Treasury Secretary Timothy Geithner has insisted the deadline is real. “There is no credible way to give Congress more time,” he said recently. One analysis, by the Bipartisan Policy Center, suggests that once the government runs out of cash and lacks the power to further borrow, it would need to slash spending at once by as much as a whopping 44 percent. The U.S. now borrows more than 40 cents for every dollar it spends. So long as the Treasury has tax revenues coming in, it can still make interest payments to technically avoid default. Some analysts think it would lean that way at first, so as to do less harm to the country’s long-term credit rating. Default would be a “major crisis” that would radiate “shockwaves” through the financial system, Federal Reserve Chairman Ben Bernanke told Congress recently. But putting a priority on paying interest on maturing debt to avoid a default would simply force spending cuts instead – some of them more likely to hit ordinary people. Parks and monuments can be temporarily shut. That’s been done before. But is it worth taxpayers’ money to pay the costs of pursuing a second trial against former baseball star Roger Clemens if the judge who declared a mistrial in his perjury case this week clears the way? And what about clinical trials on new drugs or other scientific research projects? Or completing half-finished highway construction projects? The government is even weighing the prospect of selling off some of its assets – gold in Fort Knox, buildings, property, even some national parklands – to make ends meet, if absolutely necessary. Government contractors are likely to be among the early victims, says Paul Light, professor of public policy at New York University. “No new contracts. Delayed payments. Stop work orders. I can’t imagine that Obama would ever touch soldiers’ pay. But you’d get closing of parks, as we’ve seen in Minnesota, the national monuments, freezes on discretionary spending including Medicaid.” He suggested other early austerity steps would likely include halting of highway projects and research grants, and orders to stop clinical trials of new drugs and cancer research. The state government shutdown in Minnesota may indeed offer a preview of what lies ahead on a larger scale. State parks were closed. Driver’s licenses weren’t issued. Beer giant MillerCoors was told it couldn’t sell beer in the state because its licenses hadn’t been renewed. Some conservative congressional Republicans have questioned whether there would really be a crisis if the Aug. 2 deadline were missed. They note that the government could cut programs instead and still make interest payments at least for a while. But Congress’ top two Republicans, House Speaker John Boehner and Senate Minority Leader Mitch McConnell have agreed that failure to raise the limit could provoke an epic economic catastrophe. And major rating agencies such as Moody’s and Standard and Poor’s have already signaled they’re poised to lower the nation’s coveted Triple-A credit ratings if no agreement is reached. They also hinted that the ratings might be lowered even if the U.S. continues to make interest payments on its debt. “Global investors will start asking themselves, how long will they get paid if Social Security recipients don’t?” said Mark Zandi, chief economist at Moody’s Analytics. “There would be long-lasting economic damage. The economy would be back in recession. Tax revenues would be falling again and the deficit increasing.” The U.S. has gone through short government shutdowns before – most recently in late 1995 and early 1996 – because of political standoffs. But now the stakes are far higher because the dispute may capsize the entire U.S. economy, not just shut down government agencies and delay benefit checks. Any unprecedented default on the U.S. debt would send the price of Treasury bonds – long viewed as the world’s safe-haven investment – tumbling and interest rates soaring. And the higher rates wouldn’t just be on Treasury bills and bonds but also on a wide variety of consumer and business loans pegged to Treasury rates, from mortgages to credit cards, car loans and student debt. A U.S. default, or near-default, could also cause financial panic around the globe as international investors flee Treasury bonds and bills and other dollar-denominated investments. The value of the U.S. dollar against other major currencies could tank. Given the nation’s already high unemployment rate and shaky housing markets, it would likely send the economy quickly back into recession. “There’s a huge amount of misunderstanding about the seriousness of this among the American people,” said Robert Reischauer, former head of the Congressional Budget Office and now director of the Urban Institute. “One reason is that, while experts have been apoplectic about this for the better part of four months, there is no tangible evidence of any of these consequences coming to pass,” because the stock market has still been going up and interest rates have remained low. “Most people spend their lives worrying about the things that affect them immediately and the things they have some control over. And this is not one of them,” Reischauer said. “But it will be very soon.” The Dow Jones Industrial Average lost 778 points on one day in October 2008 when the House voted down the bank bailout bill, known as the Troubled Asset Relief Program – a vote that was quickly reversed. Economists can easily see a 1,000-point or larger plunge in the Dow if the negotiations to raise the debt ceiling fail – dealing a savage blow to already fragile 401(k) plans and similar retirement investments. How hard and fast really is the Aug. 2 date? The national debt, the legacy of years of accumulated deficit spending by presidents and legislators of both parties, now stands at $14.34 trillion. The government blew past the legal debt limit on May 16. Treasury has kept paying bills with accounting footwork ever since but is nearing the end of that, officials say. Now, said Geithner recently, “We’re left running on fumes.” ___ AP Economics Writer Martin Crutsinger contributed to this report.

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Obama: We ‘Need To’ Reach Debt Ceiling Deal In 10 Days

July 10, 2011

WASHINGTON — President Barack Obama says he and Congress “need to” agree on a budget deal in 10 days in order to meet an Aug. 2 deadline to increase the nation’s debt ceiling and avoid a potentially calamitous government default. Obama spoke as he and the eight top House and Senate leaders assembled at the White House for a rare Sunday session to negotiate the terms of a deficit reduction package. The meeting came a day after House Speaker John Boehner abandoned efforts to bargain for a $4 trillion, 10-year debt trimming agreement. Boehner said a smaller deal that would reduce the deficit by about $2.4 trillion over the next decade was more realistic. Obama aides said Sunday the president would still push for as big a package as possible.

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Republicans Wage War On Financial Reform

July 5, 2011

WASHINGTON — President Barack Obama’s financial overhaul law is nearly a year old. For congressional Republicans, the fight to weaken it is just starting. Wary of trying to repeal the entire statute and being portrayed as Wall Street’s protectors – banks rank among the country’s least popular institutions – GOP lawmakers are trying to nibble away at the behemoth measure. It’s a crusade they’re waging despite lacking the White House and Senate control they need to prevail. Days ago, one Republican-run House committee approved bills diluting parts of the law requiring reports on corporate salaries and exempting some investment advisers from registering with the Securities and Exchange Commission. Another House panel voted to slice $200 million from Obama’s $1.4 billion budget request for the SEC, which has a major enforcement role. Meanwhile, Senate Republicans are continuing a procedural blockade that has helped prevent Obama from putting Elizabeth Warren or anyone else in charge of the Consumer Financial Protection Bureau, which opens its doors in two weeks. The law hurts “the formation of capital, the cost of capital and access to capital, and you can’t have capitalism without capital,” said Rep. Jeb Hensarling, R-Texas, a leader of the House Financial Services Committee. “So Republicans in the House will be examining each and every one of the 2,000-plus pages” of the law, which he called “a job creator’s nightmare.” Confident that Obama and the Democratic-controlled Senate can prevent the House from doing major damage, Democrats view the Republican drive as a political exercise – for now. “It’s mostly setting a marker for the election. And it helps with their campaign contributions,” said Rep. Barney Frank, D-Mass., who chaired the Financial Services Committee last year and was a chief author of the law. “But it also tells people in the financial community that if they win the next election, they’ll be able to undo it all.” The financial industry leans Republican in its campaign contributions but not overwhelmingly. Sixty-one percent of the $9 million that commercial banks gave federal candidates for the 2010 elections went to Republicans, while 54 percent of the securities and investment industry’s $9 million went to Democrats, according to the nonpartisan Center for Responsive Politics. Democrats are using the GOP drive for their own fundraising. In one email sent last week under Frank’s name soliciting money for House candidates, the party wrote that Republicans want to “bring back the days of unrestrained excess, deception and de-regulation of Wall Street.” The mailing called it “payback to their big contributors in the financial services industry.” Obama signed the banking and consumer protection measure last July 21, a keystone achievement that responded to the biggest financial crisis and most severe recession since the 1930s. It passed Congress with solid Democratic support and near-uniform GOP opposition. Among its provisions, the law: _ Created the consumer protection agency to oversee mortgages, credit cards and other financial products. _ Established a body of regulators to scan the economy for threats to the financial system. _ Required banks to hold back money for protection against losses. _ Curbed the trading of derivatives, speculative investments partly blamed for the 2008 financial crisis. _ Gave the Federal Reserve powers to oversee huge companies whose failures could jeopardize the entire financial system. Yet the law was just a start, since it ordered federal agencies to craft rules to enforce it. As of July 1, out of an estimated 400 regulations to be written, 38 are complete. That leaves 362 proposed, facing a future deadline or having missed due dates for completion, according to the law firm Davis Polk. Republicans say the overhaul went too far and has saddled banks and other companies with requirements that harm their competitiveness. The House Financial Services panel alone has held more than a dozen hearings on the law, in part to underscore to administration witnesses that some provisions – like forcing banks to hold back capital as a hedge against losses – will hurt business, according to the committee’s chairman, Rep. Spencer Bachus, R-Ala. “What we are doing is rational, it is sensible, it is entirely practical, it is compassionate,” said Rep. Nan Hayworth, R-N.Y., a tea party-backed freshman on that panel. “So we are doing the right thing, and it behooves the Senate and the administration to follow suit.” The highest-profile fight has been over Warren, picked by Obama to set up the new consumer bureau. Many Democrats and liberal groups want her to become its first director. Following a May clash between Warren and a House subcommittee chairman, House Oversight Committee Chairman Darrell Issa, R-Calif., plans to question the Harvard law professor and long-time consumer activist at a July 14 hearing about her role shaping the new agency. Meanwhile, 44 GOP senators have promised to block a vote on any nominee unless the bureau is made “accountable to the American people” by replacing the director with a board of directors and giving Congress control over its budget. Forty-one senators can prevent a nomination from coming to a vote. “You try to get leverage where you can. In the Senate, nominations are your leverage,” said Mark A. Calabria, who monitors financial regulation at the conservative-leaning Cato Institute. On another front, Republicans want to cut the budgets of agencies that are supposed to enforce the overhaul. Besides denying the SEC extra money next year, the House Appropriations Committee would limit the consumer protection bureau to $200 million, well below the $329 million Obama wants. The full House has voted to hold the Commodity Futures Trading Commission, which oversees derivatives, to $171 million, short of this year’s total and less than two-thirds of what Obama wanted. Republicans cast the cuts as part of their deficit-cutting drive, but Democrats say the reductions are designed to obstruct the new law. SEC Chairwoman Mary Schapiro said in a speech this spring that budget cuts would mean “an investor protection effort hobbled.”

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GOP Governor Pushes Contentious Change

July 4, 2011

COLUMBUS, Ohio — Ohio’s new Republican Gov. John Kasich is a study in contradictions. He is candid yet secretive. He is acerbic yet personable. He quibbles over media access yet is omnipresent on Twitter and Fox. He’s made a cause of taking on public workers after spending most of his life as one. Critics call Kasich’s inconsistencies arrogance. Fans see him as bold and endearingly human. Polls have found mounting dissatisfaction among voters. One thing shines through regardless: John Kasich is a man in a hurry. Six months into a four-year term, Kasich has dumped his Democratic predecessor’s high-speed rail initiative and education overhaul. He’s moved to privatize Ohio’s job creation operation, state prisons and the Ohio Turnpike. He’s signed a bill limiting bargaining rights for 350,000 unionized public workers that’s even stricter than Wisconsin’s polarizing first-in-the-nation restrictions. The state budget he signed on Thursday closes a yawning budget gap that approached $8 billion while cutting estate, income and investment taxes. The pros and cons of Kasich have both Democrats and fellow Republicans seeing the possibility that his impact could be important as President Barack Obama seeks to retake Ohio in 2012. Obama won with 51.5 percent of the vote in 2008, but it is essentially a race between the parties to see whose ideas – Obama’s stimulus and health care policies, or Kasich’s business incentives and cuts to government – do more, faster for average Ohioans. Both know that to Ohio voters, the economy is king. “Ultimately John Kasich’s popularity will not be the most important number to determine whether Obama carries Ohio. It will be the unemployment rate,” said Peter Brown, assistant director of the Quinnipiac Polling Institute. Indeed, Kasich, appearing Sunday on CBS’ Face the Nation, said doing “what’s right” trumps any consideration of his political popularity. “At the end of the day you look yourself in the mirror and you say to yourself, `Did I do what was right for families and for children? If I paid a political price, so what?’” Kasich said. And the former congressman and chairman of the House Budget Committee in the Clinton administration admonished Washington lawmakers to re-evaluate their own motivations. “I mean, there’s too much posturing. There’s too much thinking about your party, yourself.” Looking almost shell-shocked on Election Night after squeaking out a victory over Ted Strickland, a once-popular Democrat, Kasich tossed two victorious fists in the air. He grabbed his running mate, Mary Taylor, for a twirl to the music, and grinned. “Guess what? I’m gonna be governor of Ohio!” He punctuates his proclamations with a pointed finger, a verbal jab and a nod of his head of brown tousled hair. Long-time Statehouse lobbyist Gayle Channing Tenenbaum says it’s a rare day when Kasich doesn’t say something that surprises. “It’s interesting to watch him because you just don’t know what particular thing he’s going to be grabbing onto at that particular moment,” she said. “When it’s something that you are really interested in, such as mental health or autism, it always pleases you.” Now 59, Kasich moves through his days with the demeanor of the young man he was when he arrived at the Statehouse in 1978, making history as the youngest state senator Ohioans had ever elected at 26. His youthful self-image shows through when he declares he’ll change the color of Ohio’s pink drivers’ licenses or restore snow days schoolkids were losing in a legislative battle. He likes Lady Gaga, Spiderman and wants Ohio to be cool. Yet a Quinnipiac Poll found voters’ disapproval of Kasich rose from 46 percent in March to 49 percent in May. Majorities disliked his handling of the state budget and said his policies are unfair to people like them. Kasich is among a handful of new Republican governors around the country – including Florida’s Rick Scott and Wisconsin’s Scott Walker – who are trying a new aggressive approach, often to the displeasure of the public. Public Policy Polling declared Kasich and Scott the two most unpopular governors in America in May. Protests dog Kasich wherever he goes. Last week, thousands of teachers, firefighters, police officers and other unionized workers paraded through the streets of Columbus against Ohio’s new collective bargaining law – many chanting, “O-H-I-O, John Kasich’s got to go!” On a recent afternoon at Port Columbus International Airport, Bill Parizek, a Republican from suburban Dublin, tried to explain the phenomenon, comparing Kasich to New Jersey Gov. Chris Christie, a fellow Republican and fiscal conservative. “They have that cold, just-the-facts kind of approach. They do what they think they need to do to right the ship, and they’re not as warm and fuzzy as probably a lot of people would like,” said Parizek, 49, who works for a New York investment fund. “I think that’s the profile of the kind of person you need to make really tough, fundamental structural change.” Kasich exudes confidence when he enters a room, even being so bold as to deliver his State of the State address without a script. His style can lend itself to verbal gaffes. At Ohio Memory Day, a day of advocacy for people with Alzheimer’s disease, he told the crowd he “drew a blank” trying to write his remarks. He called a police officer who once pulled him over “an idiot” in front of a gathering of Ohio EPA workers. Kasich later apologized. George Tucker, an AFL-CIO union leader for the Toledo region, interprets such misstatements by Kasich as a disregard for other people. He said the governor is “just out of touch.” “I don’t think he has any feelings or sympathy for working people,” Tucker said. “He doesn’t have to look people in the eye who are being put out of their jobs like we do and tell them, `You’re not going to get that assistance you were counting on.’” Kasich, known in Congress for fighting for a balanced budget, ran for president in 2000 but dropped out before the Republican primary. His work as a speaker, best-selling author of books on his conservative philosophies, former Fox News commentator and managing director at since-failed investment bank Lehman Brothers helped make him a millionaire – so he says he’s not worried about being a one-term governor. He says he’s trying to fix Ohio’s economy and can’t be distracted by lousy poll numbers, Statehouse protests and critics who parse his every word. By clashing with well-funded unions and special interests such as nursing homes and casinos, he says he never expected to be liked. In fact, his is almost a holy mission. “Do you have any idea the pounding I’ve taken in six months?” he asked a group of reporters and Cabinet directors at a Friday event. “I kind of like it, I think it accrues to my benefit – not in this world, but by doing the right thing, I get points, OK?” He started taking on reporters even before he took office – denying them records and attempting to bar them from his ceremonial inauguration. After he was criticized, he went beyond changing his mind to hosting the largest midnight swearing-in anyone could remember – with more than 150 onlookers and his entire Cabinet. Two months later, Kasich tried to bar recording equipment at the media’s technical briefing on his budget, hoping to focus attention on a public budget unveiling that evening that starred Ohio’s budget as Apple’s latest iPad and Kasich as Steve Jobs. Confronted again, Kasich relented – but not before the political blogosphere lit up with allegations that he was becoming a serial obstructionist. Kasich has often answered his critics – bloggers, unions, Ohio Democrats and late-night comedians – with a well-timed appearance on Fox News, where he used to host “From the Heartland with John Kasich,” or upbeat Twitter posts like this one from Wednesday: “Proud of my partners in the legislature. Together, we closed an $8 billion budget gap and cut taxes!” With the Ohio vote so closely divided between the parties, the question will be whether Kasich can ultimately win over the state with his bold approach. Right now, it seems for every Ohioan who appreciates what he’s attempting, there is another who disagrees, like Democrat John Hisey, a 60-year-old retired manufacturing worker from Newark. Criticizing Kasich and his fellow Republicans, Hisey said the governor is “bad for Ohio.” “They want everybody to work for $7.35 an hour, unless you’re a brain surgeon or something like that,” Hisey said. “A simple man can’t go out and raise his family like he used to. It’s true.”

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The Rich Get Richer

July 2, 2011

WASHINGTON — This is one anniversary few feel like celebrating. Two years after economists say the Great Recession ended, the recovery has been the weakest and most lopsided of any since the 1930s. After previous recessions, people in all income groups tended to benefit. This time, ordinary Americans are struggling with job insecurity, too much debt and pay raises that haven’t kept up with prices at the grocery store and gas station. The economy’s meager gains are going mostly to the wealthiest. Workers’ wages and benefits make up 57.5 percent of the economy, an all-time low. Until the mid-2000s, that figure had been remarkably stable – about 64 percent through boom and bust alike. Executive pay is included in this figure, but rank-and-file workers are far more dependent on regular wages and benefits. A big chunk of the economy’s gains has gone to investors in the form of higher corporate profits. “The spoils have really gone to capital, to the shareholders,” says David Rosenberg, chief economist at Gluskin Sheff + Associates in Toronto. Corporate profits are up by almost half since the recession ended in June 2009. In the first two years after the recessions of 1991 and 2001, profits rose 11 percent and 28 percent, respectively. And an Associated Press analysis found that the typical CEO of a major company earned $9 million last year, up a fourth from 2009. Driven by higher profits, the Dow Jones industrial average has staged a breathtaking 90 percent rally since bottoming at 6,547 on March 9, 2009. Those stock market gains go disproportionately to the wealthiest 10 percent of Americans, who own more than 80 percent of outstanding stock, according to an analysis by Edward Wolff, an economist at Bard College. But if the Great Recession is long gone from Wall Street and corporate boardrooms, it lingers on Main Street: _ Unemployment has never been so high – 9.1 percent – this long after any recession since World War II. At the same point after the previous three recessions, unemployment averaged just 6.8 percent. _ The average worker’s hourly wages, after accounting for inflation, were 1.6 percent lower in May than a year earlier. Rising gasoline and food prices have devoured any pay raises for most Americans. _ The jobs that are being created pay less than the ones that vanished in the recession. Higher-paying jobs in the private sector, the ones that pay roughly $19 to $31 an hour, made up 40 percent of the jobs lost from January 2008 to February 2010 but only 27 percent of the jobs created since then. Kathleen Terry is one of those who had to settle for less. Before the recession, she spent 16 years working as a mortgage processor in Southern California, earning as much as $6,500 in a good month, a pace of about $78,000 a year. But her employer was buried in the housing crash. She found herself out of work for two and a half years. As her savings dwindled, the single mother had to move into a motel with her three daughters. They got by on welfare and help from their church and friends. Terry started taking a 90-minute bus ride to job training courses. Eventually, she found work as a secretary in the Riverside County, Calif., employment office. She likes the job, but earns just $27,000 a year. “It’s a humbling experience,” she says. Hard times have made Americans more dependent than ever on social programs, which accounted for a record 18 percent of personal income in the last three months of 2010 before coming down a bit this year. Almost 45 million Americans are on food stamps, another record. Ordinary Americans are suffering because of the way the economy ran into trouble and how companies responded when the Great Recession hit. Soaring housing prices in the mid-2000s made millions of Americans feel wealthier than they were. They borrowed against the inflated equity in their homes or traded up to bigger, more expensive houses. Their debts as a percentage of their annual after-tax income rose to a record 135 percent in 2007. Then housing prices started tumbling, helping cause a financial crisis in the fall of 2008. A recession that had begun in December 2007 turned into the deepest downturn since the Great Depression. Economists Kenneth Rogoff of Harvard University and Carmen Reinhart of the Peterson Institute for International Economics analyzed eight centuries of financial disasters around the world for their 2009 book “This Time Is Different.” They found that severe financial crises create deep recessions and stunt the recoveries that follow. This recovery “is absolutely following the script,” Rogoff says. Federal Reserve numbers crunched by Haver Analytics suggest that Americans have a long way to go before their finances will be strong enough to support robust spending: Despite cutting what they owe the past three years, the average household’s debts equal 119 percent of annual after-tax income. At the same point after the 1981-82 recession, debts were at 66 percent; after the 1990-91 recession, 85 percent; and after the 2001 recession, 114 percent. Because the labor market remains so weak, most workers can’t demand bigger raises or look for better jobs. “In an economic cycle that is turning up, a labor market that is healthy and vibrant, you’d see a large number of people quitting their jobs,” says Gluskin Sheff economist Rosenberg. “They quit because the grass is greener somewhere else.” Instead, workers are toughing it out, thankful they have jobs at all. Just 1.7 million workers have quit their job each month this year, down from 2.8 million a month in 2007. The toll of all this shows in consumer confidence, a measure of how good people feel about the economy. According to the Conference Board’s index, it’s at 58.5. Healthy is more like 90. By this point after the past three recessions, it was an average of 87. How gloomy are Americans? A USA Today/Gallup poll eight weeks ago found that 55 percent think the recession continues, even if the experts say it’s been over for two years. That includes the 29 percent who go even further – they say it feels more like a depression.

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For A Change, Gas Cheaper On Independence Day Than Memorial

July 2, 2011

(AP) NEW YORK — Call it an Independence Day discount. Gasoline prices usually peak in the summer. This year, however, they peaked a little earlier, on May 5. The subsequent slide has made gas about 24 cents per gallon cheaper than it was on Memorial Day. The national average now stands at $3.55 per gallon. That’s the cheapest gasoline has been since late March. Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, expects the national average to drop another 25 to 30 cents per gallon this year. “Prices will be lower until we get to hurricane season, then who knows?” Kloza said. Hurricanes that pass through the Gulf of Mexico can potentially disrupt oil production and force fuel prices higher. While gas is cheaper than it was on Memorial Day, it’s hardly inexpensive. It’s still 79 cents more than a year ago. And the only other year gas prices were higher for the July Fourth holiday was 2008, when gas was around $4.10 per gallon. The drop in gas is due to a decline in oil prices. Benchmark West Texas Intermediate has given up more than 16 percent since the beginning of May. The contract for August delivery lost 48 cents to settle at $94.94 per barrel Friday on the New York Mercantile Exchange. In London, Brent crude fell 71 cents to settle at $111.77 per barrel on the ICE Futures Exchange. Oil fell Friday after China reported that its manufacturing industry cooled off in June, slipping to its slowest pace in 28 months. Activity slowed down as credit tightened due to inflation-fighting measures and weaker oversea demand. The country is still expected to drive world oil demand for years, but a slowdown in manufacturing could temper the demand for fuels. In the U.S., however, factory activity picked up in June, in part because of lower fuel prices. The Institute for Supply Management, a trade group of purchasing executives, said Friday that its index of manufacturing activity has increased for 23 straight months. In other Nymex trading for August contracts, heating oil dropped 2.18 cents to settle at $2.9245 per gallon and gasoline futures added less than a penny to settle at $2.9726 per gallon. Natural gas fell 6.3 cents to settle at $4.33 per 1,000 cubic feet.

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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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Biden Speaks After Deficit Talks Break Down

June 23, 2011

WASHINGTON — Vice President Joe Biden says bipartisan budget talks have made headway but that the next step is up to President Barack Obama and top congressional leaders. Biden issued a statement Thursday declaring the talks in a state of “abeyance” after Republican negotiators abandoned the talks in a dispute with Democrats over higher taxes. Biden said the goal of the talks was, in his word, “to report our findings back to our respective leaders.” He said those leaders need to determine the scope of an agreement that can tackle the problem and attract bipartisan support. Democrats and Obama have insisted on reducing long-term deficits by cutting spending and increasing tax revenue. Republicans have said tax hikes will not be part of the negotiations.

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White House Wants Business To Help Convince Congress To Raise Debt Ceiling

June 15, 2011

By Rachelle Younglai WASHINGTON — Worried that Congress will not act in time to raise the country’s borrowing cap, the Obama administration is enlisting the business community to persuade lawmakers that a default will have dire consequences. Outgoing White House economic adviser Austan Goolsbee is set to talk to a slew of business representatives this week, according to a person with knowledge of the meeting. The meeting will mark the second time in less than a month that Goolsbee has tried to get businesses to ratchet up the pressure on Congress to raise the nation’s $14.3 trillion debt limit before August 2, when the Treasury says it will no longer be able to pay the government’s bills. “The White House wants the business community to pull its weight,” said one person familiar with the administration’s thinking who was on Goolsbee’s initial conference call on the subject. There is a “profound misperception” among some lawmakers that a temporary default will not imperil the fragile economy, said the person, who was not authorized to speak on behalf of the administration. Calls to the White House seeking comment on the effort were not immediately returned. The flash point for the White House came when famed investor Stanley Druckenmiller said he could tolerate a brief debt default if it forced lawmakers to reach a deal to slash future budget gaps. This year’s deficit is projected to hit $1.4 trillion. The comments from Druckenmiller, a former hedge fund manager and longtime ally of George Soros, appeared to lend credibility to the belief of some Republicans that the administration was fear mongering about the consequences if Congress failed to move quickly to raise the limit on how much the government can borrow. Less than a week after Druckenmiller told the Wall Street Journal that a default would not be the “catastrophic” event administration officials claimed, the White House called on some of its Democratic friends in corporate America. “It really scared the administration that a brand name was saying that (default) was not a big deal,” said a financial services industry source who also was on the Goolsbee call in May. During the call with about 60-70 executives from large and small firms across the country from financial services to manufacturing, Goolsbee likened the debt talks and potential market fallout to a smoldering fire pit in Iran and said one could only get so close before his clothes would catch fire. The message from Goolsbee, according to the participant, was, “We know markets will react negatively, but don’t know how close we can get before they start reacting negatively.” The White House economic adviser cited a study by centrist think tank Third Way that said default would drive the country into a second recession — a statement Treasury Secretary Timothy Geithner would later make in a letter to Congress. So far, U.S. markets have shown little concern over the budget stalement in Washington with investors apparently confident lawmakers will lift the debt ceiling in time. The yield on the benchmark 10-year Treasury note hovered around 3 percent on Tuesday, indicating strong demand. Still, the United States’ largest foreign creditor, China, warned that U.S. lawmakers contemplating a technical default, or a delay in interest payments, are “playing with fire”. UNCONVINCED Conservative Republicans, who helped shift control of the House of Representatives to their party in elections in November, remain unconvinced that there will be terrible fallout if the August 2 deadline is missed. “A lot of my supporters, a lot of my friends… are making sure that I know that I can’t raise the debt ceiling until there is a good plan moving forward to (curb spending,)” said Representative Stephen Fincher of Tennessee. Fellow Republican Mike Pompeo said there were bankers in his district in Kansas who were watching the negotiations closely and wanted to make sure Congress “got it right,” adding that he was more convinced than ever that raising the debt limit without big spending cuts would be wrong. Publicly, President Barack Obama and his economic team have been warning lawmakers for months that missing payments on any of the government’s obligations could push interest rates sharply higher and throw the economy back into recession. They say Republicans would shoulder the blame if that happened. Lobbying groups for powerful companies such as JPMorgan Chase, Bank of America and Caterpillar Inc, have tried with little success to persuade lawmakers — and the public — that a debt default would be unthinkable. Republican Representative Nan Hayworth of New York said the majority of her constituents have told her that they would prefer that the debt ceiling not be raised. “I have assured them that it will be accompanied by substantial measures to stop adding to the debt as fast as possible,” she said. (Additional reporting by Laura MacInnis) Copyright 2011 Thomson Reuters. Click for Restrictions .

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UK Plans World’s First State-Backed Green Investment Bank

May 23, 2011

LONDON — The British government outlined plans for the world’s first state-backed green investment bank on Monday – a key plank of its pledge to transition the country into a low-carbon economy. Deputy Prime Minister Nick Clegg said the bank will open for business next April and will likely focus initially on investing in areas such as offshore wind, waste and non-domestic energy efficiency. The bank will be capitalized with an initial 3 billion pounds ($4.8 billion) from the Treasury coffers but will be given independence from the Treasury and will be able to borrow in the capital markets and from the private sector from April 2015. Clegg said he expects the bank to have injected some 15 billion pounds into the green economy within four years. “The bank is intended to bridge the gap between venture capital and the green economy, provide the finance for low-carbon infrastructure and lay the foundation for long-term, balanced growth,” said Clegg, the leader of the junior Liberal Democrats party in the Conservative-led coalition government. “The green investment bank will go from an idea to a flow of investment in under two years, and quickly grow into an independent investing, and then borrowing, institution,” he added, noting it was an “an extraordinary political commitment” at a time the government is axing billions of dollars of spending to cut heavy national debt. Clegg said the global market for low-carbon and environmental goods and services was worth 3.2 trillion pounds in 2008/09, and is forecast to continue to show strong growth. Many countries around the world have a development bank, but Britain will be first to have a national bank dedicated to the green economy. The plans announced by Clegg make some key concessions for critics who had feared the bank would be too tightly controlled by the Treasury, which had argued for the bank to be allowed only to borrow from the government. Campaigners argued that if the bank was not allowed to borrow from the capital markets, it would be unable to deliver the necessary investment in low-carbon technology. Clegg said the bank will have full operational independence “as soon as possible.” And it will have borrowing powers from April 2015 as long as targets for reducing government debt have been met. Greenpeace executive director John Sauven welcomed the government’s commitment to the bank’s independence, but said that it will be “hamstrung from the outset by keeping the restriction on borrowing powers until at least 2015.” John Cridland, the director general of the Confederation of British Industry, said the bank must deliver certainty for investors if it is to generate the scale and pace of investment needed to shift the UK to a low-carbon economy. Cridland, who has forecast that 450 billion pounds of investment is needed by 2025 to bring green jobs and opportunities to Britain, warned the bank “won’t work if it needs the Treasury’s permission to blow its nose.” “The bank needs to be able to get into the markets itself and do what it’s intended to do,” he added.

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Greek Prime Minister: ‘Debt Restructuring Is Not Under Discussion’

May 22, 2011

ATHENS (Harry Papachristou) – Greece must avoid debt restructuring and push on with budget cuts and privatisations to overcome its debt crisis, the country’s Prime Minister George Papandreou and senior ECB officials said on Saturday. Papandreou must present a fiscal plan next week that is credible enough for the European Union and the International Monetary Fund to continue bankrolling his debt-laden country. But a large majority of Greeks reject more austerity, according to a poll published on Saturday, which also shows the ruling socialists losing their lead versus the conservative opposition for the first time since their 2009 election victory. “Debt restructuring is not under discussion,” Papandreou said in an interview in Sunday newspaper Ethnos. One year into its EU/IMF 110-billion euro bailout, Greece is struggling with weak revenues and deep recession, fuelling speculation that it will have to restructure its debt to pull itself out of the fiscal mess that triggered a euro zone crisis. The chairman of the 17-country Eurogroup Jean-Claude Juncker said on Tuesday Greece may have to move toward a “soft restructuring” of its debt. But the European Central Bank remains strongly opposed to such a move, due to fears that it would destabilise the euro. Greece has no other option but to follow through its fiscal plan, ECB governing council member Ewald Nowotny told Greek newspaper To Vima on Saturday. “For the ECB, the line is one and clear: you have to implement the commitments you have made.” In a separate interview in newspaper Kathimerini, ECB executive board member Juergen Stark said any kind of debt restructuring would thwart the country’s return to bond markets and undermine reforms. “We are at a critical juncture, what it really takes now is action,” Stark said. On Friday, Fitch became the second major ratings agency to warn that it would consider any kind of debt restructuring as a sovereign default — exactly the kind of outcome euro zone governments are trying to avoid. Asked by Ethnos if he would consider a debt “reprofiling” rather than a restructuring, Papandreou said: “We are looking after our job… We do not join the public discussion about such scenarios.” LIMITS OF AUSTERITY, PRIVATISATIONS Greece is considering deeper cuts in public sector wages and further tax increases on a range of products and professions to qualify for more aid, Greek newspapers said on Saturday. The plan may include scrapping bonuses to civil servants and employees in state-run companies, newspapers Ta Nea and Isotimia reported, without citing any sources. The government may also lower or scrap tax-free thresholds on property holdings and the self-employed, raise consumption taxes on soft drinks and certain fuel types or shift a range of products to a higher VAT-bracket, other newspapers said. Papandreou vowed on Saturday to take any measure necessary to secure more funding for his country. “Greece must convince everyone of its determination,” he said. But a large majority of Greeks say they cannot take more austerity as the country enters its third year of recession. Eighty percent of respondents told pollster MRB they refused to make any further sacrifices to get more EU/IMF aid, an MRB poll for paper Realnews showed. The same poll shows Papandreou’s ruling Socialist PASOK neck-and-neck with the opposition conservatives, with both parties scoring 21.5 percent each. In the previous MRB poll in April, PASOK had an 1.8 point-lead. But Papandreou warned that any failure to push through the plan might lead the country straight to default. “At the moment, it does not seem as if Greece can cover its 2012 borrowing needs… from the market,” he said in the interview. Papandreou pledged to speed up a 50 billion euro privatisation programme, a key part of efforts to shore up finances without a debt restructuring. However, he reiterated that the state would keep stakes in firms managing vital public goods and services, such as water and electricity utilities. In an interview with German magazine Der Spiegel, Juncker urged Greece to set up a trustee institution to help privatize state assets, similar to the body that privatised East German companies after the fall of communism. “Henceforth, the European Union will escort Greece’s privatisation programme as if we were conducting it ourselves,” he said. (Editing by Philippa Fletcher) Copyright 2011 Thomson Reuters. Click for Restrictions .

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White House: No Alternative To Raising Debt Ceiling

May 18, 2011

WASHINGTON — The White House said on Wednesday that there is no “Plan B” if Congress does not vote to increase the debt limit by August. The debt limit, which is currently set at $14.29 trillion, was reached on Monday, but Treasury Secretary Timothy Geithner told Congress the government can continue to pay its debts until about Aug. 2 by using “extraordinary measures.” If Congress does not raise the debt ceiling by then, there is no plan in place for dealing with the resulting defaults, a senior administration official said in a briefing with reporters. “There is no alternative to raising the debt limit. It has to be raised,” the official, who spoke to the reporters on background, said. “There’s really no way around it.” The White House is pushing back against a few Republicans — including Sen. Pat Toomey (R-Penn.) and Rep. Paul Ryan (R-Wisc.) — who hinted this week the government could default on its debts for a short time in pursuit of a broader deal to cut the deficit. Republicans have overall agreed that the debt ceiling needs to be raised but have said they will not vote to raise the ceiling unless it is paired with major spending cuts and long-term debt reduction. But some fear that talks to reach that deal, which are being facilitated by Vice President Joe Biden, will last beyond the Aug. 2 deadline for increasing the debt limit. A few Republicans have said extending talks beyond that deadline could be done without serious harm to the markets as long as a deal was eventually reached to raise the debt ceiling. Toomey, speaking on Wednesday at the conservative American Enterprise Institute, pointed to a weekend interview in the Wall Street Journal with investor Stanley Druckenmiller, who said he would accept late payments on U.S. debts if it meant overall progress on the long-term deficit. Sen. Jon Kyl (R-Ariz.), who is representing Senate Republicans in the White House debt limit talks, also referenced the editorial when speaking with reporters on Tuesday. Ryan made a similar remark Tuesday, telling CNBC the investors he speaks to would be willing to accept late payments “for a day or two or three or four.” The White House firmly rejected such an idea in the Wednesday briefing, saying even short-term default would harm the government’s credit and its reputation in the markets. “That’s not a plan; that’s default,” the official said. As lawmakers continue to push for a deal on the debt, the Treasury will continue to function by taking steps to “buy head room” within the current deficit, said a senior administration official. Earlier this month, the Treasury stopped providing State and Local Government Series Treasury securities, which help state and local governments to manage their debt. After reaching the debt limit Monday, the Treasury began using additional measures to avoid default. Geithner declared a “debt issuance suspension period” on Monday to borrow from the Civil Service Retirement and Disability Fund. The fund will be made whole after the debt limit increase is enacted, according to law. The Treasury will continue some business as usual, including maintaining its auction schedule to issue new bonds. The administration rejected the idea of selling off assets to buy time for the debt ceiling deal, arguing it would amount to a “fire sale” where assets would likely be sold for less than their true value. “The idea of dumping gold on the market would be extremely damaging,” a senior official said, while another official added that most assets do not have enough value to buy the government much time. Despite rhetoric over raising the debt ceiling by some lawmakers, Geithner is confident the debt limit will eventually be increased, an official said. “They always seem extremely challenging, but they seem to get there,” an official said.

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Debate Begins In Earnest As U.S. Hits Debt Limit

May 15, 2011

WASHINGTON (Reuters) – The United States will reach the limits of its borrowing authority on Monday, but don’t expect to hear alarm bells in Washington or on Wall Street. Rather, that ringing sound you hear is the opening bell in a fight that’s likely to last a full 15 rounds. It’s a moment the Obama administration has warned about for months. Without congressional action, the Treasury Department will be shut out from the bond markets and the country could eventually default on its obligations, an event that would roil markets and economies across the globe. There will be little immediate financial impact when the United States reaches its existing $14.294 trillion debt ceiling, as the Treasury Department says it can stave off a default until early August. Observers don’t expect Congress to swing into action until the last possible minute. Bond markets have remained placid as traders calculate that despite the theatrics in Washington, the chances of default are extremely small. “I don’t think this is a big story yet,” said Dan Ripp, an analyst with Bradley Woods, a securities firm in New York. Budget experts say the debt limit provides an opportunity to address the country’s long-term fiscal problems before it courts a Greek-style debt crisis. “Nothing blows up next week, but the clock is ticking now. We need to get on top of this problem,” said Alice Rivlin of the Brookings Institution. Unlike nearly every other developed country, the United States can’t increase its borrowing authority without legislative action. This is a mixed blessing for Congress: The public is overwhelmingly opposed to a debt-limit increase, and the vote to raise the limit is always politically painful. But it gives lawmakers further leverage over federal spending. “The beauty of the debt ceiling issue is it gets results,” Senate Republican Leader Mitch McConnell said on Thursday. Lawmakers from both parties say they won’t back an increase without steps to ensure that debt remains manageable. Urged on by the conservative Tea Party activists who handed them control of the House of Representatives last fall, Republicans are calling for trillions of dollars in spending cuts. Democrats say tax hikes need to be part of the solution. As the two sides maneuver for advantage, the Treasury Department will have to dip into other pots of money, such as government employee pension funds, to pay the bills. The agency has plenty of experience in using what it calls “extraordinary measures” to keep the wolf from the door. According to the Congressional Research Service, Treasury has had to use alternate sources of funding six times since 1985. Treasury will run out of options eventually, as the government currently spends each month about $125 billion more than it takes in. According to CRS, the government would have to boost tax revenues by two-thirds or eliminate spending on the military, scientific research and all other discretionary programs to avoid a default. The other alternative — refusing repayment of its bonds — would likely destroy the country’s sterling credit reputation, push stocks down by at least 6 percent, for a start, and possibly lead to another recession, according to an analysis by the centrist think tank Third Way. TAKING A HARD LOOK The debt ceiling debate is forcing lawmakers to take a hard look at the country’s fiscal path, which has changed dramatically for the worse over the past decade. In January 2001, the non-partisan Congressional Budget Office projected the country would run a surplus of $5.6 trillion over the coming 10 years. Instead, debt more than doubled as President George W. Bush cut taxes, waged two wars and expanded health benefits. The 2008-2009 recession blew a deeper hole in the budget, pushing annual deficits to their highest levels relative to the economy since World War Two. By the end of the decade, CBO’s projected surplus was nowhere to be found and the country had instead racked up an additional $6.2 trillion in cumulative deficits. Experts say the United States will need to trim deficits by roughly $4 trillion over the coming 10 years to keep debt from rising to dangerous levels relative to the economy. Democrats and Republicans agree on some programs, like crop subsidies, which should come under the knife, but those are dwarfed in dollar terms by the areas in which the two sides disagree, such as healthcare programs and taxes. As the 2012 election cycle gets underway lawmakers will have more incentive to dial up the rhetoric. Markets may impose a discipline of their own. Standard & Poor’s warned last month that it might downgrade the United States’ top-notch debt rating if Washington doesn’t tackle its fiscal situation, and bond yields could rise if a substantial deal does not emerge from the debt ceiling talks. “That’s the kind of thing that could emerge over the long term,” Ripp said. (Editing by Philip Barbara) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Health Care For All Nears Reality In One State

May 11, 2011

MONTPELIER, Vt. — Accustomed to being the first to dip its toe into hot-button issues, Vermont is preparing to provide public health care to all residents regardless of income, moving toward a government-run system that will take it as close to Canada philosophically as it is geographically. Gov. Peter Shumlin is expected to sign legislation this month marking the first step on the path to phasing out most private insurance. The effort puts Vermont well in front of last year’s federal health care overhaul. The ultimate goal, Shumlin said recently, is a Canadian-style system “where health care is a right and not a privilege.” But it’s not clear yet how Vermont – the first state to ban slavery in its constitution and to give marriage-like rights to same-sex couples – will achieve universal health care. The legislation places responsibility for the details of the new system, including how to pay for it, in the hands of a powerful new state board. Vermont’s turn toward universal care comes as more than two dozen states have gone in the opposite direction, suing to overturn the federal law. The U.S. House last week voted to strip federal funding from key parts of it, though that move is expected to die in the Senate. While the federal law requires people to have health insurance and offers subsidies to help low- and moderate-income people buy it, Vermont would go further. It would change the way doctors and hospitals are paid and streamline the processing of insurance claims. The federal law was modeled in part on Massachusetts’ groundbreaking 2006 system that required all residents to have health insurance; unlike the Vermont plan, the Massachusetts program does not provide health care to all but does offer subsidized insurance to those can’t otherwise afford it. The Vermont bill sets up a five-member board which, in consultation with the executive branch and Legislature, is to answer the big unanswered questions in this year’s bill. Those include how the system will be paid for – some have suggested a payroll tax on employers and workers; what benefits will be covered; what copays and deductibles it would include; and other details. “Vermont is leading the way in having an authentic discussion about what a universal health care system would look like in the state,” said Katie Robbins of Healthcare NOW. The Philadelphia-based group supports single-payer health care, under which everyone gets coverage from the same government-run system, similar to what military personnel have now. Despite the growing opposition to the federal law, Vermont, where liberal Democrats control the governor’s office and both houses of the Legislature, is undaunted in moving in the direction of Canada, which pays for its health care system through taxes. And supporters say the state has built-in advantages. Vermont, with a small population of about 620,000, is often ranked as one of the healthiest states. It is well below the national average for infant mortality, childhood obesity, AIDS diagnoses and a range of other indicators of poor health, according to figures kept by the Kaiser Family Foundation. The Census Bureau reported that, in 2007, Vermont ranked sixth in the country in physicians per capita, with 374 per 100,000, versus a national average of 271 per 100,000. And about 90 percent of Vermonters have some form of health insurance already. But some of those with insurance say it falls far short of what they need. Heather Loughlin, 42, was working as a vice president at the Sugarbush ski resort when she was diagnosed 2 1/2 years ago with multiple sclerosis. Before long, she found herself no longer able to work and buying insurance with a subsidy from the state under a current program, but with a private insurer. A thick stack of coverage denial letters later, Loughlin said, she was back living with her parents in Ludlow, who were going into debt in their retirement to help her meet her medical costs. “It doesn’t matter if you’re paying $300 or $400 a month for insurance,” Loughlin said. “It’s a mirage.” She called the repeated coverage denial letters “mind-boggling and enraging. They just try to wear you down.” Advocates for changing the system brought hundreds of people with stories like that to hearings and rallies at the Statehouse last year and again this spring. James Haslam of the Vermont Workers Center, which spearheaded a campaign under the banner “Health Care Is A Human Right,” said the legislation wouldn’t have passed without the grass-roots support. “If other people want this in their states, they have to start organizing their neighbors,” he said. The bill indicates that the state would “maximize the receipt of federal funds” to help pay for the new health care system. But Vermont’s prospects of receiving federal money are uncertain amid efforts by Republicans in Congress to chip away at the federal overhaul. “The big hole in Vermont’s plan has always been its failure to specify a funding source,” said Shawn Shouldice of the National Federation of Independent Business, which opposes the legislation. “The only clearly defined funding element was the federal grant money … and now that could vanish, as well.” William Hsiao, a Harvard health care economist and consultant to the drafters of Vermont’s legislation, has called for a payroll tax shared by employers and workers. But lawmakers put off a decision on that, some saying they wanted a way to tax non-wage income to support the program as well. There are also doubts the bill really will move Vermont toward a genuine single-payer system. It leaves room for people to buy supplemental insurance, and among the big questions is whether workers at IBM and some of the major employers in the state, whose self-insurance systems are regulated under federal law, will be allowed to be absorbed into Vermont’s system. In a move crucial to the project’s success, backers say, the board will design and administer new cost-control measures, including “global budgeting” for hospitals and other health care providers. Instead of the traditional “fee-for-service” system in which doctors are paid by the patient visit or procedure performed, the new system will be designed to pay for providing necessary health care to a given population. A senior health researcher at the conservative Heritage Foundation in Washington warned, though, that Vermont may want to be careful in playing with the financial incentives that can influence how health care systems develop over time. In some other countries, Ed Haislmaier of Heritage said, the sort of “global budgeting” Vermont envisions ends up with less acutely ill patients with longer hospital stays. “Hospitals turn into nursing homes,” he said. The bill calls for maintaining and expanding the state’s Blueprint for Health program, which is designed to streamline and provide better preventive care to people with chronic conditions like heart disease and diabetes. Rep. Mark Larson, chairman of the Health Care Committee in the Vermont House and a key architect of the legislation, acknowledged that the bill is really a planning document and that its supporters have much left to prove. After the House gave the bill final approval 94-49 Thursday, he said, “I think today’s vote reflects people saying, ‘OK, you’ve made your case. Now show me.’”

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Dr. Sasha Galbraith: The Wage Gap Plot Thickens

May 9, 2011

A recent article in the Wall Street Journal blatantly states that there is “no male-female wage gap.” Among other things, the author, Carrie Lukas (executive director of the conservative Independent Women’s Forum ), points out that women work an average of 8.01 hours per day on the job, versus men, who work 44.4 minutes longer each day. This difference, she says, explains over one third of that wage gap. Really? This just goes to show, statistics can be misleading. While often useful, they are also great at hiding a multitude of evils, as well as giving us nonsense. Take, for example, the fact that rich families spend more on groceries than poor families. So what? I guess then, the extra hours that women put in at home in unpaid family, elder and household care count for nothing in that wage gap. In fact, Lukas cites one group of people — single, childless urban female workers between the ages of 22 and 30 — who earn 8 percent more than similar men. And that’s my point exactly! According to a University of Michigan study of U.S. families, married women with three kids or more logged an average of 28 hours of housework per week. Compare that to the 10 hours per week put in by their spouses. In fact, getting married creates seven hours per week more (unpaid) work for the wife. Fine, you say, most married women with loads of kids don’t work full-time outside the home. True. According to the Bureau of Labor Statistics , 43 percent of married mothers work full-time outside the home, about half the ratio of married fathers. But among married fathers and mothers who work, women spend twice as much time on housework (two hours per day) than men. Why should we care if people work for no pay? Because ignoring unpaid work distorts our Gross Domestic Product and the assessment of our national living standards. If a mother goes into the paid workforce, she has to arrange for someone to take care of the kids. In some cases, it might be a relative who probably will do this work for free, or it might be a childcare center for which she has to pay. Similarly, the family will probably have to pay someone else to clean the house and cook meals (restaurants and take-out services). While all those paid services count toward the GDP, they also overstate the implied benefits to our standard of living — which is usually assumed to track with the rise of GDP. Why should we care if women are paid less than men for doing exactly the same job? Because women invest their earnings differently than do men. According to a UNICEF report , women spend more money on the education, health and welfare of their families. This, in turn, benefits the economic well-being of the country as a whole. If women were paid the same as men, the U.S. GDP would be 9 percent higher (and Europe’s would increase by 13 percent, according to a UN report ). I’ve often wondered what would happen if all the women in the world decided not to do any of their unpaid work for a day. Oh wait, I think that’s called Mother’s Day. Happy Mother’s Day, ladies. Crossposted from Forbes.com .

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Donald Trump: ‘I Am Very Proud Of Myself’

April 28, 2011

DOVER, N.H. — After weeks of suggesting Barack Obama was born in Africa, Donald Trump hastened to boast that he had forced the Democratic president to release a detailed Hawaii birth certificate disproving that claim, painting an apparent setback as a victory within minutes of arriving in the first-in-the-nation primary state. The developer and reality TV show host, who is considering a White House run, again showed the difficulty establishment Republicans are having in controlling the early stages of their wide-open nominating contest. He also proved himself a nimble messenger, or spinner. “Today I am very proud of myself because I have accomplished something that nobody else has been able to accomplish,” Trump told reporters Wednesday shortly after his black and red helicopter, emblazoned “TRUMP” on the side, touched down in Portsmouth. He arrived not long after the White House released the president’s long-form birth certificate from Hawaii. He said he was honored “to have played such a big role in hopefully – hopefully – getting rid of this issue. Now, we have to look at it, we have to see, is it real.” Trump said he hoped the birth certificate “checks out beautifully,” but he used the opportunity before television cameras to again sharply criticize Obama on several fronts, including Libya policy and gasoline prices. He also raised questions anew about Obama’s educational record and how he got into college. But he again offered no proof of anything amiss. Trump’s blistering attacks on Obama, including raising widely debunked rumors that the president was born abroad, have piqued the interest of some Republican voters. He has seen his standing in some polls grow in the months since he first dangled a presidential candidacy before a GOP primary electorate looking for a leader to aggressively challenge the Democratic president. Many rank-and-file Republicans still dismiss Trump as a non-serious distraction. But as he easily grabs headlines, other potential candidates are playing a more cautious game, and most don’t seem eager to talk about him. They’ve been distancing themselves from the so-called “birther” claims in recent days, and most weren’t eager to weigh in Wednesday. Sarah Palin, the former Alaska governor, sent a brief tweet that said: “Media: admit it, Trump forced the issue. Now, don’t let the WH distract you w/the birth crt from what Bernanke says today. Stay focused, eh?” That was a reference to Federal Reserve Chairman Ben Bernanke’s news conference. And former Massachusetts Gov. Mitt Romney said on Twitter: “What President Obama should really be releasing is a jobs plan.” Less than a year before Iowa and New Hampshire Republicans become the first to vote in the race, the GOP field is far from set. There’s no true front-runner and no single establishment candidate. That leaves ample room for attention-getting events by less orthodox politicians such as Trump and third-term Rep. Michele Bachmann of Minnesota. Romney, who lost the nomination in 2008, former Minnesota Gov. Tim Pawlenty and former House Speaker Newt Gingrich all have taken initial steps toward full-fledged runs but none has emerged as the candidate to beat. Many Republicans expect Bachmann and former Sen. Rick Santorum to make their interest official. They also are waiting to hear from former Utah Gov. Jon Huntsman and Indiana Gov. Mitch Daniels. The 2008 vice presidential nominee, Palin, and the Iowa caucus winner, Mike Huckabee, have dropped hints they will not run, but Republican insiders say no one is sure. Mississippi Gov. Haley Barbour became the latest Republican to opt against a presidential run this week. “This is shaping up to be a wacky year,” said Scott Reed, who managed Republican nominee Bob Dole’s 1996 campaign and had been advising Barbour. It’s the most wide-open GOP primary in four decades, he said, and the eventual nominee conceivably could jump in as late as September. “There is still room for someone to emerge as the conservative alternative to Romney,” Reed said. Most veteran Republicans don’t believe that person will be Trump, the thrice-married, much-caricatured developer who has donated heavily to Democrats in past years and switched his stands on key issues such as abortion. Karl Rove, the top political adviser to President George W. Bush, calls Trump a “joke candidate.” Jennifer Horn, a 2008 Republican congressional nominee from New Hampshire, said in an op-ed column that Trump has flip-flopped on major issues and is not a credible candidate. If Republicans allow him to “hijack the primary process then they deserve exactly what they get,” she wrote. Over the years, Trump has given thousands of dollars to Democratic candidates, including New York Sens. Chuck Schumer and Kirsten Gillibrand and Senate Majority Leader Harry Reid of Nevada. Trump talked of running for president as a third-party candidate in 2000, and he made a brief splash with a 1988 New Hampshire speech that some took as a preliminary Republican candidacy. In New Hampshire on Wednesday, Trump breezily dismissed his critics. “I think I’m quite conservative as a Republican,” he told reporters in Portsmouth. In at least two instances, he said, “I’m leading the polls.” Forcing Obama “to finally come out and issue a birth certificate can only help,” he said. Trump said he has given campaign money to “many Republicans, many Democrats. And I think there’s something nice about that,” because it promotes bipartisanship. As for switching his stand on issues, he said, “My views change. … I tell people, you have to remain flexible because the world changes.” He also turned the conversation to Obama. “Nobody even knows what’s going on in Libya,” Trump said. He said Obama claims to have little control over gasoline prices, but “he does if he gets on the phone or gets off his basketball court or whatever he is doing at the time.” After holding court before reporters, Trump traveled to several other stops, all within a nine-mile radius of the Portsmouth airport. He spent a few minutes shaking hands at a Portsmouth diner but spent little time in conversation. Passing by a table of older men, he waved and said, “Why aren’t you at work?” “We’re retired!” answered the group of former workers at the Portsmouth Naval Shipyard. “Don’t touch Medicare, right?” Trump said, moving on without waiting for an answer. Joe Lovell, of Somersworth, said seeing Trump arrive by limo was a surprise in this state that values close contact with presidential hopefuls. Asked what he thought of Trump, he said, “Nice hair.”

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GE CFO: ‘Best Earnings Outlook In The Last 10 Years’

April 27, 2011

SALT LAKE CITY (Scott Malone) – General Electric Co sees its best earnings growth prospects in a decade as the global economic recovery drives demand for the heavy energy and aviation equipment it makes, top executives said. Rising oil prices have not yet taken a toll on global growth rates, Chief Executive Jeff Immelt said at the company’s shareholder meeting on Wednesday. “Things are getting better every day. The global economy outside the U.S. is strong,” he told reporters. Asked about oil prices, which have risen about 33 percent over the past year on rising demand, particularly in emerging markets, Immelt said they have not yet taken a toll on growth. “It’s something to think about, but it doesn’t seem to be hurting the economy,” he said. The U.S. economy is also improving, he added, although the housing sector remains a weak spot. GE believes its profit growth over the next few years will be the best it has seen in a decade, officials said. “This is the best earnings outlook we’ve had in the last 10 years,” Chief Financial Officer Keith Sherin told a crowd of 268 shareholders. GE no longer provides investors with numeric profit forecasts; but analysts on average look for earnings per share excluding one-time items to rise 16.5 percent this year, according to Thomson Reuters I/B/E/S. GE, which employs about 134,000 people in the United States, each year holds its annual shareholder meeting in a different city where it has operations. Its energy, healthcare and finance arms all have a presence in Salt Lake City. In a nod to the prevalence of firearms in the Western United States, the sign directing shareholders to the meeting’s location in the city’s Salt Palace convention center pointed out that no guns would be allowed in the meeting room. NUCLEAR OUTLOOK UNCLEAR The future of the nuclear power industry is unclear in the wake of the disaster at Japan’s Fukushima power plant, where GE designed the turbines, Immelt said. “It’s too soon to say what the future of the nuclear business is going to be,” he said. GE’s nuclear operations are a joint venture with Japan’s Hitachi Ltd. The world’s largest maker of jet engines and electric turbines has seen its stock price more than triple from its recessionary lows below $6, though the shares remain at about half their level before Immelt took the top job from Jack Welch a decade ago. Immelt told shareholders that even through the recession and financial crisis, “in every year we earned more money than when the stock traded at an all-time high.” GE shares were up 2.7 percent to $20.64 on the New York Stock Exchange. Over the past year, the shares have risen 4 percent, lagging the 12 percent rise of the Dow Jones industrial average, of which it is a component. Immelt faced shareholder questions on issues ranging from his appointment as an economic adviser to the Obama administration to GE’s past support of efforts to attach a price to emissions of the greenhouse gas carbon dioxide. No shareholders asked about the company’s low tax rate — which has been in the public eye over the past month — though a group of several dozen protesters who said they were affiliated with the conservative Tea Party movement gathered outside to protest it. Shareholders approved company-backed resolutions including the election of the board and a proposal to have a nonbinding “say on pay” vote each year. They voted down all five company-opposed proposals, including one calling for the board to rescind stock grants and another asking GE to disclose more about the use of animal testing at its healthcare unit. GE competes with some of the world’s largest businesses, including Germany’s Siemens AG, French industrial group Alstom SA and Swiss engineering company ABB Ltd. (Reporting by Scott Malone; Editing by Gerald E. McCormick, Dave Zimmerman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Robert Kuttner: A Double Dip Recession for 2012?

April 25, 2011

Economists are painting a pretty bleak picture of the economic outlook between now and the November 2012 election. Will this hurt President Obama’s re-election chances? Or will voters blame the Party of No? That, of course, partly depends on what kind of campaign Obama runs and partly on the Republicans. But first, let’s take stock (actually, maybe let’s sell stock). The Federal Reserve has been buying up lots of bonds to keep interest rates very low. The Fed disguises what it’s doing with the antiseptic and mystifying term, “quantitative easing,” or QE for short. This is the second time the central bank has tried this trick, hence the coy nickname, QE 2. The problem is that very low interest rates only take you so far in a depressed economy. For the most part the Fed’s policy has been good for large banks and good for the stock market. Ordinary borrowers, businesses and homebuyers have trouble getting credit. But other factors are starting to limit the effectiveness of very low interest rates. For one, the very low rates in the US are depressing confidence in the dollar. That means we start importing inflation. For another, rising commodity prices worldwide — partly the result of the Fed’s policy, partly due to rising demand in India and China — means increasing prices of consumer goods at home. Five-dollar-a-gallon gas is not good for President Obama. Nor is the practice of food processing companies shrinking the size of standard packages to disguise price increases. And in the one part of the economy that might benefit from a little inflation, low interest rates have not worked to levitate depressed housing values. The time-tested remedy, when cheap money ceases working, is expansive fiscal policy — government deficits and public investment. Now there’s an idea. Oops. Forget it. There is, of course, huge pressure from the nation’s opinion elites to cut the deficit, long before the economy is out of the woods. It comes from four potent sources. Wall Street deficit hawks have been banging these drums for three decades, even during the late 1990s when the budget was in surplus. The elite media buys this story, hook, line, and sinker. Big deficits are seen as proof of partisan gridlock and government irresponsibility. The six bipartisan horsemen of budget apocalypse, Senators Warner, Chambliss et. al. are widely depicted as fiscal heroes. The pundits seem to forget where these deficits came from. Republicans since Ronald Reagan have pursued a strategy of cutting taxes and then expressing shock at the ensuing deficit and demanding program cuts accordingly. We were already having historically high deficits when the recession began, because of the Bush tax cuts of 2001 and 2003. Today’s even more extreme Republicans would cut taxes further, slash outlays to their lowest level since before FDR, invoking the gods of deficit reduction. President Obama, for his part, has fanned these flames with his appointment of the Bowles-Simpson commission, and his premature shift, as early as the 2010 State of the Union Address, from the theme of economic recovery and job creation to that of deficit reduction. His recent address at George Washington University was terrific at holding the line on Medicare, Medicaid and Social Security, but bought into the premise that we need deficit reduction more than we need job creation. Why is Obama pursuing this strategy? Partly because his conservative economic advisers buy it, and partly because his political advisers look at polls that tell them voters care about deficits, especially political independents. But that current of public opinion exists only because opinion leaders — including Obama himself — have made such a fetish of deficits. There is a whole politics that just isn’t on the table: massive public investment to create jobs and growth — which then increase revenues and bring down the deficit. The political scientist Walter Dean Burnham refers to this sort of dynamic as “a politics of excluded of alternatives.” But wait, isn’t the deficit a real problem? Yes, and no. Eventually, deficits at the 2011 level are not sustainable. However, the current accumulated debt held by the public of about 60 percent of GDP is not dire. We could have two or three years of bigger deficits, very major public investment, let the debt ratio peak at 100% of GDP; and then stronger recovery, lower unemployment, and higher taxes on the wealthy would bring the debt ratio slowly down, as occurred after WW II. Japan’s debt ratio, for comparative purposes, is over 200 % of GDP — and Japan is increasing government outlay to repair the damage of the earthquake and tsunami. Britain’s, after World War II, was over 250 percent, and Britain went on to enjoy a postwar recovery. Why can’t we have massive public reparation with war or natural disaster? Because politicians lack the vision and nerve. Austerity will only slow down the recovery. The idea that a steeper path to deficit reduction will somehow restore business confidence and thus more than offset the hit to purchasing power is just blarney. And with both parties committed to some version of austerity, we could easily have the worst of both worlds — increasing inflation coupled with persistent stagnation. However much the Republicans are at fault–for creating the financial collapse, blocking a stronger stimulus in 2009, and looting the Treasury with tax cuts for the rich, causing much of the deficit problem in the first place — an incumbent president tends to take the blame for hard economic times. Obama’s talk of having a kinder, gentler brand of deficit reduction is no match for rising fuel and food prices and persistent worries about basic economic security. Can the president shift to a rhetoric and policy that emphasizes the need for more jobs and a stronger recovery, and soon? Let’s hope so. There is nothing like an election hanging to concentrate a politician’s mind. Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril .

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Politics, Ideology Overshadow Debt Limit Talks

April 20, 2011

(Reuters) – In the looming fight over raising the debt limit, Washington will have its eye on two deadlines: July 2011 and November 2012. The first is the date by which Congress will likely have to act in order to ensure that the United States doesn’t default on its $14 trillion in accumulated debt. The second deadline is when President Barack Obama and most members of Congress will face voters. What has often been a routine, if unpleasant, vote could this year turn into a battleground in the 2012 campaign as Republicans and Democrats advance clashing ideological visions of the nation’s priorities. Fresh from pushing through the largest domestic spending cuts in history, Republicans hope to use the debt limit debate as a vehicle to win bigger cuts and satisfy conservative Tea Party activists who handed them control of the House of Representatives last year. They will also promote a deficit-reduction plan that relies on permanent spending curbs, lower taxes and scaled-back government health programs as they try to wrestle control of the White House and the Senate from Democrats. Obama and his Democrats will lay out a rival vision of deficit reduction through a mix of lower spending and tax increases for the wealthy, arguing that getting the country’s fiscal house in order does not require wholesale cuts to popular programs. The battle is likely to stretch out for months and could bring the world’s most powerful economy to the brink of default — a prospect that would have far more serious implications for investors and the U.S. economy than the government shutdown that was narrowly averted less than two weeks ago with a last-minute deal on spending reductions. “Shutting down the government is like a really bad stomach ache. The debt limit is like a heart attack,” said Norm Ornstein, a congressional analyst at the conservative American Enterprise Institute. POSTPONING D-DAY Unlike nearly every other advanced economy, the United States requires legislative approval for any increase in the amount of money it can borrow. Congress has voted to raise the debt limit 10 times since 2001 as annual budget deficits brought on by wars, tax cuts and the worst recession since the 1930s pushed the country deeper into debt. The Treasury Department estimates it will hit its current limit of $14.294 trillion by May 16, though it could use a variety of tricks to stave off default until early July. Some observers think Treasury could postpone a default for several more weeks beyond that. Whatever the final deadline, Congress isn’t likely to act much before then. “The unwritten rule of Congress is: Why do today what you can put off until tomorrow?” said Dan Ripp, an analyst at New York securities firm Bradley Woods. Though a default isn’t likely, the almost inevitable brinkmanship could unnerve investors who are already rattled by Standard & Poor’s warning that it might strip the United States of its prized triple-A credit rating unless Obama and Congress can find a way to slash the deficit within two years. That would erode the status of the United States as the world’s most powerful economy and the dollar’s role as the dominant global currency. Ripp said he wouldn’t be surprised if investors pushed up the yield on the benchmark 10-year Treasury bond by 20 or 30 basis points if the debate stretches beyond May 16. CHANGING ROUTINES In the past, the politics on a debt-limit vote have been relatively straightforward. The party in power talks about the need to ensure the continued soundness of the country’s credit and votes for an increase; the party out of power inveighs against irresponsible fiscal policies and votes against. Obama, who is now pushing to raise the debt ceiling, voted against an increase as a member of the Senate in 2006, when George W. Bush was in the White House. Nearly every single Republican in the Senate voted for a debt-ceiling increase that year. Three years later, when Democrats held power, every Senate Republican but one voted against an increase. Democrats have followed the same pattern. This year, the politics are more complicated, as House Republicans have to find common ground with the Democrats who control the Senate. Obama hopes that a consensus can be reached in bipartisan talks led by Vice President Joe Biden and that they would wrap up by late June. But another bipartisan group may be a better bet. The so-called “Gang of Six” — three Republicans and three Democrats in the Senate — have been quietly meeting over the past months in an effort to forge a deficit-reduction plan that could win support in both parties. One thing appears certain: Congress will not pass a “clean” bill, free of extraneous conditions, as Obama wants. Republican leaders say any bill that passes the House will have to include long-term spending limits, and even Democrats who control the Senate say spending cuts will need to be part of the package. “The debt limit presents an opportunity for us to make some significant reforms in the budget process,” said Republican Susan Collins, a key swing vote in the Senate. That could take the form of a balanced-budget amendment to the U.S. Constitution — but it’s unlikely to become law as it would also need to win passage in 38 of the 50 state legislatures. Hard caps on federal spending, tied to economic growth, are a more likely option. Democrats could back a limited cap that excludes benefit programs like food stamps and unemployment benefits, according to a congressional Democratic aide. But at this point, Republicans aren’t saying exactly what they want. Even if Republicans include spending limits in the package, they still might not have enough votes to pass it through the House. House Speaker John Boehner was forced to rely on Democratic votes to pass record spending cuts last week after 59 Republicans voted against the deal on the grounds that it did not go far enough. This time, Democrats might not bail Boehner out. “I don’t think the Democrats should give them any votes,” said Representative Peter DeFazio, an outspoken liberal Democrat. “People say, ‘Oh my God, it would be a financial catastrophe.’ Yes it would, but guess who’s first in line for the financial catastrophe: the people on Wall Street. … Let them pick up the phone and educate the Republicans on how destructive these threats are.” (Additional reporting by Caren Bohan; Editing by Kieran Murray) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Controversial GOP Budget Proposal Passes House Vote

April 15, 2011

WASHINGTON — The House has passed a Republican budget blueprint proposing to fundamentally overhaul Medicare for future beneficiaries while combating out-of-control budget deficits. It would impose sharp spending cuts on social safety net programs like food stamps and Medicaid. The GOP proposal passed 235-193, with every Democrat voting “no.” The nonbinding plan lays out a fiscal vision cutting $6.2 trillion over 10 years from the budget submitted by President Barack Obama. It calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans. People 55 and over would remain in the current system, but younger workers would receive subsidies that would steadily lose value over time. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below. A bold but politically risky plan to cut trillions of dollars from the federal budget steamed toward a party-line House vote Friday, as insurgent Republicans rallied behind the idea of fundamentally reshaping the government’s role in health care for the elderly and the poor. The GOP plan proposes a federal budget totaling $3.5 trillion next year, while promising more than $6 trillion in accumulated spending cuts over the next decade compared with the budget that President Barack Obama offered in February. It relies on stiff cuts to domestic agency accounts, food stamps and the Medicaid health care program for the poor and disabled. The GOP’s solution to unsustainable deficits that presently require the government to borrow more than 40 cents of every dollar it spends is to relentlessly attack the spending side of the ledger while leaving Bush-era revenue levels intact. It calls for tax reform that would lower the top income tax rates for corporations and individuals by cleaning out a tax code cluttered with tax breaks and preferences, but parts company with Obama and the findings of a bipartisan deficit commission, who propose devoting about $100 billion a year in new revenues to easing the deficit. The Republican plan “disavows the relentless government spending, taxing and borrowing that are leading America, right at this moment, toward a debt-fueled economic crisis,” according to the document. Democrats and many budget experts say this spending-cuts-only approach is fundamentally unfair, targeting social safety net programs like Medicaid and food stamps while leaving in place a tax system they say bestows too many benefits on the wealthy. Republicans shied away from tackling Social Security shortfalls, steering clear of a political minefield. But their budget plan calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans. People 55 and over would remain in the current system, but younger workers would receive subsidies that would steadily lose value over time. “The changes being proposed would not affect one senior citizen in America, not one. Anyone 55 years and older will not be affected by any of these changes,” said House Speaker John Boehner, R-Ohio. “But if you’re 54 and younger, those Americans understand that if we don’t make changes, the programs won’t be there.” Virtually every budget expert in Washington agrees that projected Medicare cost increases are unsustainable, but the GOP initiative – attacked by Democrats as ending Medicare’s guarantee as we know it – has launched a major-league Washington imbroglio. The primary author of the GOP plan is unfazed by the Democratic attacks. “The biggest threat to Medicare is the status quo and the people defending it,” House Budget Committee Chairman Paul Ryan, R-Wis., told The Associated Press on Thursday. Democrats countered with official estimates showing the GOP plan would provide vouchers whose value would steadily erode. “They end the Medicare guarantee,” said top Budget Committee Democrat Chris Van Hollen of Maryland. “They force seniors to leave the Medicare program and go into the private insurance market where costs continue to rise day in and day out.” The House began debate on the measure Thursday and continued Friday with the easy defeat of two liberal budget alternatives. In a tricky vote Friday, a plan offered by the conservative Republican Policy Committee failed, 136-119, in a tally which most Democrats withheld their votes. The Democratic strategy was to force some Republicans to vote against the conservative plan, which was being “scored” by anti-tax groups like the Club for Growth, which supports economic conservatives in GOP primary races. Had the conservative plan actually passed, it would have derailed the underlying GOP budget. The GOP plan isn’t actual legislation. Instead, under the arcane and decidedly imperfect congressional budget process, the measure sketches out a nonbinding blueprint each year for running the government. The resolution doesn’t require the president’s signature, but it does set the framework for changes to spending or tax policy in follow-up legislation. The most immediate impact of the GOP plan would be to cut the $1 trillion-plus budget for appropriated programs next year by $30 billion, following on $38 billion in cuts just adopted. That would return domestic agency accounts below levels when George W. Bush left office. Friday’s voting comes on the heels of final congressional action on a long-overdue plan to wrap up the 2011 budget year. That measure claims $38 billion in savings but just $20 billion to $25 billion in lower deficits because illusory spending cuts comprise a big portion of the measure. The Democratic-controlled Senate has yet to produce its alternative plan as the Budget Committee chairman, Sen. Kent Conrad, D-N.D., and other members of Obama’s independent fiscal commission pursue a bipartisan “grand bargain” blending big spending curbs with new revenues flowing from a simplified tax code. The budget deficit is projected at an enormous $1.6 trillion this year, but more ominously, current projections show an even worse mismatch as the baby boom generation retires and Medicare costs consume an ever-growing share of the budget. But there’s a standoff between House Republicans and Obama over the president’s plan to raise taxes on upper-income people. For the long term, Ryan’s 10-year plan still can’t claim a balanced budget by the end of the decade because of promises to not increase taxes or change Medicare and Social Security benefits for people 55 and over. But eventually annual deficits are projected to fall to the $400 billion range, enough to stabilize the nation’s finances and prevent a European-style debt crisis that could force far harsher steps, Ryan says. The GOP plan seeks to cut $5.8 trillion from the budget. But that amount is inflated because, like Obama, the Ryan plan underestimates the likely costs of military operations overseas to produce $1 trillion in iffy spending cuts. The GOP measure also comes after Obama on Wednesday promised stiffer deficit curbs than contained in his February budget. Obama proposed reducing deficits by $4 trillion over 12 years, with $3 trillion coming from spending reductions and $1 trillion from additional revenue. He would leave Medicare and Medicaid intact but with new cost controls. But after Ryan asked the White House budget office for more details, he was pointed to a news release.

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Showdown To Avert Shutdown Set Stage For Even Tougher Confrontations

April 9, 2011

WASHINGTON — A last-minute budget deal forged amid bluster and tough bargaining averted an embarrassing federal shutdown, cut billions in spending and provided the first major test of the divided government that voters ushered in five months ago. Working late into Friday night, congressional and White House negotiators finally agreed on a plan to pay for government operations through the end of September while trimming $38.5 billion in spending. Lawmakers then approved a measure to keep the government running through next Friday while the details of the new spending plan are written into legislation. Obama signed the short-term measure without fanfare Saturday. Congressional approval of the actual deal is expected in the middle of next week. “Americans of different beliefs came together again,” President Barack Obama said from the White House Blue Room, a setting chosen to offer a clear view of the Washington Monument over his right shoulder. The agreement was negotiated by Obama, House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev. The administration was poised to shutter federal services, from national parks to tax-season help centers, and to send furlough notices to hundreds of thousands of federal workers. All sides insisted they wanted to avoid that outcome, which at times seemed inevitable. Shortly after midnight, White House budget director Jacob Lew issued a memo instructing departments and agencies to continue normal operations. Boehner said the deal came after “a lot of discussion and a long fight.” He won an ovation from his rank and file, including the new tea party adherents whose victories last November shifted control of the House to the GOP. Reid declared the deal “historic.” The deal marked the end of a three-way clash of wills. It also set the tone for coming confrontations over raising the government’s borrowing limit, the spending plan for the budget year that begins Oct. 1 and long-term deficit reduction. In the end, all sides claimed victory. For Republicans, it was the sheer size of the spending cuts. For Obama and Reid, it was casting aside GOP policy initiatives that would have blocked environmental rules and changed a program that provides family planning services. Not all policy provisions were struck. One in the final deal would ban the use of federal or local government funds to pay for abortions in the District of Columbia. A program dear to Boehner that lets District of Columbia students use federally funded vouchers to attend private schools also survived. Republicans had included language to deny federal money to put in place Obama’s year-old health care law. The deal only requires such a proposal to be voted on by the Democratic-controlled Senate, where it is certain to fall short of the necessary 60 votes. The deal came together after six grueling weeks as negotiators virtually dared each other to shut down the government. Boehner faced pressure from his GOP colleagues to stick as closely possible to the $61 billion in cuts and the conservative policy positions that the House had passed. At one point, Democrats announced negotiators had locked into a spending cut figure – $33 billion. Boehner pushed back and said there was no deal. During a meeting at the White House this past week, Boehner said he wanted $40 billion. The final number fell just short of that. In one dramatic moment, Obama called Boehner on Friday morning after learning that the outline of a deal they had reached with Reid in the Oval Office the night before was not reflected in the pre-dawn staff negotiations. The whole package was in peril. According to a senior administration official, Obama told Boehner that they were the two most consequential leaders and if they had any hope of keeping the government open, their bargain had to be honored and could not be altered by staff. The official described the scene on condition of anonymity to reveal behind-the-scenes negotiations. The accomplishment set the stage for even tougher confrontations. House Republicans intend to pass a 2012 budget in the coming week that calls for sweeping changes in the Medicare and Medicaid health programs and even deeper cuts in domestic programs to gain control over soaring deficits. In the Republican radio address, House Budget Committee Chairman Paul Ryan, R-Wis., warned of a coming crisis. “Unless we act soon, government spending on health and retirement programs will crowd out spending on everything else, including national security. It will literally take every cent of every federal tax dollar just to pay for these programs,” Ryan said Saturday. That debate could come soon. The Treasury has told Congress it must vote to raise the debt limit by summer. Republicans hope to use this issue to force Obama to accept long-term deficit-reduction measures. ____ Associated Press writers David Espo, Andrew Taylor, Erica Werner, Julie Pace and Ben Feller contributed to this report.

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Republicans Gamble With Politically Risky Budget Proposal

April 6, 2011

WASHINGTON (Reuters) – Republicans on Tuesday unveiled a politically risky 2012 proposal that aims to bring down huge budget deficits by cutting healthcare benefits for the poor and elderly. The 2012 budget blueprint from Paul Ryan, chairman of the House of Representatives’s budget committee, builds on the Republican Party’s campaign promise to scale back the size of the federal government. His plan for the fiscal year that begins October 1 would achieve nearly $6 trillion in savings over the next decade, chipping away at a budget deficit that this year is expected to hit $1.4 trillion. “This is a budget that creates economic growth. It is a budget to pay off our national debt. It is a budget to get our fiscal track on the right track,” Ryan said. But the plan drew harsh criticism. “While we agree with his ultimate goal, we strongly disagree with his approach,” White House Press Secretary Jay Carney said. The House Republican plan, Carney added, “cuts taxes for millionaires and special interests while placing a greater burden” on the elderly, children with disabilities, students and workers who have lost their health coverage. The non-partisan Congressional Budget Office, in its analysis of the Ryan budget, cautioned that some of the Medicare proposals would shift healthcare costs to elderly recipients. Similarly, Medicaid changes would shift some costs to the states, which already are cash-strapped. Republicans hope deficit-cutting scores big with voters concerned about gaping federal budget deficits, but public opinion polls find opposition among Americans to many of the domestic spending cuts Republicans are offering. That could come back to haunt the party in the 2012 elections. Ryan’s plan could move quickly through the Republican-led House, where fiscally conservative Tea Party members are clamoring for even deeper spending cuts. It is unlikely to clear the Senate, where Democrats still have a majority. Ryan put forward his 2012 blueprint while his colleagues continued to wrangle about a budget for the current fiscal year ending September 30. That bitter debate, if unresolved by Friday night, could lead to a partial government shutdown. Negotiations this week on the 2011 budget have stalled over some $33 billion in proposed cuts. Ryan’s proposal for 2012 includes much steeper cuts and sets the stage for an even more contentious debate. Republican leaders hope Ryan’s 2012 proposal can reduce pressure from members of the conservative Tea Party movement who are forcing the party to adopt a hardline stance in current negotiations over the 2011 budget. MEDICARE, MEDICAID PROPOSALS Under the Republican proposal, which could be approved by the House Budget Committee soon, Medicare would be replaced with a voucher system giving recipients a fixed amount of money to buy private insurance plans. People now 55 and older would stay in the current plan. Medicaid healthcare for the poor would be turned over to the states under a block grant system. On the tax side, top rates for individuals and businesses would be cut to 25 percent from 35 percent under the Ryan proposal. The Wisconsin Republican said his plan would balance the U.S. budget by 2015, but that does not include the effect of interest payments on debt. His plan also makes economic assumptions that some critics call rosy. The proposal fails to address another major problem — keeping the Social Security retirement system solvent. Instead, it urges Congress to work on a bipartisan solution to reforming this popular program. The sniping between Republicans and Democrats over tax and spending priorities will extend well into next year and the 2012 presidential and congressional elections. Democrats hope the Ryan budget proposal and Tea Party demands for deeper, faster spending cuts on popular domestic programs like Medicare will prompt a voter backlash against Republicans. Some corporate groups praised the Ryan budget plan. The proposal “focuses the policy discussion on the importance of entitlement reform in putting America’s budget in order for the long term,” said the Business Roundtable. (Additional reporting by Thomas Ferraro, Kim Dixon, Donna Smith and David Morgan; Editing by Eric Walsh and Paul Simao) Copyright 2010 Thomson Reuters. Click for Restrictions .

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