pennsylvania

Fixing A ‘Gaping Hole’ In Fracking

by AP on February 22, 2012

Huffington Post…

PITTSBURGH (AP) — A nonprofit group has opened an office in western Pennsylvania to help the public with health concerns over Marcellus Shale gas drilling operations. The Southwest Pennsylvania Environmental Health Project opened an office last week in McMurray, southwest of Pittsburgh, and says its mission is to support people “who believe their health has been, or could be, impacted by natural gas drilling activities.” “The state lacks enough resources to really address this,” Director Raina Rippel said Tuesday. “There is this gaping hole for the community.” Rippel said the project has several paid staff members, including a nurse. Other medical and research experts are consultants. The onsite nurse will make house calls in Washington County, but phone calls or emails from other parts of the state are welcome, Rippel said. The nurse will provide referrals, help clients navigate the health care system and consult with environmental health specialists. All the project services are free, she said. Rippel said her group has met with local public health officials, and will work with them. The group also is setting up a network of physicians to refer people to, and has been in contact with the U.S. Environmental Protection Agency. Timothy Kimmel, director of the Washington County Department of Human Services, was out of the office Tuesday afternoon and could not immediately be reached. The Marcellus Shale Coalition, an industry group, said it supports a thorough, unbiased health assessment. “We live, work and raise our families in these communities, and are absolutely committed to ensuring that our air, water and public health are protected,” coalition President Kathryn Klaber told the Pittsburgh Post-Gazette. “There is no higher priority, and to the extent this initiative can advance objective, fact-based research, we welcome it.” Rippel acknowledged that some people who worry about gas drilling could have been exposed to pollutants from another industry or have medical conditions that originated before the drilling boom of the last five years. Old coal mines and oil wells have been identified as possible sources of methane gas in drinking water wells. “You don’t necessarily have clear data,” she said, of possible links between recent gas drilling and health problems. But she said the only way to better understand these issues is through outreach and research. Dr. Helen Podgainy, a pediatrician who has treated children from Washington County, said more studies need to be done on the health risks for those living near gas wells. “It’s difficult for those in the medical community to know what we should be on the lookout for, and how to address problems that we might see,” Podgainy told the Post-Gazette. “I do not want my patients to become ‘the canaries in the coal mine.’ A proactive approach is to everyone’s benefit.” The Health Project office is open Tuesday through Friday. It is funded by the Heinz Endowments, the Pittsburgh Foundation and the Claneil Foundation. ___ Online: http://www.environmentalhealthproject.org

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Fixing A ‘Gaping Hole’ In Fracking

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Whole Foods Market, one of the largest U.S. natural foods grocers, is ensuring it has no ties with the California chicken hatchery accused in a lawsuit this week of abusing baby chicks, a spokeswoman said Friday. Whole Foods “had about five degrees of separation” from Cal-Cruz Hatcheries Inc., said Beth Krauss, spokeswoman for the Austin, Texas, based chain of more than 300 markets. She looked into Whole Foods’ link to Cal-Cruz following a HuffPost email inquiry on Wednesday. A lawsuit was filed that day in Santa Cruz, Calif., by an animal rights group, asking a judge to halt abuse filmed by an undercover investigator that included hatchlings tossed into buckets of waste, piled into bins and left to die after being mangled by machinery. “Moving forward, we will not be working with any ranches that receive chicks from Cal-Cruz,” Krauss said. Whole Foods buys chicken from distributors that rely on ranches to raise the birds from hatchlings. Krauss explained that the company’s network of suppliers in some cases stretches back to Cal-Cruz, which sold chicks to Central Coast Fryer. Central Coast Fryer in turn sold chickens to Field to Family Natural Foods, which sold them to Whole Foods. The grower Bauer Family Farms was previously part of Central Coast’s network, but the companies no longer work together, Krauss said. She didn’t know why. Whole Foods will continue to work with Bauer, Krauss said, “but they are no longer going to have any Cal-Cruz chicks coming to them because they won’t be working with Central Coast any longer.” Within eight weeks, Whole Foods will stop receiving chickens born at Cal-Cruz, Krauss said. The supermarket chain needs that much time because another Cal-Cruz-linked supplier, Pitman Farms, is opening its own hatchery, she said. The decision to sever ties with Cal-Cruz was made by individual farms, not by Whole Foods, and Krauss said she couldn’t say if the moves were related to the abuse allegations. Bauer Family Farms and Central Coast Fryers did not return messages seeking comment. Field to Family declined comment. Cal-Cruz didn’t return calls. The lawsuit against Cal-Cruz was filed by Washington, D.C.-based Compassion Over Killing , represented by Animal Legal Defense Fund attorneys. A Compassion Over Killing undercover investigator’s video showed hatchlings with ripped skin being tossed into bins, trapped under machinery and drowned. Cal-Cruz has 30 days to admit or deny the allegations. Cheryl Leahy, Compassion Over Killing’s general counsel, said the hatchery is still operating and “we have no reason to think the hatchery has made any significant changes to its practices.” Whole Foods’ standards of quality prohibit animal abuse, Krauss said. Last year, the chain implemented a rating system for how well pigs, chickens and cattle are treated prior to slaughter. The non-profit Global Animal Partnership, which performs the inspections, hopes to begin assessments of hatcheries within two years, said Miyun Park, executive director. “The point of that was to encourage ranchers to improve their welfare practices and also better inform our customers about how the animals are raised,” Krauss said. “We’re one of the few retailers directly addressing animal welfare. Issues like this just prove how important that 5-step program is. But it’s a work in progress.” WATCH COK’s undercover video from within Cal-Cruz:

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Whole Foods Market Ending Ties With Hatchery In Chick Abuse Lawsuit

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Did A Pennsylvania Woman’s Fake Penis Get Her Fired?

January 13, 2012

A Pennsylvania woman has filed suit after her New Jersey-based employers allegedly dismissed her for wearing a prosthetic penis to work. The Philadelphia Daily News cites a federal civil rights complaint filed by Pauline Davis Wednesday, which says she wore the device to the J&J Snack Foods plant in Moosic, Lackawanna County as she was contemplating sex reassignment surgery. Davis, who was employed as a packer/line inspector, eventually confided in several co-workers about her situation. One employee eventually alerted management, according to the complaint, and Davis was subsequently fired. The 45-year-old Davis is now seeking back pay, damages for suffering and humiliation, and punitive damages. Davis’s attorney, Lalena J. Turchi, told the Daily News that the fake penis was heavily concealed and “in no way interfered with her ability to do her job.” Futhermore, as MSNBC noted , Davis also claims a male employee who was undergoing hormone treatments and wore female clothing to the workplace was treated more favorably. “[Ms. Davis] was subjected to disparate and discriminatory treatment for being a female, and for being a female who identified with the male gender,” the lawsuit states , according to The Times-Tribune . Spokespeople for J&J Snack Foods have thus far offered no comment on the case, and there is no indication in any of the reports that Davis ever completed or furthered the gender-reassignment surgery. For other cases of discrimination related to gender identity and sexuality in the workplace, see the slideshow below:

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Gambling Gains: Another Victory for Sports Betting, in N.J.

January 10, 2012

Fresh off a victory in his state on the path towards legalizing sports betting, New Jersey state Sen. Raymond Lesniak pledged Tuesday to take the fight nationwide. On Monday Lesniak, a Democrat, succeeded in rushing a sports-betting bill through the state legislature. The bill would allow wagering on pro and college games in Atlantic City and at the state’s racetracks if a federal ban on sports betting is reversed. Following an expected signature of the measure by Gov. Chris Christie, the New Jersey attorney general could file suit in federal district court as early as this month to try to overturn the federal prohibition, Lesniak said. The economic funk is empowering gambling proponents like Lesniak, who is also behind a state online gambling bill. New Jersey is bearing $10 billion of a collective $95 billion debt carried by U.S. states in 2012. And the Garden State is losing gambling revenue to Nevada and betting rings run by organized crime, Lesniak said. While other states are looking to generate revenue through casino gambling, New Jersey is taking the lead on sports betting. And it’s doing so without much help. “Other than mild encouragement, [other states] let us carry the ball for the rest of the country,” Lesniak said. If New Jersey’s challenge succeeds in overturning the 1992 Professional and Amateur Sports Protection Act, people could bet on the Super Bowl and other sporting events in any state that legalizes bookmaking. Four states — Nevada, Delaware, Montana and Oregon — are already exempt from that law. Americans bet $100 billion a year on sports, legally or otherwise, according to the University of California, Los Angeles gambling studies program. Lesniak believes that all that stands in the way of cash-hungry states getting their share though sports betting is persuading the court that the law is unconstitutional. States should be allowed to determine how they raise revenue, particularly when four states are already given the privilege, he said. New Jersey’s expected battle with the Justice Department would be a rematch of sorts. Lesniak, through his law firm, filed suit last year to strike down the ban. He firm handled the work pro bono, he said. But the federal appeals court threw out the suit, declaring that the state itself would have to file the action. Momentum has been building for pro-gambling forces. The Justice Department this month eased its interpretation of the Wire Act, opening the possibility for states to pursue online gambling for games such as poker. And Lesniak is optimistic about the upcoming challenge against the Sports Protection Act. He cited a letter in which the Justice Department objected to Congress’ passing the law because it violated states’ rights. The letter was addressed to Joe Biden, the current vice president who was then chairman of the Senate Judiciary Committee. Attorney Peter Dugas , director of government affairs for the Washington, D.C., firm Clark Hill, said no challenge has come close to eliminating the sports betting ban and that a different outcome was “really questionable.” Lesniak remains undaunted, saying if the court addresses substance over procedural issues, the outcome should be a no-brainer in favor of his side. “It should not take long in U.S. District Court to get a decision,” he said.

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PA Residents With Tainted Water Scramble After Delivery Plans Reportedly Canceled

January 8, 2012

ALLENTOWN, Pa. — The U.S. Environmental Protection Agency abruptly changed its mind Saturday about delivering fresh water to residents of a northeastern Pennsylvania village where residential wells were found to be tainted by a natural gas drilling operation. Only 24 hours after promising them water, EPA officials informed residents of Dimock that a tanker truck wouldn’t be coming after all. The about-face left residents furious, confused and let down – and, once again, scrambling for water for bathing, washing dishes and flushing toilets. Agency officials would not explain why they reneged on their promise, or say whether water would be delivered at some point. “We are actively filling information gaps and determining next steps in Dimock. We have made no decision at this time to provide water,” EPA spokeswoman Betsaida Alcantara said in an email to The Associated Press. It’s not clear how many wells in the rural community of Dimock Township were affected by the drilling. The state has found that at least 18 residential water wells were polluted. Eleven families who sued Houston-based Cabot Oil & Gas Corp. expected water from the EPA to arrive either Friday or Saturday. They say they have been without a reliable source of water since Cabot won permission from state environmental regulators to halt deliveries more than a month ago. Cabot, which was banned in 2010 from drilling in a 9-square-mile area around the village, took legal responsibility for the Dimock methane contamination, but contends water wells in the area were already tainted with methane long before the company arrived. The company also says it met a state deadline to restore or replace Dimock’s water supply, installing treatment systems in some houses that have removed the methane. But homeowners say their wells are tainted with methane gas and toxic chemicals that are used in hydraulic fracturing, a technique in which water, sand and chemicals are blasted deep underground to free natural gas from dense rock deposits. Dimock resident Craig Sautner said an EPA staffer in Philadelphia told him Saturday the water delivery was canceled. He said the EPA staffer, on-scene coordinator Rich Fetzer, would not explain why. “You can’t be playing with people’s lives like this,” said Sautner, whose well was polluted in September 2008, shortly after Cabot began drilling in the area. Sautner and the other homeowners had been relying on deliveries of bulk water paid for by anti-drilling groups, but the last delivery was Monday, and some of them ran out. After the EPA delivery fell through Saturday, the environmental group Water Defense, founded by actor Mark Ruffalo, said it would send a tanker from Washingtonville, N.Y., on Sunday to replenish the residents’ supply. Dimock has become a focal point in the national debate over the so-called fracking method, which has allowed energy companies to tap previously inaccessible reservoirs of natural gas while raising concerns about its possible health and environmental consequences. The industry says the technique is safe. Gas drilling companies have flocked in recent years to the Marcellus Shale, a massive rock formation underlying New York, Pennsylvania, Ohio and West Virginia that’s believed to hold the nation’s largest deposit of natural gas. Pennsylvania has been the center of activity, with thousands of wells drilled in the past few years. The latest twist in the three-year-old Dimock saga left residents with plenty of questions, but no answers. “What happened? Who had the power here? Who had the power to change their minds? Was it the governor? Was it somebody from Washington? Was it Cabot? What happened? We don’t know. We’re really confused,” said Wendy Seymour, an organic garlic farmer. Seymour said an EPA official in Philadelphia told her Friday that she could expect a delivery. On Saturday, another EPA official called her and “apologized for the confusion” and said EPA was still assessing the situation. Claire Sandberg, executive director of Water Defense, said the EPA owed them an explanation. “It’s tragic to see the EPA raise these people’s hopes and then dash them, to see the EPA suggest they were beginning to accept their responsibility to protect the public, and then back out a few hours later when these people are so desperate,” she said.

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Bankrupt American Airlines Owns A Townhouse That May Be Worth Millions

December 15, 2011

Buried deep in American Airlines’ Chapter 11 bankruptcy filing is a striking asset — a town house in one of London’s most expensive residential streets that property experts say could be worth up to $30 million. The five-bedroom house in London’s high-end Kensington district is a throwback to the airline’s expansion two decades ago and stands a 10 minute walk from the former home of Princess Diana, with gentry and diplomats as neighbors. UK regulatory filings show the house has been used as a residence for senior executives, including the current chairman and chief executive Thomas Horton, since the airline bought it in the early 1990s. Listed as “London Residence LON6526,” the five-floor house is one of eight owned properties declared by parent company AMR Corp when it asked for protection from creditors on November 30, sagging under $30 billion of liabilities. The plush residence in Cottesmore Gardens — recently named Britain’s 10th most expensive address by property firm Zoopla — could become a thorn in the airline’s side as it fights its way through bankruptcy. Corporate restructuring usually involves sacrifices by staff, retirees and creditors. Robert Mann, an airline consultant with RW Mann & Co, who is a former fleet planning executive at AMR, said the ownership of the house is far from the biggest problem the airline is facing but added it would raise eyebrows and should probably be sold. “As part of an overall debt-clearing exercise, yes it probably should be sold and leased back if they really want to stay there. If you can realize 17 million bucks, you ought to do it.” Confirming ownership of the house, American Airlines said it is used by the senior official in charge of its international business “and for corporate functions from time to time.” Contacted last week, it initially declined to say whether it planned to keep the house, but in response to further Reuters queries said its ownership of the property was being reviewed. “AMR can confirm that it’s a property it purchased in the 1990s when property values were lower,” the airline said. “However, as we work through our Chapter 11 reorganization, we are focused on achieving a competitive cost and debt structure and will, of course, review our use and ownership of this and all our real estate as part of that process.” A union representing 30,000 workers at American Airlines and American Eagle expressed outrage over the property. “In the current economic downturn, many Americans have lost their houses. In this bankruptcy, AMR’s executives should lose their house,” said James C. Little, president of the 200,000-member Transport Workers Union of America, which is on the airline’s creditors’ committee. “However, the typical pattern for this company is workers keep it afloat through concessions, bring in outside work and boost productivity while managers pocket hundreds of millions in bonuses and live posh lifestyles. This would have been Marie Antoinette’s favorite airline.” Many large companies own or rent property for executives posted overseas, though AMR’s filing lays considerable stress on efforts to cut costs before filing for bankruptcy. In its request for Chapter 11 protection, AMR said it had already shed billions of dollars in cumulative annual costs over the past 8 years to cope with the “relentless pressures of ever intensifying competition and rising fuel prices.” The airline said it had pursued “every effort short of Chapter 11 to reform its cost structure.” DISCREET ENCLAVE Lined by cars such as Porsches and Range Rovers, Cottesmore Gardens in west London is a quiet side street. The airline’s house would be worth between 12.5 million pounds and 16 million pounds if it came to the market today depending on the internal state of repair, said Kit Allen, a director of house sales at property consultancy Savills . A source at international real estate group Knight Frank said the house could fetch as much as 20 million pounds. “This is a very discreet enclave that is ideal for high-profile residents wanting to live in relative anonymity,” said the source, who asked not to be named. The street houses a private school and the most recent electoral records show the Cottesmore Gardens set includes an earl, the former chief executive of one of Europe’s largest companies and a prominent former investment banker. Disgraced Canadian media tycoon Conrad Black was a neighbor until 2005 when he reportedly sold for 13 million pounds. A Reuters reporter who visited the property on December 1, found no one at home. A few steps lead up to imposing black double doors below a renovated facade in immaculate condition. The property appears to be a normal family home, with a high-spec kitchen in the basement and a living room, complete with chandelier, on the first floor. AMR Corp filed for creditor protection after failing to win a deal with pilots to pare labor costs. Employees were notified on the day of the bankruptcy filing that future retirees can no longer get a lump sum distribution because the pension plan is underfunded. The airline has started rejecting leases for aircraft and is trying to relieve itself of two real estate leases including one for a terminal at Chicago Midway airport. Apart from the group’s Texas headquarters, its credit union and a handful of reservation offices, nearly all the airline’s offices and airport facilities are leased rather than owned. (Additional reporting by Kyle Peterson in Chicago, Paul Hoskins and Tom Bill in London; Writing by Chris Wickham and Tim Hepher; Editing by Janet McBride) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Bennet Kelley: Taxation by Press Release in the Cradle of Liberty

December 14, 2011

Pennsylvania’s recent enactment of the so-called “Amazon Tax” via a press release from the Department of Revenue may be seen as a deft political move by Governor Tom Corbett to close a budget gap without enacting any new taxes, but viewed from afar the action is a cause for alarm over the state of politics in Pennsylvania today. The Amazon Tax is an attempt to collect revenue from a legal black hole. Like most states, Pennsylvania has a sales tax under which retailers (both online and offline) are required to collect and remit the tax from all sales. The exception to this rule is for out-of-state retailers who have no physical presence in the state, which is a bright line that the Supreme Court crafted pursuant to the Constitution’s Due Process and Commerce clauses. Where the sales tax is not collected, however, consumers are still obligated to pay the tax to their state, which is almost universally ignored or at least forgotten. Pennsylvania estimates that it loses $380 million annually to this black hole. This is where the Amazon Tax comes to the rescue by redefining who is an in-state retailer by including out-of-state online merchants (such as online behemoth Amazon.com) which pay commissions to in-state affiliate marketers and thus extending the collection obligation to such merchants. The Amazon Tax has become a popular item of discussion in state capitols the past few years because in theory it generates revenue for cash strapped states without having to actually raise taxes or, stated more frankly, is a gimmick that allows politicians to avoid an honest debate and accountability when it comes to state finances. Several states have enacted legislation to adopt the Amazon tax, but Pennsylvania is not one of them. While the website for the Pennsylvania capitol explains that “[m]aking law in Pennsylvania is a meticulous process — and for good reason,” Governor Corbett has enacted the Amazon tax by simply releasing a press release saying that existing law includes the Amazon tax. This, of course, begs the question why the Commonwealth left over a billion dollars in sales tax revenue on the table during e-commerce’s first generation or thought it necessary to attempt to pass Amazon tax legislation earlier this year. In addition, this expansive interpretation of the tax code flies in the face of Pennsylvania law that tax laws are to be strictly construed. In reality, the Amazon tax is not quite the panacea advocates portray it to be. In fact, enactment of the tax causes immediate economic hardship as hundreds of online retailers immediately sever their relationship with in-state affiliate marketers who lose as much as 50% of their income as a result. For Pennsylvania’s 9,000 affiliate marketers this means an immediate loss of as much as $350 million in annual income (which is more than five times greater than the losses to state businesses due to record flooding caused by Tropical Storm Lee). That may be why “Amazon Tax states” Illinois, North Carolina and Rhode Island have seen little to no increase in revenue as a result. While this is catastrophic for affiliate marketers, all Pennsylvanians should be alarmed that in this cradle of liberty, a mere forty miles from where Lincoln so eloquently honored those who fought to preserve government of and by the people, the tax laws can be dramatically altered by a mere press release. Carl Sandburg noted that “[w]henever a people . . . forget its hard beginnings, it is beginning to decay.” That is why the bankruptcy that Pennsylvanians should be alarmed about emanates not from Harrisburg City Hall but from the Governor’s mansion.

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Deepak Chopra: What’s the Best Outcome for Occupy Wall Street?

December 5, 2011

I find it personally very hard to understand how anyone could fail to sympathize with the Occupy movement, but I also understand why doubt and uncertainty hang in the air. As one pundit pithily remarked, “Everyone’s waiting to see if this is a movement or just a moment.” Movements fit a pattern that so far isn’t the Occupy pattern. It has no leaders, no demands, no coherent vision, and no legislation to propose. Nobody is running for Congress on an Occupy platform. All of this means that the powers that be have no pragmatic reason to come out vigorously for the Occupiers, even though more than 900 protests have been staged so far worldwide. In politics, what unites right and left is obviously opposed to these protests. Both sides share power, money, and elite privileges. Does that spell the end of the Occupy movement as soon as winter becomes hard enough and the police violent enough? It could, of course. In terms of power, the Occupiers have none. They even lack the power of civil disobedience along the model of Gandhi and Martin Luther King. Yet a secret influence may be on their side: a true shift in consciousness. If you clear out the distractions, what the Occupy movement stands for is economic inequality. The 99 percent are grossly undervalued in society. There is injustice in the way corporate greed has been allowed to wreck the global economy at will, without fear of punishment. There is injustice in the way jobs have been undermined, a manufacturing base ruthlessly destroyed for the sake of corporate profits. This injustice doesn’t affect simply the factory workers, farmers, and underclass who typically lead social revolutions. A small elite has stripped away bargaining rights, pensions, and job stability without a shred of conscience. The result has been this push-back, feeble as it looks when measured against corporate monoliths. Yet there is another side. In countries like India and China, injustice is being righted. For the first time in history, the dispossessed and least powerful people in the world, amounting to billions of them, are finding a voice and a living income at the same time. The problem with this movement toward equality is that it is coming at the expense of rich countries. The prevailing attitude (not always supported by the facts) is that America loses whenever China and India win. Yet if you stand back, the shift in consciousness is the same. Occupiers want social and economic justice, which is exactly what impoverished workers want in China and India. The specific issues aren’t the same; at times they give the appearance of being total opposites. Both sides want more jobs, and when the same job is at stake, there will be a loser and a winner. When a rich country strives to end inequality, the playing field is obviously different from that in a poor country. Even so, the shift in consciousness is the same. Michael Moore has circulated some practical action points for the Occupiers, none of which would come close to passage in the present political environment. But the first seven strike me as basic tenets of social justice, and if consciousness successfully shifts, they would serve as bellwethers of change. The seven points are: Eradicate the Bush tax cuts for the rich and institute new taxes on the wealthiest Americans and on corporations, including a tax on all trading on Wall Street (where they currently pay 0 percent). Assess a penalty tax on any corporation that moves American jobs to other countries when that company is already making profits in America. Our jobs are the most important national treasure, and they cannot be removed from the country simply because someone wants to make more money. Require that all Americans pay the same Social Security tax on all their earnings (normally, the middle class pays about 6 percent of their income to Social Security; someone making $1 million a year pays about 0.6 percent (or 90 percent less than the average person). This law would simply make the rich pay what everyone else pays. Reinstate the Glass-Steagall Act, placing serious regulations on how business is conducted by Wall Street and the banks. Investigate the Crash of 2008, and bring to justice those who committed any crimes. Reorder our nation’s spending priorities (including the ending of all foreign wars and their cost of over $2 billion a week). This will reopen libraries, reinstate band and art and civics classes in our schools, fix our roads and bridges and infrastructure, wire the entire country for 21st-century Internet, and support scientific research that improves our lives. Join the rest of the free world and create a single-payer, free and universal health care system that covers all Americans all the time. Therein lies the best future for the Occupiers, that we reach a tipping point in global awareness. The signs are good so far. The Berlin Wall stood until the day a shift in awareness knocked it down. America’s grossly unbalanced economic system stands equally firm, and although it doesn’t have the Soviet army to protect it, the attitude of corporate greed, political corruption, and elitist privilege serves just as well. That the Occupiers lack leaders, legislation, and political candidates is irrelevant. What they have on their side is truth and a sense of justice. A society that cannot pay attention to those things is by definition an unjust society and deserves to decline. In terms of raw power, the Occupiers have lost the battle in advance. But in terms of a future that rights wrongs, they are the living spark of our national conscience. For more, visit deepakchopra.com .

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Delaware River Basin Fracking Decision Delayed For Now

November 23, 2011

Environmentalists are cheering after a meeting on the future of hydraulic fracturing, or fracking, for natural gas in the Northeast has been postponed. The Delaware River Basin Commission , consisting of the governors of Pennsylvania, New Jersey, New York, Delaware and a representative from the Army Corp of Engineers, was set to meet this week and vote on regulations for natural gas drilling in regions near the Delaware River. Three days ahead of the meeting, the DRBC commission’s website announced the meeting was postponed with no rescheduled date listed. The announcement came after Delaware withdrew its support, threatening the draft regulations ‘ chances of receiving a majority vote from the five-member commission. Last week, Delaware Governor Jack Markell sent a letter to the commission’s other members , announcing that he would not vote for the currently-proposed fracking regulations, joining New York in opposition. Despite the postponement, a planned protest rally still took place Monday at the meeting site in Trenton, N.J. The Wall Street Journal reports that the hundreds of activists in attendance shared a celebratory mood . Yet their victory only means an extension of a fracking moratorium for the time being. Filmmaker Josh Fox, the director of ” Gasland ” and one of the rally’s organizers, told HuffPost, “I think that what we’re dealing with here is obviously a very practical issue, 15.6 million people’s water, but also something symbolic, because we’re there with an enormous amount of strength on the ground.” An important concern for activists is fracking’s history of groundwater contamination . Earlier this year, a peer-reviewed study from Duke University linked “natural gas drilling and hydraulic fracturing with a pattern of drinking water contamination so severe that some faucets can be lit on fire.” The Delaware River Basin provides drinking water to over 15 million Americans — roughly five percent of the country’s population. This includes the city of Philadelphia and about half of New York City’s water supply. While the DRBC claims its proposed regulations are intended to ” protect the water resources of the Delaware River Basin ,” during natural gas extraction, others aren’t so sure. Actor Mark Ruffalo , who also attended Monday’s rally, said in a statement , “I applaud Governor Markell for admitting that there is no science to justify opening up one of North America’s important River Basins to industrialization and greed. Now the rest of the commission will hear from us, the people who speak for this beautiful river not for short term profits.” Fox said he was also pleased with the meeting’s postponement and the show of support in Trenton on Monday. “This was a huge victory,” Fox told HuffPost. “We were on the brink of disaster. We were on the brink of having the gas industry move into the Delaware River Basin without any assessment of what impact [fracking] would have on it.” According to Fox, an official count put an estimated 850 people at the gathering in front of the New Jersey Statehouse, with around 1,000 at the earlier rally at the site of the cancelled DRBC meeting. He said, “It was an amazing rally. I really think it was a turning point.” A federal advisory panel recently reported that if steps aren’t taken to reduce the impact of fracking, ” serious environmental consequences ” could occur. The Associated Press reports that there has not been much progress on 20 recommendations given to the federal government and the oil and gas industry by the committee. Supporters of natural gas drilling cite its abundance in the U.S. and its ability to create jobs in struggling areas of the Midwest and Northeast. For more information about the campaign against natural gas drilling in the Delaware River Basin, visit the Save The Delaware website . To learn more about the disputed pros and cons of fracking, click here .

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Lobbyists Take Aim At Super Congress

September 16, 2011

WASHINGTON, September 16 (Reuters/Tim Reid) – The special “super committee” tackling U.S. deficit reduction was meant to operate independently and free from outside influence — but Washington’s corps of high-paid lobbyists has found a way in. They have descended on the Congress in recent days to persuade rank-and-file lawmakers to act as de facto lobbyists themselves, penetrating the committee and convincing their colleagues to protect the interests of special groups. “It’s a strategy of turning members (of Congress) into lobbyists,” said Rich Gold, a partner at the Washington firm Holland & Knight. As he spoke to Reuters, Gold was on his way to the Senate to meet with lawmakers and their staff on behalf of a client to discuss corporate tax reform, which will likely be part of the committee’s deliberations. “Having a lot of support from the rank and file members in Congress and having them talk to the super committee members is going to be critical,” Gold said. “You are going to have to motivate groups of members to talk to the super committee members to get something in, to keep something out, or to prevent something from being cut.” The special bipartisan committee, made up of six Republican and six Democratic lawmakers, was formed as part of the deal to raise the U.S. debt limit and is meant to operate free from pressure from Congress and outsiders. It began meeting formally last week, will set its own rules and must come up with at least $1.2 trillion in savings for the next decade. It must report by November 23 but if it fails to reach a deal, or if Congress fails to endorse its plan, $1.2 trillion in mandatory cuts will be triggered in 2013. With such massive potential cuts to the U.S. federal budget being decided by just a handful of lawmakers in such a short time, lobbyists say the situation is unprecedented. So, scrambling to protect clients from budget cuts, lobbyists have swarmed to Capitol Hill to enlist help and gather what intelligence they can about what is happening inside the committee. GATHERING INTEL Jack Howard, a veteran lobbyist at Wexler & Walker with close ties to four of the committee’s Republican members, said he had already spent a lot of time on Capitol Hill, and elsewhere in Washington, talking to lawmakers and their staff about the panel. “I see them in the hallways as they pass to go and vote, I see them at breakfasts, lunches, dinners, receptions,” Howard said. At present, Howard added, he is conducting “a lot of intelligence gathering from lawmakers, their staff and the party leadership staff on Capitol Hill — pretty much anybody I can find. Based on that intelligence, down the road we will assess how best to influence the committee.” Howard described the lobbying strategy for the committee as a “three dimensional game of chess” — talk to the party leadership on Capitol Hill and their staff; the super committee members and their staff; and rank and file lawmakers and other committee chairmen on Capitol Hill because if a deal emerges, it must pass both the House and Senate. “The super committee members have to be responsive to the rank and file member because ultimately they have to pass something. The super committee cannot operate in a vacuum. The super committee members are accountable up to the party leadership and accountable down to the rank and file.” MOST INFLUENCE So early in the process it is unclear which members of Congress will have the best chance of influencing committee members. But Howard said on the Republican side, John Boehner, the House Speaker, and Mitch McConnell, the top Senate Republican, were keeping heavily involved in the super committee’s work. Both men handpicked the Republicans who sit on the committee. “They will keep a tight rein on the process,” Howard said, making it important for him to keep in close contact with the Republican party leadership on Capitol Hill. The effort to influence what gets cut and what get saved inside the committee will be unprecedented, and intense. According to a study released this week by LegiStorm, a watchdog group, there are 11,700 registered lobbyists in Washington — and 14,000 people who work on Capitol Hill. In the past 10 years, the study added, more than 5,000 former congressional staffers and nearly 400 former lawmakers became federal lobbyists. One lobbyist, speaking on the condition of anonymity, said: “It’s not just going to be the 12 members who decide this. There’s a dual strategy: you talk to members of Congress to get them to talk to the super committee members; and you talk to members with an eye on the vote they will take on whether or not they pass the deal.” (Reporting by Tim Reid, Editing by Cynthia Osterman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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QE3 Not Guaranteed To Happen, And Not Guaranteed To Help If It Does

August 13, 2011

With the economy growing at a snail’s pace and the job market still disconcertingly weak , economists are wondering whether the Federal Reserve will undertake a new round of stimulus efforts to keep the country from slipping into a double-dip recession. Even if the Fed goes that route, however, it may not have much of an effect. Such a program would be known as QE3 — a third session of quantitative easing, which the Fed has done twice before. “Quantitative easing” refers to the Fed buying up assets, particularly longer-term Treasury bonds, as a way of pumping more money into the economy and stimulating investment. Both rounds of quantitative easing have occurred during the current economic crisis, with the previous round, known as QE2, lasting from November 2010 to June of this year. Economists gave it decidedly mixed reviews. At the end of QE2, unemployment was still high, GDP growth was discouragingly slow and consumer spending was on the way down . Critics of quantitative easing say that not only was the second round ineffective, but the influx of new money put the country at greater risk of inflation. Nevertheless, stimulus advocates are keeping a close eye on the Fed , looking for signs that QE3 is on the way. Not everyone believes that it is. “The hurdles facing QE3 are very high,” said David Jones, an executive professor of economics at Florida Gulf Coast University’s Lutgert College of Business. “It’s not off the table completely, because if we do have a double-dip, anything is on the table. But it’s off the table for now.” Jones told The Huffington Post that QE2′s opponents criticized the program so ardently — both in the U.S., where analysts worried about inflation, and overseas, where the flood of new dollars was seen as tipping the international trade balance unfairly in America’s favor — that it’s unlikely Federal Reserve Chairman Ben Bernanke will try a new round of bond-buying unless it’s the only way to stave off disaster. “The Fed is much better at pulling us back from the abyss — like it did in the credit crisis of 2007-2008 — than it is at trying to boost growth in a recovery,” said Jones. Even so, many economists believe QE3 is coming sooner or later. In a recent CNBC poll , 46 percent of economists surveyed said they expected the Fed to undertake a new round of easing, compared with just 37 percent who said it would not. Earlier this week, Goldman Sachs researchers published a note saying that there is “no question” Bernanke will have enough votes on the Federal Open Market Committee to implement QE3, and that they “fully expect him to use these votes … if he views it as necessary.” Analysts from Harvard , Credit Suisse , Standard Life and a number of other institutions have also said that QE3 seems like a distinct possibility. For its part, the Fed has said only that it plans to keep interest rates near zero through the middle of 2013, as a way to encourage corporate borrowing and investing. On Tuesday, a day after the Dow plunged more than 600 points in a single session , Bernanke said the Fed had “discussed the range of policy tools available to promote a stronger economic recovery” — a phrase that many market participants have taken as a veiled reference to a new round of bond-buying coming up. Drew Matus, a senior economist at UBS, says it would be a mistake to jump to that conclusion. “In the context of a market that had been down very sharply the day before, that was them reassuring people that they still have ammunition,” Matus told The Huffington Post. The markets did seem placated after Bernanke’s remarks, rallying to finish up more than 400 points on the day . But while Bernanke may have the power to move markets in the short term, there are doubts as to whether new easing efforts would even have the desired expansionary effect. Jones told The Huffington Post that the country is reaching a point of “diminishing returns” with its asset-purchasing programs, and inflation hawks have argued that QE3 would drive up the price of commodities like gas and oil, leaving consumers unable to spend money on anything but necessities. QE3 speculation could rise to a fever pitch in the next couple of weeks, as many believe the Fed will save any major statements for its August 26 conference in Jackson Hole, Wyo. It was at this conference last year that Bernanke indicated that QE2 was on the way. Matus, for one, doesn’t expect a similar announcement this time. “UBS’s view is that [QE3] is not going to happen,” he said. “In my mind, Bernanke hasn’t got as much flexibility as a lot of people think he does.”

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Christopher Mitchell: Comcast: Internet Access Is Temporarily a Civil Right

August 9, 2011

As a condition of its massive merger with NBC , the federal government is requiring Comcast to make affordable Internet connections available to 2.5 million low-income households for the next two years. In promoting the program, Comcast’s Executive VP David Cohen, has made some unexpected admissions : “Access to the internet is akin to a civil rights issue for the 21st century,” said David Cohen, Comcast’s executive vice president. “It’s that access that enables people in poorer areas to equalize access to a quality education, quality health care and vocational opportunities.” It was only after the federal government mandated a low-cost option for disadvantaged households that Comcast realized everyone could benefit from access to the Internet. Sadly for Comcast, it has done a poor job of reaching those disadvantaged communities, by its own admission : “Quite frankly, people in lower-income communities, mostly people of color, have such limited access to broadband than people in wealthier communities.” This is why so many communities are building their own next-generation networks – they know that these networks are essential for economic development and ensuring everyone has “access to a quality education, quality health care and vocational opportunities.” And they know that neither Comcast nor the federal government are going to make the necessary investments. They need a solution for the next 20 years, not just the next 2. Comcast has a de facto monopoly in many communities. Modern cable networks offer much higher capacity connections than older phone networks using DSL . So unless you are one of the few Americans served by a community fiber network or FiOS, you probably have two choices in broadband: relatively faster connections from a cable company or relatively slower connections from the phone company. Private sector competition is not around the corner – overbuilding a massive provider like Comcast is very difficult, which is why so few companies try. Due to the limited competition, Americans pay their cable companies too much for access to the Internet. Consider that Tacoma residents pay less for the same services as those in Seattle , because Tacoma long ago built its own cable network. Comcast uses its vast profits to lobby Congress and the Federal Communications Commission to repeal rules that stop big cable and phone companies from slowing down competitors like Netflix. This is the rub. Comcast builds and operates networks to maximize its profit — a model that simply does not fit essential infrastructure like the Internet. Who would invest in FedEx if UPS owned the roads and set the rules for access? The question is how to solve this age-old problem. Even Comcast recognizes that its normal approach leaves millions behind. We can do better. Chattanooga, Tennessee; Lafayette, Louisiana; Reedsburg, Wisconsin; Windom, Minnesota; Cedar Falls, Iowa; Wilson, North Carolina; Monmouth, Oregon; Highland, Illinois; Kutztown, Pennsylvania; Spanish Fork, Utah, and many others have built networks that actually put community needs first. Chattanooga has the nation’s most advanced citywide network. Tiny Kutztown has kept an extra $2 million in its citizens pockets through lower bills over the past 10 years. Rural Windom kept employers in town when incumbent providers could not meet their needs. Smart communities invest in themselves rather than depending on big, absentee corporations. Requiring Comcast to provide affordable broadband connections is better than not, but continuing to let Comcast effectively decide who can afford access to the Internet is madness.

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Walmart Supreme Court Ruling Being Used By Wall Street

July 8, 2011

WILMINGTON (Tom Hals) – The U.S. Supreme Court’s dismissal of a massive sex-bias case against Wal-Mart Stores Inc may have handed Wall Street a new weapon in its battle against angry investors who lost billions on securitized home loans. At first glance, last month’s ruling in the Wal-Mart case may seem far removed from lawsuits over complex mortgage investments blamed for helping to trigger the global financial crisis in 2008. But attorneys are seizing on the Supreme Court decision as they fight to prevent pension fund investors from banding together as a class to pursue claims they were misled about bonds built from flimsy mortgages. In the Wal-Mart case, the Supreme Court on June 20 found that 1 million current and former female employees from 3,400 of the retailer’s stores had too little in common to form a class. The court’s language about issues of a “common question” could, according to attorneys arguing for the banks, also bar mortgage bond investors from suing en masse. Lawyers defending a unit of Washington Mutual argue that the “commonality” that was missing among the female Wal-Mart workers is also missing among investors in securitized mortgages, even when they invested in the same pool of loans. They made the argument in court papers filed on June 22 arguing against certifying a class of investor plaintiffs suing Washington Mutual. The case is pending in U.S. District Court in Seattle. If successful, the defense tactic could prevent investors in mortgage-backed securities from pooling their resources and bringing a case as a group. That could make it more difficult for them to pursue cases against big issuers of mortgage bonds, such as Bank of America and JPMorgan Chase & Co. The Washington Mutual legal team referred questions to JPMorgan, which bought the bank in 2008. JPMorgan did not immediately return a call for comment on Friday. CLASS SYSTEM The Wal-Mart case was closely watched and the ruling is expected to make it tougher to bring class-action cases, which are often used in drug and product liability lawsuits and have led to mammoth settlements with consumers or shareholders. The Supreme Court decision steers courts away from certifying broad classes of plaintiffs while leaving the door open to breaking out sub-classes later, said James Cox, a professor at Duke University Law School. In the mortgage market, banks securitized home loans by collecting large pools of mortgages and placing them with a trust. The trust then issued bonds cut into “tranches,” each carrying a different credit rating. The higher-rated tranches were paid first from the money flowing from homeowners. Courts already have denied class status to investors who sued on behalf of all others who bought bonds issued by different trusts that were set up by a particular bank or mortgage company, such as Countrywide Financial. The Supreme Court’s Wal-Mart decision may help narrow the class scope further, separating tranches within a particular loan pool trust. In their court papers, Washington Mutual lawyers cite the Wal-Mart decision for their argument that each tranche of the mortgage-backed security needs to be analyzed separately to determine which loans back which tranche, and whether those loans were properly written. “Even if plaintiffs seek to ask the same question across all loan groups and all securities, unless they can be assured of getting the same answer, no class can be certified,” the court filing says. The Wal-Mart ruling is the first case cited in Washington Mutual’s argument. The company’s lawyers also cite the decision to make their point that each tranche must be evaluated separately, not lumped together merely because they have common legal claims, according to the court papers. Thomas Hatch, an attorney who has brought mortgage-backed securities cases but is not involved in the Washington Mutual lawsuit, said courts are right to narrow classes to a single trust, but he disagreed with cutting to the tranche level. “The defendants are wrong in claiming you have to be in the same tranche to be in the same class,” said Hatch, because those various slices of the bond rely on the same offering document. “It isn’t tranche specific, it is trust specific.” The Seattle federal court will take up the Washington Mutual class certification issue on July 27. The case is In re Washington Mutual Mortgage Backed Securities Litigation; U.S. District Court, Western District of Washington, No. 09-00037 (Editing by Martha Graybow, Gary Hill) Copyright 2011 Thomson Reuters. Click for Restrictions .

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WATCH: Mayor Fasting In Hopes Of Solving City’s Financial Crisis

June 21, 2011

NEW YORK (Edith Honan) – Pennsylvania’s debt-ridden capital of Harrisburg has tried every form of fiscal belt-tightening, from layoffs to furloughs to filing for bankruptcy. Now, it is turning to God. Mayor Linda Thompson said on Friday she will join religious leaders in three days of fasting and prayer to encourage “a cooperative spirit among government leaders, the business community and citizens.” “I am open about my faith and will be participating in the voluntary prayer and fast,” Thompson said in a statement. The city is now weighing a financial rescue plan presented by the state. The fast and prayers, which will be facilitated by about a dozen Christian, Jewish, and Muslim religious leaders, will begin at midnight on June 21 and end on June 24. On Monday, a team of state-appointed advisors recommended the city sell a deeply indebted incinerator at the root of its fiscal problems, renegotiate its labor agreements, cut jobs, sell other assets and assume $26 million in new borrowing. The city council has until July 23 to adopt the plan. (Editing by Greg McCune) Copyright 2011 Thomson Reuters. Click for Restrictions . Watch video from WHTM ABC27 here:

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Richard (RJ) Eskow: Dear Speaker Boehner: Thanks for Quoting Me, But You Left Out Jobs — and "Star Wars" Movies!

June 13, 2011

I never expected that I’d have an opportunity to write an open letter to the Speaker of the House about the fact that he misquoted me, especially one that requires some detailed descriptions of the plot and weaponry used in the Star Wars movies. But here we are. In a move that some of us have anticipated since early 2009 , the Republicans are now running to both the left and right of the White House on jobs. Today Speaker of the House John Boehner quoted your humble correspondent in “his” latest blog posts. (Most politicians write their own blog posts and tweets about as much as people like me hold high office. And we won’t talk about the ones that do .) Since the Speaker quoted me out of context, the following letter should clear the record: Dear Mr. Speaker: In a post entitled ” Dem Unrest on Jobs Looms Over ‘Recovery Summer’ Anniversary ,” your website reads: “If the president won’t do something about jobs, who will?,” the Campaign for America’s Future, a leading progressive activist group, asked last week, adding: “it seems as if the White House is from Mars and the middle class is from Venus.” While the support is gratefully noted, Mr. Speaker, that wasn’t actually an official statement by the Campaign for America’s Future, where I have a fellowship. It’s the opening sentence to a piece I published in the Huffington Post and the Our Future website. And I would like to respectfully point out, Sir, that your staff left out the following sentence: “…Republicans act like they’re from the Death Star, patrolling the economy in their Imperial Cruisers directing laser blasts at every job initiative they can find.” That’s hardly what I’d call a ringing endorsement of GOP policy, Mr. Speaker. Most people would immediately recognize this reference to Star Wars , where the Galactic Empire’s planet-sized space station traveled the universe destroying rebel planets and Darth Vader’s minions led their attacks on the rebels from Imperial Cruisers armed with superlasers. I would like to assure you, Mr. Speaker, that I don’t really equate the Republican Party and its leadership with Darth Vader, Emperor Palpatine, and the other leaders of that fictional evil empire. But what the Republican Party would be is extremely destructive. While many of us have been frustrated with the Administration at times on the jobs issue, the Republican approach would replace excessive compromise with catastrophe. I don’t know if you’re a science fiction fan, but I was dedicated to it as a child. As a six-year-old I even “wrote” and illustrated space stories for my immigrant grandmother’s birthday. (“Very nice,” she said. “Have you ever thought about becoming a lawyer?”) I looked down on Star Wars when it came out, for a variety of reasons comprehensible only to fellow sci-fi addicts: I knew too many of the cultural references, was embarrassed by the corniness of the plot and characters, and thought it wasn’t true enough to the physical reality. But that film series captured the public’s imagination because it dealt with right and wrong in three-dimensional way. Life, the films seemed to say in the end, is more complicated than just ‘good guys’ and ‘bad guys.’ So is the economy. Your blog post promotes the Republican Party’s “Plan for America’s Job Creators” and its “measures designed to remove government obstacles to private-sector growth.” But not every rich person or profitable company is a job “creator.” Some are job destroyers, like the companies that ship jobs overseas or the banks that are once again capturing the record levels of corporate profits they enjoyed before the financial crisis — squeezing out profits for job-creating employers and refusing to lend to stimulate the economy. Tax cuts for big business haven’t worked. Even with two trillion dollars in cash on hand, they’re not hiring — because people don’t have jobs or strong enough wages to buy their products. Your “job creator” plan would drive unemployment much higher by pushing free trade agreements with Colombia, Panama, and South Korea. The budget passed by your Congress strips funds for police jobs, disaster relief jobs, and dozens of other types of employment. And your party’s eagerness to deregulate Wall Street all but guarantees another crisis and even more joblessness in the future. A smart jobs policy would start by identifying the real jobs “creators.” They’re the medium-sized businesses who hire workers to meet demand, and the manufacturing and other companies who are based in this country. And it would recognize that we’ll only have real job growth when unemployed and under-earning people have money in their pockets to purchase goods and services. More tax giveaways for the wealthy and big corporations, won’t do it, Mr. Speaker. And more deregulation will lead to another disaster. Remember, we tried it your way once and the results were disastrous. But though I’d rather not be misquoted, please don’t misunderstand the Star Wars reference. We’re all Americans, and we’re all in this together. It would be a great thing if the House, Senate, and White House can agree on a genuine program of government investment in economic growth and job creation. So thank you for using my words, sir, even if it was done selectively. Best wishes for your success in working constructively with the Senate and White House on job creation. And may the Force be with you.

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Jan Brewer: ‘Just Cruel’ To Focus On Deficit Instead Of Jobless

June 13, 2011

Unemployed people in Arizona and Pennsylvania are watching helplessly as lawmakers in each state fight over measures to restore extended unemployment insurance for tens of thousands of people whose checks stopped this week. Arizona Gov. Jan Brewer (R) called a special session of the state legislature on Friday, but lawmakers argued without actually voting on Brewer’s bill to save the benefits. They’ll take the debate up again on Monday afternoon. “Republicans failed to act,” said Sarah Muench, spokeswoman for Democrats in the Arizona House of Representatives. Some Republicans in Arizona have said they don’t want to coddle the unemployed with federal deficit spending even if it doesn’t affect the state’s budget. Brewer said Republicans should put the federal budget deficit ahead of their jobless constituents. “I understand that some legislators have concerns about the extension of unemployment aid,” she said. “They worry about the federal deficit. So do I. But you don’t balance the federal budget by turning your back on Arizonans in their time of need. That’s not principled fiscal conservatism. It’s just cruel. And we are better than this.” Paul Boyer, spokesman for House Republicans, told HuffPost the House didn’t vote on the bill Friday because it wouldn’t have passed, thanks partly to missing lawmakers. “The votes just weren’t there,” Boyer said. “Part of the problem is there are a lot of members that aren’t here.” Brewer said in a statement that a minor change in state law will preserve benefits for 45,000 through the rest of the year, adding $3.5 million per week to the local economy. Arizona and Pennsylvania became ineligible for the federal Extended Benefits program because it requires a state’s unemployment rate to be 110 percent of what it was in either of the two previous years. Since rates have fallen slightly, Congress said states could change their laws to look back an additional year to remain eligible for the program. So far nearly 30 states have done so. In Pennsylvania, lawmakers are also debating a bill this week that would preserve Extended Benefits. The program provides the final 20 weeks of checks for jobseekers who exhaust 26 weeks of initial state benefits and up to 53 weeks of federal Emergency Unemployment Compensation. More than 100,000 Pennsylvanians could miss out on benefits by the end of the year. HuffPost readers: Worried about losing out on Extended Benefits in Arizona or Pennsylvania? Tell us about it — email arthur@huffingtonpost.com . Please include your phone number if you’re willing to do an interview. Both the Pennsylvania and Arizona bills would restore EB while at the same time tightening work-search requirements for people who receive the aid. Several states, including Missouri, Michigan, and Florida, have passed laws to preserve Extended Benefits while simultaneously permanently slashing state benefits. The federal programs will expire at the end of the year unless Congress reauthorizes them again, so workers in those states could be left with only reduced state benefits starting in January. Gail Turley of Mesa, Ariz. said that when she checked her bank account on Monday, she didn’t find the $157 weekly payment she’d been receiving most weeks since losing her job doing customer service for a bank in 2009. She said she’s worked a few temp jobs since then, but the job search has been dismal. “Being able to do it online allows you to apply for a lot more jobs rather than going to them one at a time but it’s so impersonal, it’s hard to even get in contact with anybody,” Turley, 49, told HuffPost. She’s been following the debate in the legislature closely and blogging about it for the Examiner. Turley said she’d have 11 or 12 weeks of Extended Benefits left if the program hadn’t lapsed. “It is very frustrating,” she said.

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Todd to Head Bank of America Merrill's CMBS Research | PennRealtySite

June 4, 2011

Alan Todd plans to join Bank of America Merrill Lynch in August as head of U.S. commercial mortgage-backed securities research. View full post on. … The Best place to find news on Pennsylvania real estate …

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Sarah Palin, Donald Trump Meeting In New York City

May 31, 2011

NEW YORK — Sarah Palin and Donald Trump exchanged words of admiration Tuesday after a brief meeting at the real estate magnate’s penthouse in a Manhattan skyscraper bearing his name. Palin, the former Republican vice presidential nominee, said she and Trump shared similar ideas for improving the U.S. economy, while Trump called Palin a “terrific woman and a terrific friend” whom he hoped would seek the GOP presidential nomination. The meeting, part political parley and part reality TV show, capped the third day of Palin’s bus trip through historic sites along the East Coast. Palin has said she is considering joining the field of Republican candidates vying to challenge President Barack Obama next year. Earlier, Palin, her husband, Todd, and several family members toured sites in Pennsylvania, including the Gettysburg Civil War battlefield and Philadelphia’s Independence Hall. Trump, the multimillionaire host of Celebrity Apprentice who mused about a presidential bid himself before dropping out of the running earlier this month, made headlines painting the U.S. as a country in decline. He criticized China for unfair trade practices and said the U.S. under Obama had become a “laughing stock” to the rest of the world. Palin apparently heeded those words, saying she and Trump shared a similar world view. “What do we have in common? Our love for this country, a desire to see our economy put back on the right track,” Palin told reporters after a 15-minute meeting with Trump outside the Trump Tower, where he owns a three-floor penthouse. “To have a balanced trade arrangement with other countries across this world so Americans can have our jobs, our industries, our manufacturing again. And exploiting responsibly our natural resources. We can do that again if we make good decisions,” Palin said. Trump demurred when asked if he would support a Palin presidential candidacy. “She didn’t ask me for that. She came up as friends,” Trump said. “She’s a great woman, a terrific woman and a terrific friend. I’d love her to run.” Palin added, “We both agree that competition is good and the more folks in that primary, the better.” After the meeting, Trump and his wife, Melania, rode in a stretch limousine with Palin, her parents and youngest daughter Piper to have dinner at a pizza restaurant in Times Square. The Palins planned to visit Ellis Island and the Statue of Liberty Wednesday morning.

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University of Pennsylvania Announces Partnership with Chinese Academy of Sciences

May 30, 2011

University of Pennsylvania Announces Partnership with Chinese Academy of Sciences

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Art Levine: GOP-Style Democrats Slash DC Budget: Homeless Moms Already Given Bus Tokens, Not Shelter

May 17, 2011

Except for white Republicans in Congress opposed to home rule, few people outside of Washington, D.C. — and even some white liberals who live in the District — bother to pay much attention to Washington’s local political battles. But that changed briefly last month, when Mayor Vincent Gray and six members of the city council were arrested in high-profile protests against a Republican-driven federal budget deal that prevents the city from spending its own funds on abortions for low-income women. Congress has traditionally had authority over the Democratic-run District’s budget, but rarely directly interferes in spending. “Why are we the sacrificial lamb?” Gray had asked. Progressive media outlets praised Mayor Gray for seeming to stand up to Republicans and their distorted budget priorities. Yet Mayor Gray and much of the rest of the city council are moving on their own to make the city’s disabled, youngest and neediest citizens the sacrificial lambs of the proposed new city budget, with two-thirds of the cuts targeting the poor. And those programs make up less than a quarter of all city spending . It’s yet another troubling sign of the rightward shift of state and national Democratic Party leaders. It’s a trend that can be seen everywhere from Democratic legislators in Massachusetts voting to strip public employee unions of the right to bargain collectively to national Democrats meekly accepting until it’s too late GOP messaging on deficit cuts and tax breaks for the rich. Here in Washington, city services are already so strained before the proposed cuts that even families with young children seeking emergency shelter are routinely turned away, and have often been given instead bus tokens to ride the buses all night with their toddlers and infants. As Eric Sheptock, a literally homeless homeless activist working with a donated laptop, described a recent hearing on the crisis: One mother cried as she explained how that she, with her 3 children — ages 5, 3 and less than a year-old — in tow, was told by an employee of the Virginia Williams Family Intake Center that there were no shelter spaces for them and that she was given bus tokens so she could ride the city bus all night with her children in order to stay warm. Other mothers testified that they also were given bus tokens so that they could use the bus as a de facto shelter. (DC Law states that, if there is no shelter space available for a homeless family with small children, then they must be put into a motel room) The Mayor’s proposed budget would essentially close down all shelters for everyone except when the weather falls below freezing. The mayor’s justification? ” In some quarters, we have created a culture of dependency that does not encourage residents to take control of their lives,” he declared in a speech nonetheless proclaiming a vision of a compassionate “One City” uniting all. Unlike the original welfare reform plans passed by President Clinton, though, these new meat-ax approaches to social services don’t provide any transitional assistance. As activist Kesh Ladduwahetty with the all-volunteer DC for Democrac y, a DFA affiliate, asks, “How does turning people out into the streets and eliminating child care programs help residents to take control of their lives, educate themselves, and become self-reliant?” Some councilmembers may seek to restore a portion of the $20 million to be cut in homeless services, but are doing relatively little to fight for $110 million in other vital services on the chopping blok, including mental health and other programs for the nearly one-third of District children who are poor. Prospects for protecting these programs are even worse than in the fights over social programs at the national level, because local safety-net advocacy groups are mostly under-funded, poorly organized and have no media savvy, making it even easier for the mainstream media to largely ignore the devastation these cuts would cause. Journalists here focus, at best, on councilmembers bickering over taxes . The Washington Post , for instance, doesn’t even have a reporter anymore covering the social services beat. The Mayor has asked for a slight rise in taxes for those earning over $200,000, but even that’s being resisted by a deadlocked City Council claiming it would discourage businesses and upscale residents. All told, his revenue-raising proposals could add about $127 million , but other ways to boost revenues as much as $104 million more, including increasing taxes for the very richest and closing tax exemptions for buying out-of-state bonds, are considered by council insiders to be off the table. This same city council spends more on itself — both per resident and per councilmember — than any other city in the entire country, according to the Pew Foundation . As the Washington City Paper reported: “The District came in first in costs in relation to both the number of city residents and the number of council seats. The council has a total budget of $19,434,000, including employee benefits–that averages out to $1,494,923 per seat, and $32.41 per resident.” But they don’t seem to mind kicking a few thousand people from shelters or cutting emergency assistance for the low-income disabled in order to preserve virtually all of their own perks — and keep costs down for the city’s richest citizens. Indeed, at a city council meeting on Monday, council members even opposed raising fees for wealthy Washingtonians who own three cars or to increase downtown parking fees. As the influential Greater Greater Washington blog pointed out: “At times, the discussion became quite heated, particularly when some members were defending the rights of people who own 3 cars and make over $200,000, yet wouldn’t consider driving downtown for dinner if it cost them $4 to park.” Analyst David Alpert added, “In a budget that makes very deep cuts, there was more passion for keeping parking cheap and for keeping taxes on the wealthy low than anything for keeping people off the street and from going hungry.” Yet as one progressive, Mary Beth Tinker, an SEIU pediatric nurse and a DC for Democracy member, pointed out in her testimony (full document here ) last week about the impact of raising taxes modestly on those earning over $100,000: For the price of a cup of coffee, you can save childrens’ lives. That is the increased cost in taxes per week, $1.80, that a DC resident making $125,000 would pay if their tax rate went from 8.5% to 9%. For the price of a latte, you can retain essential services to DC’s children. That is the cost in taxes per day, $3.60, that a DC resident making $350,000 would pay if their tax rate went from 8.5% to 9.5%. You can judge a society by how it treats children… The status of children in DC is a human rights shame by any indicator: infant mortality rates, graduation rates, soaring poverty rates. Amazingly, there are now proposals that would make things even worse: cuts of over $600,000 in programs to high-risk youth, cuts to summer school and grandparents struggling to raise their grandchildren, cuts in substance abuse programs for mothers. And, to put salt on the wound, there is even a proposal to cut $2.5 million in mental health services for traumatized children. But we do have alternatives. We can raise funds for children by reversing the tax break given to upper income earners in 1999. All for the price of a cup of coffee. On Wednesday, an alliance of progressive advocacy groups, including Save Our Safety Net and D.C. for Democracy, are planning a “Safety Net Reality Tour” to protest the cuts — and they’re going straight to the heart of the D.C. government, the Wilson building on Pennsylvania Avenue. The alert asks, ” Engage Councilmembers to remind them that we need additional revenue in order to restore funding to the programs that keep DC residents safe, housed, and healthy.” Yet that perspective gets little attention in the media or among Democratic politicians. Plus, business groups have also opposed plans that would close some loopholes allowing companies to pay lower taxes. And theater groups have opposed a modest 6% sales tax on tickets. Presumably, the extra cost of tickets would somehow deter upscale patrons from attending searing dramas about social injustice. Naturally, the $2.3 million in revenue it could generate would be wasted on sheltering homeless mothers who don’t have the good taste to appreciate Strindberg revivals. The clout of the theater crowd seems well on its way to overwhelming any lobbying by liberal advocacy groups, and council staffers say the proposal to tax theater tickets is all but dead. All these pressures make restoring vital services to the needy even less likely, especially because advocates have to overcome the myth that businesses and residents are over-taxed compared to other jurisdictions. In fact, surrounding affluent suburbanites pay higher total taxes than D.C. residents earning over $150,000 do, and the city’s tax burden is the 25th lowest of major cities. Right-wing leaning reports have also ranked the District as among the least competitive places because of high taxes. But as Natwar Gandhi, the chief financial officer of the city, has observed, ” In the District, almost two-thirds of businesses pay only the minimum of $100 a year. When actual business taxes paid are ranked, the District falls in the middle of the pack.” Amazingly enough, the city population is so liberal and Democratic that a new poll by the DC Fiscal Policy Institute found that 90 percent of taxpayers earning over $100,000 favor raising taxes on the wealthy to help pay for social services. That’s a level of affluent professionals’ supporting raised taxes you’d be hard pressed to find outside of an Upper West Side cocktail party hosted by The New York Review of Books in honor of Naomi Klein, author of The Shock Doctrine . Even so, D.C.’s African-American Mayor has proposed a draconian budget attacking the $330 million deficit that apparently borrows its underlying theme from Rep. Paul Ryan’s GOP budget plan: balance the budget on the backs of the poor. “The similarity of our Democratic politicians with Republicans is that they put a greater emphasis on budget cuts,with the poor bearing the biggest brunt of it — and the safety net is seen as something without value. It’s just seen as a cost with no value,” says Ladduwahetty, a leading organizer with DC for Democracy. This GOP-leaning tilt has been exacerbated by the vacuum of strong leadership coming from the White House and the Democratic Party in recent years defending the importance of government and safety-net programs; instead the ground has been ceded to Republicans on the issue of the deficit and tax cuts for the rich. A startling two-thirds of all the $187 million in D.C. cuts are aimed at programs serving the most vulnerable residents of the city: the homeless, poor kids needing mental health services, working adults who need subsidized child care, the disabled and the very poorest families needing emergency cash assistance. Even before these cuts that could throw nearly 2,400 homeless families and single adults into the street , basic services have already been so shriveled that the city’s primary intake center , the Virginia Williams Family Resource Center, is turning away families seeking emergency shelter — and just calling their relatives on their behalf or giving them bus tokens to ride the buses all night as a way to catch some sleep with their babies in tow. One of those young women is Denise Gibson, a 26-year-old woman who was holding her month-old newborn in her arms when she testified in March at a hearing before Councilman Jim Graham, chair of the human services committee. After surviving as a ward of the state in foster care and other arrangements until 21, she’s been homeless since 2006. “I’ve been a nomad,” she said about her search for housing. Sometimes, she’s able to stays inside her mother’s one-bedroom apartment, but that only allows her to sleep on the floor with her baby boy and she soon has to leave. Most of the time, she explained, “Some nights I stay in my storage place, some nights I stay at the Greyhound like I’m waiting for a bus. Since December, 2010 when I went to Virginia Williams, they told us we can’t stay anywhere [in shelters] unless it’s hypothermia; there’s no room at the shelter. They didn’t bother to find us [temporary] hotels, they just give us bus tokens and send us off.” Earlier, officials at the intake center turned her away when she was pregnant, claiming that they couldn’t help her until she was a single mother. After she gave birth,”They can’t help me now that my son is here.” In his first of month of life, he virtually never slept in a regular crib or bed. Under supportive questioning by Graham, more disturbing details emerged of life for the poor in a city where, as in the White House and Congress located a few blocks away, austerity instead of compassion and job creation is accepted as a political fact of life. But Graham, at least, wasn’t accepting that philosophy and asked, “Where have you been living?” Gibson responded, “I sometimes stay in my mother’s apartment building.” “Do you go to your mother’s apartment?” “No, there’s no security there [ in the building] and and it’s easy for us to stay there. I go to the stairwell, and I have my bags.” The day before the hearing, she stayed all night at the Greyhound station, even after begging a “Miss Croft” at the Virginia Williams center for help in finding an overnight spot for her and her baby. A stunned Graham recapped: “You went to Virginia Williams with a baby, and you’ve been sleeping in a stairwell and a bus station and you spoke to Miss Croft, and there’s nothing to do?” He furiously called in front of him the acting director of the Department of Human Services, the same agency that Mayor Gray once led, and berated her for the agency’s inaction. In typical bureaucratese, the interim director, Deborah Carroll ,explained, “During hypothermia season, any participant who meets the definition of homeless should get shelter. We’ll have to investigate each case.” Of course she left unspoken the reality that if the weather is below freezing the DHS officals feel free to ignore requests for shelter from families, let alone individuals Eventually, after pressure from Graham, a space was found in the city’s one family shelter — but it will be almost certainly closed down except in sub-freezing weather if the Mayor’s budget proposal becomes law. Her dramatic case has, so far,been ignored by all major broadcast and print media outlets in the city, except for the dedicated blogging of Eric Sheptock, the “homeless homeless” advocate working with a donated laptop and cell phone, building thousands of “friends” and “followers” on Facebook and Twitter . But his online advocacy doesn’t start until after he walks or takes a bus each morning to get a breakfast handout four miles away. Sheptock has a stark, up-close perspective on the DC government’s new War on the Poor (as opposed to LBJ’s War on Poverty): “To make a long story short, they want to push the poor out of the city,” he says. “They don’t want a place where the poor and homeless can come.” He adds, “They won’t want to wait to end the culture of dependence: they just want poor people to get out of town. They’re defunding affordable housing , they’re decreasing housing production, they’re shutting down shelters, breaking down encampments. You don’t prevent homelessness, you don’t cure it, you don’t want to shelter them.” As a list-ditch effort in the face of political indifference, he’s starting to try to organize the homeless themselves. He also wonders, “I don’t know why Mayor Gray is so callous.” Yet to today’s new pro-corporate state and national Democrats, reflecting the winner-take-all political trends that have accelerated during the Obama era, “These people are seen as sort of dispensable, and don’t deserve the social safety net. It’s part of an increasingly conservative trend in the Democratic Party,” says Kesh Ladduwahetty. Janelle Treibitz, the chief Campaign Organizer for Save Our Safety Net DC adds, “We’d like council members to take a stronger stance opposing cuts.” A few councilmembers, especially Jim Graham, have been very outspoken, but most of the efforts to restore some cuts are being done behind closed doors with little effort to rally the public behind them. Advocacy groups, including DC for Democracy and Save our Safety Net, have a total of a few thousand supporters, and while they’ve generated hundreds of emails, they haven’t been able so far to deluge the government with phone calls, reframe the debate or garner extensive media coverage. That could start to change next week, when S.O.S. is organizing with its allies next Wednesday, May 18th what it’s calling a “All-Hands-On-Deck-Action Day” inside the DC government main building, the Wilson building. But the harsh realities of the new Democratic politics remains, even in this most liberal of cities. At a hearing on the budget this week, led by by the scandal-plagued Chairman of the City Council, Kwame Brown, best known for demanding a “fully loaded” $1900- a- month leased SUV from city officials, activists challenged his opposition to raising taxes, the deadlocked council’s complacency, and the council leadership that has ignored public opinion favoring preserving social programs. “Some members of this Council have stated their opposition to any income tax increase. They owe the public an explanation as to why they would sooner ask a homeless person to live on the street rather than ask our wealthiest residents to pay taxes in line with their suburban counterparts,” Kesh Ladduwahetty argued. Even an otherwise liberal council member, Mary Cheh, a respected law professor who represents the 70%-plus white Ward 3 that’s the city’s richest, opposes raising taxes even to save social services. While declining to be interviewed for this article, she posts on her website for constituents her GOP Lite opposition to raising taxes, mixed with vague promises to find revenues elsewhere. “It is vital for our continued growth and prosperity that we shed our reputation as a high tax jurisdiction, and we have struggled very hard to do that over the past few years. Increasing the rate on incomes over $200,000 will send precisely the wrong message,” she says. “But, rather than support the income tax rate increase, I am looking at other ways to generate revenue or save money that will allow us to avoid the hike in income tax rates and restore some of the human services cuts.” Jeremy Koulish, who chairs DC for Democracy’s budget committee, directly challenged Council Chairman Kwame Brown and his allies on their allegiance to what used to be Democratic Party values. Noting the poll that showed 85% and above approval for raising taxes, he declared, “Certain politicians and a chunk of the city’s establishment are not listening. Who are you listening to? Grover Norquist? The Chamber of Commerce? The Wall Street Journal editorial page? They’re all powerful forces, but that goes against the concerns of the people who live here. What we’re hearing from you is the kind of rhetoric we hear from Republicans.” And, like the fate of the national budget fight, the ability of local progressive groups to effectively organize will not only determine the outcome of this one local budget, but become a symbol of what’s needed to get even Democratic cities and states to serve people in need, not just corporations. ********************************** This article is updated from a piece that originally appeared on the Truthout.org website.

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Dan Collins: Donald Trump’s Legacy: Would You Buy a Used Apartment From This Man?

May 16, 2011

Donald Trump is out, but the memory of the Trump-for-President era will, I hope, live on. We’ve learned a lot. The public, for instance, has been educated to understand that you can’t trust a thing the guy says. “I maintain the strong conviction that if I were to run, I would be able to win the primary and ultimately, the general election,” Trump said in a statement. Is it possible he really believes that? If so, would you buy a used apartment building from this man? The Trump presidential campaign should go down in history as a huge warning sign for other rich, high-profile jerks who think they can notch their name recognition up to even more astronomic levels by pretending to be presidential timber and making outrageous, headline-grabbing allegations about whoever’s running the country. Doesn’t work. Much more important to the egomaniacs who might be tempted to consider this kind of activity, It’s Bad For The Brand. A guy like Trump, who’s basically a reality show celebrity, can skate below the surface of real press scrutiny for a long time. For instance, he continually bragged about his academic background. “I’m a really smart guy. I was a really good student at the best school in the country,” he said on The View . Who ever bothered to check the facts – until Trump the alleged candidate started trashing Obama’s education, claiming he had “heard” that the president got terrible grades and demanding to know how he made it into Columbia and Harvard. Now – since he brought it up – we’ve learned that Trump spent two unremarkable years at Fordham (where he was on the squash team), after which he made a sudden leap to the University of Pennsylvania’s Wharton School. (The undergraduate version, not the one that gives you an MBA.) We also know that his path to that amazing leap in academic status began with an interview with an admissions officer at the University of Pennsylvania who was a high school classmate of Trump’s older brother. Also that after he got to Penn, Trump continued his pattern of never distinguishing himself academically in any way. But the real heart of the Trump Brand is his reputation as a great business guy and real estate developer. Now, thanks to a recent front-page story in the New York Times , we know that a lot of the glitzy Donald Trump housing developments are actually somebody else’s projects, which leased the Trump name and sometimes purchased an appearance by The Man himself at a meet-and-greet for prospective buyers. When the projects go bankrupt, do not expect the fact that Trump put his name on the building meant he put any money on the line. Ditto for the now apparently defunct Trump University, which, reporter Michael Barbaro noted, got a D minus from the Better Business Bureau. If we wanted to keep at it, we could go on to Trump’s military record. He recently told Fox’s Channel 5 news in New York about the “amazing” experience of being in college and watching the draft lottery during the Vietnam War and discovering that he had a “very, very high” number. The problem here is that warrior Trump got out of the Vietnam War by receiving a medical deferment. He was classified 1-Y by the Selective Service in 1968, according to Wayne Barrett’s biography of Trump. [Disclosure: Barrett and I are old friends and we have co-authored a book on Rudy Giuliani.] And the first draft lottery wasn’t held until more than a year after Trump left Penn. So again, the moral. Here was a long-running celebrity who made an extremely good living by marketing himself to the world as a colorful but (supposedly) canny blowhard businessman. Then he decides to pretend to run for president on a platform that revolved around whether the current occupant of the White House was there illegally. Now, Barack Obama is doing fine but Donald Trump has been exposed as a guy who will, for a fee, put his name on anything from a troubled real estate development to a grade D for-profit school. Who brags about a high-achieving Ivy League academic career he doesn’t really seem to have had, and who can’t even get the story of how he stayed out of Vietnam straight. He tried playing in the big leagues and came to disaster. Stick with what you do well, Donald. Go fire Gary Busey again.

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fiberAmerica’s George Day Elected to Keystone Energy Efficiency Alliance Board of Directors

May 16, 2011

ALLENTOWN, PA–(Marketwire – May 16, 2011) – fiber America, an innovative manufacturer of consistent, high quality and environmentally-friendly cellulose fiber insulation products, today announced that its director of business development, George Day, has been elected to the board of directors for the Keystone Energy Efficiency Alliance (KEEA). This non-profit organization is dedicated to energy efficiency market transformation in Pennsylvania through advocacy, education and training.

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Newt Gingrich Businesses Owed Unpaid State Taxes

May 14, 2011

ATLANTA — Companies run by Republican presidential candidate Newt Gingrich have faced overdue tax bills in four states worth more than $6,000, according to records reviewed by The Associated Press. The tax liens, which generally allow governments to seize assets or property to settle tax bills, ranged in size from a $195 property tax bill in the Atlanta suburbs to $1,969 in unpaid Missouri taxes. Most of the liens were paid shortly after tax authorities filed them. One exception was in Pennsylvania, where Gingrich Holdings Inc. last week paid off a $1,599 lien for unpaid corporate income taxes just days before Gingrich formally announced he would run against Democratic incumbent Barack Obama. Gingrich spokesman Rick Tyler said Gingrich and his firms were unaware of most of the tax liens until being contacted this week by the AP. “When an issue has arisen, we’re anxious to resolve the issue and get the taxes paid,” Tyler said. “We want to be in compliance with all the states.” Georgia State University professor Jack Williams, who teaches multistate taxation, said he most commonly sees liens filed against businesses in financial distress. Other contributing factors could be poor record-keeping or aggressive tax collectors. “The lien stage is about as deep into the process you get before the taxing authority seizes your assets and sells that,” Williams said. Until deciding to run for president, Gingrich was the CEO of Gingrich Holdings Inc., the parent company of firms that manage his book and TV contracts, produce documentary films, offer consulting services and oppose Obama’s health care overhaul. Tyler said Gingrich’s businesses are financially healthy. Last week, Gingrich Holdings paid off a lien worth $1,599 for corporate income taxes that court records show dates back to 2002. Pennsylvania Department of Revenue spokeswoman Elizabeth Brassell said privacy laws forbid her from discussing the case further. Tyler said the problem appears to have started in 2002 when state officials rejected a tax return on a technicality. While the company believed it had satisfied the bill, it paid off the lien earlier this month after learning of the remaining balance, Tyler said. In 2009, a Gingrich Holdings subsidiary paid $2,654 in Missouri tax liens for unpaid withholdings taxes and sales or use tax. Court documents show Gingrich’s company still faces a $688 lien for more withholding taxes, although Tyler said Gingrich’s company previously paid the bill and blamed state officials for failing to note the payment. He said Gingrich’s company expects to receive paperwork from Missouri officials acknowledging the payment in several days. Missouri Department of Revenue spokesman Ted Farnen said privacy laws ban him from discussing the case. One of Gingrich’s now-defunct businesses, Gingrich Enterprises Inc., faced a flurry of tax liens in Indiana. It satisfied some and believes the rest are paperwork problems. In 2002, records show Gingrich Enterprises resolved Indiana tax liens totaling $1,349. Tyler said he did not know Friday what caused those tax bills. Gingrich had delivered speeches in the state before and after the liens were issued and may have received speaking fees. The company filed paperwork in Georgia showing it was dissolving in November 2002. The next month, Indiana officials filed the first of 43 more liens against the company. Tyler said Gingrich officials alerted Indiana this week that the company went out of business in late 2002 and never owed state taxes after that. He said Gingrich expects to receive a letter from Indiana officials acknowledging that decision shortly. Indiana Department of Revenue spokeswoman Stephanie McFarland said she could not discuss the case, citing confidentiality laws. Business records show the mailing address for the firm was a post office box and the home of Gingrich’s ex-wife, Marianne Gingrich. She said she previously alerted Indiana officials that the company closed and supplied them with ways to contact her ex-husband. She now throws away some of the bills. “If Indiana really wanted money from him, they could find him,” she said. ___ Associated Press news researcher Judith Ausuebel in New York and reporter Charles Wilson in Indianapolis contributed to this report. Ray Henry can be reached at . http://twitter.com/rhenryAP

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The Ten States That Profit Most From Sin

May 14, 2011

From 24/7 Wall St.: As state budgets strain under huge debt loads, they are counting increasingly on “sin taxes”, one of the few reliable sources of revenue in these uncertain economic times. States have profited from the public’s voracious appetite for easy money (gambling), nicotine (smoking) and booze (alcohol) for years. Some are more successful at it than others. A few states generate less than 1% of their revenue from preying on their residents’ vices while sin accounts for between 5% and nearly 13% of the budgets of others. Some of the difference can be chalked up to varying rates of addiction, but aggressive tax policy also plays a part. Pennsylvania makes the greatest percent of its revenue from gaming taxes of any state. It charges a 55% tax on slot machine proceeds. Conversely, Las Vegas collects only 8%. Read The Ten States That Profit Most From Sin Sin is profitable for many reasons. For one thing, it sells well. In New Hampshire, more than half of its state revenue comes from tobacco sales. Meanwhile, states like Michigan generate revenue evenly across all sins. Still others, such as New Jersey, make a great deal from these bad habits because they’re taxed at such a high rate. To identify the states that make the most money from sin, 24/7 Wall St. , calculated the taxes and revenue each state makes from gambling, alcohol, tobacco and lotteries and compared the receipts against the total revenue for the state. The Tax Policy Center provided alcohol and tobacco tax receipts for 2008, the year for which data is most recent. The North American Association of State and Provincial Lotteries provided state lottery receipts. Revenue from taxes on gambling, as distinguished from lotteries, was obtained from The American Gaming Association. Sin taxes should be viewed in context of the broader economy. Many investors are concerned that the anemic economic recovery will sputter further, particularly as the debate over the debt ceiling continues to rage. Members of the GOP, led by Speaker of the House John Boehner (R-OH), have indicated they they will not vote to raise the debt ceiling without significant spending and budget cuts including popular entitlement programs such as Medicare and Medicaid. The Speaker’s public statements on the debt ceiling and the need for cuts, have angered some. Recently, 75 professors at Catholic University, where the Speaker is receiving an honorary degree this weekend, wrote an open letter accusing him of supporting a budget that will hurt the old, the sick and the poor. “Mr. Speaker, your voting record is at variance from one of the Church’s most ancient moral teachings: From the Apostles to the present, the Magisterium of the Church has insisted that those in power are morally obligated to preference the needs of the poor,” they said. Whether the accusation is fair, it is true that austerity measures can affect the lives of many residents. Following reduced funding from the federal government, 21 states are considering cuts in public school aid to balance their budgets, according to The Center for Budget and Policy Priorities. In order to keep the nation’s debt at its current level without raising taxes, federal spending would have to be cut by 35%, or $1.2 trillion dollars, according to the Government Accountability Office. Of course, such an effort would be unsustainable. In addition to demanding changes to entitlement and spending cuts, Republicans are refusing to consider any tax increases. While that may make sense to some, an exception should at least be made for sin taxes. There are many who maintain that income taxes, property taxes, and even corporate taxes should remain fixed, or even lowered. Increases in income taxes could dampen consumer spending, the argument goes. That’s hardly a prudent course of action for a struggling economy. Likewise, raising property taxes would do nothing for the languid housing market. And corporate taxes, especially for small businesses, are often regressive, and could ultimately discourage hiring if they are raised too high. That’s one reason states are more dependent on sin than ever. These are the states that derive the greatest amount of their revenue from bad habits: 10. New Jersey Most Profitable Sin: Lottery ($924 Million) Revenue From Sin: $2.123 Billion (8th Highest) Total State Revenue: $49 Billion (8th Highest) Percent Total Revenue From Sin: 4.34% New Jersey is an example of a state in which residents are paying a disproportionate amount of taxes for their vices. Although residents gamble, use alcohol and tobacco, the percent of the population that gambles, drinks or smokes is low compared to the national average. The state has the 18th lowest rate of binge drinking in the country and the ninth lowest rate of cigarette smoking. Despite these low rates, high taxes boost the state’s revenue from these activities. New Jersey generates the eighth highest revenue from tobacco and the 17th greatest amount from alcohol sales. The greatest moneymaker for the state, though, is the lottery. In 2010 the state made just under $1 billion through the lottery, the fifth greatest amount among all the states. 9. New Hampshire Most Profitable Sin: Tobacco ($170 Million) Revenue From Sin: $248 Million (12th Lowest) Total State Revenue: $5.5 Billion (3rd Lowest) Percent Total Revenue From Sin: 4.54% New Hampshire has the ninth smallest population in the country, with a small budget to match. In a single year, the state collected only $248 million combined from taxes and revenue related to tobacco, alcohol, and the lottery However, because the state’s total revenue is just $5.5 billion, the third smallest in the country, its sin taxes equal 4.5% of New Hampshire’s budget, a larger percentage than 40 other states. New Hampshire does not have any taxable gambling, and collected only $12.5 million in alcohol taxes in 2008, the fifth smallest amount by any state. Most of “The Granite State’s” revenue from sin derives from tobacco – the state collected nearly $170 million from cigarette taxes in the most recent year for which data is available. The state has one of the biggest populations of smokers in the U.S. It sells an average of 116 packs per person per year, the third most in the country. On top of this, New Hampshire has the 16th highest tobacco excise tax at $1.28 per pack. According to the New York Times, the state’s cigarette taxes have not always been so high – in 2005, they were only 52-cents per pack. The state Legislature is considering a bill which would reduce the price per pack by ten cents, a measure which opponents say would cost the state millions of dollars. 8. Illinois Most Profitable Sin: Tobacco ($827 Million) Revenue From Sin: $2.157 Billion (7th Highest) Total State Revenue: $2.157 Billion (7th Highest) Percent Total Revenue From Sin: 4.55% Although Illinois’ sin taxes are by no means small compared to other states, the main reason for the state’s massive “sin revenue” is the large numbers of people in the state paying these taxes. The average person in the state pays $168 in sin taxes and lottery tickets per year. While this number may seem like a lot, it is only the 19th largest amount in the country. Even tobacco taxes, which contribute the most to the state budget, are not especially high. As of January 2011, Illinois had a tax of $0.98 on a pack of cigarettes, the 20th lowest tax in the country. The sheer number of smokers, however, results in tobacco generating the most in sin revenue. There is a significant chance the amount made by the state through tobacco will increase in the near future. A $1-per-pack tax hike was approved by a state Senate committee in March of 2011. The tax has yet to be approved by the House. 7. Michigan Most Profitable Sin: Tobacco ($1.08 Billion) Revenue From Sin: $2.242 Billion (6th Highest) Total State Revenue: $45.7 Billion (10th Highest) Percent Total Revenue From Sin: 4.91% Michigan collects more than $2.2 billion from alcohol, tobacco, gambling and the lottery, which accounts for nearly 5% of the total state budget. The Great Lakes State has an even distribution of revenue from each of the four vices. Michigan collected more than $700 million from the state lottery in 2010, tenth most in the country, and $311 million from casino taxes, the 8th most in the U.S. The biggest portion of Michigan’s sin revenue comes from tobacco. In 2008 (the most recent year of available data) the state collected the third most in the U.S. from tobacco taxes – more than $1.08 billion. The state has the 11th highest cigarette tax in the country, at $2.00 per pack. 6. Pennsylvania Most Profitable Sin: Gambling ($1.32 Billion) Revenue From Sin: $3.547 Billion (2nd Highest) Total State Revenue: $70.4 Billion (4th Highest) Percent Total Revenue From Sin: 5.04% Pennsylvania is the sixth largest state by population, has the fourth largest revenue, and has the second largest revenue from sin taxes. These taxes end up providing more than 5% of the state’s total revenue. The main source of this money is gambling. Pennsylvania makes more money through gaming taxes than any other state in the nation, even Nevada. In 2010, Pennsylvania made about $1.3 billion through taxing slots parlors. Nevada, by comparison, made about $835 million. Pennsylvania currently has ten casinos, Las Vegas has 260. The Keystone State levies a 55 percent tax on slot machine revenue, however, while Nevada’s tax is only eight percent. Apparently, this tax has not done much to dissuade gamblers. Revenue from slot machines rose from $13.4 million in 2006-07 to just below $1.75 billion in 2008-09, according to the Center for Gaming Research. 5. South Dakota Most Profitable Sin: Lottery ($117 Million) Revenue From Sin: $212 Million (11th Lowest) Total State Revenue: $3.8 Billion (The Lowest) Percent Total Revenue From Sin: 5.63% The National Association of State Budget Officers estimates that South Dakota collected less revenue than any state last year. That is why the state’s $212 million collected from “sin” is the fifth biggest percentage of government income in the country. The state collects the 19th most in gaming taxes in the U.S., although this is primarily because 29 states do not collect taxes on their casinos at all. The state’s biggest source of sin-based income is the South Dakota Lottery, which generated roughly $117 million in revenue last year. The state’s cigarette tax is $1.53 per pack, roughly triple that of North Dakota. The state’s alcohol taxes are also higher than most, at 27 cents per gallon of beer. According to the South Dakota newspaper The Capitol Journal, the state’s revenues from video lotteries actually dropped as much as 15% last year, possibly because of a smoking ban in casinos and bars which was enacted in November. 4. Indiana Most Profitable Sin: Gambling ($875 Million) Revenue From Sin: $1.628 Billion (10th Highest) Total State Revenue: $26.7 Billion (23rd Highest) Percent Total Revenue From Sin: 6.11% Despite having the 15th largest population, Indiana only has the 23rd largest state revenue. The state has the tenth largest revenue from sin taxes, however, and the fourth largest percentage of total revenue deriving from sin. This is largely due to gambling, from which the state made the second largest amount among all the states in 2010. Indiana’s 13 casinos all have a graduated tax rate of 15% to 40% – meaning that the more you make the more you’re taxed – as well as a $3 per patron admission tax, according to the American Gaming Association. Together, this brought in $875 million in 2010 – more than Nevada but less than Pennsylvania. Gambling is not the only major “sin” related revenue for the state, however. About 23.1% of residents in Indiana smoke cigarettes, the fifth highest rate in the country. In 2008, the state made $520 million from tobacco taxes, the ninth greatest amount in the country, despite having the 21st lowest tobacco tax rate. 3. Delaware Most Profitable Sin: Lottery ($275 Million) Revenue From Sin: $659 Million (25th Lowest) Total State Revenue: $8.7 Billion (11th Lowest) Percent Total Revenue From Sin: 7.55% f you were to take the revenue Delaware collects in a single year from gaming, the lottery, tobacco, and alcohol, and were to divide it among the state’s 897,000 residents, each person would receive $733. This amount is more than double nearly every other state in the country. Delaware residents bought 122 packs per person in a single year (the second most in the country. The state also has the sixth highest percentage of binge drinkers in the U.S. as well. Taxes for both of these substances are either average or below average, including a mere 16 cents per gallon of beer, but the state makes up for this in sheer volume of use. While alcohol and tobacco are significant sources of income, most of Delaware’s profits from sin come from its lottery, with which it earned $275 million last year, and casino taxes, which the state ranks 12th in the country for annual revenue. On May 11, according to the News Journal, the state Senate approved a measure to legalize medical marijuana, which will perhaps soon become another major source of sin revenue for Delaware and other states like it. The bill is awaiting an expected signature by Governor Jack Markell. 2. Rhode Island Most Profitable Sin: Lottery ($345 Million) Revenue From Sin: $706 Million (22nd Highest) Total State Revenue: $8.1 Billion (9th Lowest) Percent Total Revenue From Sin: 8.66% Despite being one of the smallest states, with one of the smallest revenues, Rhode Island makes the seventeenth greatest amount among all states through its lottery. Just under half of all the money the state makes through the taxes considered for this list, which constitute 8.66% of the state’s total revenue, comes from the lottery. The state also made $114 million from tobacco taxes in 2008, which is a relatively large amount considering the size of the state’s population. Rhode Island charges a tax of $3.46 for a pack of 20 cigarettes — the second highest amount in the country, behind New York. Each year, the average Rhode Islander pays $671 in sin tax. The only state in which residents pay a larger share is Delaware. 1. Nevada Most Profitable Sin: Gambling ($835 Million) Revenue From Sin: $1.01 Billion (13th Highest) Total State Revenue: $7.9 Billion (12th Lowest) Percent Total Revenue From Sin: 12.83% Most Profitable Sin: Nevada’s revenue from sin is 12.83% of its total budget, which is nearly 4% higher than Rhode Island’s and greater than the percentages of New Jersey, New Hampshire, and Illinois combined. Not surprisingly, most of Nevada’s income comes from gambling – the state collected more than $835 million, the third-most in the country. In terms of other sin taxes, the state ranks average both in alcohol and tobacco taxes. Interestingly, the Nevada is one of only seven to not have a state lottery. According to the Las Vegas Journal-Business Review, state lawmakers proposed a bill to create one, but it failed last month in the legislature. Read more at 24/7 Wall St.

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Joe Biden, Congressional Group Begin Budget Talks

May 5, 2011

WASHINGTON — Bowing to political reality, Vice President Joe Biden on Thursday acknowledged the need to pair significant spending cuts with legislation raising the government’s borrowing limit so it can pay its bills. “They’re not technically connected, but the face of the matter is they’re practically and politically connected,” Biden said at the start of budget meetings with top lawmakers at Blair House, the guest house across Pennsylvania Avenue from the White House. As he spoke, the vice president glanced at House Majority Leader Eric Cantor, R-Va. Members of both parties say the government must address out-of-control deficits in order for Congress to go along with the unpleasant task of increasing the debt ceiling beyond the current $14.3 trillion limit. The government borrows more than 40 cents of every dollar it spends. The White House and Republicans who run the House say a deal expected this summer probably won’t produce sweeping changes to taxes and benefit programs such as Medicare and Social Security. But Cantor came to the talks with $715 billion in proposed savings from other programs, including cuts to farm subsidies and food stamps, according to an aide. The federal deficit could reach $1.6 trillion this year, so both sides are setting modest expectations. But they said the meeting offered a chance to identify even small cuts that can build toward a broader agreement. Treasury Secretary Timothy Geithner took some pressure off the talks when he told Congress this week that the government could continue to meet its obligations through Aug. 2. The government is borrowing an average of $125 billion a month. House Republicans have passed a detailed budget blueprint that aims to cut spending by more than $5 trillion over the next decade. Biden sought to flesh out a plan that President Barack Obama outlined last month that would reduce deficits by $4 trillion over 12 years. “We staked out our position in a very definite way. They haven’t,” Cantor said Wednesday. “So we need to understand where they’re coming from.” Obama’s proposal calls for about $1 trillion in higher tax revenues, a nonstarter with House Republicans. At the same time, a GOP plan to slash Medicaid and turn Medicare into a program in which future beneficiaries receive subsidies to purchase private health insurance is dead with the White House and Democrats. In addition to Cantor, the White House invited the second-ranking Senate Republican leader, Arizona’s Jon Kyl; the chairman of the Senate Appropriations Committee, Hawaii Democrat Daniel Inouye; the chairman of the Senate Finance Committee, Montana Democrat Max Baucus; and senior House Democrats Jim Clyburn of South Carolina and Chris Van Hollen of Maryland. One proposal that some Republicans hope to add to the debt ceiling bill would cap spending at about one-fifth of the size of the economy, backed by automatic cuts if Congress failed to enact legislation that keeps spending under the limit. That idea from Sens. Bob Corker, R-Tenn., and Claire McCaskill, D-Mo., is opposed by the White House. It says the plan would force drastic, across-the-board cuts to Social Security, Medicare and Medicaid while doing nothing to fix tax laws full of special breaks. “Arbitrary spending caps are nothing but a backdoor means of imposing immediate and deep cuts in Medicare and Social Security,” said Kenneth Baer, spokesman for the White House budget office. Cantor wouldn’t dismiss the idea, but he said Republicans want something concrete immediately. “All that is fine, but the history of Congress has been that anytime you put enforcement mechanisms in place like that, ultimately they’re waived,” he said. “We’re about trying to effect real cuts, real reforms this year.”

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Mayors To Washington: ‘We Need Money’

April 30, 2011

CHICAGO — Near the end of a two-day summit here that brought together mayors and federal officials to talk about city design, the mood turned confrontational. It started when Philadelphia Mayor Michael Nutter , in the middle of a Friday discussion on the federal government’s role in city development, turned toward the Washington officials who were sitting with him on stage and expressed his disappointment. “Mayors could never get away with the kind of nonsense that goes on in Washington,” he said. “In our world, you either picked up the trash or you didn’t. You either moved an abandoned car or you didn’t. You either filled a pothole or you didn’t. That’s what we do every day. And we know how to get this stuff done.” That evidently hit a nerve, as cheers erupted through the Grand Ballroom of the Hilton hotel, where many in the audience were mayors. Manny Diaz, former mayor of Miami, who sat on stage with Nutter, gave an impromptu speech criticizing Washington lawmakers. Other mayors stood up and took the microphone during the question and answer session — not to ask questions, but to get things off their chests. The event, co-sponsored by the National Endowment for the Arts, the American Architectural Foundation and the U.S. Conference of Mayors, became, for a few minutes, a forum for mayors to express a difficult truth: Two-and-a-half years after the worst financial crisis since the Great Depression, the nation’s cities still struggle with chronic budget gaps that can’t easily be filled. Tax revenue has plunged as property values have fallen and payrolls have shrunk. Local governments, many of which are legally required to balance their budgets, have made cuts that a few years ago would have been unthinkable. Municipal budget woes stem partially from crises on the state level, which in turn aren’t helped by a lack of federal assistance. Federal dollars from the American Recovery and Reinvestment Act covered less than half of states’ combined budget shortfall during this fiscal year, according to a recent report from the nonpartisan Center for Budget and Policy Priorities . Come next fiscal year, which for many states begins this July, states’ combined shortfall will exceed $110 billion, with only $6 billion in federal aid available, according to the report. That leaves cities out in the cold, as states focus on solving their own problems. In Newark , aid from the state of New Jersey fell by 40 percent between 2008 and 2010, contributing to a budget crisis that eventually prompted the city, one of the country’s most dangerous according to FBI data, to lay off 13 percent of its police force late last year. In Milwaukee County , a community that has contended with a decade-long erosion of bus service, a transit cut in the coming state budget could deal a critical blow to the region’s public transportation. “We get the brunt of what the recession really entails. We’re also the last to come out of that,” Ed Pawlowski, the mayor of Allentown, Pennsylvania, said in an interview after the panel discussion. “While the economy is getting slowly better, cities are still struggling in a significant way.” Mayors want federal money. They say they can put it to quick and efficient use, creating jobs and helping improve the economy from the bottom up. Nutter gave an example: He closed Philadelphia’s crumbling South Street Bridge in 2008, initiating a two-year repair project that was completed on budget and a month early last fall, he said. But federal funds are running dry, as Washington lawmakers have become seemingly obsessed with a desire to cut the federal deficit. In April, lawmakers almost shut down the federal government as they argued over a few billion dollars in spending cuts. Now, some are saying they will not vote to increase the debt ceiling, and risk leading the nation into default, just to enforce budget austerity. The four federal officials who sat on stage during the discussion — Derek Douglas, special assistant to the president on the White House Domestic Policy Council; Roy Kienitz, under secretary for policy at the Department of Transportation; Salin Geevarghese, senior advisor at the Department of Housing and Urban Development; and Rocco Landesman, chairman of the National Endowment for the Arts — became punching bags. “You guys need to keep your day jobs. You’d make lousy mayors,” said Jennifer Hosterman, mayor of Pleasanton, California, addressing the federal officials as she stood on the ballroom floor. “To hear from the four of you all of your gyrations and concerns and discussion about how we communicate with local government — we at local government just have to make it happen.” The moderator, Carol Coletta, the former executive director of the NEA initiative the Mayors’ Institute on City Design, tried to ease the tension. “What are you asking them to do?” she said. “I mean, what is it that they’re keeping you from doing?” Hosterman talked about her efforts to come into compliance with California’s Global Warming Solutions Act. She described months of intense, focused efforts to make her city more efficient. She has specific goals in mind, she said, but she needs more resources. “Love the dialogue — thank you very much for that,” she said. “But we need money.” The audience laughed in assent, clapping loudly. The federal officials on stage were speaking in broad, theoretical terms. But the mayors wouldn’t stand for that. They knew what needed to get done, they said. What they wanted from Washington was the dollars to do it. “We should not be expecting or depending on top-down permission from the White House or Washington to have us advocate for this stuff,” said R. T. Rybak, mayor of Minneapolis, who stood up and addressed the other mayors. Earlier, Mayor Nutter had complained about the seeming hypocrisy of federal lawmakers who go to ribbon-cuttings and ground-breakings, even if they never supported the legislation for those projects. Rybak heartily commiserated. “I’ve seen those guys at the ribbon cuttings. And it pisses me off,” he said. “But I go out and organize at election time and tell people exactly who delivered and who did not.” Douglas, of the White House Domestic Policy Council, said federal officials are doing what they can to help. But political gridlock can muck up the process. “We do hear you,” he said. “If you look at the president’s budget proposal for FY12 and you go look at the transportation section that he proposed — this is what he’s asking for — the stuff you’re talking about is in there. That’s what he requested. Is he going to get what he requested?” “We can ask for everything under the sun,” Douglas added. “But just because we ask for it doesn’t necessarily make it so.” But the mayors were not satisfied. Diaz, the former mayor of Miami, said that the conversation in Washington is the opposite of what it should be. Instead of cutting spending, he said, lawmakers should be finding ways to support job-creation and help the economy grow. It’s the mayors, he said, who create jobs. But the mayors aren’t getting the federal support they need. “We’ve got to figure it out. All of us have very, very difficult budget times right now. But notwithstanding that, we have to figure out how to do it,” he said. “As a matter of fact, there’s a greater argument to move the country forward now, because we’re in the dumps, than when things were hopping five, 10 years ago.” Kienitz, of the Department of Transportation, suggested that Diaz run for U.S. Congress. “You could provide that leadership that we need,” Kienitz said. “Thanks,” Diaz replied, “but I don’t want a job in Washington.”

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The U.S. Banking Industry Is Shrinking: Who Benefits?

April 28, 2011

By Knowledge@Wharton Though the U.S. banking sector was in recovery mode in 2010, it still managed to reach some highs and lows. There were 157 bank failures in the country last year, the most since 1992, according to the Federal Deposit Insurance Corporation (FDIC). And the number of new bank charters was at an historic low — 11, compared with 181 three years earlier. With so many banks leaving the sector and so few entering it, a long-anticipated consolidation process is now under way. The U.S. is expected to end up with no less than 6,529 commercial banks and 1,128 savings institutions by the end of this year. That is a 4.4% decline from the previous year, and it leaves the country with nearly half as many institutions as it had 20 years ago, according to the FDIC. What does this consolidation mean for the banking sector’s next 20 years? Should consumers be concerned about the shrinking number of banks? Many experts expect consolidation to continue, and predict that the trend will leave the banking system better off in the long run. “We don’t really need as many banks as we used to,” says Jack Guttentag , a finance emeritus professor at Wharton and former economist at the Federal Reserve Bank of New York. “Banks now have the power to [set up branches] wherever they want to, so what really matters is how many options a customer has in a certain market.” Therein lies the challenge, according to Kenneth H. Thomas, a Wharton lecturer of finance. As he sees it, not all customers will benefit from greater consolidation. A market, such as the one in the U.S., that is “over-banked,” with a supply of banking services exceeding demand, “is generally good for consumers and businesses because it results in lower prices — i.e., lower loan rates, loan/deposit fees and higher deposit rates — and higher output [in terms of] more varied and innovative products,” he notes. “Some may argue that ‘over-competition’ [or over-banking] could drive weaker banks out of business” — as happened to Washington Mutual, the savings institution that collapsed in 2008 — “but then someone else comes in and replaces them, yet may reduce the number of offices and amount of services.” History Lessons It is no accident that the U.S. has had such a large number of banks. Rather than setting up one, large national bank as other countries do, the U.S. federal government rolled out various laws in 1784 to encourage multiple banks in individual states. In 1863, a new banking act introduced a national charter that encouraged the establishment of more financial institutions even as it taxed banks with state charters. Nearly 70 years later, with the dawn of the Great Depression, the country had more than 30,000 banks. But the stock market collapse took its toll. In 1933 alone, about 4,000 commercial banks and 1,700 savings and loans institutions failed. The next wave of consolidation occurred in 1994 with the arrival of the Riegle-Neal Interstate Banking and Branching Efficiency Act. That made interstate expansion easier, whether it occurred through M&A activity or organically. The number of banks began shrinking annually by about 4.5% before another period of expansion in the late 1990s, according to the FDIC. With another swing of the pendulum last year, consolidation returned to 1994 levels. But in contrast to previous times, much of the consolidation has been due to failures rather than through M&A. Shuttered banks have ranged from American National Bank of Ohio, a small institution with assets of $70 million that had struggled for years to turn a profit and was under regulatory pressure until it was closed in March, to $25 billion Colonial BancGroup of Alabama, which closed its doors in the summer of 2009, a few days after regulators started an investigation into accounting irregularities. As the third largest failure in U.S. history, all of Colonial’s deposits were sold to BB&T, turning it into the ninth-biggest U.S. bank by assets, according to Bloomberg. As for M&A, there were 197 deals last year, a 20-year low. Loretta J. Mester, a Wharton adjunct professor of finance and director of research at the Federal Reserve Bank of Philadelphia, expects consolidation to continue over the next few years. “In the short term, I think consolidation will pick up as weaker banks go through mergers and acquisitions, and stronger banks take time to get their capital shored up” in their pursuit of greater efficiency and economies of scale, she notes. The Little Guy The institutions that will likely be hardest hit by all this activity will be the community banks. Most of these small, locally owned banks have less than $1 billion of assets, but account for 92% of all banks and savings institutions, says the FDIC. For many of them, the arrival of the recent Dodd-Frank Wall Street Reform and Consumer Protection Act was a death knell.Tougher controls involving capital, liquidity and leverage, and a surge in regulatory red tape, have left such banks struggling, particularly those with less than $500 million of assets. “Many small banks feel that they are being pushed out of existence by new regulations,” Thomas states. Their plight hasn’t been lost on the FDIC, which has launched various initiatives to give community banks some relief. A few weeks ago, for example, it released guidelines that lighten requirements for how these banks manage customers whose accounts are consistently overdrawn. The FDIC has also been encouraging entrepreneurs to buy troubled banks. According to Thomas, this trend started two years ago, when new charters were hard to come by. A case in point: BankUnited, a 70-branch Miami Lakes, Fla.-based financial institution, was taken public earlier this year after the FDIC sold it in 2009 to a bevy of private equity investors led by John Kanas — the former chief executive of a Long Island regional bank sold a few years ago to Capital One. Todd A. Gormley , a Wharton finance professor, says community banks play an important role in local economies. They typically have close relationships with individual customers, while, for example, making loan decisions based more on personalized information than the credit scores and other hard data used by large banks. “Smaller firms and local individuals trying to get loans from larger banks could be a subset of the population that is worse off because of consolidation,” Gormley suggests. There is also something to be said for the often underrated efficiency of smaller lenders that rely on personal relationships as a guarantee against loan defaults. In a study published last year, Stephanie Moulton, a professor of public affairs at Ohio State University, found that borrowers with low incomes or bad credit are significantly less likely to default on loans if they borrow from a local bank than if they receive a loan from a distant bank or mortgage company. Personal relationships, she concluded, are an important factor in the reciprocal relationship between lender and borrower, resulting in both sides offering critical information, such as repayment schedules. Easy Come, Easy Go According to Guttentag, consolidation also leaves a handful of banks controlling the majority of certain types of products. Four “mega banks” — Wells Fargo, Bank of America, JPMorgan Chase and Citigroup — now hold three-fifths of the home mortgage market, which limits consumers’ choice of products and their ability to shop around for competitive pricing. “It’s a textbook issue of a concentration of power,” Guttentag says. “A limited number of firms control the market, and they will engage in implicit collusion.” Thomas, meanwhile, is concerned about the concentration in geographic markets as a result of ongoing consolidation. While there are more than enough banks in the entire country, some cities, states and regions have just one dominant bank. “There are a few markets in danger of becoming a one-bank or two-bank town,” he says. For example, in the Pittsburgh metropolitan area, PNC Bank has 47% of the deposit share, according to the FDIC. The second-largest bank in the area is Citizens Bank of Pennsylvania, which has 8.5% of the deposit share. “We need competition because competition lowers prices,” Thomas states. While there are no limits on deposit shares in certain markets, 1994′s Riegle-Neal Act imposes a 10% cap on nationwide deposits for a single bank. That has since been interpreted as a cap on growth that occurs through mergers rather than organically. The Treasury Department is now looking into modifying the cap to include all consolidated liabilities. But Mester says consumers need not worry. “When there is consolidation, there are not necessarily fewer outlets for banking services,” she notes. While the total number of banks may be declining, the number of branches isn’t. Additionally, no matter where they are, consumers have access to a growing number of Internet banking options. In the last 10 years, the number of bank branches nationwide has increased 15%, although that expansion has primarily involved banks with $500 million or more in assets. The number of branches dropped slightly for the first time in a decade in 2010. As for the future, Guttentag predicts that the number of banks will continue to shrink, but he doubts the U.S. will ever look like, say, Canada — which has just 22 banks. Indeed, if consolidation continues as it has over the past 20 years at the average annual rate of 3.3%, it would take 60 years for the total number to fall below 1,000 banks and nearly 130 years to get below 100. “Even if the number of banks shrinks from 6,000 to 100, if those 100 are operating in all market segments and if consumers have many options, there is no reason for concern,” Guttentag says. Additional reading from Knowledge@Wharton: The Dodd-Frank Financial Regulatory Law: Long-Awaited Cure — or Cause for ‘Wild-Eyed Alarm’? ‘A Major Transformation’: The Pros and Cons of the Dodd-Frank Act The Coming Meta-Boom and Meta-Bust — One Economist’s View

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The End Of America Is Best Illustrated By Major League Soccer, Apparently

April 25, 2011

This morning’s Drudge Report gives the banner treatment to a report from the Wall Street Journal ‘s MarketWatch , detailing how the International Monetary Fund has set a 2016 date for “the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.” Per MarketWatch, this “provides a painful context for the budget wrangling taking place in Washington, D.C.” and “raises enormous questions.” (Basically, what it all means is that some big numbers will get bigger and something that’s been true for a long time — China’s economy is growing at a faster pace than that of the United States — will continue to be true.) Here’s another enormous question, though: What is going on in the picture that Drudge provides for this story? Holy crap! What is going on there? Have the mobs already formed to rampage over this news from the IMF? What have they set ablaze? And are we all uniting under this blue-and-gold checked banner, for freedom? Actually, no. None of those things are happening. Apparently, what’s depicted is a gathering of the ” Sons of Ben ” — fans of the Philadelphia Union of Major League Soccer , so named for Philly’s own Benjamin Franklin (which is bad-ass, by the way). It seems that this is a shot of the Sons, cheering in the “River End” section of PPL Park in Chester, Pennsylvania . I’ve got no idea what the smoke is, but it appears in other images of the fans in full cheer. [UPDATE: A Union supporter writes me to say that the smoke is from smoke bombs that are set off whenever Philly scores a goal.] Well, you have to give Drudge credit for getting an image of Union supporters. [Hat tip: Twitter users @VercengetorixII , @gplefka ] [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Initial Jobless Claims Fall Slightly, But Remain Above 400,000

April 21, 2011

The number of Americans filing new claims for unemployment benefits fell last week but held above the key 400,000 level, hinting at some loss of momentum in the labor market recovery. Initial claims for state unemployment benefits fell 13,000 to a seasonally adjusted 403,000, the Labor Department said on Thursday, unwinding some of the prior week’s quarter-end jump. Economists polled by Reuters had forecast claims slipping to 392,000. The prior week’s figure was revised up to 416,000 from the previously reported 412,000. The four-week moving average of unemployment claims, a better measure of underlying trends, rose 2,250 to 399,000. “It gives the impression that the momentum of labor market improvement is a bit disappointing at this point,” said Sean Incremona, an economist at 4Cast in New York. “We are still looking at a moderate recovery, so near-term we might have to edge lower some employment calls. I think we are still going to see the recovery sustained.” The claims data covered the survey period for April’s nonfarm payrolls report, which will be released in early May. Employers added 216,000 jobs in March, the most in 10 months, and the unemployment rate slipped to a two-year low of 8.8 percent from 8.9 percent. U.S. Treasury debt prices extended gains on the report and the dollar fell to session lows against the yen. Jobless claims below the 400,000 mark are usually associated with steady employment growth. Despite the increase last week, the four-week average has now been below that level for an eighth straight week. A Labor Department official said three states — Pennsylvania, Virginia and Alaska — had been estimated for last week’s data, raising the possibility for large revisions next week. The number of people still receiving benefits under regular state programs after an initial week of aid fell 7,000 to 3.70 million in the week ended April 9, the lowest level since September 2008. Economists had expected so-called continuing claims to slip to 3.67 million from a previously reported 3.68 million. The number of people on emergency unemployment benefits dropped 23,693 to 3.53 million in the week ended April 2, the latest week for which data is available. A total of 8.3 million people were claiming unemployment benefits during that period under all programs. (Reporting by Lucia Mutikani, additional reporting by Chris Reese in New York; Editing by Padraic Cassidy) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Obama Administration Looks To Ease Pain Of Medicare Cuts

April 19, 2011

WASHINGTON — Millions of seniors in popular private insurance plans offered through Medicare will be getting a reprieve from some of the most controversial cuts in President Barack Obama’s health care law. In a policy shift critics see as political, the Health and Human Services department has decided to award quality bonuses to hundreds of Medicare Advantage plans rated merely average. The $6.7 billion infusion could head off service cuts that would have been a headache for Obama and Democrats in next year’s elections for the White House and Congress. More than half the roughly 11 million Medicare Advantage enrollees are in plans rated average. In a recent letter to HHS Secretary Kathleen Sebelius, two prominent GOP lawmakers questioned what they termed the administration’s “newfound support” for Medicare Advantage. The shift “may represent a thinly veiled use of taxpayer dollars for political purposes,” wrote Sen. Orrin Hatch of Utah and Rep. Dave Camp of Michigan. Camp chairs the House Ways and Means Committee, which oversees Medicare. Hatch is his counterpart as ranking Republican on the Senate Finance Committee. Seniors are among the deepest skeptics of the new health care law. A recent AP-GfK poll found that 62 percent disapprove of Obama’s handling of health care, as contrasted with 52 percent approval among Americans overall. The poll also found that seniors are more likely to trust Republicans than Democrats on health. The insurance industry says the bonuses will turn what would have averaged out as a net cut for Medicare Advantage plans in 2012 into a slight increase. The administration says the reason for the bonuses is quality improvement, not politics, and the program will be evaluated as it goes along. “We are looking at whether an alternative payment incentive structure would lead to broader quality improvements across all Medicare Advantage plans, by giving incentives for a broader range of plans to improve,” said Medicare spokesman Brian Cook. Medicare covers seniors and disabled people. About one-fourth of beneficiaries are signed up in Medicare Advantage plans that offer lower out-of-pocket costs and more comprehensive benefits than the traditional program. Some of the heaviest enrollment is in politically contested states, including Florida, Pennsylvania, Ohio, Nevada, Minnesota and Colorado. The health care law cut $145 billion over 10 years from Medicare Advantage, partly to correct a widely acknowledged problem with overpayments to the plans. Those cuts start off modestly in 2012 and build up. Insurers were expected to shift the burden to beneficiaries in the form of fewer services and higher out-of-pocket costs, triggering an exodus back to traditional Medicare. “The net result is that the boat didn’t get rocked,” said independent analyst Dan Mendelson, president of the information firm Avalere Health. “It’s fair to say that (Medicare) could not tolerate dislocation, given the political climate.” But Mendelson also said he agrees with the administration that the new money will get more plans thinking about how to improve quality, if they want to remain profitable. “They are giving the plans training wheels to improve their quality,” he said. The health care law itself tried to soften the impact of Medicare Advantage cuts by providing quality bonuses for highly-rated plans that received four or five stars in a government grading system. Then, in a policy shift quietly completed this month, HHS decided to grade on the curve. Average-quality plans garnering just three or three-and-a-half stars would also get bonuses, although at a lower percentage than top-tier plans. The HHS decision means four out of five Medicare Advantage enrollees are in plans now eligible for a bonus. Under the tougher approach Congress took in the health care law, only one in four would have been in plans getting the extra payments. HHS’ nearly $7-billion bonus program is temporary. In 2015, the cuts called for in the health care law will kick in again. Still, the episode could be an early sign that Medicare cuts used to finance much of Obama’s coverage expansion for the uninsured will turn out to be politically unsustainable, as have other efforts to impose austerity. For example, Congress has routinely waived cuts in Medicare payments to doctors. A nonpartisan agency that advises lawmakers on Medicare criticized the bonus plan. The Medicare Payment Advisory Commission said it amounts to “a mechanism to increase payments” and its design “sends the wrong message about what is important to the program and how improved quality can best be achieved.” At a time when government is urging health care providers to improve quality and cut costs, the bonus plan “lessens the incentive to achieve the highest level of performance,” commission chairman Glenn Hackbarth wrote to HHS officials. Medicare spokesman Cook disagreed, saying even plans that get two stars will now have an incentive to improve. Medicare has classified the bonuses as a demonstration program, relying on broad legal authority Congress gave the agency to experiment with quality improvements. It’s the costliest demonstration program in Medicare history. The money will come from the Medicare trust fund.

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Goodbye To Federal Funding For 2012 Candidates

March 31, 2011

NEW YORK — A cornerstone of U.S. politics since the 1970s, public funding of presidential campaigns may soon go the way of other relics of the era like long sideburns and lava lamps. Neither President Barack Obama nor any of the leading 2012 Republican contenders is expected to accept federal matching funds and the limits they impose. In fact, opting to take public money to finance a presidential campaign this year is likely to be seen as the mark of a loser. “I would be shocked if they took matching funds. I don’t think that it’s a successful model this time, or in the future,” says GOP strategist Carl Forti. He’s been an adviser to former Massachusetts Gov. Mitt Romney and helped run American Crossroads, an independent group that raised millions to defeat Democratic candidates in 2010. Obama’s record-breaking fundraising in the 2008 campaign allowed him to abandon the public system in both the Democratic primaries and the general election. With his success as a benchmark, top-tier Republican candidates now are planning to go it alone. The president, who has no Democratic primary race, may become the first candidate to raise $1 billion for the general election in 2012. Republicans in a wide field must battle each other for the party’s private donors. But the emergence of free-spending independent political groups – since the Supreme Court in 2009 cleared the way for unlimited corporate spending in campaigns – is expected to help close the imbalance between Obama and the GOP. Several of the Republicans also have immense personal wealth. Presidential candidates of both parties once relied on money from the U.S. Treasury as an indispensible part of their budgets. Indeed, the ability to qualify for matching funds was considered an indication of a candidate’s strength after the system was put in place following Watergate-era fundraising abuses. The system was intended to reduce candidates’ dependence on large contributions from individuals and groups. Money for the program comes from a voluntary $3 checkoff on Americans’ income tax returns. The fund currently contains $195 million, which can be used only for presidential primary and general election campaigns and to subsidize the major parties’ nominating conventions. Over time, the program began to weaken. George W. Bush refused public funding in his 2000 and 2004 presidential primary campaigns but did accept the money in the general election. Several candidates in both parties opted out in the 2008 primaries, but others did accept matching funds, including Democrat John Edwards. Arizona Sen. John McCain, the 2008 GOP nominee, turned down matching funds for the primaries but then took them in the general election – a move that severely hindered his ability to compete financially with Obama. For this year’s serious GOP candidates, refusing federal funds will be both liberating and daunting. By refusing matching funds, candidates are potentially forfeiting a lot of money. Edwards received nearly $13 million in matching funds in the 2008 primary, and Joe Biden, now the vice president, accepted over $2 million for his primary run. McCain, the winner of the GOP nomination that year, accepted $84 million in federal funds for the general election, but that barred him from any private fundraising. Obama opted out of the system and raised $264 million. For the general election this time, a qualifying party’s nominee would get just under $90 million and would be prohibited from raising more privately. For the primaries it’s more complicated: Qualifying candidates can receive a federal match of up to $250 for each contribution from an individual and must abide by both state spending limits and an overall spending limit of around $50 million. Among the likely Republican candidates: _ Romney, a multimillionaire, turned down public funds in 2008. He raised $66 million and lent his campaign $44 million before eventually dropping out. He’s expected to enter the 2012 field soon and has begun assembling a list of “bundlers” who have been asked to raise $25,000 apiece. He has told donors he hopes to take in $50 million for the primaries – less than his 2008 run but an ambitious figure nonetheless. He has not indicated how much of his personal fortune he will commit. _ Former House Speaker Newt Gingrich hopes to raise $30 million for the primaries, his advisers say. Gingrich has long solicited funds for several organizations including the independent American Solution for Winning the Future, which raised and spent $28 million in 2010. _ Mississippi Gov. Haley Barbour has a strong national fundraising base from his years as a lobbyist and as chairman of the Republican National Committee and Republican Governors Association. His advisers say he plans to refuse federal matching funds and has set a goal of raising $55 million for the primaries. _ Minnesota Gov. Tim Pawlenty hopes to raise about $25 million for the primaries. Advisers say they don’t believe he would accept matching funds. Pawlenty’s campaign has deployed a 16-member national fundraising team aimed at starting an aggressive fundraising push April 1. He also has raised $4 million for three separate political action committees. Other potential candidates have been less clear about their plans. _ Real estate developer Donald Trump says he will decide by June whether to join the field. Like Romney, he is very wealthy and has vast business connections. _ Former Utah Gov. Jon Huntsman is expected to launch a campaign sometime this spring when he returns from China, where his is serving as U.S. ambassador. Huntsman has abundant personal wealth. _ Minnesota Rep. Michele Bachmann, a tea party favorite weighing a run, raised more than $13 million for her 2010 re-election campaign and has a strong national fundraising base. Former Pennsylvania Sen. Rick Santorum is also considering a run and is popular among many social conservatives. _ Former Arkansas Gov. Mike Huckabee and former GOP vice presidential candidate Sarah Palin are weighing bids but are considered less likely to run. Both have strong fundraising connections. The big Republican field is off to a late start. Most 2008 contenders were in by early 2007 and were able to raise money in the first quarter of the year, between January and March. Most this time won’t start until the second quarter, beginning April. 1. “We have a very different environment than we did in 2008,” said Dave Levinthal of the Center for Responsive Politics, which tracks campaign fundraising. “These candidates have all shown they have a proven ability to raise money. The problem is, if you have half a dozen or more relatively well-known Republicans running around, there is only so much cash to go around.” Some of the GOP-favoring private groups may get involved in the primaries, raising and spending money on behalf of candidates or targeting others for defeat. But many are likely to save their firepower for the general election.

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U.S. Economy Growing Faster Than Rivals, But Creating Far Fewer Jobs

March 31, 2011

WASHINGTON — The United States is out of step with the rest of the world’s richest industrialized nations: Its economy is growing faster than theirs but creating far fewer jobs. The reason is U.S. workers have become so productive that it’s harder for anyone without a job to get one. Companies are producing and profiting more than when the recession began, despite fewer workers. They’re hiring again, but not fast enough to replace most of the 7.5 million jobs lost since the recession began. Measured in growth, the American economy has outperformed those of Britain, France, Germany, Italy and Japan – every Group of 7 developed nation except Canada, according to The Associated Press’ new Global Economy Tracker, a quarterly analysis of 22 countries representing more than 80 percent of global output. Yet the U.S. job market remains the group’s weakest. U.S. employment bottomed and started growing again a year ago, but there are still 5.4 percent fewer American jobs than in December 2007. That’s a much sharper drop than in any other G-7 country. The U.S. had the G-7′s highest unemployment rate as of December. Canada and Germany have actually added jobs since the recession ended in June 2009. U.S. companies aren’t acting the way economists had expected them to. In the past, when the U.S. economy fell into recession, companies typically cut jobs but often kept more than they needed. Some might have felt protective of their staffs. Or they didn’t want to risk losing skilled employees they’d need once business rebounded. Among manufacturers, for example, some tended to hoard workers during downturns by giving them make-work assignments – sweeping factory floors, counting inventory, painting warehouses. The result is that productivity – output per workers – has typically decelerated or even dropped as the economy has weakened. Japan and Europe have been following that script. At the depth of the recession in 2009, productivity shrank 3.7 percent in Japan and 2.2 percent in Europe. The United States has proved the exception. U.S. productivity growth doubled from 2008 to 2009, then doubled again in 2010, according to the Organization for Economic Cooperation and Development. Panicked by the 2008 financial crisis and deepening recession, U.S. employers cut jobs pitilessly. They slashed an average of 780,000 jobs a month in the January-March quarter of 2009. “My sense is there was much more weeding out of the weakest workers – the ones they didn’t want,” says Harvard economist Kenneth Rogoff. Yet after shrinking payrolls, many companies found they could produce just as much with fewer workers. And with that higher productivity came higher profits. By July-September quarter of 2010, U.S. corporate earnings were 12 percent more than when the recession began. By contrast, corporate profits fell 6 percent in Japan and 16 percent in Canada from the October-December quarter of 2007, according to Haver Analytics. In Reading, Pennsylvania, Remcon Plastics moved fast once sales evaporated in the fall of 2008. “I have never seen my business go so quiet,” says Peter Connors, founder of the company, which makes pharmaceutical equipment. “I recognized that business wasn’t going to be strong for some time.” So he laid off 25 temporary workers. And he put his 50 full-time employees on a three-day workweek. Remcon rethought how it did business – restructuring the workplace, for example, so employees didn’t have to walk as far to do their tasks. A plastic part that once had to be made by six workers now needs three. It can be produced faster. “So even as demand came back, we could wait to add people,” Connors says. Japanese, European and Canadian companies are less inclined to purge employees. Their customs, labor regulations and unions discourage aggressive layoffs. U.S. management practices “make it easier for employers to avoid adding permanent jobs,” says economist Erica Groshen, a vice president at the Federal Reserve Bank of New York. “They have temporary help they can hire easily. They’re less constrained by traditional human resources practices or by union contracts.” Fewer than 12 percent of American workers belong to unions, which provide some protection against job cuts. That’s the fourth-lowest union participation rate among 31 countries the OECD tracks. “When there’s pressure to cut costs in the United States, it’s borne by the workers,” says Howard Rosen, visiting fellow at the Peterson Institute for International Economics. “In Europe, it’s borne differently.” In Germany, unemployment is lower now than before the recession. To limit layoffs, German companies spread the pain by reducing workers’ hours. “Japanese companies took it upon themselves to paint the factory – do more stuff that kept people on the payroll,” says Gary Burtless, senior fellow in economic studies at the Brookings Institution. That helps explain why Japan’s unemployment rate was the lowest among G-7 countries in December at just 4.9 percent, though it may rise after the earthquake and nuclear disaster that struck Japan’s northeastern coastline. The United States is “on the other end of the spectrum,” says Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University. “Everything is tilted in favor of the employers… The employee has no leverage. If your boss says, `I want you to come in the next two Saturdays,’ what are you going to say – no?” ____ AP Business Writer Pallavi Gogoi in New York contributed to this report.

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Poll Suggests Americans Growing Increasingly Pessimistic On Economy

March 30, 2011

WASHINGTON — For all the talk of recovery, Americans are growing increasingly pessimistic about the economy as soaring gas costs strain already-tight budgets. So far, people aren’t taking it out on President Barack Obama, a new Associated Press-GfK poll shows. Even so, the survey highlights a central challenge Obama will face in his campaign for re-election. The president will have to convince a lot of voters who are still feeling financial hardship that things are getting better. Obama’s approval ratings have held steady at around 50 percent over the past month. But the disconnect between negative perceptions of the economy and signs that a rebound are under way could provide an opening for Republicans at the outset of the 2012 campaign. In the survey, just a sliver of Americans – 15 percent – said they believed the economy had improved over the past month, compared with 30 percent who had thought that in January. Only a third were optimistic of better times ahead for the country, down from about half earlier this year. And 28 percent thought the economy would get worse, the largest of slice of people who have expressed that sentiment since the question was first asked in December 2009. “It’s in a poor state,” said Billy Shirley, 74, a Democrat from Commerce, Ga. “Everything’s going to the bad. Everyone’s spending more on gas, food, everything. The prices on everything are going up, and that’s hurting the nation.” Recent economic indicators paint a more positive picture: The unemployment rate, though still high at 8.9 percent, has been declining, and consumer spending and personal income were both up last month. The gross domestic product was growing at an annual rate of 3.1 percent as last year ended. Americans are acutely focused on their financial well-being, even as turmoil in the Middle East commands international attention. And the foreign unrest is directly affecting them by boosting oil prices. More Americans – 77 percent, up from 54 percent last fall – now say gas prices are highly important to them. Obama’s job-performance ratings haven’t suffered as people’s attitudes about the economy have shifted over the past month. Half still approve of how he’s doing his job, and half say he deserves to be re-elected. His rating on handling the economy was unchanged: 47 percent approved. In fact, twice as many people said Obama “understands the important issues the country will need to focus on during the next two years” as said that about Republicans in Congress. That’s not to say that Obama is escaping responsibility for the economic situation. Annale Iltis, 26, of Sarasota, Fla., faults big business, the federal government and, to a lesser extent, the president. “I do a bit,” she said, “but at the same time he has good ideas. He just doesn’t have the backers in the House and the Senate to get them done.” The self-described independent voter, who supported Obama in 2008 and says she would do so next year, is concerned that deep budget cuts that Congress is considering will hurt the fragile economic recovery. “It seems stable now but I fear it’s going to go downhill quickly,” she said. Henry Kugeler, 49, of Chicago, likened the situation to the fable about the crawling tortoise that wins the race against the speedy hare, saying: “Right now, the country is the tortoise. I don’t think the economy is getting worse. The recovery that’s happening is real, but it’s incredibly slow.” The Democrat doesn’t blame Obama or other politicians, saying: “They haven’t helped but I don’t know that they’ve hurt.” Obama inherited an economy in recession. Republicans angling for the chance to challenge him next fall have been blaming him for the slow recovery and arguing they could do better. Presidential advisers are hopeful that the positive economic trends continue, giving Obama an opportunity to make the case for keeping him in office rather than risk an economic backslide. As the slow-to-start GOP nomination fight starts in earnest this spring, the poll shows that candidates clearly have work to do. More than or nearly half of Republicans surveyed say they don’t know enough about the following potential contenders to even express an opinion about them: Mississippi Gov. Haley Barbour, Indiana Gov. Mitch Daniels, former Utah Gov. Jon Huntsman, former Minnesota Gov. Tim Pawlenty, former Pennsylvania Sen. Rick Santorum and Minnesota Rep. Michele Bachmann. Roughly two-thirds of Republicans expressed favorable views of former Arkansas Gov. Mike Huckabee and former Alaska Gov. Sarah Palin, while former House Speaker Newt Gingrich and former Massachusetts Gov. Mitt Romney got slightly lower marks. Even though many of the candidates aren’t well-known, about half of Republicans say they are satisfied with their choices. The poll comes just as Republicans and Democrats on Capitol Hill wrestle over the federal budget, and there could be a partial government shutdown without further action by Congress. The Republican-controlled House has approved some $60 billion in spending cuts. The Democratic Senate is looking at $33 billion. Without agreement, some Republicans say they won’t approve funding to keep the government operating. The issue of federal spending isn’t just something lawmakers talk about. It’s clearly weighing on the public. Roughly half in the survey said they expected enormous federal budget deficits to cause a major economic crisis for the country for the next decade, and most said they worry that mounting federal debt will hamper the financial future of their children and grandchildren. In the shorter term, people in the poll view everyone negatively when it comes to handling the deficit, but lawmakers get worse marks than the president. Only about a third of those surveyed approve of how Republicans and Democrats are dealing with the issue, while 41 percent approve of Obama on the matter. People also are evenly divided on which party would best handle the deficit. The Associated Press-GfK Poll was conducted March 24-28 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide and had a margin of sampling error of plus or minus 4.2 percentage points. ___ Associated Press Polling Director Trevor Tompson, Deputy Polling Director Jennifer Agiesta and News Survey Specialist Dennis Junius contributed to this report. Online: http://ap-gfkpoll.com

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Rick Santorum Blames Abortion For Social Security Woes

March 29, 2011

CONCORD, N.H. — In his latest trip to New Hampshire, Republican Rick Santorum says the Social Security system would be in much better shape if there were fewer abortions. The former Pennsylvania senator and potential presidential candidate was asked about Social Security during an interview on WESZ-AM radio in Laconia on Tuesday morning. He says the system has design flaws, but the reason it is in big trouble is that there aren’t enough workers to support retirees. He blamed that on what he called the nation’s abortion culture. He says that culture, coupled with policies that do not support families, deny America what it needs – more people. Santorum has been a frequent visitor to New Hampshire, which holds the earliest presidential primary.

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William Hogeland: How John Adams and Thomas Paine Clashed Over Economic Equality

March 28, 2011

Here’s John Adams on Thomas Paine’s famous 1776 pamphlet ” Common Sense “: “What a poor, ignorant, malicious, short-sighted, crapulous mass.” Then comes Paine on Adams: “John was not born for immortality.” Paine and Adams may have been alone among the founders for having literary styles adequate to their mutual disregard. “The spissitude [sic!] of the black liquor which is spread in such quantities by this writer,” Adams wrote of Paine, “prevents its daubing.” Paine : “Some people talk of impeaching John Adams, but I am for softer measures. I would keep him to make fun of.” They went on and on. The Paine-Adams antipathy wasn’t just personal. Its sources lay in the founding generation’s deep political divisions over economic equality. Those who don’t know there was a founding political division over economic equality can thank the many historians — including even some biographers of finance-savvy founders like Superintendent of Finance Robert Morris — who feel more comfortable with philosophies of government, issues in constitutional law, and (if they get into economics at all) the legacies of Robert Walpole, Jacques Necker, and David Hume than with day-to-day American economic realities, and with the full range of 18th-century thinking from elite to working-class, on monetary and finance policy. Things John Adams hated about “Common Sense” are revealing. One was the pamphlet’s widespread reputation as the tipping point for America’s declaration of independence from England. Adams thought that was nonsense. The only novel thing in “Common Sense,” Adams believed — and he meant it in a bad way — wasn’t what he cast as its belated, derivative call for American independence. It was what he blasted as Paine’s “democratical” plan for a new kind of American government, which flew in the face of the balanced republicanism that Adams loved. That part of the pamphlet was its only important part to John Adams, but it is often ignored or glossed over in favor of celebrating what Adams thought the pamphlet never did: persuade Americans to support independence. In proposing a new American government, Paine scoffed caustically at the whole idea of balance and the covalence among branches that we’re taught to revere as exceptionally American, but were really derived from the post-Settlement English constitution. Where Adams saw checks and balances as key to liberty, Paine wanted an executive branch subordinated to a hyper-representative legislature (a single house, with no check from any elite “upper” house) and a judiciary directly elected by the people. Most horrifying to Adams, Paine wanted citizens to have the vote regardless of property ownership. While in “Common Sense” Paine dialed back his thoughts on equality, arguing only for easy access to the franchise, in other works he promoted smashing the ancient equation that liberty-loving Whigs had always made between property and representation. Paine wanted the less propertied and — horrors! — even the unpropertied not only to vote in a free America, but also to hold office. Paine’s goal in giving the lower sort and the poor access to political power was economic equality. When ordinary Americans held power, they would pass laws promoting the interests of ordinary Americans — and obstructing, not coincidentally, the interests of finance elites. And that’s just what happened in Pennsylvania beginning in 1776, when Paine’s friends wrote a constitution for that state , based largely on Paine’s ideas, removing the property qualification for the first meaningful time anywhere. Assemblies elected under that constitution passed anti-monopoly laws, worked to bring about government debt relief, and took away the charter of the bank founded by the high financier Robert Morris for the purpose of enriching himself and his friends. The ideas in “Common Sense” that John Adams feared and loathed became realities in Pennsylvania. Many historians celebrating Paine’s goals of liberty and independence fail to acknowledge that for Paine, those goals were inextricable from political equality for the people he spoke for: ordinary working Americans. One of the most fascinating moments in Paine’s career therefore occurred when he went to work for the high financier Robert Morris himself, writing at Morris’s behest on behalf of federal taxation in the service of national unity. Paine’s democratic populist friends saw Morris’s taxes, and indeed Morris’s wish for national unity, as a means of shoring up American wealth and pushing back the economic gains ordinary people had made in the Revolutionary period. Paine excoriated Morris for chicanery during the Revolution and helped create the economically democratic government that took away Morris’s bank and made the fat cat investor accountable to public opinion. In the 1780s, sudden support for Morris’s nationalist finance made Paine look like a sellout. He lost friends among his 1776 allies for equality. But unlike many of his populist friends, Paine wanted a strong national government for America. Many economic populists of the period made the mistake of placing hopes for popular finance in antifederalism and then in the emerging “states rights” thinking of the anti-Hamilton elites. Populists had reason to feel more sympathy for state governments than for a national one: legislatures from time to time had been susceptible to the will of the less enfranchised, expressed through rioting ; states had issued paper currencies and established land banks . And nationalists like Morris and Hamilton were indeed out to end all that. They wanted to make finance and monetary policy national matters, empowering suppression of debtor riots and enforcement of taxes collected for the benefit of an interstate money elite. Paine, however, was impatient with the anti-nationalism of his fellow democrats. Skeptical of knee-jerk populism, he had high hopes for national finance. The strangest of bedfellows, Paine and Morris were working together at weird cross purposes. Paine’s vision, diametrically opposed to Morris’s, was like Morris’s in being a national one. Along with “the madman of the Alleghenies” Herman Husband, who also saw through state-focused elites’ pandering to populism and thought an egalitarian national government might be better empowered to hold greed in check, Paine’s radical democracy made him an offbeat kind of Federalist. Gazing farther than most of the popular finance activists of his time, he looked for a strong national government that would amplify the democratic gains he’d helped achieve in Pennsylvania. The United States government, in Paine’s vision, would justify its national power by regulating elite finance throughout the states, promoting the interests of ordinary Americans everywhere, and increasing social equality by law. For Thomas Paine, American finance policy must dedicate itself to economic equality. Cross-posted from New Deal 2.0 .

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Andrew Reinbach: Fracking Tide Turns — Frackers Get Mean

March 28, 2011

The PR tide seems to be turning against fracking, and predictably, the political rhetoric from the gas industry and its allies is turning nasty. In upstate New York, for instance, Richard Downey, director of a local landowner’s coalition that hopes to lease its land to drillers, recently published an opinion piece in the Oneonta Daily Star playing the class warfare card — claiming pro-drillers are good, truck-driving local folk, while the antis are Volvo-driving, brie-eating NIMBY elitists against anything ruining the view from their estate. Downey himself is a retired New York City teacher, and while his rhetoric seems less than measured, it’s typical of the posture displayed in letters to the editor columns across the state, many of which read like pieces in right-wing blogs — vitriolic, largely fact-free, and wrapped in the flag, A recent editorial in The New York Post , for instance, did everything but claim anti-frackers are led by former Weatherman Bill Ayers, calling anti-frackers “Hard-core lefties and environmental groups” that include the Working Familes Party and MoveOn.org. This characterization of the anti-frackers isn’t even true; in New York’s Marcellus Shale region, for instance, the anti-fracking forces include local families farming the same land since the Revolution. The same is becoming true in states as far apart as Pennsylvania, Arkansas, and Wyoming, where concerns about the effect of hydro-fracking upon ground water supplies are getting more pronounced everyday — together with lawsuits over the same. But the rhetoric is a good indication of how defensive the frackers have become, as a rising tide of media stories about the dangers of fracking to the environment appear alongside reports of serious environmental accidents, and local governments banning fracking within their precincts. Pittsburgh, for instance, passed an anti-fracking ordinance last November. Since then, local townships across upstate New York have done the same — recently joined by Ontario, Canada. And last May in Flower Mound, Texas, no-fracking candidates swept a recent municipal election. In fact, the tide of public opinion is visibly turning against hydro-fracking — and not just in the Marcellus Shale region that begins in northern Alabama and ends near Utica, New York. Generally speaking, early industry assertions that hydro-fracking is perfectly safe have collapsed under a flood of facts about the procedure, leaving deep suspicions about the industry’s intentions and reliability. Enter a Philadelphia PR firm, Gregory/FCA, which charted the turning tide in a recent article it published in its blog, displaying data that made it clear that public opinion is turning against fracking. “Since the beginning of 2010, the positive sentiment in traditional media for Marcellus Shale has fallen dramatically, from a high of +3.1 to a low of -0.3 in January 2011,” wrote Gregory Matusky, the company president, in the report. Matusky follows up that polling data — he says he analyzed millions of media reports to come up with the downward trend — with what amounts to a memo on how to counter media reports like the one from Moundsville, West Virginia that the municipal water supply temporarily ran dry because local gas drillers withdrew so much water from it. Matusky’s main heads: • Publish an ocean of information about the Marcellus Shale. Matusky, who says he has no energy company clients, claims that the Marcellus Shale gas play is generally a good thing, but that the anti-fracking forces “…aren’t under the same time constraint as gainfully employed Americans [and] have…idle time to plant falsehoods, raise suspicions, and demonize the oil and gas industry.” • Never respond to the supposed negatives. Constantly focus the conversations on how domestic reserves of clean energy of natural gas that will reduce our nation’s carbon footprint, says Matusky. • Make it about people. “The people of Marcellus Shale are fierce, noble individuals who have been ignored for generations. The industry needs to…make their stories of economic renewal a mainstay of the storytelling.” How? “The industry should underwrite a [reality] show,” he says. • Dominate the online discussion. “The industry needs to dominate online conversations as a way to positively impact consumers, regulators, influencers, and ironically, the traditional media….” • Connect the dots for the public [about the benefits of natural gas]. • Language is important. Find a better term than fracking, says Matusky; “The very term “fracking” has a negative connotation. Much of what Matusky recommends is already finding its way into the public realm — Downey’s op-ed piece being only one example. Missing from Matusky’s analysis? Whether allowing hydro-fracking in the Northeast is a good business deal. People fighting to keep gas drilling out of their backyards like to point out, for instance, that the West and Midwest are running out of fresh water, and will eventually lead people and industry back to where it is — the Northeast. These people then say that looked at this way, swapping the region’s plentiful supplies of clean water for the money gas drilling will bring is, to all intents, trading its birthright for a mess of pottage. Whether notching up the rhetoric will save the gas industry’s bacon is uncertain at best. Pennsylvania and West Virginia may have already made their deal with the industry, but New York hasn’t, and aside from signs that new regulations covering fracking may be delayed almost indefinitely, two recent bills were introduced in the state legislature that would keep the fracking wolf from the door for some time: Assembly Bill A06541 proposes a 5-year moratorium on hydro-fracking, and Senate Bill S4220 would ban it altogether. Also muddying the water for the energy industry: The Environmental Protection Agency, under fire for having exempted fracking from the Clean Water Act in 2004, is conducting a wide-ranging analysis of all the environmental impacts of hydro-fracking and isn’t expected to issue a report for several years. The newly installed Commissioner of New York’s Department of Environmental Conservation, Joseph Martens, has made conflicting statements that, when parsed, suggest little may be approved in New York until the EPA issues its own regulations. Delay, though, may not turn out to be the best outcome, since it gives the energy industry plenty of time to follow Matusky’s advice and slap some new reality show on the airwaves. Maybe it’ll be called Gas Driller Angels.

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In AT&T Deal, Bankers Guaranteed To Benefit As Consumers And Shareholders Hope For Best

March 23, 2011

Eleven years ago, at the height of the telecom bubble, Deutsche Telekom paid about $51 billion for one of America’s smallest national cell phone companies, hoping to gain entry into the burgeoning U.S. market. On Monday, the German giant announced it’s selling the offspring of that deal — T-Mobile USA — to AT&T for $39 billion. That 2000 investment — now worth about 40 percent less after adjusting for inflation — has cost Deutsche Telekom and its shareholders dearly. The benefits for the American public, which were widely touted at the time as the German company fought for regulatory approval, are debatable. But the bankers on those deals sure made a killing. And while it remains to be seen whether the same purported “synergies” and “cost savings” that were peddled in 2000 will ultimately benefit AT&T’s shareholders who are being promised the same thing, bankers once again are poised to strike it rich. Bankers’ fees will roll in regardless of whether their advice will ultimately benefit their clients. “When you look at investment bankers, their job is to put buyer and seller together,” said Matt McCormick, a portfolio manager at Bahl & Gaynor, which oversees about $3.2 billion. “Much like a real estate broker, if you’re trying to buy a house, does the broker really care if you’re in a ranch, or a two-story home, or with a pool or not? They are only paid if a deal gets done.” AT&T’s shareholders are cool to the idea. McCormick, who oversees about 500,000 shares of AT&T for clients, said the benefits of the deal are “yet to be seen.” Shares in AT&T are up 0.6 percent since Friday. Bankers will probably pocket about $120-140 million off the AT&T and T-Mobile deal, according to Teck-Tjuan Yap, managing director at Freeman Consulting Services. For JPMorgan Chase, which advised AT&T and provided a $20 billion loan, it’ll likely be much, much more after a few years, one prominent bank analyst said. Richard Bove, an analyst at Rochdale Securities, told clients that the purchase could be worth upwards of half a billion dollars for JPMorgan after fees and other sorts of income over the coming years are considered. Bankers, unlike shareholders, are always among the biggest beneficiaries when companies merge. Back in 2000, when Goldman Sachs was advising VoiceStream Wireless, the firm that eventually became T-Mobile, it made at least $80 million off its sale to Deutsche, securities filings show. That $80 million is worth $103 million in today’s dollars. Investors fared worse. Shares of Deutsche Telekom closed at 10.8 Euros on Tuesday, down about 60 percent from when the firm announced it was buying VoiceStream. In July 2000, Deutsche’s shares were trading in the 25-Euros range. Even investors who bought houses in Miami at the height of the housing bubble in 2006 have fared better. Their investment is down only about 49 percent, according to the S&P/Case-Shiller Home Price Index. The initial investment in T-Mobile was apparently so bad for Deutsche’s investors that they celebrated the sale to AT&T. Deutsche’s shares are up 12.6 percent since Friday’s close. But the wisdom of Deutsche’s bankers’ advice at the time isn’t what generated their fees. Donaldson, Lufkin & Jenrette, a firm that was eventually bought by Credit Suisse, got paid to get the deal done. That’s generally how it works, according to Alex Edmans, a finance professor at the University of Pennsylvania’s Wharton School and a former investment banker at Morgan Stanley. “Bankers’ fees are not contingent on the success of the deal,” Edmans said. “How much a banker gets paid for advising on a deal doesn’t depend on whether it creates shareholder value or whether they could sell it for more later. They get a fee for the announcement and the completion of the deal.” Edmans reckons that this may skew incentives towards completing a deal “at any cost, even if it’s not in the client’s interest.” There are three benefits from getting a deal done — regardless of its merits, he said. First, the bank immediately receives fees. Last year, mergers and acquisitions generated $17.9 billion in fees for investment banks, a 23 percent increase from 2009, according to data compiled by Bloomberg. Second, the banks on the deal improve their rankings among peers. Wall Street compiles lists ranking firms based on the income banks generate off M&A and the value of their deals. These lists are incredibly important — both for bragging rights and for landing future clients. Edmans said the potential of moving up these lists creates a “huge incentive” to get deals done as potential clients largely decide which bank they’ll pick for future deals based off their rankings. Third, deal activity improves a bank’s market share, particularly if the deal is huge. Predictably, there’s an emphasis on doing lots of deals, rather than being selective about which truly are the best for clients. The AT&T deal is the largest telecom acquisition since AT&T purchased BellSouth in 2006 for about $102 billion, according to Dealogic, a data provider. Thanks to the proposed purchase, JPMorgan moved one spot up in the rankings, according to data compiled by Thomson Reuters. “Even if you do a lot of value-destructive deals, this doesn’t seem to reduce your market share going forward,” Edmans said. “That sort of discouragement doesn’t really seem to exist.” “This isn’t optimal for the industry,” he added. There’s a way to ease the distortion caused by such incentives, Edmans argues. He said clients should judge banks based on the quality of their advice, rather than on the number of times they’re asked to provide that advice. In a paper with Jack Bao of Ohio State, Edmans and his colleague ranked banks based on whether investors cheered a proposed deal. By looking at the stock price of the affected companies over a three-day period immediately preceding and following a deal’s announcement, they found that the biggest banks were among the worst when it came to advising successful mergers. Goldman Sachs was about 10 times worse than the average firm, Edmans and Bao found. Morgan Stanley was just a tad better than Goldman. JPMorgan was also significantly worse than average. Their paper will be published in the Review of Financial Studies. Edmans and Bao found that middle-tier investment banks advised the best deals, likely providing the best advice, according to their metric. The big banks like Goldman and Morgan, Edmans said, probably advised bad deals because they had other interests in getting the deal done, like future opportunities underwriting the firm’s bonds or new stock issuance, as opposed to simply getting paid for providing good advice. “Given how the industry works, the banks are doing the rational thing,” Edmans said. That particularly makes sense in cases in which banks aren’t even brought in for their advice. “Being a consultant I hate to say this, but sometimes consultants are called onto a job just to validate what the CEO and CFO want,” said Yap of Freeman. “The question is: are the bankers basically called in to validate or justify,” or are they brought in to provide good counsel? Yap asked. He said that for AT&T, the question may not be about the benefit of purchasing T-Mobile, but rather the detriment that could arise from a competitor buying the nation’s fourth-largest wireless provider. If AT&T didn’t attempt to merge with T-Mobile, for example, the firm could face the prospect of declining market share if a competitor joined forces with Deutsche’s American subsidiary. AT&T and T-Mobile said the value of the “synergies” from their merger — corporate lingo for the savings derived from eliminating duplicative employees and activities — are “expected to exceed the purchase price of $39 billion,” according to a joint statement. That’s nothing new to McCormick, the money manager. “The usual things I look for in every press release are always statements like, ‘This will mean more synergies’ or ‘This will lead to more cost savings,’” he said. Firms are “always touting those key points again and again and again.” “But the truth is, they rarely work out.” ************************* Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Video: Siegel Says `Early Tightening’ by Fed Won’t Hurt Market

March 18, 2011

March 18 (Bloomberg) — Jeremy Siegel, a professor of finance at the University of Pennsylvania’s Wharton School, and Tim Mulholland, managing partner at China-America Capital Co., talk about inflation and Federal Reserve policy, and the potential impact on the U.S. stock market. Siegel and Mulholland, speaking with Matt Miller, Carol Massar, Julie Hyman and Adam Johnson on Bloomberg Television’s “Street Smart,” also discuss oil and natural-gas prices. (Source: Bloomberg)

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Scott Paul: We’re Number Two: Why America Is Losing its Lead in Manufacturing and How We Can Get it Back

March 16, 2011

When IHS Global Insight revealed this week that China has passed the United States to lead the world in manufacturing output, the response from some in government and manufacturing was to quibble with the data. The correct response is to develop a national manufacturing strategy , so that we can once again lead the world in manufacturing, which is a position we’ve held for 110 years. Why a strategy? Well, Germany has one. China has one. South Korea has one. In fact, every other industrialized nation has a network of currency, trade, tax, investment, innovation and skills policies that promote domestic manufacturing. We stand alone in allowing our jobs to be freely outsourced overseas. Our economic and training policies spur on a service and financial sector economy at the expense of investments in manufacturing. First, let’s consider the data on the size of manufacturing. Manufacturing accounts for one-third of China’s economic output. For most of our industrial competitors, the number is somewhere between 15 and 20 percent. In America, manufacturing accounts for less than 13 percent of our GDP , and that figure is falling every year. The rate of growth in manufacturing in China has averaged over 20 percent per annum over the past three years. In the U.S., despite a recent rebound, that figure is only 1.8 percent. We’ve shed 50,000 factories and 5.5 million manufacturing jobs over the past decade. Meanwhile, one company in China — Foxconn — created more manufacturing jobs last year than the entire U.S. economy. So many in industry are quick to blame America’s manufacturing woes on labor and regulation. They couldn’t be more wrong. The fact is, average compensation of an American manufacturing worker, including benefits, is a little over $32 per hour. In Germany, the figure is $48 per hour. Yet Germany’s manufacturing base is thriving. Germany has a trade surplus. German unions sit on company boards and make joint decisions about capital investments and corporate strategy. Plus, much of what we manufacture is not labor intensive; it’s capital intensive. Investing in human capital will make us more productive, and it will grow manufacturing. Why does being number one in manufacturing matter so much? First, manufacturing jobs are simply not replaceable. Workers who lose their manufacturing jobs end up in jobs that pay far less. The tax base shrinks. The demand on government services grows. Here’s a startling fact: if states would have held their share of manufacturing jobs over the past decade, there would be no state-level budget crises, even in California . Manufacturing drives innovation in our nation, because two-thirds of private sector R&D and 90 percent of patents come from manufacturing. As researchers at the Harvard Business School have ably demonstrated , when production leaves, innovation follows. It’s why we we’re in the embarrassing and unenviable position of importing solar, battery, and wind technologies that we invented in America a generation ago, as we seek to jumpstart clean energy manufacturing in our nation. Finally, it is arrogant, elitist, discriminatory, and foolish to suggest that young people should not enter manufacturing, yet that’s what experts tell us every day. We need an educational system that does not warehouse kids who want vocational careers. We need our business schools to teach managers how to “reshore” work rather than follow the race to the bottom. Fortunately, there is a way forward. We’ve put forward a plan to keep it made in America that has broad support from the American people–right, left and center. It’s common sense. This new Congress is in its third month, yet no bill to create American manufacturing jobs has been sent to the President’s desk. America likes an underdog, and that’s exactly what blue collar work is these days. It’s about time our political leaders in Washington discovered that. Otherwise, there may be some long days ahead on the campaign trail for the President in states like Pennsylvania, Ohio, Michigan, and Wisconsin.

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Alan Grayson: Did They Die in Vain?

March 12, 2011

On May 4, 1886, in Haymarket Square in Chicago, the public rallied peacefully in support of 40,000 workers in Chicago who had gone on strike, to win the right to organize. The police attacked, and eight died. On July 6, 1892, in Homestead, Pennsylvania, 3800 workers went on strike, to win the right to organize. Three hundred hired and armed goons attacked them. Five people died. On April 20, 1914, in Ludlow, Colorado, 1200 coal miners went on strike, to win the right to organize. The Colorado National Guard attacked their shantytown, and burned it to the ground. Nineteen people died. Two women and 11 children were asphyxiated, and they burned to death. Here and around the world, many people have fought and died, so that you and I would have the right to organize. And so that 250,000 public workers in Wisconsin would have that right, too. This is not exactly a new idea. Six months after the Ludlow Massacre, President Wilson signed the Clayton Act, prohibiting the prosecution of union members under Antitrust Law. That was almost a century ago. Two decades later, during the Franklin Roosevelt’s first term as president, he signed the National Labor Relations Act into law. It protects the right to organize. That was over 75 years ago. The right to organize also is a fundamental principle of international law. Over 150 countries have ratified the “Right to Organize” Convention, an international treaty. It was adopted in 1949, over 60 years ago. So why are we even talking about this, 11 years into the 21st century? Because the teabaggers want to “take back America.” They want to take it back, all right — take it all the way back to the 19th century. When there was no right to organize. When people worked for a dollar a day. When grown men competed against children for jobs. When women were barred from most jobs entirely. When you worked until you died. Not to mention slavery. I want to see an America that is healthy and wealthy. They want an America that provides cheap labor to our corporate overlords. An America where the middle class is chained by debt. We didn’t ask for this fight. But we have no choice except to fight back. For the survival of the middle class in America. For us, for our children, and for our grandchildren. And so that the victims in Haymarket, in Homestead and in Ludlow did not die in vain. As Cardinal Spellman said 45 years ago, “it is a war thrust upon us, and we cannot yield to tyranny.” I’m ready to fight for what’s right. What about you?

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In The Pipeline: Construction and Development News for March 6 – 12

March 8, 2011

In The Pipeline is a column on significant land sales, transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers. Send us news leads about your new project — and sign up to be added to our distribution list to receive future In the Pipeline columns by e-mail. Read previous columns and articles. $786M Pennsylvania Convention Center Opens to Public

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Beacon To Sell Market Square Office Complex in DC for $615M

March 1, 2011

Beacon Capital Partners LLC agreed to sell nearly 700,000 square feet of Class A commercial office space at 701 and 801 Pennsylvania Ave. in Washington, DC, to Wells Real Estate Investment Trust II Inc. for approximately $615 million, according to a recent U.S. Securities and Exchange Commission filing. The deal is set to close by Thursday, March 10. Wells REIT II, an affiliate of Norcross, GA-based Wells Real Estate Funds, will use a $500 million…

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DATA SNAP: US Jan Housing Starts Jump 14.6%

February 16, 2011

========================================================== U.S. Housing Starts Jan Dec ! Consensus: ! Total Starts: +14.6% -5.1%r ! +0.2% ! Single-Family: -1.0% -8.4%r ! Actual: ! ! +14.6% ! ========================================================== By Alan Zibel and Andrew Ackerman WASHINGTON -( Dow Jones )- Home construction in the U.S. rose to the highest level since September last month, an indication of life in the battered sector. Construction of homes and apartments rose 14.6% from a month earlier to a seasonally adjusted annual rate of 596,000 from a downwardly revised 520,000 in December, the Commerce Department said Wednesday. New building permits, a gauge of future construction, fell 10.4% to an annual rate of 562,000. A month earlier, permits had posted a 15.3% monthly gain as builders sought approval before building codes changed in Pennsylvania, California and New York state. Economists surveyed by Dow Jones Newswires expected housing starts would rise 0.2% to an annual rate of 530,000 in January. Permits had been projected to plunge to a rate of 545,000. The month’s results were driven by a 77.7% gain in multifamily construction, a volatile part of the market. Single-family homes, which made up about 70% of all starts, fell by 1.0% from a month earlier. Compared with the same month a year earlier, overall new-home construction was down 2.6% Home construction remains low due to weak demand from buyers. While some people are buying houses, many of those are foreclosures and other previously owned homes rather than new ones. Even as the housing market struggles, the U.S. economy has been picking up. Gross domestic product increased by 3.2% in the October to December quarter of 2010, after rising 2.6% in the third quarter. As foreclosures continue to pour onto the market, meanwhile, the U.S. homeownership rate has been falling. In the fourth quarter of 2010, 66.5% of Americans owned homes, down from 67.2% a year earlier and the lowest rate since the end of 1998, according to the Census Bureau. New-home sales were down 7.6% in December from a year earlier, the latest government data showed. Aside from low demand, builders have also had problems getting financing to start projects. New-home construction last year peaked in April, but then fell sharply with the expiration of tax incentives for first-time purchases. Housing starts in December fell 5.1% from a month earlier, revised from an originally reported 4.3% monthly decrease. The Commerce Department data showed that regionally, housing starts in January increased 41.8% from a month earlier in the Northeast, 36.4% in the Midwest and 15.8% in the South. Construction fell 9.7% in the West. Actual housing starts, without seasonal adjustments, rose to 38,200 in January from a downwardly revised 33,700 in December. Lumber and commodities markets watch those numbers closely to gauge demand. The Commerce report can be found at http://www.census.gov/const/newresconst.pdf -By Alan Zibel, Dow Jones Newswires; 202 862 9263; alan.zibel@dowjones.com (MORE TO FOLLOW) Dow Jones Newswires Copyright

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IRS Takes 100,500 SF in Northeast DC

February 16, 2011

The U.S. General Services Administration inked a 100,500-square-foot, 10-year deal for the Internal Revenue Service in Union Square in Washington, DC. The well-known division of the U.S. Treasury Department is scheduled to occupy three floors at 999 N. Capitol St. NE in January of next year. The IRS’ Criminal Investigation Division currently occupies 103,120 square feet at 1750 Pennsylvania Ave. NW in the central business district, according to…

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Candy Charity Scandal? Ex-Hershey Official Claims Corruption

February 11, 2011

HARRISBURG, Pa. — A former official involved with the multibillion-dollar charitable trust that controls the Hershey candy company is claiming in a court filing that board members used the trust’s considerable assets to pad their bank accounts and treat themselves to luxury hotel stays, limousine rides and free golf. That official, Robert Reese, was fired Thursday by the Hershey Trust Co., the bank that manages the charity’s money. Reese, a former top executive at the Hershey Co. candy company for 25 years, is the grandson of the man who started Reese’s candy, which Hershey’s bought in the 1960s. Most recently, Reese had served as a board member and the trust’s president. The trust’s letter of termination accused Reese of recommending and approving the inclusion of the IRAs in the company’s common fund, despite being advised that the practice violated securities laws – an allegation that Reese appeared to blame on the board. Reese’s allegations come four months after the state attorney general’s office said it was investigating transactions by the Hershey Trust, although the office has not specified which transactions. In a brief interview Thursday, the 60-year-old Reese declined to say why he decided to go public with the allegations now and steered questions back to the school for underprivileged children that the trust benefits. “What’s important here is not me,” Reese said. “It is the Milton Hershey School and School Trust.” Reese detailed his accusations of misuse of power in a document he filed Tuesday in Dauphin County Orphans Court. In a separate filing Thursday, he named 12 current and former Hershey Trust board members, including chairman LeRoy S. Zimmerman, a former attorney general of Pennsylvania and a longtime friend of newly elected Gov. Tom Corbett, who was the attorney general last fall when the office revealed its investigation. Zimmerman did not immediately return a message left at his Harrisburg law office Thursday evening. A trust spokeswoman released a statement saying the board had received word of Reese’s first filing Wednesday. It came after Reese learned he had not been re-elected to the board for another term, the statement said. “The Hershey Trust Co. board has received this petition and takes its fiduciary duties very seriously,” it said. “We will review these matters and respond appropriately.” The Hershey Trust oversees more than $7 billion in assets, including Hershey Entertainment & Resorts Co., operator of Hersheypark and the Hotel Hershey, and the controlling stake in the candy company begun more than a century ago by Milton S. Hershey. Reese said the Hershey Trust board members voted themselves exorbitant salary increases in recent years, boosting them from $35,000 in 2002 to as much as $130,000 last year. The trust bought a financially troubled golf course, partly owned by then-Hershey CEO and trustee Richard H. Lenny, and directed millions of dollars in upgrades to the Hotel Hershey, even though the $70 million cost was opposed by the hotel’s financial management, Reese said. Board members went on to golf for free at the course and stay for free at the hotel, while occasionally traveling by limousine and in first-class airline seating, he said. The trust has defended the golf course’s purchase as a valuable buffer, but Reese said the trust performed no financial analysis to justify the $12 million price, triple the course’s appraised value. A trustee, who was unnamed in the filing, hosted a political party fundraiser at the former home of Milton Hershey, High Point, which is owned by the trust, and a trust subsidiary catered the event without the political party committee paying any cost, Reese said. The trust or one of its subsidiaries also paid a government-relations consulting company partly owned by a son-in-law of a trustee hundreds of thousands of dollars without substantial evidence that the charity got its money’s worth, Reese said. In 2006, the trust allowed individual retirement accounts into its common funds, which financially and personally benefited a trustee, although the trustee had been advised that it was against federal securities regulations. Legal costs exceeded $11 million in money indirectly owned by the charity, Reese said. Reese, who was general counsel of the candy company when he retired from it in 2002, joined the trust as a director in 2008 to advise the board on a potential merger with Cadbury PLC. The board elected him president in 2009. ___ Information from: The Philadelphia Inquirer, http://www.philly.com

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Robert Kuttner: Business Doesn’t Need American Workers

February 7, 2011

Once again, the job numbers are dismal. In January, the U.S. economy created just 36,000 domestic jobs, far below the roughly 145,000 that economists had forecast. The unemployment rate fell, to 9 percent, but only because more and more discouraged workers are giving up and leaving the workforce. The U.S. still has a jobs gap of about 14 million jobs, and that number is increasing as the labor force grows. Counting people who’ve given up, or who are working part time when they want full time jobs, the real unemployment number is around 17 percent. America now has about 25 million people either out of work or underemployed. Meanwhile, corporate profits continue to set records. Profits in the third quarter of 2010 were 1.659 trillion, about 28 percent higher than a year before, and the highest year-to-year increase on record. What’s going on? Very simply, America’s corporations no longer need America’s workers. As Harold Meyerson documents in a brilliant piece for The American Prospect , our most admired corporations — GE, Apple, Hewlett Packard, Intel — are creating ever more jobs overseas and relatively fewer at home. This has the double benefit of taking advantage of cheap labor abroad and disciplining workers to accept low wages at home. Along with the high unemployment rates have come declining earnings. Meyerson writes: “In 2001, 32 percent of the income of the firms on Standard & Poor’s index of the 500 largest publicly traded U.S. companies came from abroad. By 2008, that figure had grown to 48 percent.” This record contrasts dramatically with that of the right’s favorite whipping boy — Western Europe. Germany is gaining jobs at a rapid clip. Its industrialists are committed to producing at home, and just in case they get ideas of making outsourcing a way of life, they have strong unions who negotiate agreements on where production is located. Germany’s labor costs are the highest in the world, but Germany nonetheless runs the world’s largest export surplus — 7 percent of GDP — while America runs chronic trade deficits. Barring drastic policy changes, our jobless recovery is likely to continue. There are three parts to the problem. First, while the economy is still in deep recession, both the administration and its Republican critics are already talking about steeper budget cuts. President Obama talks a good game about infrastructure spending, but it’s hard to see where the funds will come from as deficit hawks in both parties prevail. In Sunday’s New York Times , Jacob Lew, the president’s budget director, wrote a depressing (in both senses of the word) oped piece on the case for deeper budget cuts. In theory, massive infrastructure spending could create a lot of good jobs, but the Obama budget is likely to offer new spending at token levels to prove his good faith as a deficit-hawk, and the Republicans will likely deny him even that. Then there is the problem that Meyerson nails. The Obama administration is not about to take issue with American companies that profit from locating ever more production abroad. The corporate elite is fiercely opposed to any limits on its freedom to relocate, and Obama is on a mission to make peace with big business. The administration continues to promote “free trade” deals on the premise that they will create jobs — but more and more of those jobs get created offshore. Both political parties are in denial about the plain fact that American industry is competing against an industrial system in China radically different from our own. If a company like GE wants to operate in China, the Beijing regime extracts conditions that violate the spirit if not the letter of the World Trade Organization. Companies are made to take on Chinese partners, to transfer sensitive proprietary technology, and to shift their production and R&D to China. In exchange, they get government subsidies and docile workers. Eventually, much of their production is displaced by their Chinese partners, but in the meantime they make a lot of money. In the past two decades, company after company concluded that the U.S. government didn’t really care if we lost our manufacturing base. The Chinese government was making them an offer they couldn’t refuse, so one by one they made a separate peace with Beijing. At the latest U.S.-China summit, there was clucking about its overvalued currency, though last week the Treasury, out of solicitude for the feelings of Beijing’s leaders, once again declined to name China as a currency manipulator. But the overvalued Renminbi is a sideshow. The main game, which even relative hawks in the U.S. government just won’t raise, is China’s rigged industrial system. Why won’t American officials go there? Because American corporations have adapted just fine. Finally, there is the service economy. As many defenders of off-shoring have pointed out, even if Apple produces most of its products in China, a lot of the value-added stays in the U.S. Apple sales create jobs for workers in retail stores, warehouses, and shipping, as well as a relative handful of elite software and hardware designer jobs, not to mention corporate profits. Swell, but in the absence of a labor movement, or higher minimum wages, or other pressure for decent retailing wages, the service economy is turning into a Wal-Mart economy, where domestic service jobs that are created mostly pay lousy wages. These alarming job trends were not caused by the financial collapse that began in 2007. Rather, the prolonged recession revealed deep structural changes in the U.S. economy that reflect a gross imbalance between a corporate elite and ordinary working people. So if you want to know why the Democratic Party did so badly in the 2010 midterms, it’s because the administration lacked a plausible story about how to alter these basic dynamics. And it lacked that story because it was unwilling to challenge the corporate business model that disdains American workers. In light of that reality, the latest gestures by the president to show the business elite just what a good fellow he is are not just disappointing, but they are foolish politics. The president’s approval ratings may be up slightly in the wake of the Tucson shootings. The attack gave Obama an opening to shame the Republicans for their shrill partisanship and to model civility. But high-minded gestures will not cure the jobs crisis. The 2012 election will be won or lost in the industrial heartland, where states like Michigan, Ohio, Wisconsin, Missouri, and Pennsylvania are devastated from the recession, and whose jobs are not coming back as long as current policies continue. There is a whole other strategy available for dealing with the jobs crisis — a constructive economic nationalism. But neither the White House nor the Republican opposition is offering it. 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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Investigators Accused Of ‘Malpractice’ In Report On For-Profit Colleges

February 2, 2011

A lobbying group representing the for-profit college industry filed a lawsuit today accusing federal government investigators of “professional malpractice” after issuing a report last summer that documented aggressive and misleading recruitment at several for-profit institutions. The undercover investigation by the Government Accountability Office, which involved four investigators posing as fictitious prospective students, found numerous examples of deceptive statements made by admissions officers and other employees at 15 for-profit colleges. The findings included overstated promises of potential salaries after graduation and high-pressure tactics that pressed applicants to enroll before receiving information about financial aid. The for-profit college industry in recent months has seized on revisions made to the report in November – changes that in many cases represent technical tweaks and elaborations, but that the industry says have “cast serious doubt on the credibility and objectivity of the GAO’s analysis.” The report garnered great attention when it was released last August, causing stock prices to plunge at many of the publicly-traded corporations that own for-profit schools. The for-profit college sector includes a diverse array of schools, ranging from specialized institutions such as ITT Technical Institute to mostly-online colleges such as the University of Phoenix and Kaplan University. Chuck Young, a spokesman for the GAO said the revisions in no way undermine the overall message of the report, and that the agency stands by its findings. According to Young, an independent GAO review team examined the report after it was published and “found no material flaws in the evidentiary support for the overall message.” The lawsuit — filed by the Coalition for Educational Success, represented by Washington lobbyist Lanny Davis — is the latest example of an intense campaign the for-profit colleges are waging against new federal regulations that could restrict their access to lucrative federal student aid dollars. Industry groups have filed a flurry of lawsuits against the Department of Education and conducted an advertising blitz accusing the government of trying to prevent students from going to college. Davis, a former special counsel to President Bill Clinton, began representing the for-profit college sector last year. He has faced criticism in recent years over his paid representation of controversial international figures, including Laurent Gbagbo, the Ivory Coast dictator who refused to step down after losing an election last year. Davis dropped Gbagbo as a client soon after taking him on in December, following complaints from human rights groups. The for-profit college industry faces increased scrutiny as evidence mounts of its students leaving with debts they cannot afford to pay, given the low-wage jobs they tend to attain after graduation. For-profit schools enroll about 12 percent of students nationwide, yet the sector takes in nearly 25 percent of all student aid dollars and is responsible for 43 percent of student loan defaults. A number of the alterations to the GAO report cited in the lawsuit involved wording changes and statements made by recruiters to the fictitious students that were omitted from the first report. For example, in the original report, the GAO noted how a representative at a two-year college in California told the undercover applicant getting a job is a “piece of cake” and graduates of the computer drafting program could make more than $120,000 per year. The revised report added that the employee also said in the current economic environment, the job applicant could expect a job earning $15 per hour, if lucky. However, during the same interview, the representative also encouraged the student to falsely fill out a federal student aid form in order to qualify for Pell Grants. There were no revisions to that conclusion. In another case, the original report said a recruiter at a publicly-traded four-year college in Pennsylvania told an applicant she “should” take out the maximum in federal student loans, even if she didn’t need all of the money for tuition. The revised version of the report changed the wording to “could.” The lawsuit names a series of other tweaks made to the report, suggesting that “pervasive and one-sided errors resulted from the intentional bias driving the investigation, in violation of the GAO’s protocols.” GAO has not discounted any of the conclusions of its report, and the vast majority of the findings required no tweaks or revisions. Some of the more misleading statements included a recruiter in Washington, D.C., telling an applicant a barber can earn between $150,000 and $250,000 per year, even though the Bureau of Labor Statistics pegs 90 percent of barbers’ salaries below $43,000 per year. Another employee at a college in Florida sat coaching an undercover applicant while she took a proficiency test. The same recruiter implied a student did not have to pay back student loans, even though federal student aid is a debt that often cannot be discharged even in bankruptcy. The lawsuit notes that the GAO’s “malpractice and negligence” with the report forced the group to take on “substantial costs and expenses” to set the record straight. The Coalition for Educational Success has been pursuing a separate lawsuit against the Department of Education over access to e-mail records discussing proposed industry regulations. Another group representing the industry, the Association for Private Sector Colleges and Universities, filed a lawsuit last month against the Department of Education seeking to undo consumer protection regulations approved last fall. The disputed rules included guidelines meant to prevent misleading and deceptive pitches by recruiters and measures prohibiting bonuses awarded to recruiters based on the number of student enrollments they secure.

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Matthew L. Wiener Joins Cuneo Gilbert & LaDuca, LLP

February 2, 2011

WASHINGTON, DC–(Marketwire – February 2, 2011) – Matthew L. Wiener has joined the law firm of Cuneo Gilbert & LaDuca, LLP as Special Counsel. Wiener was previously General Counsel to Sen. Arlen Specter and, before that, Counsel to the House Judiciary Committee. Wiener is a graduate of Stanford Law School, where he was articles editor of the Law Review. Prior to his work on Capitol Hill, Wiener was a litigation partner at Dechert LLP and an adjunct professor at Rutgers University School of Law. In addition to practicing with the firm, he will be teaching a course on Congressional powers with Sen. Specter at the University of Pennsylvania Law School.

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Dr. Stan Humphries: Underwater Homeowners Unable to Swim to Warmer Waters?

February 2, 2011

Imagine this: You’re a successful professional in a small city, circa 2005. Your job is going well and the housing market is going gangbusters, so you dive in and buy a great starter home. You put down 10 percent (a lot for the times) and take out a 30-year fixed loan with monthly payments you can easily afford. You are responsible. Fast forward a few years, and the Great Recession is underway. Your company is in trouble, and you get laid off. Since you bought near the peak of the market and only put down 10 percent, you owe more on your mortgage than your home is worth. You’re underwater, like more than one in five single-family homeowners with mortgages, according to my real estate research firm Zillow. You’ve got enough in savings to get by for a few months, and you start searching for a job. Your area has been hard-hit by unemployment, so you’re thrilled when you get an offer from across the country. One problem: You’re stuck in your home. Or are you? The idea that negative equity impacts labor mobility is a notion that has likely occurred to anybody who’s thought about the matter for more than a couple minutes. Our acceptance of this notion is aided by a constellation of facts that seems to support it: 1. Long-term unemployment, measured as the percentage of unemployed people who have been out of work for more than 27 weeks, is at its highest level (44.3%) ever seen in the data series stretching back to the late 1940s. An interesting phenomenon considering that while unemployment itself is high (9.4% currently), it has been higher in the past (10.8% in November 1982). 2. Labor mobility is quite low. Only 1.4% of Americans moved between states in the year ending March 2010, the lowest interstate migration rate in the past fifty years. Moreover, interstate migration encountered a sharp decline in 2006, the year in which home values crested and started to fall. 3. The housing recession that began in 2006 and has already led to a decline of more than 26% in the value of homes (assuming they are sold in a non-distressed transaction) has created rates of negative equity that are unprecedented in the post Great Depression era. At the end of the third quarter of 2010, Zillow estimated that 23.2% of single-family homes with a mortgage were in a negative equity position. So, the data appear incontrovertible: high negative equity has led to decreased mobility which, in turn, has led to higher-than-normal long-term unemployment. The icing on the cake? A report in 2008 from the New York Fed confirming this relationship in a direct empirical test. Mobility was almost 50 percent lower for owners with negative equity than owners with positive equity. Slam dunk, right? Revised Data Throws Cold Water on Relocation Theory As with many complex economic problems, jumping to conclusions is not so simple. Late last year, the Minneapolis Fed released a couple papers that threw cold water on the whole argument. First came a paper arguing that migration between states actually didn’t suffer a precipitous decline in 2006. What happened instead is that the Census Bureau, who collects the data to compute the metric, changed their method of accounting for missing data (when respondents can’t or won’t answer a question). Once correcting for the change in methodology, it turns out that interstate migration has been on a slow, steady decline since 1996 and there was no actual blip in 2006. The reasons behind this longer term decline are the focus of active, ongoing research into whether mobility has become less necessary or simply harder and more expensive. Second came the paper taking another look at the New York Fed analysis and showing that the original authors’ treatment of missing data had biased the results. Reproducing the analysis with the change in the treatment of missing data found that homeowners with negative equity are at least as mobile as those with positive equity, and that those with high levels of negative equity are particularly mobile. Theoretically, this latter conclusion makes some sense for an underwater homeowner since the upside of moving (by defaulting and getting into a cheaper housing situation) grows relative to the downside (taking a credit hit because of foreclosure) as the level of negative equity grows. (Interesting side note: a senior economist at the Minneapolis Fed, Sam Schulhofer-Wohl, was author on both papers; Greg Kaplan at the University of Pennsylvania was co-author on the first). In conclusion, negative equity is toxic in a lot of ways. It combines with unemployment to increase the foreclosure rate which, in turn, depresses home values. It also slows the conveyor belt of homeowners selling their current homes and buying up to more expensive ones because they can’t easily sell due to negative equity. But, as markets continue to experience declines in home values towards what Zillow hopes is a bottom later this year, it is at least somewhat comforting that negative equity doesn’t appear to be leading to stasis in our labor market. We’ll take good news wherever we can find it.

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