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Jon Huntsman: Mitt Romney ‘Is In The Hip Pocket Of Wall Street’

by on November 29, 2011

Huffington Post…

During a New Hampshire campaign event on Monday, Republican presidential candidate Jon Huntsman had some harsh words for fellow contender Mitt Romney. As CNN reports, Huntsman said of the former Massachusetts governor , “Anyone who is in the hip pocket of Wall Street because of all the donations they are picking up, like Mr. Romney, is in these days not going to be the change agent who is going to fix the too-big-to-fail banking system.” Per MSNBC, Huntsman’s comments were delivered to an audience of about 80 people . Huntsman went even further in his attack on Romney . Presumably referring in part to endorsements that Romney has received from Senator Kelly Ayotte (R-N.H.) and Congressman Charlie Bass (R-N.H.), Huntsman said, “You should be wary of any candidate who carries the endorsements of every member of Congress, because it means they’re going to be a status quo president.” This is not first time Huntsman has gone after Romney. During a Republican presidential debate last week in Washington, D.C., the two candidates sparred over Afghanistan policy . HuffPost’s Sam Stein reports: In one of his sharper moments in Tuesday night’s debate, Jon Huntsman pressed Mitt Romney specifically over his willingness to defer to military commanders when it comes to U.S. policy in Afghanistan. “At the end of the day the President of the United States is Commander in Chief, Commander in Chief. Of course you are going to listen to the generals… but the president is Commander in Chief,” Huntsman declared, underscoring the argument that Romney was outsourcing policy to the Pentagon. To bolster his point, Huntsman pointed to the Vietnam War as an instance in which military command dictated U.S. policy too far. The invocation of Vietnam as a nadir in U.S. history may not win over the GOP crowd. But it certainly got Romney a bit piqued. “Of course the Commander in Chief makes the final decision,” he replied. “But the Commander in Chief makes that decision based upon that input of people closest to the ground.” In addition to criticizing his opponent’s ties to Wall Street, the former Utah governor announced on Monday a plan to prevent future bank bailouts. Per Bloomberg Businessweek , “Huntsman’s priorities include ending ‘too big to fail’ by setting a ‘hard cap’ on bank size based on assets as a percentage of gross domestic product.” As the Associated Press reports , “Huntsman also wants to shut mortgage giants Freddie Mac and Fannie Mae and repeal the law, known as Dodd-Frank, that overhauled the financial system.” The candidate’s plan to “end too-big-to-fail” is outlined on his official campaign website . Huntsman is quoted on the site as saying, “Capitalism without failure isn’t capitalism. We need banks that are small and simple enough to fail, not financial public utilities.” Huntsman, whom MSNBC reports is polling at 8% in New Hampshire, has been aggressively courting the state’s primary voters. He even made an appearance on a recent episode of “Saturday Night Live,” heaping praise on the Granite State during the show’s “Weekend Update.”

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Jon Huntsman: Mitt Romney ‘Is In The Hip Pocket Of Wall Street’

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WATCH: Faces Of Zuccotti Park: The Chef

by The Huffington Post on November 11, 2011

Huffington Post…

This story is part of a series that profiles the protesters at Occupy Wall Street. Sean Dolan, 48, has worked as a chef in a variety of restaurants over the last 30 years, most of them in Providence, R.I. While he’s done everything from line to prep to standard short-order cooking, his favorite is Italian — “tossing saute pans and cooking calamari and veal saltimbocca and chicken parmesan,” he said. But when he was fired from his most recent job in early October, instead of applying for other jobs, Dolan hopped a train to New York City and came straight to Zuccotti Park to join the protesters. He’d heard about the Occupy protest on NPR — he doesn’t read print media much anymore, except for the Providence Phoenix — and wanted to help out anyway he could. Within half an hour of arriving, he was put to work at Occupy Wall Street’s kitchen, serving free hot meals to the people who are taking a stand against corporate privilege in this small city park in lower Manhattan. “The minute I got here, it was like this door opened,” Dolan said. “All of a sudden I was a part of something bigger than myself for the first time in my life. And the passion came back.” Dolan lives with his wife, Patricia, in his hometown of Bellingham, Mass., and spends four or five days a week working in the kitchen at Zuccotti Park, then returns to Massachusetts to recharge. “I find it necessary to recuperate,” he said. “Some of the people living down here … you can see the toll it takes on them.” But Dolan is no wimp. “I plan to keep coming down here every week as long as I’m physically able,” he said. “I want to see some results. The awareness issue is through the roof right now. But I want to see a general strike. … Something that grabs the world by the nuts and says, ‘Yeah!’” Video by Adam Kaufman, editing by Hunter Stuart

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WATCH: Faces Of Zuccotti Park: The Chef

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Obama Puts Passion Into Jobs Speech Rarely Seen In His Presidency

September 9, 2011

WASHINGTON — Most presidents kick off their re-election campaigns with a speech on the campaign trail somewhere, or from the Oval Office. President Obama did it in a novel, telling and shrewdly chosen place: in the middle of an address to Congress. If people were wondering what template Barack Obama would choose for his re-election effort — some had suggested FDR in 1936 or Ronald Reagan in 1984 — we now have an answer: Harry Truman in 1948, the “Give ‘Em Hell Harry” who challenged Congress to tackle with the post-war nation’s problems and castigated the Republican Congress for its obstinate failure to do so. Addresses to joint sessions of Congress are supposed to be august, stately and somber affairs, but the president turned it into a raucous and lively mixture of a campaign stump speech and a college-style debate on the floor of the British House of Commons. His tactical strategy is clear. The only political institution less popular than he is at this time is the Congress. An astounding, almost pre-revolutionary 82 percent of the American people think that the Congress is doing a bad job of dealing with the nation’s problems. That’s far worse than his own job-approval ratings, which were languishing in the low 40s. By putting forward a simply-named, to-the-point bill – the American Jobs Act – and by challenging Congress to pass it and pass it now, Obama hopes to create a win-win: either the Congress accedes or, as President Truman did in 1948, he can run against the “do nothing” Congress. But there was more politics to the speech than that. Time and again he reached out to the GOP and to conservative — or at least right-leaning — independents. He agreed flat out that Medicare spending needed to be cut. He said that regulations needed to be trimmed. Much of the $450 billion bill consists of tax cuts. This is no accident. Obama desperately needs to rebuild his appeal to independent suburban voters, and to show that he was and is willing to meet the GOP half way. Again the idea to work for a win-win: either he gets the results, or he can say that he tried — moved far — and that the “do nothing” Congress did nothing. This was a startling, feisty, combative and, in a way, commanding president that has rarely been seen on the stage in Washington. Something about being in the lion’s den — and staring straight at the GOP leadership — seemed to invigorate him. There are widespread doubts that the Congress will act. There is deep disappointment that the president’s ideas and actions so far have done much good to revive the economy. Poll after poll shows that the American public doubts his efficacy as a leader. Liberals are entitled to wonder if his passionate defense of labor organizing rights, worker safety laws and the like were a case of protesting too much. But he put a passion into his remarks that he has rarely shown in public in his presidency, or even on the campaign trail. Friends and foes alike had to wonder watching him tonight: where has that Barack Obama been? The other question, of course, is: Why did it take so long for “Give ‘Em Hell, Barry” (as Chris Matthews christened him) to appear? And the last question: Is it too late, either to do anything for the economy, or for his own chances? Follow Howard Fineman on Twitter: www.twitter.com/howardfineman Watch highlights from Obama’s jobs speech below:

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Exxon’s Failed Pipeline May Have Carried Oil Sands Crude

July 15, 2011

SALMON, Idaho (Reuters/Laura Zuckerman) – An Exxon Mobil pipeline that ruptured, leaking oil into Yellowstone River, may have sometimes carried a heavier and more toxic form of crude than initially thought, federal regulators said on Thursday. The U.S. Transportation Department’s Pipeline and Hazardous Materials Safety Administration spokeswoman Patricia Klinger said her office had learned that the pipeline may have been used to carry heavier crude. “I just found out that apparently, and the regional folks just found out, there is an interconnect on the pipeline that possibly does carry some oil out of Canada,” she said in response to a question about tar sands crude in the pipeline. That a pipeline thought to transport only “sweet,” low sulfur crude could have carried so-called tar sands crude from Canada raised concerns by health and environmental officials, even as Exxon officials said the heavier oil was not flowing through the Silvertip pipeline when it broke on July 1. “The actual crude in the line at the point of the incident was a blend of crudes from Wyoming,” Exxon spokesman George Pietrogallo told Reuters in an email on Thursday. Exxon was responding to a question about whether tar sands crude had ever flowed in the pipeline. Almost all the oil produced in Canada’s Alberta fields is from tar sands. The chemistry of tar sands oil, derived from tar sands or bitumen and sweet crude is significantly different, said Ronald Kendall, head of the environmental toxicology department at Texas Tech University. “Tar sands oil is in itself heavier oil and it contains more compounds that are toxic and may contain heavy metals like lead,” Kendall said. In a July 6 email to Reuters, Exxon spokesman Kevin Allexon said the crude carried by the pipeline “does not originate from Alberta” but from fields on the Montana-Wyoming border. On Thursday, Exxon revised that. “The pipeline carries a variety of different production fields in the U.S. and Canada,” Pietrogallo said in the email. ‘HELL NO’ Tar sands crude may cause more wear and tear on pipes because of its chemical makeup, including corrosive and abrasive agents, said Tom Finch, the pipeline administration’s technical services director for the western regional office. Federal inspectors were trying to determine if transport of tar sands crude could have triggered internal corrosion that may have played a role in the rupture, he said. Montana Governor Brian Schweitzer faulted Exxon for failing to tell the state exactly what kinds of crude ran in the pipeline or spell out what hazardous chemicals were in the mix now contaminating riverside properties. “Since they dumped that oil into the river that the state owns and manages, since they have spread oil in a film across 150 separate properties, since the film is over fishing access sites and state parks, we thought it would be appropriate to know what it is,” Schweitzer said. Richard Opper, head of the Montana Department of Environmental Quality, said he was surprised to learn the pipeline buried in the streambed of the Yellowstone may sometimes have moved tar sands crude from Canada. “If the question is, did we know it was carrying tar sands oil? Hell, no,” he said in an interview on Thursday. “If companies are changing the kinds of materials in pipelines to mixes that make them more likely they will leak or rupture, that raises huge concerns.” Exxon has apologized for the spill, which it estimates at 42,000 gallons, and pledged to restore a river prized for its near pristine waters, scenic beauty and abundance of wildlife. EPA officials are analyzing the chemical fingerprint of the oil which, depending on its source, could contain anything from benzene, a known carcinogen, to hexane, a toxin that can damage the human nervous system. Preliminary testing by the EPA has shown no detectable levels of some hazardous compounds harmful to humans. But at least five residents were treated in hospital emergency rooms for symptoms like dizziness, nausea and respiratory distress, according to state environmental officials. Environmentalists said on Thursday that questions about the grades of crude in the Silvertip should prompt a call by regulators for new pipeline standards and guidelines. “The industry likes to say, ‘oil is oil’; it’s pithy but untrue,” said Anthony Swift, energy analyst for the National Resources Defense Council. “Some grades of tar sands oil are fundamentally more corrosive and dangerous.” (Editing by Dan Whitcomb, Cynthia Johnston and Peter Bohan) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Dara O’Rourke: How Could Nike Not Know? And How Do We Find Out?

July 15, 2011

Two major stories have broken in the last few days that raise questions about how much global brands — and in particular Nike — know about conditions in their supply chains. First, Greenpeace released a report accusing Nike (and Adidas, Puma and other international brands) of sourcing apparel from factories in China that pollute rivers with hazardous chemicals . Nike’s response was, “To the best of our knowledge we are not contributing to pollution of the Yangtze Delta through our factory partners.” Not a very reassuring statement. Second, and more troubling, the AP reported abusive conditions for workers in a Pou Chen factory in Indonesia producing Converse shoes for Nike. (Did you know that since 2003 Nike has owned and made those hipster Converse shoes you’re wearing?) According to the AP: The 10,000 mostly female workers at the Taiwanese-operated Pou Chen plant make around 50 cents an hour. That’s enough, for food and bunkhouse-type lodging, but little else. Some workers interviewed by the AP in March and April described being hit or scratched in the arm — one man until he bled. Others said they were fired after filing complaints. “They throw shoes and other things at us” said a 23-year-old woman in the embroidery division. “They growl and slap us when they get angry. “It’s part of our daily bread.” Interestingly, after looking into these allegations, Nike found similar abuses. The company’s own inquiries also found workers at the two factories were subjected to “serious and egregious” physical and verbal abuse, including the punishment of forcing workers to stand in the sun, said Hannah Jones, a Nike executive who oversees the company’s efforts to improve working conditions. Nike’s investigation found that nearly two-thirds of the 168 factories making Converse products fail to meet Nike’s standards for contract manufacturers. Nike blames these problems on pre-existing licenses and subcontracting relationships that they claim prevent Nike from inspecting factories or enforcing their code of conduct. This quite frankly is hard to believe. Shoe and apparel orders are refreshed every year, if not every season. Does Converse really have pre-existing licenses from before Nike bought them in 2003? Does Nike not have rules about subcontracting? And furthermore, does the world’s number-one shoe brand really not have the leverage to motivate factories to meet their code of conduct today? This is particularly surprising for Nike, as the company has been under a spotlight since the 1990s regarding labor and environmental practices , and was one of the first shoe brands to disclose their supplier factories. Nike is actually a leader in a very non-transparent industry. But even after a decade of investments in corporate responsibility programs, codes of conduct, monitoring, reporting, training, etc., problems clearly still remain. GoodGuide is able to capture some of this information in our ratings of Nike and other apparel brands. Unfortunately, there is a lot that we — and apparently Nike — still don’t know about apparel and footwear supply chains. And sadly we know even less about the less transparent brands you and I buy from everyday.

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Americans Continue To Struggle As Fears Of Inflation Aren’t Eliminated

July 15, 2011

NEW YORK — Gas prices fell in June, but prices for nearly everything else rose, according to figures released Friday by the Bureau of Labor Statistics . Prices for food, shelter, apparel, medical care services and new and used vehicles all increased in June. The Labor Department report, known as the Consumer Price Index, is one of the most prominent monthly indicators of inflation. It fell by 0.2 percent in June, the first decrease in a year. That decrease was mainly due to a 6.8 percent drop in gas prices. But since gas and food prices are considered volatile, a different measurement — known as the core index — omits gas and food fluctuations; it climbed 0.3 percent. The Labor Department report indicates that overall inflation is up 3.6 percent from a year ago, and the core index is up 1.6 percent. The Associated Press points out that this is slightly below the target rate of the Federal Reserve , which usually hopes to see 2 percent core inflation. Economists tend to pay more attention to core inflation, and the rise in June’s figures slightly exceeded their expectations, according to Reuters . Experts had predicted that the report would probably show a decrease in the cost of living — but that wasn’t the case. A recent Gallup poll suggests prices are too high for many consumers. According to a survey released Friday, Gallup’s Basic Access Index — a measurement of how many Americans can afford necessities like food, water, shelter and health care — has not yet recovered from the drop it took in November 2008. Gallup reports that compared to a year ago, fewer Americans say they have health insurance coverage. The number of Americans who say they have visited a dentist in the last 12 months, or have had “enough money to buy food at all times in the last 12 months” is also down. The findings dovetail with the Labor Department’s report, which shows that food prices have risen 3.7 percent over the past 12 months, with all the major food groups — such as dairy, meats and poultry, fruits and vegetables — increasing at least 3.2 percent. Although gas prices experienced a month-over-month drop, they’re still up 35.6 percent over a year ago. A report issued Thursday by Wells Fargo suggests that high gas prices are depressing consumer spending elsewhere. Sales at furniture, electronics and sporting goods stores fell in June, which Wells Fargo economists attribute to the strain caused by high gas prices, though they note that department stores, clothing shops and home improvement centers posted modest monthly gains. The good news is that many expect consumer prices to decline in the second half of the year. On Thursday, speaking at a Senate Banking Committee hearing, Federal Reserve Chairman Ben Bernanke predicted that inflation will “subside in coming quarters,” according to the Wall Street Journal . Last month, the Fed revised its core-inflation forecast upward , saying it expected to see rates of between 1.5 and 1.8 percent in 2011. “We expect core inflation to rise during the second half of the year and then subside a bit,” Mark Vitner, a managing director and senior economist at Wells Fargo Securities, told The Huffington Post via email. “Consumers simply lack the purchasing power to pay these higher prices.”

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Josh Levy: AT&T and T-Mobile: Fewer Jobs, Less Investment

July 15, 2011

This week the Washington Post’s Cecilia Kang reported that the Obama Administration is feeling “caught in the middle” between consumer advocates — like Free Press — who oppose AT&T’s takeover of T-Mobile, and labor unions like the Communications Workers of America, who have come out in support of the deal. According to Kang, the CWA says the new mega-company “would generate about 100,000 jobs through a promised $8 billion in investment to expand its high-speed wireless network — a powerful argument at a time of soaring unemployment.” However, this “powerful argument” is nothing more than a powerful fairy tale. This merger will indisputably result in lost jobs, not job gains. First off, AT&T has a long history of laying off its workers, often after acquiring other companies. AT&T has actually cut more than 100,000 jobs in the last nine years, while at the same time T-Mobile has added more than 20,000. In addition, CWA has said it’s looking forward to adding 20,000 newly-unionized members to its ranks if this deal goes through. This is all well and good until you realize that T-Mobile currently employs about 40,000 people. Using CWA’s own calculus, as many as 20,000 jobs could disappear if these two companies combined forces. We can all agree that the more jobs the better, and we can all agree that workers who want to organize unions shouldn’t be blocked from doing so. But with this deal, we’d simply end up with fewer jobs for everyone, and workers’ bills would go up. And what about AT&T’s promise to increase its spending by $8 billion over the next six years? It’s a sleight of hand. The truth is, thanks to merger “synergies” that AT&T would create, the combined AT&T-T-Mobile would be spending $10 billion less over that period than the two companies would separately. Here’s how it breaks down: AT&T is promising to spend an additional $8 billion over the next six years if the merger goes through. (Forgetting for the moment though that AT&T would need to up its investment by that much even if the deal is blocked, to keep building out its own network and make up for its chronic under-investment). But T-Mobile, which has been much more aggressive than AT&T in building out high-speed wireless networks, would spend approximately $18 billion total in the same period if not acquired. That’s $18 billion in investment that would be lost if AT&T takes over T-Mobile. So do the math: $8 billion (AT&T’s new investment) minus $18 billion (lost T-Mobile investment) = negative $10 billion. Yes, AT&T — a company that is actually planning on reducing investment and firing workers — is getting away with spinning a fairytale about increased investment and new jobs. Let’s hope that the regulators at the FCC and Department of Justice are spending their days reading non-fiction, and leaving the fairytales for bedtime. Go here to learn more about the merger myths AT&T is peddlling.

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Minnesota Government Shutdown Deal Pushes Budget Problems Down The Road

July 15, 2011

ST. PAUL, Minn. — Minnesota’s leaders made a deal that will probably end the nation’s longest state government shutdown in a decade, but they didn’t really solve their budget problem. Instead, they just shuffled it down the road to be faced another day. An agreement between Democratic Gov. Mark Dayton and GOP leaders will delay schools promised aid and convert future tobacco settlement money into cash now. If lawmakers sign off on the deal in the next few days, it would end a two-week shutdown that spread pain to all corners of the state. Thursday’s deal came after Dayton abandoned his long push for tax increases, a painful move he said he made after hearing in recent days from residents around the state who just wanted an end to the shutdown. Yet the deal – although Dayton got about $1.4 billion in new revenue that many Republicans will find hard to swallow – brought more criticism than relief. “There’s still going to be a deficit coming out of this that has to be resolved,” said Charlie Kyte, who heads a group of school administrators who have endured years of delayed aid payments. Democratic Senate Minority Leader Tom Bakk called the deal “a borrow-and-spend proposal that does nothing to solve the long-term financial challenges.” In some ways, Minnesota is a microcosm of the budget standoff in Washington. Federal leaders are struggling to attack deep-rooted budget problems and may resort to short-term fixes as part of a deal to raise the debt ceiling. The latest Minnesota plan follows the same formula that had the state gripped by deficit after deficit for much of the last decade. When Republican Gov. Tim Pawlenty was in charge, the state dug into a billion-dollar tobacco endowment, tapped into federal stimulus money and emptied reserves to paper over budget problems. Deficits disappeared but quickly returned. It’s a fallback position stemming from intractable political divides: Democrats for years have pushed tax increases Republicans wouldn’t allow, and Republicans sought deep spending cuts that Democrats couldn’t stomach. Facing a $5 billion deficit this year, Dayton sought to raise income taxes on the highest earners to soften reductions in planning spending. Republicans were bent on holding spending to $34 billion, the amount already projected to come into the state treasury over the next two years. On Thursday, Dayton surrendered on raising taxes, while Republicans gave in on spending more money. Dayton said the state government would be back in business “very soon,” but he didn’t say exactly when. Disappointment came from some on the left who hoped Dayton’s push for top-tier income taxes would prevail, bringing the state permanent new revenue to protect funding for social programs. The Rev. Grant Stevensen heads a coalition of Twin Cities congregations that demonstrated earlier in the week at the Capitol, urging lawmakers to raise taxes. “We don’t live in a poor state, and there’s no real budget crisis, but there is a moral crisis,” Stevensen said. “We don’t seem to be thinking of each other as we put this budget together as people who are creating one great state together.” Some on the right weren’t happy, either. “Certainly we’re not doing any end zone dances,” said Rep. Mike Benson, a freshman Republican from Rochester. “Realistically there are some things that are going to go down hard. Sounds to me we’re kicking the can down the road a little bit with the education shift, but we’re not raising taxes.” Another first-term Republican, Rep. Ernie Leidiger of Mayer, said he hasn’t decided whether the deal will get his vote. “We should have spent less. It’s a problem all over the country, and it’s certainly a problem here in Minnesota, and we must continue to work on it,” he said. Tom Horner, who ran third in last year’s governor’s race as a third-party candidate, warned that the solution wouldn’t last. “We’ve tried short-term fixes and they aren’t working,” Horner said in a statement. “They’ll put us right back where we started two years from now, but with fewer options on the table.” The shutdown put Minnesota, a state once regarded as a model of good governance, in the national spotlight. The state laid off 22,000 workers, halted road construction projects, closed state parks and rest stops, made it impossible to get fishing licenses and cut off funding for many social services. It put lives in limbo, as nurses, cosmetologists, drivers and businesses couldn’t get licenses they needed to launch careers or expand. In recent days, it even threatened to cut off the flow of some beer because of licensing snags. In return for dropping his tax increase demand, Dayton won some conditions. Republicans agreed to drop a list of several policy changes such as banning state aid for stem cell research. They also agreed to back off a plan to cut the state workforce by 15 percent. Republicans conceded to higher state spending than they had wanted. The GOP spent months insisting that the two-year budget be capped at $34 billion, the amount the state was projected to collect without new sources of money. Instead, it will be closer to $35.4 billion. Yet many of the deal’s details remained murky, including exactly what will be cut from planned spending. The somber looks worn by Dayton, House Speaker Kurt Zellers and Senate Majority Leader Amy Koch as they announced the deal testified to a hard bargain. “It was about making sure that we get a deal that we can all be disappointed in, but a deal that is done, a budget that was balanced, a state that was back to work,” Zellers said. ___ Associated Press writers Brian Bakst and Jeff Baenen contributed to this report.

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Grant Cardone: Social Media Reputation Management Tips

July 15, 2011

With increasing numbers of people heading online as their first step to research your company, product and even for your personal information, it only takes a few bad reviews or complaints to result in lost opportunities and a damaged perception or brand. Your customers are online and it is vital to manage your online reputation in order to protect your brand as it may be the first impression the public gets about you. Social tools, like Yelp, Facebook, Twitter, Youtube and blogging sites with endless agendas have magnified the voices of your clients and potential prospects for your business. Let’s face it, almost anything can get posted about you or your company regardless of the facts. No matter who you are or what business is, when you start getting attention, it is only a matter of time before someone will post something negative about you online. With the influence of social media, those that are critical of you, your product or your company can easily show up online bashing you. Criticism, dissatisfied customers, varying opinions, opposition, even intentional and malicious brand-bashing are not new challenges in business. These issues has been around since the creation of gossip and opposition, it is the power, accessibility and reach of the web that makes your social media reputation a new issue. Here are some ideas about how to manage negative social media: 1) Treat Your Social Media Reputation Like Your Personal Reputation. Handle social media attacks the same way you would a personal attack. Handle it, don’t delegate this or take it lightly. Nothing is more important than your name and reputation. 2) Handle ALL negative post as opportunities. All complaints, bashing, and customer dissatisfactions should be treated as opportunities not problems (until proven to be something else). A dissatisfied customer or post can be turned into a fan when handled correctly. I have a policy in my company where I personally contact every customer that expresses a complaint with the goal of making turning a problem into a win for everyone. 3) Handle Immediately — The sooner you handle the complaint the easier they handle. Respond immediately and reasonable people will appreciate you making them a priority. Don’t respond with the intent for them to remove a post or criticism but to handle it. “Wow, I saw what you posted online and I wanted to call you right away and see what I could do to handle it. I had no idea. Tell me about what happened. What can I do to resolve it?” Most people, when handled correctly, will then retract the post or post how great you are. 4) Contact directly. Do not respond publicly online to something negative as you only bring more attention to it. Like an communication it is best done when handled directly either by phone, a direct message or even in person if possible. Be careful not to suggest wrong doing in your message but that you want to see what you can do to handle the upset. 5) Be pro-active — The best solution to reputation management is to be on offense not defense. Create initiatives to simply collecting positive post and testimonials, even video, about you and your company. Encourage and make it easy for the people that love and do business with you to spread the good word about you. Aggressively build a positive public relations campaign about your good works, endeavors and contributions that will outweigh any negative post. 6) Know Your Limitations — While I believe that every complaint is an opportunity you have to know which battles to fight and which one’s to walk away from. Don’t invest time in those that have as their real goal to consume you, your focus or your energy. There are a some people that are only interested in making noise, negativity and spewing hate. Disregard and don’t engage them once they prove they are only interested in the negative. The most important consideration is you should treat your social media reputation in the same manner you would your personal and public reputation. It is only a matter of time before someone post negative comments about you, which may include exaggerations of dissatisfaction issues with some going as far as fabricating complete falsehoods. It is a fact of life that to the degree you get attention, you will at some point get criticism. Protecting your online reputation requires that you know what you can do so that the public searching you out gets the right story about you. Make it a priority and be proactive!

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Andrew Pyle: Don’t Stretch for Yield

July 15, 2011

For many Canadians on a fixed income, the last 10 years have been tough, to say nothing of the most recent couple. In an ultra-conservative portfolio, filled with Guaranteed Investment Certificates (GICs), five-year rates have spent most of their time below 5% and have hugged the 3% level for much of the past year. With average annual inflation running at 2% and price increases higher for a lot of the non-discretionary items that seniors purchase, the yield erosion has been more acute. Last year, investors were treated to something a little rare among G7 countries and that was a move by the Bank of Canada to raise interest rates, but what many forgot is that the rates they get on GICs at their local bank or brokerage have less to do with what the Bank of Canada is doing and more to do with how bond markets are performing. Bottom line, the Bank controls the extreme short-end of the yield curve with its overnight rate target (currently at 1%), GIC rates take their cue from bond yields and mortgage demand. When bond yields go up, GIC rates will tend to move higher to because of the competitive effect. Likewise, if mortgage demand goes up in general, or perhaps in a particular term, lending institutions will tend to offer higher rates on GICs to attract the funds needed to satisfy the extra demand. This is exactly why GIC rates are lower today than they were about a year ago, even though the Bank of Canada’s rate is half a percent higher. The bad news is that things are unlikely to change any time soon. While some European countries are going through a gut-wrenching jump in government bond yields as a result of debt default concerns, that is not the case in Canada. Nor will it likely to become a concern, even if Ottawa fails to balance its budget in four years as planned. In a world where the US government is routinely running trillion dollar deficits, even if Canada misses on its target it will still retain its poster child status. However, as folks become more anxious over European debt markets, they gravitate to the safer havens of the world, including Canada. That demand for refuge actually puts downward pressure on Canadian bond yields, which in turn puts a lid on GIC rates. At the same time, economic headwinds around the world ensure that growth among the developed nations of the world remains below the pace needed to cause real inflationary pressure, and this keeps central banks on the sidelines in terms of hiking rates. Yes, I know I said the Bank of Canada isn’t having much impact on those rates posted in the window, however, if the Bank were to signal a need to jack its rates higher to cool demand and/or inflation, markets would take their cue and force bond yields up, leading to juicier GIC rates. There are two strategies to take in this environment, other than altering the mix of assets in your portfolio (which should always be done in relation to a change in objectives and risk tolerance). The first, and preferred, strategy is to be patient. If you invest in GICs, stick to a five-year ladder and don’t try timing things like monetary policy changes by investing in one-year rates in anticipation of higher rates down the road. It could happen, but then again it may not. For a refresher on the success of timing, have a look at what happened to GICs in the second half of last year. The preferable strategy is to maintain a medium-term bond ladder which gives you the added benefit of potentially better yields than GICs, but also the potential to generate capital gains if the doom and gloom economic predictions come true over the next five years. What you should not do is stretch to make more yield. This includes loading up your portfolio with high risk (junk) bonds, but it also applies to not going out and buying long-term bonds, even if they are government issued. Yes, we all expect Ottawa and the provinces to remain solvent for many many years to come, but when global interest rates really do start to climb, the capital invested in long-term bonds will erode. Many investors don’t realize that a 1-2% increase in 10-year bonds yields can cause a correction of 10% in the value of those bonds. If you don’t need the capital for 10 years and you’re satisfied with the paltry yield you’ll get for those years, it may not seem like a problem; but if you do need that capital at some point you might be in for a shock. Maintaining a medium-term portfolio allows us to buy and hold to maturity. We don’t really care too much if yields spike in the near-term, because we have locked in a return for those years (assuming the government or company in question doesn’t go under). We’ll get back our nominal investment and have the capital to go and re-invest. If rates are higher by then, all the better. It all comes down to patience — probably the most valuable asset you can invest in these days.

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Robert Lenzner: Rupert Murdoch Could Take News Corp. Private

July 15, 2011

Rupert Murdoch’s $5 billion share repurchase plan of News Corp. shares is equal to 12% of News Corp’s $42 billion market cap. As the Murdoch family has 47% voting control, this $5 billion move could be the first step in taking out the public shareholders — and ensuring that the media and entertainment empire stays in the control of his children. Clearly, the $5 billion share repurchase would give the insiders over 50% of the vote in running the empire. He could afford this move since the plan to buy-in the other 61% of BSKYB is a non-starter and may remain an impossibility, given the hostility of the UK government and establishment. So, whatever excess cash flow is created by not making the offer to BSKYB shareholders — and whatever cash could be raised by selling perhaps the British newspapers — could be employed to take out the mutual funds and investment managers like Mellon and BlackRock who aren’t going to see any solid long term results from News Corp. any time soon. This strategy makes sense because Murdoch has clearly never had as his top priority creating value for other shareholders. Far from it. His priority has been the aggrandizement of media power the past 11 years, especially by vastly overpaying for the Wall Street Journal . A massive write-off of over $2 billion was the result. Never you mind; Murdoch controlled the Wall Street Journal . Here’s the recent narrative history of News Corp. shares. News Corp. shares fell from $30 a share in 2000 to $10 a share during the dotcom bubble — and then got back to $25 a share in 2006 before falling to the ridiculously low $4.00 a share in early 2009 — just $1.00 more than the $3.00 a share basement price for CBS — which has climbed back to the $28 level. Basically, over the past 11 years News Corp. has gone from $30 a share to its current $16-$17 a share level. Rupert Murdoch, you have to know, does not necessarily prioritize his value for shareholders. You would have been a lot better off buying Viacom, Sumner Redstone’s media and entertainment empire. Holders of News Corp. stock lost almost half their investment if they bought at the peak. The time to own News Corp. was the decade between 1990 and 2000 when the stock rose from the low single digits to $30 a share. You never see or hear Murdoch addressing the intrinsic value of his stock, or appearing before security analysts to promote it. Today the issue is the extent of the damage to the franchise from the illegal and unethical doings of many top brass of News Corp. — including possibly James Murdoch, Les Hinton and Rebekah Brooks. It is impossible to weigh that massive unknown against the $5 billion buyback of shares, which will retire some 12% of the company’s equity and basically give a clear majority vote to the Murdochs. With the newspaper empire under fire, and only a minority position in BSKYB, it’s bloody tough to figure. My feeling is that News Corp. is badly tainted, and the future cash flow from papers must necessarily decline steadily.

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New Hampshire Republicans Restrict Minimum Wage

June 23, 2011

New Hampshire legislators voted to override a veto by Democratic Gov. John Lynch on Wednesday, paving the way for a new law to restrict the state’s minimum wage. The bill, sponsored by Republican Rep. Carol McGuire and strongly backed by GOP leadership, automatically ties the state minimum wage to the federal minimum wage, assuring that New Hampshire’s rate is as low as it can legally be. With its minimum wage currently set at the federal rate of $7.25 per hour, New Hampshire is ensuring that it will continue to have the lowest minimum wage in all of New England. Maine, Vermont, Massachusetts, Rhode Island and Connecticut all have state minimum wages between $7.40 and $8.25 an hour. The fight over McGuire’s bill led to some unusual stances for New Hampshire politicians. McGuire has been honored by the libertarian-leaning New Hampshire Liberty Alliance and enjoyed Tea Party support, yet she essentially argued that the state should defer to the feds when it comes to the minimum wage. Meanwhile, the Democratic governor made a states’ rights argument for killing McGuire’s bill. Lynch said New Hampshire shouldn’t relinquish its right to set its own wage rate. The governor’s spokesman, Colin Manning, told HuffPost that as a result of the law New Hampshire now “cedes state control and authority” to the federal government. “New Hampshire has had a minimum wage law since 1949, and neither our citizens nor our businesses have called for its repeal,” Manning wrote in an email. “There is no need to undermine our state’s economic strategy or cede our state authority to the federal government, which is why the governor vetoed the bill.” Calls to McGuire and Republican House Speaker William O’Brien seeking comment were not returned. But in a statement after Lynch’s veto, O’Brien accused the governor of acting on “an anti-business philosophy” and “removing the ‘open for business’ sign” from New Hampshire by trying to maintain the current minimum wage flexibility. “There is no reason for New Hampshire to set ourselves higher than the national average and make ourselves less competitive for these workers who need to gain experience,” he said. Opponents of McGuire’s bill point out that the previous law did not set the New Hampshire minimum wage any higher than the federal rate — it only gave the state the option to do so if it pleased. Also, New Hampshire does not appear to have suffered from a competitive disadvantage, given that the minimum wages in neighboring states were already set higher. Several states have raised their minimum wage in recent years, but GOP leaders and business interests have assaulted some of those bumps as job killers. Missouri Republicans tried and failed to cap their state’s minimum wage earlier this year . Then in May, a Florida federal judge ruled that a state agency had been illegally suppressing its minimum wage. And business groups in Maine have lobbied for the creation of a ” training wage ” that would let companies pay teenagers less than the state minimum. The current federal minimum wage of $7.25 per hour translates into a $15,000 salary for a full-time worker. Many economists now say that higher minimum wages can provide a boost to the sluggish economic recovery. “Given the fact that minimum wage workers spend every penny they earn in their local businesses, a strong wage floor is also vital to stimulating the consumer spending necessary for real and lasting economic recovery,” said Christine Owens, executive director of the National Employment Law Project, in a statement decrying legislators’ override of Lynch’s veto. Earlier this year, Democratic Rep. Terie Norelli called McGuire’s bill “just the beginning of what I think is a real assault on New Hampshire workers and wages and irresponsible legislation.” Last month, Lynch vetoed a bill brought forth by Republicans that would have converted New Hampshire into a so-called right-to-work state. The bill would prohibit collective bargaining contracts that require workers to pay union dues if they are not union members. It would make New Hampshire the first right-to-work state in New England. O’Brien has said Republicans will try to override Lynch’s veto of that bill in the fall.

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Scott Bittle: Fiscal Follies: The Debt Ceiling and the 48 Percent Solution

May 27, 2011

With the debate over the nation’s debt ceiling continuing to rage, research conducted by our organization, Public Agenda , shows a real chasm between Washington and the rest of the country. Two-thirds of Washington leaders say we need to raise the debt limit , while surveys of the public show that most Americans continue to oppose it. But there is a crucial detail in the public opinion polls that is not getting the attention it deserves. When the Washington Post and Pew Research Center surveyed Americans about raising the debt ceiling, nearly half of Americans (48 percent) admitted that they didn’t have a good understanding of what would happen if the government didn’t raise the debt limit. When that many citizens freely acknowledge that they don’t have a solid grasp of the risks to the country if the debt ceiling deal-making goes south, that’s a wake-up call for leadership. Real leadership, that is, that’s focused on the best interests of the country as opposed an obsession with elections and politics. There are times when elected officials should follow public opinion and pay careful attention to the public’s concerns and priorities. And there are times when elected officials need to lead — they need to be stewards for the country’s future. When public understanding is limited, when people don’t grasp the consequences of a major governmental decision, the time for genuine leadership has come. Technically, the United States passed the $14.3 trillion debt limit earlier in May, and now the federal government can’t borrow any more money until Congress raises the limit. Thanks to some clever accounting at the Treasury, the government can keep going until Aug 2, but at that point, the government wouldn’t have enough money to cover its bills. Douglas Holtz-Eakin, a former director of the Congressional Budget Office, has a low-tech, but riveting 60-second version of what it would really mean up on YouTube. The country would have money coming in. After all, we’ll all still have taxes withheld from every paycheck. But what’s coming in would only cover about 60 percent of our expenses, which wouldn’t be enough to cover even what most Americans consider a very “small government.” We have to at least pay the interest on the debt, otherwise we’ll risk unleashing an unpredictable, perhaps uncontrollable meltdown in the international bond markets. (We may not be safe from financial disruptions even if we pay the interest.) Once we’ve done that, there’s simply not enough money to go around. We wouldn’t have enough money to cover all the bills for Social Security, Medicare and Medicaid, although surely we’d use what is left of the country’s revenues to pay a good chunk of each one. The real problem comes later; after paying for interest and entitlement spending, there won’t be any money left for anything else. As Holtz-Eakin puts it, “no money for the troops, no money for procurement or transportation of materials.” And the Defense Department is just the first casualty. There would be no federal money for public schools, college loans, highways, the Centers for Disease Control or just about anything else most of us expect from government. The truth is that most Americans just don’t realize what not raising the debt ceiling really means. Former President Bill Clinton may have hit on something when asked why polls showed opposition to raising the ceiling at the Fiscal Summit sponsored by the Peterson Foundation this week. “Because they’ve never lived through it,” he said. “No one knows what will happen.” It is true that another common element of leadership is to use a deadline and potential crisis to force a balky group of people to sit down and get a solid deal done. One reason why the debate in Congress is stalled is because many political leaders see the debt ceiling as an opportunity to force change in the federal budget — change that surely has to come. If we actually get sensible, practical change as a result, then we can give our leaders credit for doing their job. If they get an attack of bipartisanship and willingness to compromise, we might even be able to give them credit for a job well done. But if elected officials in Washington allow the United States to slide into a potential economic disaster by blindly following what they think the polls are telling them, then history will heap on them the censure and condemnation they will so richly deserve. Indeed, the American people themselves may take a different view once the results of the decision become evident. If they think that voters are going to reward them for putting the entire country through the wringer, they’re likely to be very disappointed.

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State GOP Lawmaker: Minorities Earn Less Because They Don’t Work As Hard

April 28, 2011

Oklahoma state Rep. Sally Kern, a Republican, made questionable remarks in the wake of a measure seeking to ban affirmative action programs advancing in the state, Tulsa World reports . According to the local outlet: Rep. Sally Kern, R-Oklahoma City, said minorities earn less than white people because they don’t work as hard and have less initiative. “We have a high percentage of blacks in prison, and that’s tragic, but are they in prison just because they are black or because they don’t want to study as hard in school? I’ve taught school, and I saw a lot of people of color who didn’t study hard because they said the government would take care of them.” In light of the proposed constitutional amendment in question clearing the state House of Representatives on Wednesday evening, the GOP lawmaker also suggested women earn less than their male counterparts because they generally spend more time in the home. The AP recently reported on the legislation: The measure [will] put on the 2012 election ballot a provision that the state may not grant preferential treatment to any individual or group on the basis of race, color, sex, ethnicity or national origin. The ban would apply to public employment, education and contracting. Opponents say the proposal targets a non-existent problem. Several Democrats contend the bill is an attempt to use race to generate fear and draw conservative white voters to the polls. The Oklahoman reports : Rep. Emily Virgin, D-Norman, one of the youngest members of the Legislature, said discrimination still occurs against women. She said she and her brother applied for home loans about the same time; her loan took longer to process and she had to make a larger down payment. “I don’t want a handout and I don’t think any woman does,” she said. Democratic state Rep. Jeannie McDaniel reportedly conveyed a similar sentiment, saying, “I don’t believe women have reached their equal rights in Oklahoma,” she said.

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Donald Trump: ‘I Am Very Proud Of Myself’

April 28, 2011

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

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WATCH: Donald Trump Goes After Mitt Romney

April 17, 2011

Washington — Potential presidential candidate Donald Trump says he’s a better businessman than possible 2012 rival former Massachusetts governor Mitt Romney. Trump said during an appearance on CNN’s “State of the Union” on Sunday morning that he has a “much, much bigger net worth. I mean my net worth is many, many, many times Mitt Romney.” Here’s an excerpt of what Trump had to say in touting his own business credentials: I’ve built a great company. And one of the beauties of, frankly, if and when I announce, some time prior to June, you will see how big my company is, because it’s much bigger and much more powerful and much stronger than anyone really knows. So you’re going to see how good it is. You’re going to see how strong it is. It’s a big, strong company that I built. And I have thousands and thousands of jobs that I’ve created over the years… Trump described Romney as a “small business guy.” Romney is a former venture capitalist with a record of turning around failing companies. While heading Bain Capital, he helped launch the Staples office supply chain, as well as buy Domino’s Pizza. Romney invested more than $40 million of his own money in the 2008 race. As for Trump’s own presidential ambitions, the billionaire said he “wished [he] didn’t have to” consider mounting a campaign for the White House. “I’m having a good time,” he said of his current life. “I have a great company. I have a very successful show, all of that stuff. … But I love this country. And if you ask me, what are the odds, I’ll let you know some time prior to June. But I will tell you, I am giving it serious, serious thought. And I’m honored by the polls, because people agree with what I’m saying.” WATCH:

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Progressives Bemoan Focus On Deficit, Call For Stronger Job Creation Agenda

March 10, 2011

WASHINGTON — The usual beef against Beltway politicos is that they spend too much time reading the polls. But to a group of progressives gathered on Thursday to talk about jobs, the problem is that the capital’s elites don’t heed the polls nearly enough. Survey after survey of public opinion finds that unemployment and the struggling economy are the most troubling issues for most Americans. But policymakers from both parties are madly pursuing a different priority instead: deficit reduction. And they want to curb federal debt not through tax increases on the rich , which the public supports, but through spending cuts on popular programs. The result, certainly in the short term , would be the opposite of job-creation. “It’s not the public that’s the problem, it’s the elite conversation that’s the problem,” pollster Celinda Lake of Lake Research Partners said Thursday. If today’s politicians are being driven by the polls, Lake said, “it’s not any polls I’ve seen.” On and off the podium at Thursday’s event — a summit on jobs organized by the progressive Campaign for America’s Future — the profound disconnect between public opinion and the public agenda was a constant theme. And it left many of the speakers more than a little dumbfounded. “The idea of national austerity in this environment is truly mind-boggling,” said AFL-CIO President Richard Trumka. “Anybody who thinks you can deflate your way into recovery is delusional,” said American Prospect co-editor Robert Kuttner. “We can’t slash our way to prosperity, we have to invest,” said economic equity advocate Angela Glover Blackwell. Indeed, what’s so exasperatingly self-defeating about the current epidemic of deficit hysteria is that the best deficit reduction program would actually be to create jobs — and bring the tax base back up. “We know the solutions,” said Leo Hindery, who heads the U.S. Economy/Smart Globalization Initiative at the New America Foundation. “They’re staring us in the face. They’re timeworn by the women and men who preceded us … including Eleanor and Franklin Roosevelt.” Among those solutions: A new WPA and Civilian Conservation Corps ; an honest-to-God Industrial policy ; maybe an infrastructure bank like the one proposed by Los Angeles Mayor Antonio Villaraigosa, who spoke at Thursday’s event; and any number of other ideas like the ones I outlined in my ill-fated America Needs Jobs series. What’s needed now, said Roger Hickey, one of the event’s organizers, is a robust, job-creating agenda that progressive candidates can run on in 2012 — an agenda that shows that “we’re not just asking people to have patience and cross their fingers and hope the economy gets better.” What explains the extraordinary disconnect between the public agenda and public policy? The toxic effects of mounds of corporate money on the political process was pretty much everyone’s top choice on Thursday, but it wasn’t the only one. Lake, for instance, said part of the problem is that many of the nation’s most prominent economists see things from the Wall Street perspective. And, of course, there’s another usual suspect: “The public is horribly served by the news media right now,” she said. ( The Nation ‘s Chris Hayes recently blamed the “incomprehensible” disconnect on “a governing elite that is profoundly alienated from the lived experiences of the millions of Americans who are barely surviving the ravages of the Great Recession.”) Kuttner put his finger on another problem, which is the lack of a genuine grassroots social movement advocating for jobs. Looking back through the last 50 years of American history, he said, in every single area where society has made great strides, “people built a movement with immense personal risk and immense courage.” Launching that sort of movement around jobs was, as it happens, the central goal of Thursday’s meeting. And coming just hours after Gov. Scott Walker used a quarterback sneak to break Wisconsin’s public unions , several speakers spoke of a possible inflection point in the making. Trumka said his message to Walker was a big “thank you.” He suggested Walker be presented with the “mobilizer of the year award.” Walker’s move was so outrageous that it might be enough to change the national conversation “from deficit hysteria to where it belongs, to jobs and the right to build middle-class living standards,” Trumka said. “This is a debate that we’ve wanted to have for 20 to 25 years.” Now, he said, “it’s our job to channel this Midwest uprising.” Wade Henderson, the head of the Leadership Conference on Civil and Human Rights, said Walker’s “unprecedented assault on collective bargaining and the right to organize is arguably the most significant challenge to civil and human rights in this early part of the 21st century.” The response to it, he said, “may well determine the future of this great nation.” Robert Borosage, the co-director of the event’s sponsoring organization, described how the powerful, spirited grassroots movement that got Barack Obama elected president basically came to a dead stop right after the election, figuring Obama would then take the lead in such areas as job creation. It didn’t work out that way, of course. “What Wisconsin is doing is pushing the start button,” Borosage said. “And now we’ve got to build again.” ************************* Dan Froomkin is senior Washington correspondent 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 , and/or become a fan and get e-mail alerts when he writes.

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Dan Dorfman: Housing Could Sink Recovery, Squash Obama

February 21, 2011

Hey, it’s now common talk that we’re on a solid road to recovery. Likewise, that President Obama, now gaining in the polls, is likely to win a second term. Maybe so, but if one perceptive and skeptical economic mind knows what she’s talking about, both are about as credible as an anti-aging process that really works. The chief reason: The housing mess — a subject that has become a bore and no one really wants to hear about anymore — could short-circuit both possibilities. Here’s the story! At the turn of the year, a senior loan officer at a significant New York State bank told me its inventory of foreclosed homes had risen 28% in the past few months. I rechecked the other day and he told me the figure had now more than doubled to 61%. “I was sure the number would have declined, given an improving economy.” he says, “but I was wrong. More and more would-be home buyers seem to be afraid of losing money and are holding back on their purchases, many preferring to rent instead.” He went on to note that he hears “the same ugly story” from many peers around the country. It reminded me of a remark a number of months ago from Chicago real estate developer Robert Sheridan, who told me that anyone who buys a house these days and pays the asking price is overpaying. He was right then and a chat with economist Madeline Schnapp made me think that’s still the case. Interestingly, she reminded me that housing peaked 56 months ago, June of 2005, to be precise. Why, I wondered, should anyone give a hoot about that now? Because, she explains, housing is still stuck in quicksand, it’ll take another four to five years (2015 to 2016) to get back where it once was and that strongly suggests to her it behooves everybody to take with a grain of salt all those rosy upgraded economic forecasts we’re getting from Wall Street and the White House as a result of a peppier economy. Why question such forecasts in view of growing signs the economy is in a turnaround mode? Because, Schnapp explains, one out of every 10 jobs in this country is associated with the housing sector. And she figures this struggling industry will require numerous years and a lot of Viagra to re-establish its potency on the economic scene, given its current sad state. Between 2002 and 2007, housing accounted for 40% of job growth and represented 20% of GDP, figures that are both considerably lower at this juncture, and Schnapp thinks it will take many moons to restore such numbers. A number of real estate optimists have been insisting for well more than a year that we’re on the verge of a housing rebound and some are still saying it. Sounds hopeful, but Schnapp, the economics chief at West Coast liquidity tracker TrimTabs Research, partially owned by Goldman Sachs, warns that playing catchup anytime soon is totally unrealistic, given such significant sales-stifling housing problems as: – A bulging inventory of 5.8 million new and existing vacant homes, about two million of which is a shadow inventory (foreclosed houses owned by banks). That’s about a 15 months’ supply. – The number of houses under water (meaning the mortgages are greater than the value of the homes) continue to swell. They now stand at 14 million or 27% of the 53 million U.S. homes, up from 25% a few months ago. – Foreclosures continue at a sizzling pace — 255,000 a quarter or more than one million a year. – Mortgage delinquencies, which often herald future foreclosures, now stand at a hefty seven million — which is only million below the January 2010 peak despite all the stimulus packages. – Rising mortgage rates. In November, the 30-year mortgage rate was 4.2%. It’s now above 5%. In effect, Schnapp is telling us the housing horror show — which seems to be competing in longevity with such long-running hit Broadway plays as Cats , Phantom of the Opera and Chicago — is far from over, could well sabotage economic growth and wreak havoc on the stock market. She also expects homeowners to suffer another 10% drop in housing prices this year President Obama obviously disagrees with such a negative assessment since his budget calls for GDP growth of 4% in 2012, 4.5% in 2013 and 4.2% in 2014. “No way, that’s nuts, not the way housing is. Obama is living in fantasyland,” says Schnapp, who thinks an average growth range of 2.5% to 3% in the three-year period is far more realistic. Her rationale: Aside from a depressed housing market, she points to such economic deterrents as financially strapped state and local governments (which means job cuts or higher taxes), higher energy prices, the June ending of QE2, high unemployment, widespread consumer deleveraging and massive deficits. Meanwhile, some other observers also see serious consequences from the ongoing housing woes. One is Florida investment adviser Martin Weiss, author of a New York Times economic best seller, who referred to housing in a recent promotional commentary on a new book he’s written. In brief: “With home values still sinking, unemployment still high and states across the country announcing major cutbacks, we’re facing bubbles and busts unlike anything we’ve seen in our history.” All of this would seem to have political implications for Obama, now a tad above 50% in the polls. In 2012, the nation will expect a considerably better economy, especially on the employment and housing fronts. Schnapp’s glum housing outlook with its negative economic consequences suggests it may not happen. Since voters vote with their pocketbooks, the worsening housing mess Schnapp is talking about could just possibly derail Obama’s bid for a second term. There is an old saying from sports losers: Wait till next year! “Where housing is concerned,” quips Schnapp, “change that to wait until five years.” What do you think? E-mail me at Dandordan@aol.com.

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Les Leopold: Financial Socialism by and for Wall Street Elites?

January 21, 2011

More than 70 percent of Americans say big bonuses should be banned this year at Wall Street firms that took taxpayer bailouts, a Bloomberg National Poll shows. An additional one in six favors slapping a 50 percent tax on bonuses exceeding $400,000. Just 7 percent of U.S. adults say bonuses are an appropriate incentive reflecting Wall Street’s return to financial health. A large majority also want to tax Wall Street profits to reduce the federal budget deficit. A levy on financial services firms is the top choice among more than a dozen deficit-cutting options presented to respondents. Bloomberg As bonus season arrives, the gap between the American people and Wall Street couldn’t be wider. And where is Washington in this great divide? Don’t ask. At a moment when Americans desperately want jobs on Main Street and expect Wall Street to pay its fair share, Washington officials are hard at work — seeking jobs for themselves on Wall Street. (Congratulations, Peter Orszag, on parlaying your position as Obama’s OMB director into a top job at CitiGroup, the bank that received hundreds of billions in taxpayer bailouts and guarantees on your watch!) Most Americans rightly sense that our mixed free-enterprise economy, which once built a broad middle class, has devolved into a system of financial socialism by and for elites. The public wants and deserves answers to these basic questions: 1 . Why do people in the financial sector make so much more money than the rest of us? Mainstream economists claim that your income reflects the economic value you produce — at least in free and open markets. But are proprietary traders, for example, really 100 times more valuable than neurosurgeons? In the UK, some economists say no: The British New Economics Foundation calculates that “While collecting salaries of between £500,000 and £10 million, leading City bankers destroy £7 of social value for every pound in value they generate.” Let’s try a back-of-the envelope calculation of Wall Street’s net social value. Compare their bonuses and profits for roughly the last five years (about $500 billion) with the economic losses produced in the financial crisis the bankers caused (about $4 trillion in value destroyed, not counting the ongoing travails of the 22 million people who haven’t yet been able to find a full-time job). For every dollar “earned” on Wall Street, about 8 dollars were destroyed. (In case you’re suffering from financial amnesia and forgot how the financial sector single-handedly caused the economic crisis, please see The Looting of America . Chapter One can be found gratis on Alternet.com.) There’s plenty of room for argument about this kind of calculation. But even Wall Street wizards would have trouble defending the billions they’ve acquired by profiting from a bubble that blew up the economy. What’s the real value of junk CDOs that were rated AAA and then sold for enormous profits before they blew up? We could make a strong case that those who profited from such bubble investments – like the people who sold synthetic CDOs to Wisconsin school districts — should pay back their fraudulent profits. (In fact, the school districts have filed a lawsuit toward that end.) 2. Do current profits of financial firms come from tax-payer bailouts? The old free-market mantra was that you could make as much as you wanted, so long as you were willing to accept all the risks that went with it. Joseph Schumpeter, a great defender of capitalism during the 1940s when much of the world was turning towards socialism, called the process of winning and losing “creative destruction.” In his vision of capitalism, the best and the brightest staked everything in their quest for success, and only the true innovators survived. Inefficient enterprises would be left by the wayside. So… are the survivors of the economic collapse like CitiGroup, Morgan Stanley, Bank of America, Goldman Sachs and JP Morgan Chase, receiving their just rewards? Actually, it sounds a bit quaint these days to suggest that the rich must actually suffer the consequences of failure. These top financial institutions did not have to pay for their reckless gambling and gaming because they were deemed to big too fail, and so were bailed out. Goldman Sachs, for example, made a very bad bet when it purchased $13 billion of financial “insurance” from AIG to cover its toxic assets. AIG, due to its own enormously bad business decisions, could not pay up and was on the verge of bankruptcy. Had it gone under, as Schumpeter probably would have urged, Goldman Sachs would have received pennies on the dollar for its bad gamble, and might have gone broke. Instead, AIG was bailed out by taxpayers and Goldman Sachs got 100 cents on the dollar. It gambled, lost, and instead of suffering the consequences, was made whole by the government. And now Goldman Sachs execs are hauling in tens of millions in bonuses (disguised as stock options, even as its profits slip a bit from astronomical highs.) Clearly, the “free and open” market did not determine who should be spared “creative destruction.” Instead, CitiGroup, Goldman Sachs, JP Morgan Chase et al were saved because of their deep political connections. These companies would be kaput were it not for taxpayer bailouts, hastily contrived loans, and all kinds of market guarantees from their friends at the Fed. Schumpeter would have recognized this scheme in a flash: It’s precisely the kind of crony socialism that he detested, only this time the game was was designed by and for financial elites in the world’s largest capitalist economy. (Please don’t compare the Wall Street rescues to the GM and Chrysler bailouts. Wall Street received ten times as much and will pay themselves a hundred times more than the top auto-executives. And the auto industry didn’t topple the US economy and send millions to the unemployment lines.) 3. But since Wall Street is paying us back, why shouldn’t they go back to earning whatever they can? Let’s follow through on that logic. Let’s say you raid your husband’s pension fund for $100,000 and take the bus to Vegas, naively hoping to triple your money. As luck would have it, you lose it all. Desperate, you manage to borrow another two million from a rich friend (Wall Street calls it “leverage”) — and then you really load up on your bets. Tragically, you lose that too. I hate to tell you this, but you’re in big trouble now. Don’t expect the government to come around and offer to cover your losses with taxpayer bailouts so you can keep on gambling till the lights go out, and then, if you win, pay back the government. That is, unless you’re too big to fail — say, a very large, well-connected investment bank. In that case, party on! It’s true, Wall Street has paid us back for much of the bailout money we gave them. That’s the good news. The bad news is that, having been rewarded for their bad behavior, they’re now back at the casino tables, playing many of the same games that took down the economy in the first place. This time there are even fewer players who are now way too big to fail. And fewer players means less competition — hence the rise in banking “fees,” especially for the average consumer. 4. Where does all their wealth come from? There are only two possible sources for all the money the financial sector is spewing: The bankers are either creating new wealth or they’re siphoning off wealth from the rest of us. Hedge fund honchos like to boast about how they weren’t bailed out and therefore are entitled to their enormous hauls. (The top 10 in 2009 earned an average of $900,000 an HOUR. The top 25 earned as much as 658,000 entry level teachers.) But our noble hedge fund managers have a great deal of difficulty accounting for what I call their “paradox of productivity.” You see, there’s supposed to be a connection between the productivity of your employees and your profits. Apple Corporation, for example, earned about $6 billion in 2009 by expertly engaging its 35,000 employees. (They went on to earn $6 billion in the last quarter of 2010 alone.) Along the way they offered us an array of popular new products that people are enjoying and putting to use. Appaloosa, the hedge fund, earned about as much as Apple in 2009 by speculating on god knows what. But it has fewer than 250 employees and it’s not at all clear what these individuals added to our economy — certainly not the iPad. How can 250 workers, no matter how wise and talented, produce as much real worth speculating on stuff as 35,000 Apple employees can make inventing, manufacturing and marketing useful products? They can’t. So hedge funds must be siphoning off wealth from elsewhere, not creating it themselves. (If you think I’m wrong, please prove otherwise, because I haven’t found a single book or paper about hedge funds, even from insiders or academics, that explains this paradox of productivity.) Ever since the crash, I’ve been calling for a ban on Wall Street bonuses and for new taxes on the financial sector. Though I felt like I was hollering in the wind, apparently most Americans agree (if we can believe the polls cited above). I naively thought that during the crash the government would come done hard on Wall Street as it did during the 1930s. I was wrong. Instead we have institutionalized a festering problem that allows Wall Street to continue siphoning off the nation’s wealth. So we have to think about a more radical restructuring. I believe the only way to end financial socialism for elites is to turn the core of high finance into group of heavily regulated public utilities — like power, water and electricity (not semi-private entities like Fannie and Freddie before they were nationalized). Financial socialism for elites has failed and will fail again, plunging millions of Americans into joblessness and sinking our nation deeply into debt. Big government has many faults, of course. But the American people, I believe, can tell the difference between public utilities that aim to serve the economy and a private oligopoly that only serves a tiny elite. Ironically, those who run the government don’t want government to end financial socialism (maybe because of financial industry campaign contributions–or because of Wall Street’s inviting revolving door). It may take another crash before Washington is willing to listen. Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009. He is currently working on a new book, How to Earn $900,000 an Hour: The Rise of Wall Street Billionaires and the One-sided Class War, (hopefully to be published in 2011).

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Jacob S. Hacker and Paul Pierson: The High Costs of Cheap Talk

November 30, 2010

Perhaps the best that can be said about President Obama’s preemptive sacrifice to the deficit-reduction gods — a two-year freeze on pay for non-military federal workers — is that it represents small change. Amid widespread calls for big immediate cutbacks that could endanger a painfully weak recovery, the president’s proposal might seem a modest offering to calm the screeching deficit hawks. But the price isn’t as small as the numbers suggest. In one fell swoop, the president has validated three dangerous myths that, if accepted, are likely to consign the United States to years of economic struggle and a continued widening of the huge gap in our society between the richest and the rest. Myth #1: Public-sector workers are the root of our economic problems Anyone who watches Fox on a regular basis might be forgiven for thinking that the biggest problem facing our nation is overpaid public workers. So it’s worth pointing out that study after study has shown that public workers are generally underpaid. Yes, federal employees don’t receive the bottom-floor wages seen in private service jobs — a border patrol agent may well make more than a private security employee — but neither do we see the exorbitant pay at the top. As the economist Nancy Folbre puts it, “Some oinking can definitely be heard out there in the labor market, but anyone willing to follow the numbers can tell that the biggest piggies are not those employed by the federal government.” But these statistics are somewhat beside the point. The deeper problem is that there’s no credible case that the pay of public-sector workers has anything to do with our current crisis. After all, if public-sector workers are overpaid today, they were also overpaid a year before the economy tanked. By contrast, we know that many of the private-sector “piggies” on Wall Street had a lot to do with our current crisis. Their pay, however, is not freezing, but getting hotter and hotter. Myth #2: The number one priority is to cut spending now to reduce the deficit Most Americans think that getting the economy back on track is far more important than the tackling the deficit. In Washington, however, fiscal austerity–or at least lip service to it–has become the defining test of seriousness. Perhaps it’s easier to feel this way when your family, friends, and neighbors are not among the millions of Americans who are out of work or working part time despite wanting a full-time job. How else can we explain why Congress cannot muster sufficient support to extend unemployment benefits to the two million Americans whose benefits are set to expire at the end of this month even as its leaders are poised, with the president’s tacit support, to extend the Bush tax cuts for the wealthiest Americans — at a cost that vastly, vastly exceeds the savings produced by a federal spending freeze? Getting the deficit under control requires an economic recovery. After all, this was the story of the 1990s. The real work of tackling the national debt is figuring out a long-term plan that will bring spending and revenues in line over the coming decades, and this work will only succeed against the backdrop of a reasonably strong economy. In the current context, deficit fixation is actually a dangerous distraction from the real and present danger that our economy will slip into stagnation. Myth #3: There’s no will or ability to challenge the runaway gains at the top of the economic ladder even as middle-class Americans lose ground Many who accept arguments #1 and #2 nonetheless call for “political realism.” They say we have to take into account that there’s not sufficient political support for any proposal that involves tackling inequality or raising taxes, even taxes on those who have done the best over the last generation. The blueprint released by the bipartisan cochairs of the president’s deficit commission–which will slash spending on Medicare, Social Security, and vital public services while tilting the tax code in favor of the top — appears to buy into just this sort of depressing realism. Perhaps this is also the president’s rationale for reinforcing the two bad arguments just discussed; he has to bow to the new priorities. But it is simply not the case that Americans’ priorities are Washington’s. Even among the more conservative electorate that went to the polls in November, the majority was against extending the Bush tax cuts for the richest, and the number one concern by far was the economy. Making the case for a strong response to our present crisis and criticizing those who talk about the need for immediate restraint yet continue to shower tax cuts and other goodies on the most fortunate wouldn’t just be good economics. It would also be good politics. Too bad it’s a course the president seems reluctant to take.

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Hunt Ramsbottom: Prop 23: It’s About Our Future

October 27, 2010

The November 2 election is less than a week away. At the polls, voters will determine the fate of California’s leadership role in developing a clean energy economy. Proposition 23, an initiative on the ballot, aims to suspend landmark environmental laws in California. If Prop 23 is approved by voters, the implementation of the California Global Warming Solutions Act (Assembly Bill 32 or AB 32) will be suspended until the state unemployment rate drops to 5.5% or below for four consecutive quarters. Currently California’s unemployment rate is 12.4%. Jobs are being lost every day. Businesses are closing. Yet the one sector that is driving employment and growth in California is clean energy. The clean technology industry employs over a half-million Californians, and these jobs are growing at a rate more rapid than the statewide average. Since the implementation of AB 32, California has garnered over $9 billion of private investment capital and is the center for clean technology innovation. With the passage of Prop 23, California would lose its market leadership and thousands of clean technology jobs. Prop 23 would destabilize the investment market and prompt companies to reduce investment or relocate to other states and nations with strong environmental policies and incentives. In the race to lead the clean technology revolution, Prop 23 will stunt the growth of California’s green economy. AB 32 was enacted in 2006 with the support of businesses, labor, environmental and health organizations. AB 32 requires California’s greenhouse gas emissions to be reduced to the levels of 1990 by the year 2020. To meet these goals, AB 32 provides the authority for implementing California’s Low Carbon Fuel Standard (LCFS) and Renewable Portfolio Standard (RPS), both of which create immediate demand for large-scale, low-carbon and renewable transportation fuel and electric power. AB 32 also authorizes California to create a market for greenhouse gas reduction credits. As part of this program, the California Air Resources Board (CARB) would develop protocols for certifying the low-carbon and other pollution-reduction attributes of clean energy technologies. Once these protocols are in place, California’s clean technology companies will have a powerful mechanism to sell their clean energy technology and products in the broader U.S. and global marketplaces. Together, the RPS, LCFS and AB32, programs create the essential elements for California’s clean technology companies to invest billions of dollars in new equipment and technology, which will provide new jobs for California workers, enabling California to become a global leader in clean technology. A “Yes” vote on Prop 23 jeopardizes both economic growth and the improvement of air quality in California, and delays the reduction in the emission of detrimental greenhouse gases. Many businesses and organizations oppose Prop 23, Rentech, Inc. being one of them. Rentech is a Westwood-based company with domestically developed technologies that process waste materials into ultra-clean, renewable synthetic diesel and green base-load electricity. These products are direct substitutes for traditional diesel and power sources and have very low lifecycle greenhouse gas emissions. Rentech is a founding member of the Green Technology Leadership Group (GTLG), an organization committed to providing policy leadership for the clean energy sector. The GTLG launched an innovative new media campaign to oppose Prop 23. The GTLG “No on Prop 23″ campaign is producing a series of video shorts with SHFT.com , the environmental new media site founded by actor-activist Adrian Grenier and film producer Peter Glatzer. The videos are being disseminated to high-traffic websites to target over one million voters. The videos, viewable at www.greentechleadership.org , focus on the growth of jobs and economic investment as a result of California’s environmental policies such as AB 32, the Low Carbon Fuel Standard, and Renewable Portfolio Standard. Prop 23 will stop job creation, investment and innovation threatening California’s economy and environment. It’s about our future. D. Hunt Ramsbottom is President and CEO of Rentech, Inc. Rentech, which stands for Renewable Energy Technologies, is a global provider of clean energy solutions. The Company is developing projects for the production of certified synthetic fuels and electric power from carbon-containing materials such as biomass and waste resources. Please visit www.rentechinc.com for more information.

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Carl Pope: Texas Oil Loses a Round

October 20, 2010

Californians have begun to vote. There are dozen of important races — but California’s the only state where global-warming policy is actually on the ballot. Two big Texas oil refiners (Valero and Tesoro) linked up with right-wing political forces and the Koch family interests to spend millions putting Prop 23 on the ballot. Prop 23 would, effectively, repeal California’s pioneering climate change legislation, AB 32, under the guise of delaying it until the economy recovers. But as the first voters send in their ballots, I’m going to call this — Prop 23 is going down. The latest field poll shows that in only a few weeks the polling numbers have moved from a dead heat to an 11-point deficit for Prop 23, which is now getting only 34 percent of the vote. At this stage, ballot measures that don’t have a majority almost always lose. Significantly, this was also the week when Valero, Beacon, and Koch needed to make massive television buys if they were going to to turn the tide. They didn’t. Instead they went dark — no television buys at all.

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Obama Tax Cuts Plan Has House Democrats Deeply Divided

September 15, 2010

WASHINGTON — Congressional Democrats are confronting deep divisions within their nervous ranks over whether to support President Barack Obama’s plan to raise taxes on the wealthiest Americans – or just punt the entire matter until after voters go to the polls Nov. 2. Democratic leaders committed to Obama’s proposal were hearing Wednesday from endangered lawmakers who fear that raising taxes on anyone in a weak economy could be politically lethal. “Don’t raise taxes in a recession,” said Rep. Earl Pomeroy, D-N.D. Democratic leaders refused to say whether they were open to changing Obama’s plan, or even commit to a vote before the balloting seven weeks off. Instead, they called House Democrats together Tuesday night to discuss a poll showing that extending tax cuts for middle-income earners was a winning strategy for the party. House Speaker Nancy Pelosi made the case that Obama’s plan was “good policy and good politics,” her spokesman said. Not everyone was convinced. A group of moderate and conservative House Democrats was collecting signatures on a letter calling for Democratic leaders to offer a bill extending tax cuts for all Americans. Broad tax cuts passed during the George W. Bush administration are due to expire at the end of the year. “We are in listening mode,” said Rep. Chris Van Hollen of Maryland, who heads the House Democrats’ campaign committee. A fuller discussion was expected at the House Democrats’ weekly meeting Wednesday, but it was canceled. This was not the debate Democrats wanted as the midterm election season opened. The plan was to make an extension of the middle-class tax cuts the party’s closing argument – against Republicans, not each other – as voters began to focus on whether they trust Democrats to improve the ailing economy enough to reward them with control of Congress for another two years. Instead, Democrats who already have cast tough votes on bills overhauling the nation’s health care and financial regulatory systems are questioning the wisdom of debating a pocketbook issue just when voters are starting to pay attention to the election. All 435 seats in the House, 37 in the Senate and the Democratic majorities in both are on the line. The rift among Democrats contrasts with strong unity among Republicans in supporting a full renewal of all tax cuts, regardless of income, despite a 10-year cost to the government of about $700 billion above Obama’s plan. Still, House Republican leader John Boehner said over the weekend he would vote to extend the relief only for middle-income Americans if that were the only option available. Some House Democrats, particularly moderates facing difficult re-election battles in districts carried by GOP presidential nominee John McCain two years ago, agree with a proposal offered by Republicans for a short-term renewal of all of the Bush-era tax cuts. “We look forward to working with you to extend all income tax rates,” a small group of conservative-to-moderate House Democrats wrote in a draft letter to party leaders as lawmakers trickled back into town Tuesday from their summer break. Democratic Reps. Jim Matheson of Utah, Melissa Bean of Illinois and Glenn Nye of Virginia were circulating the letter for more signatures and were picking up support. On the Senate side, Sen. Dick Durbin of Illinois said most Democrats support Obama’s plan to allow income tax rates on family income exceeding $250,000 to rise to as high as 39.6 percent. But he also said some want to raise the amount of income exempted from the higher rates above the $250,000 figure called for by Obama – while not advocating a full renewal for, say, millionaires. “Some people think it should go beyond $250,000, but how much and for what period of time is still being debated,” Durbin told reporters Tuesday. The cost of extending the tax cuts for everyone for the next 10 years would approach $4 trillion, according to congressional estimates. Eliminating the breaks for the top earners would reduce that bill by about $700 billion. A one-year extension of the lower rates for high-income earners would cost the government $39 billion. ___ Associated Press writer Andrew Taylor contributed to this report.

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Obama Tax Cuts Plan Has House Democrats Deeply Divided

September 15, 2010

WASHINGTON — Congressional Democrats are confronting deep divisions within their nervous ranks over whether to support President Barack Obama’s plan to raise taxes on the wealthiest Americans – or just punt the entire matter until after voters go to the polls Nov. 2. Democratic leaders committed to Obama’s proposal were hearing Wednesday from endangered lawmakers who fear that raising taxes on anyone in a weak economy could be politically lethal. “Don’t raise taxes in a recession,” said Rep. Earl Pomeroy, D-N.D. Democratic leaders refused to say whether they were open to changing Obama’s plan, or even commit to a vote before the balloting seven weeks off. Instead, they called House Democrats together Tuesday night to discuss a poll showing that extending tax cuts for middle-income earners was a winning strategy for the party. House Speaker Nancy Pelosi made the case that Obama’s plan was “good policy and good politics,” her spokesman said. Not everyone was convinced. A group of moderate and conservative House Democrats was collecting signatures on a letter calling for Democratic leaders to offer a bill extending tax cuts for all Americans. Broad tax cuts passed during the George W. Bush administration are due to expire at the end of the year. “We are in listening mode,” said Rep. Chris Van Hollen of Maryland, who heads the House Democrats’ campaign committee. A fuller discussion was expected at the House Democrats’ weekly meeting Wednesday, but it was canceled. This was not the debate Democrats wanted as the midterm election season opened. The plan was to make an extension of the middle-class tax cuts the party’s closing argument – against Republicans, not each other – as voters began to focus on whether they trust Democrats to improve the ailing economy enough to reward them with control of Congress for another two years. Instead, Democrats who already have cast tough votes on bills overhauling the nation’s health care and financial regulatory systems are questioning the wisdom of debating a pocketbook issue just when voters are starting to pay attention to the election. All 435 seats in the House, 37 in the Senate and the Democratic majorities in both are on the line. The rift among Democrats contrasts with strong unity among Republicans in supporting a full renewal of all tax cuts, regardless of income, despite a 10-year cost to the government of about $700 billion above Obama’s plan. Still, House Republican leader John Boehner said over the weekend he would vote to extend the relief only for middle-income Americans if that were the only option available. Some House Democrats, particularly moderates facing difficult re-election battles in districts carried by GOP presidential nominee John McCain two years ago, agree with a proposal offered by Republicans for a short-term renewal of all of the Bush-era tax cuts. “We look forward to working with you to extend all income tax rates,” a small group of conservative-to-moderate House Democrats wrote in a draft letter to party leaders as lawmakers trickled back into town Tuesday from their summer break. Democratic Reps. Jim Matheson of Utah, Melissa Bean of Illinois and Glenn Nye of Virginia were circulating the letter for more signatures and were picking up support. On the Senate side, Sen. Dick Durbin of Illinois said most Democrats support Obama’s plan to allow income tax rates on family income exceeding $250,000 to rise to as high as 39.6 percent. But he also said some want to raise the amount of income exempted from the higher rates above the $250,000 figure called for by Obama – while not advocating a full renewal for, say, millionaires. “Some people think it should go beyond $250,000, but how much and for what period of time is still being debated,” Durbin told reporters Tuesday. The cost of extending the tax cuts for everyone for the next 10 years would approach $4 trillion, according to congressional estimates. Eliminating the breaks for the top earners would reduce that bill by about $700 billion. A one-year extension of the lower rates for high-income earners would cost the government $39 billion. ___ Associated Press writer Andrew Taylor contributed to this report.

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Dan Dorfman: From Wall Street: Obama Won’t Run Again

September 13, 2010

Mounting friction between Wall Street and the White House has taken on an intriguing new dimension, notably speculation from the investment community that President Obama will be so bruised by 2012 that he won’t even try to seek re-election. That’s a far cry from Wall Street ‘s thinking during the last national election when then presidential candidate Obama managed to captivate a fair share of the Street’s fat cats. At the time, a number of them looked upon him as an inspirational breath of political fresh air and backed him with their wallets. But that was yesterday. Today, he has lost most of his allure in the investment community, with many there condemning him. We’ve already seen numerous press reports taking note of the disillusionment with the Obama administration by Wall Street powerhouse Goldman Sachs and various hedge fund managers. You don’t need an Einstein IQ to figure out the basis for the disenchantment. The harsh, agonizing facts speak for themselves. In brief: The economy is in limbo, with housing and unemployment ongoing horror shows. John Q. Public is getting increasingly more jittery about its financial future. The stock market continues to bloody investors, who’ve been running for cover, their latest selling outburst the dumping of a huge7.6 billion worth of U.S. equity mutual funds in the week ended September 1. The country’s financial muscle, reflecting soaring debt, a burgeoning deficit and endless stimulus, is displaying much too much flab. Some rating agencies have even raised the possibility of downgrading U.S. debt. By their actions, some countries, such as China and Iran, are openly telling the United States to go to hell. It’s all prompting swelling Wall Street talk that Obama is a one term President. That’s also the thinking of San Francisco money manager Gary Wollin, who says “unless the Republicans put up someone who has been practicing canabalism, they can’t lose in 2012.” Noting that the president has been on the attack against Wall Street, in effect blaming it for killing Main Street, Wollin sees little Street support for Obama in the future. He also expects the President to lose much of his Jewish support from Wall Street, Hollywood and from far left progressives because of his strong pro-Arab stance. The Obama legacy, as he sees it, is one of “great expectations, but instead disappointment and plenty of it. It all adds up to what the polls say will be a Democratic drubbing in the mid-term elections even though, some Wall Streeters argue, the Republicans are exhibiting themselves as political deadbeats. Why so? Because, some Republican critics say, all they do is gripe about Obama, but fail to offer up a concrete set of proposals of their own to arrest the economic drag and get the country’s financial house in order. The belief on Wall Street is that the virtually certain big Republican win in November will reinforce the view that President Obama’s reign as America’s CEO is on borrowed time. It’s pretty much a repeat of what happens time and again in Corporate America. In brief, a company’s bottom line goes to pot, its stock price takes a dive and the CEO is booted out. In Obama’s case, the expectation is he will simply be voted out. Harry S. Dent, Jr., a Florida investment adviser, newsletter writer and author, takes it one step further. Dent, who expects the economy to be in a deep economic downturn by the second quarter of next year, a plight he sees extending into 2012 or 2013, believes Obama’s approval rating will be so low when the next national election rolls around that he will be afraid to run again. “The economy makes or breaks Presidents, not vice versa,” he says. “So with our economy failing and many signs indicating it will only get worse,” Obama,” contends Dent, “is politically dead.” The big economic problems, as he sees them, are the massive debt buildup and the likelihood of a major slowdown in consumption, spurred by a retirement-conscious baby boomer population that will be much more intent on saving than spending. Since he views the ailing economy as the number one voter issue, Dent sees the Democrats getting hammered in the upcoming elections and possibly losing both the House and Senate. In his latest commentary to his newsletter subscribers, Dent expressed the view that 2012 could witness an ultimate three-way race for the Presidency, The trio: Hillary Clinton, a far right nominee (Sarah Palin, Mitt Romney or Newt Gingrich) and Michael Bloomberg, who Dent expects to seek the White House as an independent candidate). If that were to happen, Dent says Bloomberg, an accomplished businessman, would be his top choice. At the same time, Dent thinks it’s possible that a more centrist candidate could emerge for the Republicans, say Jeb Bush, that is if he could overcome the legacy of George W. Bush. Like its stock recommendations, Wall Street’s political thoughts — more of which will soon be on their way, given the impending fall elections — can often influence people’s actions, especially investors who’ve seen their net worth shrink or are unemployed. So the Street’s views on politics, it’s felt, should not be taken lightly. Normally, a very bad economy will result in a landslide win for the party out of power, which would signal a Republican White House in 2012. The predominant thinking in Wall Street is that kind of a scenario is practically a sure thing in the next national election. Maybe so, but it’s worth keeping in mind that another sure thing — Hillary Clinton’s nomination as the Democrats’ Presidential nominee in 2008 — turned out to be a myth as Obama pulled off what many political pundits thought was the impossible. What do you think? E-mail me at Dandordan@aol.com.

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Working America, Labor Group, To Mobilize Unemployed Voters

August 18, 2010

A labor-allied group is hoping to tilt the November elections toward Democrats not by playing to voters’ dissatisfaction with the economy but by motivating the actual victims of the recession. Working America, a community-organizing affiliate of the AFL-CIO, launched a campaign on Wednesday to organize and motivate hundreds of thousands of unemployed workers to head to the polls in the November elections. The organization is starting with 100,000 of its own members who are currently out of work. But the list of contacts could wind up being “several hundred thousand” of the nearly 15 million unemployed, said Karen Nussbaum, director of Working America. In Ohio alone, Nussbaum said, Working America has a list of 38,000 unemployed workers who are registered to vote — a major bloc that could tip the scale of the governor’s race as well as elections to the House or the Senate. “In an election year that is incredibly volatile where we have no idea, really, what turnout’s going to look like, where we have no idea what the real appeal of right-wing candidates is going to be, and where we’re not sure what kind of information people are going to get about the key issue, which is jobs, this becomes a more influential group,” said Nussbaum. The effort, which is the first of its kind, is an ambitious effort to re-balance the political landscape away from pro-corporate, pro-business interests. But will the unemployed vote for the candidates Working America supports? Democrats, after all, have presided over the past year-and-a-half of an epic jobs crisis and it’s not unreasonable to expect the jobless won’t be drawn to their candidacies. “Our experience as we go door to door is that people are looking for an explanation about why this is happening to them,” said Nussbaum when asked about a potential Democratic backlash. “The knee-jerk response to get mad at people that are in power is in the absence of having a better explanation. You can talk about who’s standing in the way of investing in jobs. The fact that corporations have way too much influence in government, that makes sense to people, and that when you compare voting records, when you look at for example a Republican bloc that has voted against every single jobs bill, including this unemployment extension, that’s information people take in and act on.” Senate Republicans, in the name of deficit reduction, blocked votes this year on several bills to reauthorize jobless benefits for the long-term unemployed, causing extended benefits to lapse three times. The third lapse lasted for 50 days and stopped checks to 2.5 million people. “If they can stop the recovery from occurring, If they can create as much pain as possible, the cynical view is people will be angry and either drop out and not vote at all or vote against those in the majority,” Sen. Debbie Stabenow (D-Mich.) said in June. While polling has shown that voters care much more about helping the unemployed and nurturing the economy than reducing the deficit, it’s not clear if or how the filibusters of jobs bills themselves will play in the upcoming election. Working America hopes to make them an issue. “We were so shocked at the stranglehold on extending unemployment benefits, and frankly, on the lack of kind of a general outcry, that we thought this became a big priority that we had to really get information to people and encourage unemployed voters to make their voices heard in this election,” said Nussbaum. “When we talk to people in the field they rarely bring up the deficit. It’s really not what swing voters care about…. So we’re going to be talking about voting records, we’re going to talk about the kinds of changes that have been made that actually helped create jobs, that haven’t gotten us where we need to be, but have been incredibly important. Things like the stimulus package, like [funding to prevent state government layoffs], like unemployment extensions, like health care reform, which have all been crucial for reducing the damage that has been done.” Working America’s strategy is to find as many avenues as possible to communicate with the unemployed between now and November. It’s not a simple task. The jobless tend to be more transient than those who have work. Nussbaum, however, insisted that the group’s database is updated “constantly” (nearly 20 percent of its members are unemployed workers). Moreover, between now and November officials are planning a host of outreach activities — from a tele-town hall that will reach 20,000 unemployed voters to dispatching field organizers in 12 cities to talk to unemployed workers at unemployment offices — to ensure that the baseline number of 100,000 registered unemployed voters is maintained if not expanded upon. Nussbaum, who declined to say how much money would be behind Working America’s campaign, said a lot of outreach would occur via the website unemploymentlifeline.com, which she called “the single most comprehensive source for information for unemployed and underemployed workers that exists in the country.” (The unemployed themselves have done some online organizing of their own, mainly online via websites like unemployed-friends.com, change.org, and OpenCongress.org.) With tools like these and outreach from Working America, there’s little question the unemployed will be politically engaged, but it’s an open question whether their frustration can be channeled into supporting incumbent Democrats. “I think people are angry but I think it’s been hard to direct, and in a political season that’s been…unusual.”

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Barack Obama Praises Wall Street Reform: ‘We Made Enormous Progress’

July 23, 2010

WASHINGTON — President Barack Obama on Friday proclaimed a week of “enormous progress” in fixing economic problems and cracking down on Wall Street, prodding the Senate to do even more by passing tax credits for small businesses. In the midst of a sleepy, steamy day in Washington, Obama went before the cameras to try to frame the state of the economy in his own terms. He praised a trio of matters he signed into law this week – an overhaul of financial regulations, an effort to shrink wasteful government payments, and an extension of unemployment benefits for millions of jobless people – as the governing that people expect. The president said fresh revelations of big bank bonuses underscore the need for the financial regulation bill he signed into law this week. Obama noted that the Treasury Department’s pay czar reported 17 banks gave their top executives $1.6 billion in bonuses while receiving billions of dollars in bailout money. Obama then pivoted to pressuring Congress to send him a bill to help struggling small businesses. A measure emerging in the Senate would create a new lending fund to help community banks offer loans, help states encourage more private-sector lending and eliminate capital gains taxes for certain investments in small businesses, among other steps. “Taken together, we made enormous progress this week on Wall Street reform, on making sure that we’re eliminating waste and abuse in government and in providing immediate assistance to people who are out there looking for work,” Obama said in a brief statement in the Roosevelt Room. “But ultimately our goal is to make sure that people who are looking for a job can find a job,” he said. More than 14.6 million people were out of work in June. The economy is slowing as consumers cut back spending under the strains of 9.5 percent unemployment, lackluster wage gains and sagging home values. Businesses are wary of hiring because of uncertainty about the strength of the economic rebound. A year and a half into his presidency, Obama is under mounting pressure to show more economic gains, particularly on the job front. The sour public mood about the economy is poised to be a major factor when voters go to the polls in the November midterm elections.

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Richard (RJ) Eskow: Financial Reform: The Road Behind, the Way Forward

June 25, 2010

The House and Senate have reached an agreement and we have a financial reform bill. That means we’ll see significant improvements over the status quo as it existed yesterday. It also means we still haven’t addressed the gravest risks to the economy. And for those of us who care about this country, it means that we still have work to do. We must be the voices of reason, the ones who praise what’s been accomplished but call for even deeper reforms going forward. This bill has a number of very positive features, and progressive voices helped build the momentum for them: We’ll see an audit of the Federal Reserve, which will shine a light on the hidden workings of the crony-ized banking system. A Consumer Protection Bureau will be created to protect people from bank predators. We’ll see an end to the cynical speculation in food and fuel prices that have wreaked havoc on household budgets throughout the nation. We’ll also have a new provision that gives the SEC authority to ensure that brokers act with “fiduciary responsibility” toward their clients (after a period of study). While this most directly benefits wealthier investors, it will help end abuses like the Goldman Sachs ABACUS program that nearly destabilized the entire economy. Those who want to fall into cynicism and despair can find material to feed that worldview, if they’re so inclined. This legislation will not stop Wall Street speculation in derivatives, and our financial system will still be dominated by a few “too big to fail” banks, which means our economy is still in danger. Auto dealers got their sleazy carve-out from the consumer protection bureau. It was a frustrating spectacle to watch elected officials on the Hill shoot down amendments that would have solved these problems. And cynics might be forgiven for believing that Treasury Undersecretary Neal Wolin’s blog post yesterday , where he overpraised the bill’s accomplishments and said “we don’t have to wait until (the bill’s done) to know what reform will look like,” was a signal to Hill negotiators that they could gut the Lincoln amendment without White House objection – which they promptly did. But, to those who would take that route, consider the words of labor leader Joe Hill: Don’t mourn, organize. We’ve learned that elected officials in Washington will respond to eloquent and impassioned voices calling for change, whether those voices are raised on phone calls to representatives, in letters and commentary, or in voting booths in Pennsylvania and Arkansas. But remember that elected leaders are human. If they come to see the progressive movement or any other voting bloc as relentlessly negative, they’ll stop listening. And, for those who celebrate what this bill accomplishes, a Joe Hill variation: Celebrate, then organize. The two activities aren’t mutually exclusive. In fact, that should be the preferred approach. Without the principled stand of some Democratic leaders in the White House and on the Hill, coupled with some surprise moves by courageous Republicans, we wouldn’t have the reforms we have today. So, by all means, celebrate. Reward our leaders for what they’ve done right, just before we go about the business – our business, as citizens – of pushing them to do more. What can we do to frame the argument going forward and build momentum for deeper reform? It seems to me that there are five things that must be done: 1. Create the right context Are people saying that President Obama is no FDR? Let them know that FDR was no FDR either – at least not at first. Zach Carter is right to point out that it took years for Roosevelt to enact all his banking reforms. In an equally strong historical parallel, a conservative bank-oriented faction persuaded FDR to focus prematurely on the deficit, as Obama is being persuaded now by the ” AmericaSpeaks ” contingent. It took years of trial and error before FDR came to realize that this concession was undermining the recovery he had put into motion. 2. Criticize – but don’t lose perspective Let people know that the President is right when he says that this is the most significant financial reform since the 1930s. And remind them that it took several years for FDR and Hill leaders to get that right, too. Imagine how different – and how much worse – history might have been if Roosevelt and his allies had gone down to defeat in the polls because nobody bothered to balance their criticisms with recognition of their accomplishments. FDR became a great leader because he had the capacity and the willingness to learn – from his critics, from events, and even from his own mistakes. That’s the standard to which we should hold our leaders. 3. Keep framing the moral argument Too often we forget that there are basic issues of right and wrong involved here. We’re perpetrating an unethical system as long as bankers can gamble with discounted Federal Reserve money or other public subsidies, and as long as they know taxpayers will bail them out whenever they lose. When financiers can make more money speculating than they can serving consumers and smaller businesses, the system isn’t working for its intended purpose. California readers were outraged to read yesterday that welfare recipients can use the debit cards issued by the state at ATMs in casinos , making it possible to receive a public subsidy and immediately gamble with it. Isn’t it ironic that more voters don’t feel the same level of outrage when bankers do it? Bankers, who hardly need the money, receive far more in public funds for their gambling – and they endanger the entire system when they do it. Concerned citizens can and must keep making the case for financial reform as a moral issue. 4. Keep pointing out the risks Those of us who keep warning that we’re still at risk must feel sometimes like Kevin McCarthy in Invasion of the Body Snatchers, screaming “they’re here! they’re here!” as indifferent drivers whiz past in their comfortable cars. Keep those warnings coming anyway. Our system is just as much at risk as it was before this bill was finalized. Millions of people are still victims of the last crisis. There are those who suggest another downturn may be coming soon. Historical trends suggest that crises will keep returning every seven years on average – unless and until we do something to change things. From a risk management point of view, we’re flying a plane with our eyes closed and congratulating ourselves that we haven’t crashed into anything … lately. There are political risks, too, and we shouldn’t hesitate to point those out. If we experience another crisis after this bill passes, voters will be ruthless toward the incumbents who celebrated its passage. Polls show that the public despises big banks, so the concessions we’ve seen will be a political liability – that is, until tougher reforms are enacted. 5. Look for teachable moments There will be a temptation to put this issue behind us now that the bill has passed. But history has a way of offering teachable moments – another economic downturn, a ” flash crash ” like the one Wall Street experienced a few weeks ago, or the conviction of a malefactor like Bernie Madoff. Negative events are tragic, but the hard truth is that they will keep coming until we make systemic changes . They are “teachable moments” for voters and elected officials alike, and should be opportunities to speak out. The Federal Reserve audit will provide additional opportunities to inform the public. Activists and concerned citizens should be pushing for indictments of corrupt bankers, too. There are a number of signs of malfeasance, with so many potential crime scenes to investigate that half the buildings on Wall Street should be marked with yellow police tape. A perp walk is a very teachable moment. ___________________________ So, if someone were to ask me what to do now, I’d say keep those letters, emails, and calls coming – to your Representatives, to the White House, to newspapers and talk shows. Keep talking to people around you. Be unstinting in your praise for what’s been accomplished and unhesitating in your demands for demand more. Their job is to respond to pressure. Our job is to provide pressure for the right things. Financial reform has been passed. Long live the movement to demand financial reform. Let’s pause for a moment of celebration … and then get back to work. ___________________________ Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light . He can be reached at “rjeskow@ourfuture.org.” Website: Eskow and Associates

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PM Naoto Kan: Japan’s Debt Could Make It The Next Greece

June 11, 2010

TOKYO — Japan could face a financial mess like the one that has crippled Greece if it does not deal urgently with its swelling national debt, the new prime minister warned Friday. While Japan is on firmer financial footing than Greece because most of its debt is held domestically, Prime Minister Naoto Kan’s blunt talk appeared designed to push forward his agenda, which may involve raising taxes. Speaking in his first address to Parliament after taking office Tuesday, Kan said Japan cannot continue to let government debt swell while state finances are under pressure from an aging and declining population. “It is difficult to sustain a policy that relies too heavily on issuing debt. As we have seen with the financial confusion in the European community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone,” he said. Japan, the world’s second-largest economy, has the largest public debt among industrialized nations at 218.6 percent of its gross domestic product in 2009, according to the International Monetary Fund. Kan, who became Japan’s sixth prime minister in four years after a short stint as finance minister, promised his government would work closely with the Bank of Japan to avoid an increase in deflation and would focus on developing a “strong and comprehensive” policy. Kan has said he will also consider raising taxes, an issue he said previous governments had been too timid to face. A social progressive and a fiscal hawk, Kan said he would announce further details of his economic growth plan later this month. But he said he aims to have the economy grow by more than 2 percent annually by fiscal 2020. After amassing a vast public debt and overspending to the tune of 13.6 percent of gross domestic product in 2009, Greece was saved from defaulting on its loans by the first installment of a euro110 billion ($131 billion) rescue package from the International Monetary Fund and the 15 other nations that share the euro currency. Analysts said Kan’s warning comparison with the recent development in Greece is an overstatement, since the Japanese investors who hold the majority of the government’s debt are seen as long-term stakeholders who are less likely to bolt for other, more lucrative markets overseas. “Greece had a huge public debt and huge overseas loans,” said Hiromichi Shirakawa, chief economist at Credit Suisse Japan. “Japan has a trade surplus, and it’s a major creditor nation … I don’t think Japan’s fiscal conditions is facing a similar crisis.” Instead of focusing too much on fiscal tightening, Kan should simply focus on growth strategy that works for Japan’s matured economy as the nation’s population continues to age and shrink, he added. Kan’s predecessor abruptly quit last week after he failed to keep a campaign promise to move the Marine Corps Air Station Futenma off the southern island of Okinawa. Kan is enjoying a jolt of public support, with approval ratings of between 60 and 70 percent boding well for his party heading into next month’s elections. His Democratic Party is considering a July 11 date for the polls, but that has caused a row with their coalition partner and prompted its leader to announce in the early hours Friday his resignation from a Cabinet post. The junior coalition party wants instead to extend the current parliamentary session to vote on a key postal reform bill.

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Democrat Lincoln’s Senate Primary Race Tests Voter Dislike of Incumbents

June 8, 2010

By Patrick O’Connor June 8 (Bloomberg) — Arkansas Democrats decide today whether U.S. Senator Blanche Lincoln will stand for re-election or become the year’s fifth congressional incumbent denied re- nomination in a sign of voter discontent. In other high-profile races, former Hewlett-Packard Co. Chief Executive Officer Carly Fiorina and former EBay Inc. CEO Meg Whitman are seeking Republican nominations in California after trading their business careers for politics. In Nevada, Republicans pick a candidate to run against Senate Majority Leader Harry Reid . Eleven states hold primaries or run-offs today to choose candidates for November’s midterm elections. A U.S. House seat also will be filled by one of two Republicans in a special election in Georgia. Some of the results will offer clues about the perils of incumbency, the clout of the Tea Party and the prospects for wealthy, self-funded Republicans. In South Carolina, a primary today has taken on the same sideshow quality that followed revelations last year of an extramarital affair by Republican Governor Mark Sanford . Two state political operatives have said they had affairs with Nikki Haley , a married state representative who remains ahead in the polls for the Republican nomination to replace Sanford. In Arkansas, Lincoln is facing Lieutenant Governor Bill Halter in a Democratic runoff after neither received more than 50 percent of the vote in a May 18 primary. Defeated Incumbents If she loses, Lincoln would join Utah Republican Bob Bennett and Pennsylvania Democrat Arlen Specter as the third senator denied re-nomination this year. It’s been 30 years since more than two senators were similarly derailed, according to the Senate Historian’s office; in 1980 four incumbents lost in primaries. Two U.S. House members, Democrat Alan Mollohan of West Virginia and Republican Parker Griffith of Alabama, also have lost primary races this year. “There is no way Lincoln’s defeat can be seen as anything but people being upset with incumbents,” said Julian Zelizer , a history and public policy professor at Princeton University in New Jersey. Halter, 49, has blasted Lincoln, also 49, for voting against the final version of President Barack Obama ’s health- care bill. Halter’s allies in organized labor have attacked Lincoln for opposing a measure to ease union-organizing requirements and for voting against union lawyer Craig Becker nomination to the National Labor Relations Board. Labor Spending During a June 6 appearance on CNN’s “State of the Union,” Lincoln said Washington-based unions have spent about $10 million in the last three months trying to unseat her. Lincoln has highlighted her power as chairwoman of the Senate Agriculture Committee and touted a provision she added to pending financial-industry overhaul legislation to force commercial banks to wall off their swaps-trading desks. She also had former President Bill Clinton , who served 12 years as Arkansas’s governor, campaign for her. “You see the center-left tension” within the Democratic Party playing out in the Lincoln-Halter race, Zelizer said. The winner will face Republican Representative John Boozman in November. In California, polls show Fiorina leading for the state’s Republican Senate nomination and Whitman ahead for the party’s gubernatorial nod. Fiorina, 55, would take on Democratic Senator Barbara Boxer , 69; Whitman, 53, would face former Democratic Governor Jerry Brown , 72, who is currently the state’s attorney general. Self-Financing Whitman has funded her campaign with $71 million of her own money, state records show. She’s spent part of her campaign treasury rebutting attacks by opponent Steve Poizner , the state’s insurance commissioner, who ran ads that featured circling vultures to criticize Whitman’s ties to Goldman Sachs Group Inc. Whitman has outspent Poizner, 53, by more than three-to- one, state records show. Fiorina has enjoyed a cash advantage over her main primary opponent, former U.S. Representative Tom Campbell , 57. As of mid-May, Fiorina had raised more than $7.5 million and spent more than $6.7 million; Campbell had raised $2.6 million and spent $1.6 million, according to the Center for Responsive Politics. Jobless Figure California’s unemployment rate reached 12.6 percent in April, the nation’s third-highest. Economic unease among voters and concern about expanding government put Boxer, a three-term incumbent, at risk of losing in November, said Jennifer Duffy of the nonpartisan Cook Political Report . “Voters seem to be in the mood for some change right now, even in a state as Democratic as California,” Duffy said. In Nevada, recent polls show Sharron Angle , a former state legislator who went to court in 2003 to block a proposed tax increase, leading a 12-candidate Republican field for the right to challenge Reid. Angle, 60, has been helped by backing from Tea Party adherents and the anti-tax Club for Growth in pulling ahead of former state party chairwoman Sue Lowden , 58, and Las Vegas businessman Danny Tarkanian , 48. “Nevada is ground zero for the tremendous amount of voter discontent,” said Ross Baker , a political science professor at Rutgers University in New Jersey, citing the state’s highest-in- the-nation foreclosure rate and second-highest unemployment rate behind Michigan. “Sharron Angle has tapped into that anger.” An Angle win might fuel other anti-establishment candidates, Zelizer said. “The question with the Tea Party is, is this a serious movement that can do serious things?” he said. “To the extent they’re successful, they get more people involved.” To contact the reporter for this story: Patrick O’Connor in Washington at Poconnor14@bloomberg.net

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Hatoyama Regrets Japan Coalition Split Over Base as Approval Rating Drops

May 30, 2010

By Sachiko Sakamaki and Takashi Hirokawa May 31 (Bloomberg) — Japan’s Prime Minister Yukio Hatoyama said he regretted the departure of a minority party in his coalition, as new polls showed rising discontent with his government less than two months before parliamentary elections. The Social Democratic Party yesterday left the government after Hatoyama fired leader Mizuho Fukushima from his Cabinet for refusing to endorse his agreement with the U.S. to relocate a Marine base within Okinawa. The move reduces the Democratic Party of Japan -led coalition’s majority in the upper house ahead of elections for half the chamber’s seats set for July. “It’s regrettable that the Social Democrats left the government,” Hatoyama told reporters today outside his office in Tokyo. “Unfortunately, there was a fundamental disagreement in regard to national security.” Hatoyama’s popularity has plunged since the DPJ’s landslide August victory in the more powerful lower house, with voters disenchanted over campaign finance scandals and his vacillating over where to move the Futenma Marine Air Base. Three polls released today showed his approval rating at or below 20 percent and six in 10 voters think he should quit. “This is a blow but it may be temporary because there’s another month until the race starts,” said Hirotada Asakawa , a Tokyo-based independent political commentator. “It’s already expected that the DPJ cannot gain a majority and the party will need a new coalition framework.” Voter Discontent Hatoyama’s favorability rating fell to 19 percent from 24 percent three weeks ago, while his disapproval rating was at 75 percent, the Yomiuri newspaper said today. The Asahi newspaper said his approval rating was at 17 percent, while the Mainichi newspaper put it at 20 percent. Almost 60 percent think he should quit over the base issue, the Yomiuri and Mainichi said. None of the polls, all of which were taken over the weekend, gave a margin of error. “We must get over this by holding on to our convictions,” Hatoyama said today. “I will do what I can to regain people’s trust.” Half of the 242 upper-house seats are at stake in the July balloting. The DPJ and its other junior partner, the People’s New Party , have 122 legislators, and losing that majority could slow Hatoyama’s legislative goals of increasing social welfare spending while aiming to cut the world’s largest public debt. The U.S. and Japan agreed on May 28 to most parts of an existing plan to relocate the Futenma base on the island to the Henoko coastal area. Hatoyama has repeatedly apologized for breaking a campaign pledge to transfer the facility off of Okinawa. The island, 950 miles (1,530 kilometers) south of Tokyo, houses 75 percent of the American bases and more than half of the 50,000 U.S. troops stationed in Japan to provide for the country’s defense under a 50-year-old security treaty. The U.S. pushed Japan to uphold a 2006 agreement to move Futenma within Okinawa by 2014, as part of a $10.3 billion plan that would also transfer 8,000 Marines to Guam. The people of Okinawa want it moved elsewhere, citing increased crime, pollution and noise. To contact the reporters on this story: Takashi Hirokawa in Okinawa at thirokawa@bloomberg.net ; Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net

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Rio Chief Says Australian Mining Tax Makes Government His `Silent Partner’

May 30, 2010

By Shani Raja May 30 (Bloomberg) — Tom Albanese , chief executive officer of Rio Tinto Group , said Australia’s plan to boost taxes on resources producers would make the government a “silent partner” in businesses such as itself. The proposal for a 40 percent super profits tax on resource companies has also damaged Australia’s reputation overseas and added to sovereign risk, Albanese said in an interview broadcast today on ABC’s “Inside Business.” “This is half our balance sheet at risk because we have someone now coming in to say, ‘I want to be your silent partner: I want 40 percent of your pretax profits and largely written-off assets,’” Albanese told the program. He said the related cost was difficult to assess because of the complexity of the tax, and may amount to “well over 50 percent.” The government set aside A$38.5 million ($32.6 million) in its May 11 budget to promote an overhaul of the nation’s tax system, including the resources levy. Mining companies oppose the tax, scheduled to take effect in 2012, placing full-page advertisements in Australian newspapers to lobby for changes. Last week, the government said it will run its own advertising campaign to counter the “misinformation.” Treasurer Wayne Swan said in an e-mailed statement today that the super profits tax, or RSPT, wouldn’t be retroactive. ‘Misleading’ Claims “There has been much comment from mining companies in recent weeks about the supposed ‘retrospectivity’ of the RSPT,” Swan said. “These claims are clearly misleading, as the RSPT will apply to mining profits from 1 July 2012. It does not apply to past profits.” Rio’s CEO said it was important to reconsider the proposal and he’s ready to work with Prime Minister Kevin Rudd ’s government on a fundamentally different approach. The world’s third-largest mining company is already paying almost 35 percent tax plus royalties, and will publish independently audited data on its tax payments later in the week, he said. “Albanese left no doubt he’s willing to engage on a long- term, workable solution, arguably a process companies like Rio should have been involved in before the tax was announced,” said Tim Schroeders , a fund manager at Pengana Capital Ltd. in Melbourne. Core Elements The government “won’t back away” from the core elements of its proposal, Finance Minister Lindsay Tanner told Channel Ten’s “Meet the Press” program today. Still, Swan told parliament last week that the government was continuing to consult with industry as criticism of his administration’s proposed advertising campaign mounted. The Shadow Minister for Employment and Workplace Relations, Eric Abetz , today called for a senate inquiry into the government’s handling of its advertising campaign. “Labor is breaking its own guidelines in order to run a partisan political campaign,” he said in a media release. “This has all the stench of a desperate government facilitating false excuses to run a political campaign at taxpayers’ expense.” The government’s use of taxpayer money to get its message across is “a scandalous situation,” billionaire businessman Clive Palmer said on “Meet the Press” today. The super-tax proposal itself is also hurting overseas investment and is likely to damage Australian jobs and livelihoods, he said. ‘National Interest’ Rudd told journalists in Melbourne yesterday the campaign is in the national interest, while Tanner said Australia’s economy could be harmed if misinformation about the tax went unanswered. Wal King , the head of Leighton Holdings Ltd. , Australia’s biggest construction company, said builders are also worried about the tax, the Weekend Australian reported yesterday. He made the comments in a statement as president of the Australian Constructors Association, the newspaper said. The mining-tax plan has prompted Rio Tinto to re-evaluate all its projects in Australia, Albanese said in the ABC interview. “I have said to each of my managers, including during discussions this week while I’ve been in Australia, that every single project in Australia needs to be tested and retested and recalibrated, basically remodeled, on a worst-case tax assumption,” he said. Minerals Council The Minerals Council of Australia ran an advertisement on YouTube and began a radio campaign on May 24 against the tax, saying Australian miners will pay a levy of 58 percent, “by far the world’s highest tax on mining.” It compares with the 23 percent paid in Canada, 30 percent in Russia and 33 percent in South Africa, the council said. Rudd’s government and resources companies are also clashing over the definition of a “super” profit, which the proposed tax sets at returns above the long-term Australian government bond rate of about 6 percent. Rudd’s Labor party and the Liberal-National opposition coalition led by Tony Abbott are tied in the polls, according to a Newspoll survey of 1,159 people taken between May 14 and 16 and published in the Australian newspaper on May 17. Voter dissatisfaction with Rudd rose to 51 percent, from 40 percent in February, in the lead up to a national ballot that must be called by April. Rudd would lose an election called now, according to a Herald/Nielsen poll published on May 10. To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net .

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Cuomo, Lazio Share Goal of Cutting New York State’s Agencies, Nypirg Says

May 23, 2010

By Mark Tannenbaum May 24 (Bloomberg) — Andrew Cuomo , the Democratic New York attorney general running for governor, shares a goal of restructuring government with Republican candidates Rick Lazio and Carl Paladino by slashing state agencies, the New York Public Interest Research Group said. Cuomo declared his candidacy this weekend with an agenda that includes reducing agencies, authorities and commissions by 20 percent. Lazio , a former congressman, and Paladino, a Buffalo businessman, say they too intend to reduce agencies, according to Nypirg’s review of candidate websites. Cuomo’s entry into the race comes as lawmakers in the state capital of Albany prepare to vote for the eighth consecutive week on emergency spending bills to keep the government running while they remain divided over a $9.2 billion budget gap for the year that began April 1. “It’s now clear that reforming Albany will be at the top of the 2010 election agenda,” Nypirg, a nonpartisan consumer group that advocates for open government and ethics rules, said in an e-mailed press release May 22. “It’s easy to promise reform, but it’s hard to achieve.” Suffolk County Executive Steve Levy , 50, another candidate for the Republican nomination in a state where Democrats outnumber Republicans by almost 2-to-1, doesn’t include cutting agencies as one of the “key reforms” on his website, Nypirg said. Ethics and Redistricting All four candidates have announced initiatives on ethics reform as well as independent redistricting after the 2010 Census, according to Nypirg’s report. “Unlike everything else, that’s an issue that has to be acted on,” Blair Horner , the Albany-based legislative director at Nypirg, said of redistricting in a phone interview. New York Democrats and Republicans will hold primaries in September to pick their candidates prior to the general election in November. Cuomo, 52, who announced his candidacy May 22, had been the Democrats’ unofficial standard bearer since February when Governor David Paterson abandoned his campaign amid an ethics inquiry. The candidate held a rally outside the old Tweed Courthouse in lower Manhattan, named for the 19th century political boss who built it. “The chronic dysfunction of Albany metastasized into the corruption of Albany, and it was a bipartisan affliction,” he said. “Unfortunately Albany’s antics today could make Boss Tweed blush.” Best-Financed As the best-financed and most popular New York official in public opinion polls, Cuomo entered the race as front-runner in the nation’s third most-populous state. Cuomo ruled out any tax increase. The state, he said, faces a “financial emergency,” requiring it to cap spending increases at 2 percent and freeze state worker salaries. Lazio, 52, has proposed capping property taxes. Levy has recommended spending- and property-tax caps similar to what Paterson has suggested, which Cuomo endorsed in his campaign announcement. Paladino, 63, also calls for lowering taxes and spending. Cuomo’s probes into alleged collusion among health insurers, abuses by student-loan companies and executive bonus practices have pushed his job approval rating to at least 68 percent in every Quinnipiac University poll since June 2008, the highest of any statewide official. Ahead in Polls A poll released May 11 by the Poughkeepsie, New York-based Marist Institute for Public Opinion reported Cuomo’s approval rating at 64 percent. In the same poll, Cuomo led Lazio 65 percent to 25 percent. He was ahead of Levy, who switched from his former Democrat affiliation to seek the Republican nomination, 63 percent to 25 percent. Cuomo led Paladino 67 percent to 22 percent. Cuomo reported $16.1 million in campaign funds to the state Board of Elections as of Jan. 15. Among the Republican candidates, Levy had $4.1 million and Lazio reported $637,000 . Lazio, in an e-mailed statement, said Cuomo “has been a central figure in Albany for thirty years, and bears responsibility for the worst four years in the history of New York government. Why should we give him another four?” Levy said it was he, not Cuomo, who first proposed wage freezes, spending and property-tax caps and non-partisan redistricting. “It is important that voters remain cognizant of who has been the leader in advancing these ideas,” he said. To contact the reporter on this story: Mark Tannenbaum in New York at mtannen@bloomberg.net .

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Blumenthal to Remain in Connecticut Senate Race Amid Questions on Vietnam

May 18, 2010

By Jonathan D. Salant and Peter S. Green May 18 (Bloomberg) — Connecticut Attorney General Richard Blumenthal will stay in the race for U.S. Senate, a Democratic Party spokeswoman said, amid a controversy over a New York Times report that he misrepresented his military service record during the Vietnam War. “He is 100 percent staying in the race,” said Kate Hansen, a spokeswoman for the Connecticut Democratic Party. “It’s not even a question.” Blumenthal, 64, scheduled a 2 p.m. press conference today at a Veterans of Foreign Wars post in West Hartford, Connecticut. The Times reported that Blumenthal claimed in public appearances to have served in Vietnam though he obtained deferments and then served in a Marine Corps reserve unit stationed in the U.S. Blumenthal’s campaign biography mentions his service in the reserves without referring to Vietnam. One of his Republican opponents, Linda McMahon , the former chief executive officer of World Wrestling Entertainment, posted an article on her campaign website claiming credit for leaking the story to the Times. Blumenthal, who entered the race after Democratic Senator Christopher Dodd announced his retirement, was favored to win the November election by the three Washington-based publications that rate congressional contests: Congressional Quarterly, the Cook Political Report and the Rothenberg Political Report. Military Service Democratic consultant Glenn Totten said misrepresenting his military service could cripple Blumenthal’s campaign. “It could be fatal if Blumenthal’s opponent is able to use that as a wedge to open a real question of character,” said Totten , who works on congressional races. “It’s one thing to say you did more in Vietnam than you actually did. It’s another to say you served there when in fact you went directly out of your way to avoid service.” “My intention was to be always clear and straightforward about what my service was,” Blumenthal said in an interview with Hearst Connecticut newspapers. “I’ve always said that I’ve served in the Marine Corps Reserve during the Vietnam era. If I said anything otherwise on very rare occasions, I may have misspoken.” A ‘Smear’ Attack Eric Schultz, a spokesman for the Democratic Senatorial Campaign Committee, said it was “no surprise Republicans would want to smear Dick Blumenthal .” The Times report said Blumenthal referred to his Vietnam service on the campaign trail, even though he didn’t go overseas. “Mr. Blumenthal owes the people of Connecticut, and particularly its veterans, a thorough explanation for the very serious questions that have been raised over what appears to be a long history of dishonest statements,” said Brian Walsh , a spokesman for the National Republican Senatorial Committee. Blumenthal led McMahon and former Republican Representative Rob Simmons by more than 30 points each in a March poll by Quinnipiac University of Hamden, Connecticut. “The one thing about it is it’s May and the election isn’t until November,” said Maurice Carroll , director of the Quinnipiac Polling Institute. “If it had happened in October, good Lord.” Five Deferments The Times, citing records, reported that Blumenthal got at least five military deferments from 1965-70 and took steps to avoid going to war. In 1970, he took a post in a Marine Reserve Washington unit that worked on local projects, the newspaper said. Simmons said in a statement that he was “deeply troubled” by allegations that Blumenthal misrepresented his service record. “Too many have sacrificed too much to have their valor stolen in this way,” he said. Blumenthal built a career pursuing financial crime. Last month, he sued Westport National Bank for allegedly aiding Bernard Madoff ’s Ponzi scheme, seeking $16.2 million for defrauded investors. He investigated insurer American International Group Inc. for possible misuse of taxpayer bailout funds and persuaded the company to turn over information on executives who received bonuses after the bailout. In 2008, he sued Countrywide Financial Corp., the mortgage company bought by Bank of America Corp., for allegedly duping borrowers into taking loans they couldn’t afford. Blumenthal is helped by his big lead in the polls in a Democratic state, said John C. Fortier , a research fellow at the American Enterprise Institute in Washington. “It seems as if he did not directly lie in writing, but in his live speeches he got carried away,” he said. Still, Fortier said, “if there are particularly egregious videos, they are campaign ad fodder for candidates to go viral on the web, both of which could be more damaging than the reports we read about in the Times.” To contact the reporters on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net ; Peter S. Green in New York at psgreen@bloomberg.net .

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Merkel May Face Voter Anger Over Greek Aid in North Rhine-Westphalia Vote

May 9, 2010

By Brian Parkin May 9 (Bloomberg) — Chancellor Angela Merkel faces the first test of her handling of the Greek crisis today, as voters in Germany’s most populous state go to the polls in a regional election that could swing the balance of power in Berlin. North Rhine-Westphalia has national clout, as home to about 18 million of Germany’s 82 million inhabitants plus E.ON AG , the world’s largest utility, and ThyssenKrupp AG , the country’s biggest steelmaker. A coalition of Merkel’s Christian Democrats and the Free Democrats, the same as the national government in Berlin, has governed in the state capital Dusseldorf since 2005. “Whoever wins will have a large say in federal policy making,” Grace Amerley Annan , a political analyst at IHS Global Insight in London, said in a May 7 note. With six votes at stake in the upper chamber in Berlin, where states are represented, Merkel’s slim Bundesrat majority is at risk, she said. Yet the state’s national significance also means voters “may oust the regional government in an act of revenge.” Merkel, who was criticized at home and abroad for refusing to rush to aid Greece, welcomed lawmakers’ backing on May 7 for as much as 22.4 billion euros ($28.5 billion) in loans for the debt-laded nation. With national polls showing public opposition to the lifeline running high, the issue may yet hurt the coalition parties in North Rhine-Westphalia, or NRW, said Manfred Guellner , head of Berlin-based polling company Forsa. Merkel ‘Not Decisive’ “Greece has grabbed the headlines and TV, stirring up fears and antagonisms, not least a fear that the euro may unravel,” Guellner said in a phone interview. “Merkel’s leadership in the crisis has not been decisive, leaving an impression that she’s dithered and failed to put out the fire. Greece, in other words, has spilled over into the NRW vote with the capacity to dent the prospects of the regional coalition.” Latest polls show Christian Democratic Prime Minister Juergen Ruettgers and his Free Democratic junior coalition partner may struggle to retain power. Four polls over the past week put the Christian Democrats at 37-38 percent support, with the Free Democrats at 6-8 percent. The combined total of 43-46 percent compares with 51 percent at the last election in 2005. The opposition Social Democrats have 33-37 percent with their preferred Green Party coalition partner at 10-12 percent, a combined 43-49 percent after winning 43.3 percent in 2005. State elections in North Rhine-Westphalia have traditionally acted as a barometer for national political trends, Nick Matthews , an economist at Royal Bank of Scotland Group Plc, said in a report on May 5. Schroeder’s Forerunner In 2005, the Christian Democratic defeat of the Social Democrats, which had ruled the state since 1966, presaged Merkel’s victory at national elections later that year. In 1995, the Social Democratic-Green coalition in the state was the forerunner of the same configuration of federal government formed by SPD Chancellor Gerhard Schroeder in 1998. Defeat in North Rhine-Westphalia would cost Merkel the six votes the state is allocated in the upper house, the Bundesrat, threatening her ability to cut taxes, extend the lifespan of nuclear-power plants or overhaul health-care. At present, government parties control 37 of the total 69 Bundesrat votes, two more than the required majority, allowing Merkel to push through contentious legislation such as the bill on Greek aid. While voters may be largely “ambivalent” toward Greece, the danger for Merkel is that her handling of the crisis underscores misgivings they already have about her government, Nils Diederich , a politics professor at Berlin’s Free University, said in an interview. “Greece adds to her miserable record of controlling runaway problems, above all the incessant squawking for tax cuts by the Free Democrats,” he said. “The disappointment of the electorate with Merkel’s coalition runs deep and any drop in support for her party in NRW can, and probably will, be placed at her door in Berlin.” To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net .

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Cameron Appeals for Coalition With U.K.’s Liberal Democrats to Oust Brown

May 7, 2010

By Kitty Donaldson and Robert Hutton May 7 (Bloomberg) — Conservative challenger David Cameron appealed to the Liberal Democrats to form an alliance to oust Prime Minister Gordon Brown after the U.K. general election failed to deliver a majority to any party. While Brown said he was willing to discuss a coalition with any party, Nick Clegg , the Liberal Democrat leader, said Cameron should have the first crack at forming a government because he won the most seats and had the most popular support.     “There is a case for going further than an arrangement that simply keeps a minority Conservative government in office,” Cameron said in London today. “I want us to work together in tackling our country’s problems.” Cameron, while gaining more seats than any Conservative leader in an election since 1931, fell short of his target. Clegg, second in the polls for much of the campaign, fell to third and lost seats. Brown led his party to its worst result since 1983. With 638 of 650 results declared, Cameron’s Conservatives had 301 seats to 255 for Labour and 55 for Clegg. “Imagine a game of poker in which everyone has been dealt a rather poor hand,” said Eric Shaw, lecturer in politics at Stirling University in Scotland. “There is a possibility that the player with the best hand wins, but there is a second possibility that the player who wins is the one who holds their nerve.” Pound, Gilts The pound and gilts fell on concern the political jockeying and subsequent recriminations would deflect efforts from reducing a record budget deficit. Sterling weakened 0.6 percent to $1.4641 at 2:50 p.m. in London. Government bonds declined, pushing the 10-year gilt up by 7 basis points to 3.87 percent. “All the talk today has been about constitutional issues and that’s not what the British government has got to deal with,” said Stephen Driver , who teaches politics at London’s Roehampton University. “The British government has got to deal with the deficit.” Brown remains as prime minister until he advises Queen Elizabeth II , as head of state, that he is resigning. As Britain has no written constitution, the 84-year-old monarch is guided by conventions built up over hundreds of years. The main requirement for the queen is to find a political leader who can command the confidence of the House of Commons. ‘Premature Resignation’ The Conservatives “will try to panic Gordon Brown in to a premature resignation,” said Robert Hazell , the director of the Constitution Unit at University College London. “We are so used to an overall victory it is regarded as a bit poor form for a prime minister to remain in office if he appears to have lost.” Whether an opposition can force Brown from office depends on its “chutzpah,” Hazell said. “Quite a lot does depend on the media and public perception.” Only one election since the queen took the throne in 1952 has failed to produce a majority. That was in February 1974, when Conservative Prime Minister Edward Heath called a snap election after a strike by coal miners seeking higher pay led to power shortages, and the government put the country on a three- day working week. Even though the Conservatives won the largest share of the vote, Harold Wilson ’s Labour Party took most seats. Heath attempted to stay in power and held unsuccessful talks on forming a coalition with the Liberal Party. He resigned four days after the vote, allowing Wilson to form a minority government that lasted until new elections in October. New Rules As the polls tightened this year, Gus O’Donnell , who as cabinet secretary is head of the Civil Service, accelerated plans to codify the conventions that surround elections and avert the uncertainty that would follow a similar result this time. “The key thing is Brown remains in office as prime minister until he chooses to resign,” said Hazell. “He is under a duty to remain in office until it is clear someone will command the support of the new House of Commons.” The queen “must not be left guessing who can command support in Parliament,” Hazell said. That means it must be clear that Cameron, Brown or Clegg has enough support from other parties to pass legislation or avoid defeat in a confidence vote. To contact the reporters on this story: Kitty Donaldson in London at kdonadlson@bloomberg.net ; Robert Hutton in London at rhutton1@bloomberg.net

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Cameron Leads as Polls Suggest First U.K. Minority Government Since 1974

May 6, 2010

By Robert Hutton May 6 (Bloomberg) — Britain votes today in an election that polls show may produce no parliamentary majority for the first time since 1974, leaving the fate of Prime Minister Gordon Brown and Conservative David Cameron with the Liberal Democrats. Four polls released last night showed Cameron’s Conservatives winning the popular vote and the most seats, while short of a majority. The outcome will turn on the almost two in five voters who polls showed were undecided in the final days and about 150 swing districts out of a total 650. The gap in support between Cameron and Labour Party leader Brown in the latest polls — about 8 percentage points — is little changed from April 6, the day the premier called the election. Backing for Liberal Democrat leader Nick Clegg surged after the first televised debate, upending the race. “People who know anything about campaigns have always been doubtful about whether individual events mattered very much,” said Philip Cowley , professor of politics at Nottingham University. “But the TV debates made a difference.” Concerns by economists that a hung Parliament may roil markets because it would be too weak to fix Britain’s finances have receded this week. The pound has strengthened against its most-active counterparts and gilts are rebounding as traders bet that whichever party takes power will deliver a plan to reduce the deficit. The pound fell 0.5 percent against the dollar and was at $1.5023 at 8:25 a.m. in London. It advanced to the strongest in nine months against the euro, to 84.87 pence. Budget Cuts With the economy recovering from its longest recession on record, Brown said Cameron’s call for budget cuts this year risked renewed contraction. They also differed on regulating the financial industry, with Cameron expressing a willingness to tax banks unilaterally and Brown saying a levy had to be global. At the same time, Clegg’s emergence and his challenge to Cameron and Brown — he said in the first of three debates that they “sound exactly the same” — deflected their focus on cutting Britain’s record budget deficit as they grappled with his surge. The Institute for Fiscal Studies said April 27 that Labour had specified just 13 percent of the cuts necessary to reduce the deficit, the Conservatives 18 percent and the Liberal Democrats 26 percent. “It would have been a very brave politician who came out and told the voters the straight truth,” said Steven Fielding , director of the Center for British Politics at Nottingham University. “So they didn’t.” Exit Polls Polling stations opened at 7 a.m. in 649 out of the 650 districts across the country. The vote in a Yorkshire seat held by the Conservatives has been delayed until May 27 because of the death of a candidate. When voting ends at 10 p.m., exit polls will give the first indications of the outcome. The full result won’t be known before tomorrow afternoon. The Conservatives had 35 percent support in a YouGov Plc poll for The Sun newspaper, unchanged from the previous day. Labour had 28 percent, down 2 percentage points, and the Liberal Democrats had 28 percent, up 4 points. YouGov questioned 6,483 people May 4 and yesterday. No margin of error was provided. That voting pattern would yield 278 seats for Cameron’s party in the House of Commons, 261 for Labour and 82 for the Liberal Democrats, according to the forecasting formula used by the British Broadcasting Corp . Nine-Point Lead A Populus survey for the Times of London put Cameron’s lead over Brown at 37 percent to 28 percent, with the Liberal Democrats at 27 percent. That would give the Conservatives 295 seats, Labour 249 and the Liberal Democrats 78 seats. An ICM poll for the Guardian showed 36 percent of respondents backing the Conservatives, with Labour at 28 percent and Clegg’s party at 26 percent, giving the Conservatives a lead in seats of 283 to 253. A ComRes Ltd. Poll found 37 percent backing Cameron’s party, 28 percent supporting Brown’s and 28 percent for Clegg’s. That would give the Conservatives 299 seats and Labour 233. “It’s been very exciting for those involved, but the polls seem to be returning to where they were at the start,” Fielding said. Time for Talks Labour has governed Britain since 1997, when Tony Blair unseated John Major , ending the Conservatives’ 18-year run that began with Margaret Thatcher ’s election. Brown, Blair’s finance minister, replaced his boss in June 2007. If the election produces no clear winner, parties will begin negotiating tomorrow to see who can form a government. Depending on how close the result is, this process could take more than a week. Parliament isn’t due to sit until May 18, to give time for negotiations. Cameron, 43, warned against a hung Parliament, saying a vote for the Liberal Democrats would allow Brown to retain power. Some Labour ministers, including Business Secretary Peter Mandelson , have not ruled out a coalition with the Liberal Democrats. Clegg, 43, said it would be “preposterous” for Brown, 59, to stay in office if Labour finishes third in the popular vote. That scenario is made possible by the vagaries of the British electoral system. The uneven distribution of party support across the country means the Conservatives need at least a 10 percentage-point lead over Labour in the popular vote to gain a majority of seats in this election, according to Colin Rallings and Michael Thrasher of Plymouth University’s Elections Unit. Brown remains prime minister until it is clear he can’t form a government, at which point he would submit his resignation to Queen Elizabeth II and advise her on whom she should summon to try to form one, likely in that situation to be Cameron. To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net .

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Philippine Bonds, Stocks, Peso Tumble on Concern Election May Be Delayed

May 4, 2010

By Francisco Alcuaz Jr. and Clarissa Batino May 5 (Bloomberg) — Philippine bonds, stocks and the peso fell after vote-counting machines malfunctioned in tests this week, raising concern there will be a delay in choosing a new leader to replace President Gloria Arroyo . The Commission on Elections yesterday said it would have to replace flash memory cards in its 76,000 vote-counting machines. It said it could do this before the May 10 election. National Movement for Free Elections , a poll-watching organization, and political analysts have said it may be impossible. “Investors are trimming their holdings and will be on the sidelines in the next couple of weeks,” said Lito Mercado , head of trading at Rizal Commercial Banking Corp. in Manila. “Days before the day itself, we find out the whole automation process isn’t ironed out, that it’s not ready. Whoever wins, the loser will think he has enough reason to protest.” The nation is holding its first computerized elections to reduce cheating that occurred in tallying ballots by hand that took weeks. Namfrel and other groups have been warning that delayed delivery and inadequate testing of the machines raised the risk they will fail or produce erroneous results. Senator Benigno Aquino , who leads in the polls, last week said his supporters would take to the streets if “the people’s will is frustrated.” Election commissioners and the commission’s spokesman didn’t answer calls to their phones today. The yield on the 6.5 percent dollar-denominated bonds due January 2020 jumped 17 basis points to 5.442, the biggest rise in yields since the bonds were first sold in July 2009, at 10:15 a.m. according to prices from ING Groep NV. Stocks Fall The Philippine Stock Index had its biggest drop in almost 11 months. The benchmark was down 3.3 percent at 3,147.50 at 11:05 a.m. in Manila. The peso fell as much as 0.8 percent to 45.01 against the U.S. dollar, its weakest since April 6. It traded at 44.99 at 10:29 a.m. “The whole automated process is already compromised,” said Bobby Tuazon, director of the Center for People Empowerment in Governance in Manila. “Many flash cards may not reach their destinations. Many areas will have to go manual again. More things will happen in the days leading up to the election.” President Gloria Arroyo’s spokesman Gary Olivar said the government is hopeful “technical issues will be resolved.” Agence France Presse earlier reported him as saying the elections may have to be delayed. Romulo Macalintal , an election lawyer who has worked for President Arroyo, said he has suggested a 15-day delay to the Commission on Elections. He clarified he wasn’t speaking for Arroyo. “To ensure a clean, honest political exercise, there’s a need for the commission to see that everything is fixed,” he said in an interview on ABS-CBN News Channel. To contact the reporter on this story: Francisco Alcuaz Jr . in Manila at falcuaz@bloomberg.net

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Brown Taps Thatcher’s Legacy of `Poll Tax,’ Asset Sales to Counter Cameron

May 4, 2010

By Robert Hutton May 4 (Bloomberg) — British Prime Minister Gordon Brown wants voters to think about one politician in the election in two days, and it’s not him. Twenty years after she left office, it’s Margaret Thatcher who features more than anyone else in Labour advertising. In swing districts, Brown invokes her spending cuts to remind voters why they turned against the Conservatives in the 1990s. Labour’s effort to tie Conservative leader David Cameron to Thatcher’s legacy may help explain why he has been unable to widen his lead over Brown, who polls show may win Labour’s smallest share of the vote since 1983 in the May 6 election. The result may be a hung Parliament, where no party wins a majority, unsettling investors concerned that such a government may be too weak to cut a record budget deficit . “Labour is banging the drum that the Conservatives haven’t changed,” said Philip Norton , author of “The Conservative Party” and professor of politics at Hull University. “Thatcher was a divisive figure.” A ComRes Ltd. poll for ITV News and the Independent newspaper last night showed Conservative support at 37 percent, Labour at 29 percent, and the Liberal Democrats at 26 percent. That would give the Conservatives 294 seats, 32 short of a majority in the House of Commons , Labour 251 seats and the Liberal Democrats 74, ComRes said. The polling company telephoned 1,024 voters on May 1 and 2. Seven-Point Lead A YouGov Plc poll for The Sun newspaper gave the Conservatives 35 percent support, with Labour and the Liberal Democrats both at 28 percent. That gives the Conservatives 277 seats, 15 more than Labour, according to the BBC’s seat calculator . YouGov questioned 1,455 people May 2 and yesterday. No margins of error were given for the polls. A Crosby/Textor poll of swing districts for the Daily Telegraph suggested that the Conservatives might win 103 seats from Labour, though none from the Liberal Democrats. That’s short of the 117 districts they need to gain from other parties to ensure a majority. Cameron’s challenge is greatest in the north of England and Scotland where Thatcher’s policies of public-sector privatizations and reducing the power of unions hit hardest. In Scotland, the Conservatives, also known as the Tories, won only one out of 59 Parliamentary seats in 2005. Labour took 40, and the Liberal Democrats 11. “For me as a business owner, the Tories’ policies look slightly better, but I just have a mental hang-up about voting for them,” said Nik Wilson, 36, who runs a florist store in Edinburgh with his wife and voted Scottish National Party in the last election. “People just forget how things were.” ‘Remember the Tories’ Labour’s first television ad in Scotland was titled “Remember the Tories” and featured Thatcher’s image three times. In another Labour spot, starring the comedian Eddie Izzard , she’s the only politician mentioned. It is not just in the north of the country where Labour, which has been in power for 13 years, sees Thatcher as a handicap for the opposition. Leaflets sent out by the party in London attack Liberal Democrat leader Nick Clegg for having made positive comments about Thatcher, 84, now known as Baroness Thatcher , who lives in the capital. “The Tories haven’t changed,” says a Labour television ad that aired in Scotland. “They closed our mines, closed our steelworks and closed our factories.” ‘Big Society’ Cameron has spent the past 4 1/2 years since he became leader of his party trying to counter that, pledging to protect spending on the National Health Service, promote female, gay and ethnic-minority candidates, and repudiating Thatcher’s claim that “there is no such thing as society.” The central plank of his campaign is something he calls “The Big Society.” “To have spent any part of your adult life under Thatcher, you’d have to be 40 years old,” said David McLetchie , business manager for the Conservatives in the Scottish Parliament in Edinburgh. “But she’s still conjured up as a demon figure. She ended up as a victim of her own rhetoric.” Independent until it joined England to form the United Kingdom in 1707, Scotland still has its own legal system and prints its own version of the national currency, the pound. Like parts of northern England where the Conservatives also struggle, Scotland’s mining and industrial areas were devastated by Thatcher’s policies of selling state-run companies and breaking the grip of unions. Poll Tax Scotland is also where the program that brought her down, called by its critics the “poll tax,” was tested in 1989. The policy of replacing property taxes with a per-person charge hurt the poorest and caused riots when it was brought to England a year later, leading the Conservatives to oust Thatcher and repeal the levy. Scotland, Brown’s home, has voted Labour since 1945. Still, the Conservative vote fell to 16 percent in 2005 from 31 percent in 1979, when Thatcher was first elected. A Progressive Scottish Opinion survey last week put Labour at 41 percent, the Scottish National Party at 22 percent, the Liberal Democrats at 21 percent and the Conservatives at 12 percent. The company surveyed 1,024 Scottish adults between April 20 and 26. Cameron is campaigning in 11 Scottish districts this year, including Edinburgh South and the seat of Chancellor of the Exchequer Alistair Darling , Edinburgh South West. “There’s no sign of a Cameron bounce,” Labour’s Scottish Secretary Jim Murphy told reporters travelling with Brown to the central Scottish city of Stirling on April 27. “It’s in the bloodstream after what happened here last time. Most people here don’t think the Tory party’s changed.” While Cameron has made some progress in changing this view, the Conservatives still have an uphill climb in Scotland, said Nicola McEwen , co-director of the Institute of Governance at Edinburgh University. “Cameron’s no Thatcher, and they’re not hated up here in the way they used to be,” said McEwen. “In Scotland, a lot of people who by any objective measure are middle class will continue to identify themselves as working class. Those things run deep. The Conservatives don’t pick up those votes.” To contact the reporters on this story: Robert Hutton in Edinburgh, Scotland at rhutton1@bloomberg.net .

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U.K. Polls Point to Hung Parliament With Five Days Until General Election

May 1, 2010

By Gonzalo Vina May 2 (Bloomberg) — Conservative leader David Cameron maintained a lead over Gordon Brown’s Labour Party in opinion polls today that suggested no party will win an outright majority in the U.K. general election to be held in five days. Three polls published today by YouGov Plc, ComRes Ltd and ICM Ltd indicate Cameron would fall short of an overall majority in the House of Commons. A poll of marginal seats by ICM Ltd in the News of the World suggested Cameron could scrape a majority of four with the support of Unionist parties in Northern Ireland, leaving him free to govern without relying on Liberal Democrat leader Nick Clegg after the May 6 election. “If the polls stay as they are, Mr. Cameron, with or without the help of Mr. Clegg, will walk into Downing Street within less than a week,” Business Secretary Peter Mandelson , a key Labour adviser, said in a statement yesterday intended to motivate party activists in the final stage of the race. Brown’s campaign to get Labour re-elected for a fourth successive term suffered blows last week after polls showed he was beaten in the final televised campaign debate and he was forced to apologize for calling a supporter “bigoted.” He lost the backing of three publications in two days, including the Guardian which had backed his party in every vote since 1983. The YouGov poll for the Sunday Times newspaper today showed support at 35 percent for the Conservatives, the Liberal Democrats at 28 percent and Labour at 27 percent. That suggests Cameron would win 285 seats in Parliament, Brown 243 and Clegg 90 seats, YouGov said. The pollster interviewed 1,483 voters online on April 30-May 1. It gave no margin of error. No Majority A total of 326 seats is needed for a majority. An ICM Ltd poll for the Sunday Telegraph said the Conservative Party’s support increased by three points since April 27 to 36 percent, Labour increased one point to 29 percent while the Liberal Democrats dropped three points to 27 percent, ICM Ltd. ComRes Ltd for the Sunday Mirror and Independent on Sunday said support for Cameron had increased by two points to 38 percent, while support for Labour slipped one point to 28 percent and by the same amount for the Liberal Democrats to 25 percent. ComRes interviewed 1,019 adults on April 30 and May 1. A separate survey of marginal electoral seats by ICM Ltd for the News of the World newspaper said Cameron will scrape a four seat majority in the House of Commons with the support of the unionist parties of Northern Ireland. The pollster interviewed 1,001 adults in 96 seats where Labour has a majority of between four and 10 percentage points over the Conservatives on April 28-29. Hung Parliament The prospect of a hung parliament, the first since 1974, may unsettle investors concerned that a government would be too weak to fix Britain’s record budget deficit. The pound has fallen about 5 percent against the dollar so far this year as the opinion polls pointed increasingly to a political stalemate. In a letter published today, business leaders threw their support behind Cameron, saying a coalition between Brown and Clegg would be “totally disastrous” for companies. It’s the third such letter from company bossed endorsing Conservative policies. Directors of 110 start-ups including Omnifone, Ariadne Capital and Telecity Group Plc said Brown had increased red tape and taxes on companies and that Clegg’s plans to increase capital gains tax would hurt investment. Cameron’s Conservatives are the only party that would “nurture and encourage business,” the leaders said in a letter released to the media today. ‘Perfect Storm’ “The prospect of a Lib-Lab coalition would be a perfect storm for business,” Rob Lewis, executive chairman of Omnifone said in an interview. “A hybrid of their policies would create a very rough ride for British entrepreneurs. It’s very concerning.” The past week was one Brown would prefer to forget. On the eve of the April 29 debate, he was heard calling a Labour voter a “bigoted woman” after an encounter in the northern English town of Rochdale and later apologized to her and to his supporters. “I have personally paid this heavy price for a mistake that I made,” Brown told the Daily Telegraph in an interview published yesterday. “Sometimes you say things in the heat of the moment, sometimes you pay a very heavy price for those things.” The Guardian The Guardian, which called for Brown to step down in June last year when he faced a cabinet rebellion, yesterday endorsed the Liberal Democrats. It’s the first switch from Labour since the party led by Michael Foot campaigned for unilateral nuclear disarmament, nationalization of industries and withdrawal from the European Common Market, a precursor to the European Union. “Invited to embrace five more years of a Labour government, and of Gordon Brown as prime minister, it is hard to feel enthusiasm,” the Guardian said in an editorial. “The Liberal Democrats have for some time most closely matched our own priorities and instincts.” The London-based Times newspaper yesterday said it was endorsing the Conservatives for the first time since 1992 a day after the Economist magazine said it was ditching Labour for Cameron’s party. In its editorial , the Times blamed Brown for losing Labour its support, arguing he had “squandered the boom” and would put the economic recovery in peril. “Cameron has shown the fortitude, judgment and character to lead this country back to a healthier, stronger future,” the Times said. “It is time, once again, to vote Conservative.” To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

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U.K. Polls Point to Hung Parliament With Five Days Until General Election

May 1, 2010

By Gonzalo Vina May 2 (Bloomberg) — Conservative leader David Cameron maintained a lead over Gordon Brown’s Labour Party in opinion polls today that suggested no party will win an outright majority in the U.K. general election to be held in five days. Three polls published today by YouGov Plc, ComRes Ltd and ICM Ltd indicate Cameron would fall short of an overall majority in the House of Commons. A poll of marginal seats by ICM Ltd in the News of the World suggested Cameron could scrape a majority of four with the support of Unionist parties in Northern Ireland, leaving him free to govern without relying on Liberal Democrat leader Nick Clegg after the May 6 election. “If the polls stay as they are, Mr. Cameron, with or without the help of Mr. Clegg, will walk into Downing Street within less than a week,” Business Secretary Peter Mandelson , a key Labour adviser, said in a statement yesterday intended to motivate party activists in the final stage of the race. Brown’s campaign to get Labour re-elected for a fourth successive term suffered blows last week after polls showed he was beaten in the final televised campaign debate and he was forced to apologize for calling a supporter “bigoted.” He lost the backing of three publications in two days, including the Guardian which had backed his party in every vote since 1983. The YouGov poll for the Sunday Times newspaper today showed support at 35 percent for the Conservatives, the Liberal Democrats at 28 percent and Labour at 27 percent. That suggests Cameron would win 285 seats in Parliament, Brown 243 and Clegg 90 seats, YouGov said. The pollster interviewed 1,483 voters online on April 30-May 1. It gave no margin of error. No Majority A total of 326 seats is needed for a majority. An ICM Ltd poll for the Sunday Telegraph said the Conservative Party’s support increased by three points since April 27 to 36 percent, Labour increased one point to 29 percent while the Liberal Democrats dropped three points to 27 percent, ICM Ltd. ComRes Ltd for the Sunday Mirror and Independent on Sunday said support for Cameron had increased by two points to 38 percent, while support for Labour slipped one point to 28 percent and by the same amount for the Liberal Democrats to 25 percent. ComRes interviewed 1,019 adults on April 30 and May 1. A separate survey of marginal electoral seats by ICM Ltd for the News of the World newspaper said Cameron will scrape a four seat majority in the House of Commons with the support of the unionist parties of Northern Ireland. The pollster interviewed 1,001 adults in 96 seats where Labour has a majority of between four and 10 percentage points over the Conservatives on April 28-29. Hung Parliament The prospect of a hung parliament, the first since 1974, may unsettle investors concerned that a government would be too weak to fix Britain’s record budget deficit. The pound has fallen about 5 percent against the dollar so far this year as the opinion polls pointed increasingly to a political stalemate. In a letter published today, business leaders threw their support behind Cameron, saying a coalition between Brown and Clegg would be “totally disastrous” for companies. It’s the third such letter from company bossed endorsing Conservative policies. Directors of 110 start-ups including Omnifone, Ariadne Capital and Telecity Group Plc said Brown had increased red tape and taxes on companies and that Clegg’s plans to increase capital gains tax would hurt investment. Cameron’s Conservatives are the only party that would “nurture and encourage business,” the leaders said in a letter released to the media today. ‘Perfect Storm’ “The prospect of a Lib-Lab coalition would be a perfect storm for business,” Rob Lewis, executive chairman of Omnifone said in an interview. “A hybrid of their policies would create a very rough ride for British entrepreneurs. It’s very concerning.” The past week was one Brown would prefer to forget. On the eve of the April 29 debate, he was heard calling a Labour voter a “bigoted woman” after an encounter in the northern English town of Rochdale and later apologized to her and to his supporters. “I have personally paid this heavy price for a mistake that I made,” Brown told the Daily Telegraph in an interview published yesterday. “Sometimes you say things in the heat of the moment, sometimes you pay a very heavy price for those things.” The Guardian The Guardian, which called for Brown to step down in June last year when he faced a cabinet rebellion, yesterday endorsed the Liberal Democrats. It’s the first switch from Labour since the party led by Michael Foot campaigned for unilateral nuclear disarmament, nationalization of industries and withdrawal from the European Common Market, a precursor to the European Union. “Invited to embrace five more years of a Labour government, and of Gordon Brown as prime minister, it is hard to feel enthusiasm,” the Guardian said in an editorial. “The Liberal Democrats have for some time most closely matched our own priorities and instincts.” The London-based Times newspaper yesterday said it was endorsing the Conservatives for the first time since 1992 a day after the Economist magazine said it was ditching Labour for Cameron’s party. In its editorial , the Times blamed Brown for losing Labour its support, arguing he had “squandered the boom” and would put the economic recovery in peril. “Cameron has shown the fortitude, judgment and character to lead this country back to a healthier, stronger future,” the Times said. “It is time, once again, to vote Conservative.” To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

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Cameron Bolsters Bid to Oust Brown With Win in U.K. Campaign Debate Polls

April 29, 2010

By Thomas Penny and Gonzalo Vina April 30 (Bloomberg) — Conservative leader David Cameron won the final debate of the U.K. election campaign, three instant-reaction polls showed, gaining momentum in his bid to oust Prime Minister Gordon Brown in the May 6 vote. Cameron’s central message in the 90-minute debate in Birmingham, central England, was that 13 years of Labour Party rule had left Britain struggling to recover from its longest recession and the highest unemployment in 16 years. “If you vote Labour, you’re going to get more of the same,” Cameron said. “If you vote Conservative on Thursday, you can have a new fresh government, making a clean break.” Brown countered by describing himself as the most able steward of a recovering economy. “They are not ready for government because they have not thought through their policies,” Brown said of Cameron and Liberal Democrat leader Nick Clegg . “We are desperate to get this country through the recession and into the recovery.” Opinion surveys before the event put Brown in third place in a three-way race behind Cameron and Liberal Democrat Nick Clegg. Forecasts point to a so-called hung Parliament, with the Conservatives having the most seats, though short of a majority. The prospect of a hung Parliament may unsettle investors on concern that a government lacking a majority would be too weak to fix Britain’s record budget deficit . The pound has dropped about 1 percent against the dollar since Clegg surged into contention after he was judged by polls to have won the first TV debate on April 15. Instant Polls In the final encounter last night, 41 percent of 1,151 viewers questioned immediately after the debate said Cameron performed best, according to a YouGov Plc poll. Clegg was called the winner by 32 percent and 25 percent favored Brown. Of the 2,372 voters questioned for a ComRes Ltd. instant poll, 35 percent thought Cameron won and 33 percent saw Clegg as the winner, with 26 percent for Brown. Another poll by ICM Ltd. for the Guardian had Cameron at 35 percent, Brown at 29 percent and Clegg at 27 percent. “Cameron was very strong at looking assured and looking like he knew what he was doing,” said Justin Fisher, professor of politics at London’s Brunel University. Brown began the debate by repeating an admission that he’d erred on April 28 in describing a voter as “bigoted.” The prime minister was forced to apologize after being caught on a microphone talking about a widow and self-described Labour supporter in northwest England with whom he’d been discussing immigration. ‘Run the Economy’ “As you saw yesterday, I don’t get all of it right, but I do know how to run the economy, in good times and in bad,” Brown said. A YouGov poll for The Sun newspaper released before the debate showed Conservative support unchanged from the previous day at 34 percent, while the Liberal Democrats fell 3 points to 28 percent and Labour was unchanged at 27 percent. YouGov questioned 1,623 voters April 28 and yesterday. That would give the Conservatives 268 lawmakers, 58 short of a majority in the 650-seat House of Commons, Labour 261 and Clegg’s party 90, according to the seat calculator on the U.K. Polling Report website. During the debate, Brown and Cameron clashed over the timing of cuts in government spending. ‘Tory Budget’ “I do fear an emergency Tory budget in a few weeks time putting the very work that we’ve done to secure the recovery in jeopardy,” Brown said, referring to the Conservatives’ pledge to announce revised spending plans within 50 days of winning power. Labour “confuse the economy with the government,” Cameron said. “What we’re saying is save government waste to put money back in people’s pockets. Gordon’s argument in a way is ‘Let me go on wasting your money so I can put your taxes up next year.’” “Cameron knew Brown would go on his record as an experienced leader in the economic crisis so he sought to lay the blame for the economic malaise at Labour’s door,” said Andrew Russell , who teaches politics at the University of Manchester. The deficit, which at more than 11 percent of gross domestic product is the largest in the Group of Seven, has been a dominant theme of the campaign. “We need to build a new stronger and fairer economy,” Clegg said. “We’ve got to do things differently.” The Conservatives, who have pledged to go further and faster than Labour and the Liberal Democrats in cutting spending, suggested last week the International Monetary Fund might need to bail out the U.K. if the vote produces an indecisive result. The British economy grew in the first quarter at 0.2 percent, half the pace of the previous three months, and unemployment is at a 16-year high. Gross domestic product contracted for six straight quarters through September 2009. To contact the reporters on this story: Thomas Penny in Birmingham, England, at tpenny@bloomberg.net ; Gonzalo Vina in Birmingham, England, at gvina@bloomberg.net .

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Clegg Says Brown Can’t Stay as Premier After Third-Place Finish by Labour

April 25, 2010

By Kitty Donaldson and Robert Hutton April 26 (Bloomberg) — Liberal Democrat leader Nick Clegg said it would be “preposterous” for Gordon Brown to stay as prime minister if his Labour Party comes third in the popular vote in the May 6 U.K. election, highlighting the obstacles to Brown remaining in power. “There are now indications Labour might come third in terms of people voting for the different parties,” Clegg told BBC 1 television’s Andrew Marr program yesterday. “It is just preposterous, the idea that if a party comes third in terms of the number of votes it still somehow has the right to carry on squatting in No. 10,” the premier’s Downing Street office, “and continue to lay claim to having the prime minister.” Out of 27 polls completed since Clegg’s breakthrough performance in the first televised leaders’ debate on April 15, 21 have put Labour in third place in popular support, according to the U.K. Polling Report Web site. The electoral system means Labour might still win the largest number of seats in Parliament even if it finishes third in vote share. Clegg said the recent rise in support for the Liberal Democrats meant changes to the voting system would be “unavoidable” after the election, signaling that would be an important element in deciding whether to support one of the other parties in a hung Parliament in which no party has an outright majority. Latest Poll A YouGov Plc poll of 1,466 people in today’s Sun newspaper put David Cameron ’s Conservatives on 34 percent, the Liberal Democrats on 30 percent and Labour on 28 percent. No margin of error was given. According to British Broadcasting Corp. calculations, such a result would give Labour 264 seats out of 650 in Parliament, the Conservatives 259 and the Liberal Democrats 98. The uneven distribution of party support across the country means the Conservatives need at least a 10 percentage-point lead over Labour to be sure of gaining a majority of seats. A hung Parliament may roil markets because a divided government would be too weak to fix Britain’s finances, some economists say. The pound slumped 1 percent in the two days after the first debate. It has fallen 4.8 percent against the dollar this year. ‘Clear Mandate’ A survey of 300 businesses by the British Chambers of Commerce published today found 65 percent “concerned” or “very concerned” at the prospect of a hung Parliament. “Instinctively, companies prefer a clear mandate to lead and govern,” BCC Director General David Frost said in an e-mailed statement. The momentum gained by Clegg after two leaders’ debates may prevent the Conservatives from winning swing seats held by Labour and the Liberal Democrats that Cameron’s party needs to take power. The Conservatives responded to Clegg’s surge by arguing that a vote for him could see Brown returned to office. The Liberal Democrat leader “has to protect himself from the ‘Vote Clegg, Get Brown,’ tag,” said Steven Fielding , director of the Centre for British Politics at Nottingham University. “He wants to retain the idea that he’s the change. The idea that he’d prop up a third-placed Brown would completely undermine that.” First Past the Post Electoral-system changes are vital to the Liberal Democrats because the first-past-the-post rule hurts smaller parties. In 2005, Liberal Democrats won 22 percent of the vote but fewer than 10 percent of the seats. If there is a hung Parliament, Clegg’s party may be able to demand change as a price for its support. “It’s about trying to seize the initiative in negotiations, trying to show they have terms and conditions,” said Andrew Russell, co-author of “Neither Left Nor Right,” a history of the Liberal Democrats. As well as voting change, the Liberal Democrats are also seeking to clamp down on bonus payments to bankers and to relieve 3.6 million low earners of the need to pay income tax. In an interview with yesterday’s Observer newspaper, Cameron refused to rule out the possibility of a coalition with the Liberal Democrats, although he emphasized he prefers to keep the electoral system in its current form to enable voters “to throw a government out of office.” ‘First and Hardest’     Brown used a speech in London yesterday to warn that a Conservative government would cut spending in areas that rely on it most. “They have already marked out the regions to be hit first and hardest,” he said. A report by the Centre for Economic and Business Research today shows that in two regions, Wales and Northern Ireland, public spending accounts for 70 percent of gross domestic product, twice what it does in London. For the U.K. as a whole, government spending has risen to 48 percent of GDP in the current fiscal year from 37 percent in 1998-99. Business Secretary Peter Mandelson , acknowledging his party is trailing in the polls, said in a Sunday Mirror newspaper interview that some former Labour voters are considering “looking elsewhere.” He said his message to them was that a vote for the Liberal Democrats risked a Conservative government. “You might start flirting with Nick Clegg, but that way you will end up marrying David Cameron,” Mandelson said. To contact the reporters on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net ; Robert Hutton in London at rhutton1@bloomberg.net .

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Clegg Rise in Polls Means More Scrutiny on Euro Adoption, Prison Sentences

April 21, 2010

By Thomas Penny and Robert Hutton April 21 (Bloomberg) — Liberal Democrat Nick Clegg is coming under increased scrutiny over his support for the euro and easing jail sentences after his surge in polls turned the British campaign into a three-way race before the May 6 vote. A YouGov Plc survey this week showed most voters oppose those positions, as well as Liberal Democrat policies that would cede more powers to the European Union, grant amnesty to some illegal immigrants, ban atomic-power plant construction and cut the nuclear arsenal. “The policies that are going to be their weakness are Europe, crime and immigration,” said YouGov pollster Anthony Wells . “There are a chunk of people who say they will vote Liberal Democrat but don’t actually like some of their policies.” Clegg’s April 15 debate performance against Conservative leader David Cameron and Labour Prime Minister Gordon Brown led to his surge in the polls. In tomorrow’s second debate, he’ll likely be attacked by Cameron, 43, the front-runner until recent days. Brown has benefited, with estimates showing the three-way race may give him a plurality in the next Parliament . A Populus Ltd. poll for the Times of London released last night showed the Liberal Democrats climbing 10 points over the past week to 31 percent. The Conservatives fell 4 points to 32 percent and Labour dropped 5 points to 28 percent. The poll was conducted April 18 and yesterday, the newspaper said. Populus questioned 1,501 voters. No margin of error was published. Divided Parliament The divided Parliament that would result from this close a vote may roil markets, because a government without a majority would be too weak to narrow a record budget deficit, some economists say. The pound slumped 1 percent in the two days after the debate last week. It had lost 5 percent against the dollar this year to $1.5379. Fifty-five percent of voters who told YouGov in a separate poll this week that they’ll vote Liberal Democrat said they didn’t agree with proposals to give the EU more say over judicial matters, bank regulation and climate-change policy. Fifty-three percent oppose ditching the pound for the euro when conditions are right. The Liberal Democrat policy of allowing criminals sentenced to less than six months to do community service was opposed by 37 percent of self-described Liberal Democrat supporters. ‘Shine a Spotlight’ “Until the end of last week, no one was taking any notice of the Liberal Democrat policies,” Philip Hammond , who speaks on the economy for the Conservatives, told Sky News. “Now we need to shine a spotlight on those policies so people understand what Nick Clegg stands for.” Labour, which has governed for 13 years, is also seeking to highlight Clegg’s less popular policies, though pollsters suggest Brown will benefit more than the Conservatives from the growth in Liberal Democrat support because of the way electoral districts are distributed across Britain. Brown, 59, has begun to attack Liberal Democrat plans not to replace the submarine-based Trident nuclear-weapons system and for an amnesty for illegal immigrants who have been in the U.K. for 10 years. Chancellor of the Exchequer Alistair Darling said in an interview yesterday that some Liberal Democrat budget policies are “pretty flaky.” ‘Progressive Alliance’ In an interview with today’s Independent newspaper , though, Brown said he wanted to see a “progressive alliance” of Labour and Liberal Democrat supporters to keep the Conservatives out of power. In Oxford East , the Liberal Democrats are trying to overturn a 1,000-vote Labour majority in a district of around 70,000. Clegg may benefit from a none-of-the-above vote against two parties that have dominated British politics for 90 years. He has sought to lump Brown and Cameron together, casting himself as an agent of change. “The more they attack each other, the more they sound exactly the same,” Clegg, 43, said of them in the debate last week. “We can do something different this time.” Clegg attacked Brown’s overtures at a news conference in London this morning. “There is something frankly desperate about a Labour Party and their leader Gordon Brown who now tries to present themselves as agents of reform and progress, when for 13 years they have been a stubborn block to reform and progress,” he said. Chris Underhay, 26, an unemployed would-be screenwriter in Oxford, said he plans to vote for the party, even though he says he doesn’t know much about their policies. ‘Open Politics’ “I pretty much decided after Thursday’s debate,” he said. “I don’t know their policies very specifically. I just like the idea that they’re for open politics. I haven’t had a look at their manifesto, but I heard it’s got actual numbers at the back of it. I like that.” The 108-page Liberal Democrat program contains four pages detailing a tax overhaul and plans to cut the deficit. Neither the Conservative nor Labour manifesto contains such tables. The Liberal Democrats’ main tax pledges are supported by 81 percent of people who say they would vote for the party. They would raise the annual threshold for paying income tax to 10,000 pounds ($15,367), a step the party says would cost the Treasury 16.8 billion pounds in 2011-12. Clegg would pay for the measure by cracking down on tax evasion, cutting pension-tax breaks for the wealthy and imposing a 10 percent levy on bank profits. With other tax increases, including a tax on homes valued at more than 2 million pounds, the party says it would raise 19.2 billion pounds. Clegg, who was greeted by 17 television cameras at a press briefing in London yesterday, joked that he was pleased at the scrutiny he and his party are now under. ‘Forensic Interest’ “I’m absolutely delighted that people are taking such a forensic interest in our policies,” Clegg said, before acknowledging that he was aware his party’s popularity could be short-lived. “Bubbles burst and I’m acutely aware that we’re in a very fluid stage in this election campaign,” he said. Back in Oxford, Liberal Democrat candidate Steve Goddard, a university lecturer in French, says he’s seen no sign support for his party is ebbing. “Our policies are a lot better known now than they were this time last week,” he said yesterday. “There’s no evidence they’re scaring people off. I suspect people don’t think about parties in terms of policies — they’re looking at values.” To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net ; Robert Hutton in London at rhutton1@bloomberg.net .

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Brown Must Avoid 1970-Style Surprise as Growth Data May Turn U.K. Election

April 18, 2010

By Rodney Jefferson April 19 (Bloomberg) — Prime Minister Gordon Brown can’t afford a repeat of 1970 for his governing Labour Party when figures on the U.K. economy are published this week. A sudden deterioration of the trade balance reported just days before that year’s vote helped the Conservatives eject Labour Premier Harold Wilson . British high-school students are taught “poor trade figures” cost him the election. Brown’s early day of reckoning could come April 23, when the Newport, Wales-based Office for National Statistics publishes its initial first-quarter economic growth estimate two weeks before the May 6 election. “It’s an extremely important number,” said Mike Turner , head of strategy at Aberdeen Asset Management Plc in Edinburgh. “If that number surprises either way, I suspect that it will have a significant bearing on the polls because either party will make hay while the sun shines.” After the longest economic slump since World War II, sustaining growth and cutting a record budget deficit have become overriding campaign issues. Brown says the proposal by Conservative leader David Cameron to start cutting spending this year risks a double-dip recession. Gross domestic product rose 0.4 percent in the three months ended in December, the first growth since March 2008. Economists expect the same rate for the first quarter, according to the median of 31 forecasts in a Bloomberg News survey. That matches an estimate by the National Institute of Economic and Social Research, a research group in London whose clients include the Bank of England and the Treasury. ‘Highly Significant’ “Provided it’s right, it’s not a game changer,” said Jeremy Peat , director of the David Hume Institute in Edinburgh and a former chief economist at Royal Bank of Scotland Group Plc in the Scottish capital. “If it’s 0.1 percent or 0.2 percent, we are back in the risk of a double-dip recession and it would be highly significant.” While the most recent polls indicate the May 6 election won’t produce a majority for Brown or Cameron, they show voters favor Brown and Chancellor of the Exchequer Alistair Darling when it comes to handling the economy. In a ComRes Ltd. survey conducted after Darling announced his budget on March 24, 33 percent of respondents backed Brown and Darling to steer the economy, compared with 27 percent favoring Cameron and his finance spokesman, George Osborne. No margin of error was provided. Darling last week underscored the risks of a single economic release roiling markets, noting that this will be the first of three estimates of GDP. ‘Three Cuts’ “Whenever you get the GDP numbers, you’ve got to remember there are three cuts at them,” Darling told reporters in Nottingham, central England, on April 13. “People don’t think about GDP every day of the week.” The economy surprised the last time GDP figures were published, at least at first. GDP expanded 0.1 percent in the fourth quarter, the ONS said initially on Jan. 26, less than the median 0.4 percent forecast in a Bloomberg survey of 33 economists. The figure then was revised up to 0.3 percent and finally on March 30 to the originally expected 0.4 percent. The initial measure from the ONS uses data for the first two months of the period provided by about 40 percent of companies assessed, or about 40,000 businesses, Joe Grice , the organization’s chief economist, said in a February interview. It also includes the full three-month figures for a further 20,000 respondents. The government gets to see the data 24 hours before they are released, the ONS said. Deteriorating Trade In 1970, Labour had been in power for six years and led opinion polls, prior to a report that showed a trade deficit for May, according to British Broadcasting Corp . archives. The ONS, which says it doesn’t keep monthly records, today reports the second-quarter trade surplus as having shrunk to 48 million pounds from 220 million pounds. Conservative leader Edward Heath scored his victory three days later after claiming the pound may have to be devalued and the public turned against Wilson, according to the BBC. Haig Bathgate , head of strategy at Edinburgh-based firm Turcan Connell, which invests on behalf of rich families, said he wouldn’t bet against the GDP number this week having an effect on the outcome of the 2010 election. “If it’s massively worse, the Tories are going to seize on it and if it’s massively better then Labour will benefit,” said Bathgate. “If it’s an extreme figure, it will have an impact.” To contact the reporter on this story: Rodney Jefferson in Edinburgh at r.jefferson@bloomberg.net

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Brown Woos Liberal Democrats After Clegg Wins Debate

April 16, 2010

By Robert Hutton and Thomas Penny April 16 (Bloomberg) — Prime Minister Gordon Brown sought to woo Liberal Democrat voters after three instant polls showed their leader, Nick Clegg , won Britain’s first televised campaign debate. Brown said he agreed with Clegg on the Liberal Democrats’ signature issue of electoral reform, saying that Conservative leader David Cameron wouldn’t deliver the overhaul sought by the Liberal Democrats after the May 6 vote. “On the issue of constitutional reform, the Conservatives are the party of no change,” Brown told reporters on the train to a campaign visit in coastal Brighton. “We and the Liberals are the parties of change.” Clegg benefited from greater exposure than a third-party leader normally enjoys as he shared equal time last night in the 90-minute event in Manchester, northwest England. A ComRes Ltd. poll suggested support for the Liberal Democrats rose 3 percentage points after the debate to 24 percent. Analysts who watched said none of the three made any major errors and Cameron did nothing to extend the Conservative poll lead to the point where he can be sure of avoiding a hung Parliament . ‘Win on Points’ The “debate was a clear win on points for Nick Clegg,” said Andrew Hawkins of ComRes, whose poll showed 43 percent saying the Liberal Democrat won to 26 percent picking Cameron and 20 percent Brown. “None of the leaders fared particularly badly or made huge mistakes, but it highlighted the challenge Gordon Brown faces in connecting with voters.” ComRes’s poll, the first to reflect the debate, showed Conservative support unchanged at 35 percent and Labour down 1 point at 28 percent. To come to that result, ComRes interviewed 4,032 viewers by telephone after the program and then weighted the results to take into account previous voting intentions and the fact that the event was seen by only around a quarter of the electorate. The debate attracted 9.4 million viewers, broadcaster ITV said. There were 44 million registered voters as of Dec. 1, according to the Office for National Statistics. ‘Fairness, Trust’ “Yesterday’s leaders’ debate was just the start,” Clegg told supporters in Warrington, near Manchester. “This general election campaign is about fairness, it’s about who you can trust.” Clegg’s party wants a system in which seats in Parliament better reflect the popular vote. In 2005, the party gained 22 percent of the vote and won only 62 seats, or 9.6 percent of the 646-seat House of Commons. Brown has backed a change requiring lawmakers to win at least 50 percent of the vote by taking into account voters’ second choice. The Liberal Democrats, who accuse Brown of a “deathbed conversion” to electoral reform, say that doesn’t go far enough.    “If you look at the policies and programs of the two parties, Labour and Liberal Democrat, we are very close together, whereas there is a gulf between the Lib Dems and the Conservatives,” Labour’s transport spokesman, Andrew Adonis , told BBC Radio 4. A YouGov daily poll published before the debate showed the Conservative lead narrowing to six points from nine, with Cameron’s party at 37 percent and Labour at 31 percent. The Liberal Democrats had 22 percent. Because of the way seats are currently allocated that lead would probably not give the Conservatives a governing majority. Pound Declines The prospect of a hung parliament, with the government lacking the strength to attack a record budget deficit, pushed the pound down to as low as $1.5386 from $1.5496 yesterday. Another instant poll by YouGov Plc of 1,091 viewers found 51 percent naming Clegg the winner, 29 percent Cameron and 19 percent Brown. A Populus poll for the Times of London of more than 620 voters showed 61 percent thought Clegg won, compared with 22 percent for Cameron and 17 percent for Brown. Two-thirds of those questioned said the debate would make a difference to their views of the campaign. No margin of error was given in any of the polls. The three leaders debated eight questions posed by audience members in a television studio. Two more debates will follow in the next two weeks. “Clegg had nothing to lose and everything to gain and he took the opportunity,” said Stephen Driver , who teaches politics at the University of Roehampton in London. “He looked normal, calm and relaxed.” 90 Years Conservative officials said they will seek to use the next two debates to tell voters that only Cameron or Brown has a realistic chance of being prime minister. Clegg’s message was that he offered a change from the other two parties, which have held power between them for the past 90 years. “The more they attack each other the more they sound exactly the same,” he told the audience at one point. “We can do something different this time.” Brown focused his fire on Cameron, whose Conservatives have led polls for almost all of his 2 1/2 years as prime minister, emphasizing his own experience. “I say to the audience and to the nation, it’s important at this moment to take no risk with the recovery,” he said. Cameron says his party would shrink the size of the state and would go further and faster than Labour in cutting the deficit. At almost 12 percent of economic output, the shortfall rivals that of Greece’s 13 percent deficit. Post-Debate Polls Post-debate polls, especially when conducted immediately afterward, can be highly unreliable because they are less likely to be truly random and therefore more prone to error, said John Russonello, a Washington-based public opinion expert. Beyond the instant reactions, Russonello said, is “what the public thinks happened — after they’ve thought about it for a while and seen all the news coverage,” he said. He cited as an example the Al Gore-George W. Bush presidential debates in the U.S. in 2000, during which Gore’s exaggerated sighing came to be seen as emblematic of his haughtiness. “That wasn’t necessarily picked up immediately in the polls,” Russonello said. “That took a while to sink in.” “The questions now are who people think is the winner once it has been filtered through the media tomorrow, and more importantly, what impact that has on voting intentions,” Anthony Wells of YouGov wrote on his Web site. “Our first chance of getting a really good idea of that will probably be the polls on Saturday or Sunday.” “The bottom line is that this is an election in which people can’t make up their mind,” said Driver. “It now may be even more unclear.” To contact the reporters on this story: Robert Hutton in Manchester, England at rhutton1@bloomberg.net ; Thomas Penny in London at tpenny@bloomberg.net

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Sudan’s Opposition Parties Announce Election Boycott Amid Rigging Charges

April 1, 2010

By Maram Mazen and Nicole Gaouette April 2 (Bloomberg) — Sudan’s opposition parties announced a boycott of Sudan’s elections this month, accusing Sudanese President Umar al-Bashir ’s government of rigging the first multiparty vote in 24 years. “The consensus today decided to boycott these elections,” which includes presidential, parliamentary and governors’ seats, the opposition parties’ spokesman, Farouq Abu Eissa, told reporters in Khartoum yesterday after a meeting of that various political groups. “The parties decided to reject and boycott this incomplete and distorted elections,” Mariam al-Mahdi, a spokeswoman for the Umma northern opposition parties, told reporters. The announcement followed days of discussions among the opposition parties on the April 11-13 elections. Earlier yesterday, most presidential challengers decided to withdraw from the race because of concerns the vote is rigged in Bashir’s favor, al-Mahdi said. The decision raised U.S. concerns about the vote’s credibility. “Nine presidential candidates met today, and most of them decided they will withdraw from the presidential election,” al- Mahdi said, without naming all their parties. Al Umma Reform and Renewal party presidential candidate Mubarak al-Fadil also said in a text message that most of the candidates were quitting the race. U.S. ‘Troubled’ “We’re troubled by any decision that reduces the competitiveness and credibility of these elections, but the situation is very fluid,” State Department spokesman Philip J. Crowley said in a briefing in Washington yesterday after the announcement that presidential opponents were withdrawing. The U.S. special envoy for Sudan, Scott Gration , is in the country meeting with officials and opposition parties and “actively working on these issues,” Crowley said. The elections for Sudan’s presidency, parliament and state governorships will take place this month, five years after the Sudan People’s Liberation Movement signed a peace deal with the government, ending a 20-year civil war between the Muslim north and the south, where Christianity and traditional religion dominate. Sudan pumps 480,000 barrels of oil per day and ranks as sub-Saharan Africa’s third-biggest crude producer, according to the BP Statistical Review of World Energy. Most of that is pumped in the south. The SPLM, which governs the semi-autonomous region of Southern Sudan , announced this week it was withdrawing its presidential candidate and boycotting the polls in the western region of Darfur. Elections Commission The opposition parties have accused the National Elections Commission of being biased in favor of Bashir’s National Congress Party. They have also called for a new commission to be set up and the voters’ list to be revamped. “Our parties until today have been and still are getting unlimited harassments from authorities,” Abu Eissa said. “We have decided to boycott the elections on all levels,” Neimat Malik, member of the Communist party’s political bureau, said by phone. Al-Mahdi of the Umma party said some of the parties will announce their final position within 24 hours after consultations within their ranks. She said the candidates could re-enter the presidential race if the government took steps to ensure a free and fair election. “They said they can review their position if there are steps taken to correct the current situation,” she said. Popular Congress Party leader Hassan al-Turabi , who helped Bashir seize power in a 1989 coup, said earlier yesterday that his party would participate in the election. The U.S., Britain and Norway yesterday called on Sudan’s government and political parties to address allegations of intimidation, harassment and other safety concerns to clear the way for the vote. “We urge all parties in Sudan to work urgently to ensure that elections can proceed peacefully and credibly in April,” the countries said in an e-mailed statement. To contact the reporter on this story: Maram Mazen in Khartoum via Cairo at mmazen@bloomberg.net ; Nicole Gaouette in Washington at ngaouette@bloomberg.net

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Ian Fletcher: Thinking the Unthinkable: Could America Repeal NAFTA?

April 1, 2010

Four congressmen have now moved a bill to repeal NAFTA. Superficially, this means little, as passage of this bill is unlikely in the near future. But more fundamentally, it means a lot, because, unbeknownst to most Americans inside and outside the Washington Beltway, free trade is inexorably losing its base of support on Capitol Hill. This means, for a start, that President Obama’s recent brave-faced pledge to move forward with his proposed Trans-Pacific Partnership (interestingly, the dread phrase “free trade agreement” has been carefully left out of the name) is, quite likely, dead on arrival. Obama himself may know this, and may have staged this gesture simply to placate foreign nations and domestic corporate interests. The lack of any change on trade issues in the Oval Office has distracted most Americans from the fact that in recent years, there has been an inexorable movement away from free trade in the House and Senate, driven by the public’s relentlessly rising skepticism of free trade. For example, according to one analysis by Global Trade Watch, no fewer than seven Senate and 30 House seats flipped from pro- to anti-free trade in the 2006 election. Seventy-three percent of winning Democratic candidates in that election emphasized trade as an issue in their campaigns, while 72 percent of losing Democratic candidates did not. Not a single candidate of either party ran on free trade as a positive agenda, and not a single opponent of free trade was ousted by a free trader, in either the House or the Senate. Six anti-free-trade Democrats — Sherrod Brown of Ohio, Claire McCaskill of Missouri, Jon Tester of Montana, Bob Casey of Pennsylvania, Sheldon Whitehouse of Rhode Island, and Jim Webb of Virginia, plus Independent Bernie Sanders of Vermont — captured seats formerly held by free traders. This trend continued in 2008. Thirty-six new free-trade opponents were elected to the House: 13 in contests against incumbents, 20 in battles for open seats, and three in special elections. (Eight free-trade opponents lost, so the net gain was 28.) And seven new free-trade opponents were elected to the Senate: Mark Begich of Alaska, Mark Udall of Colorado, Jeanne Shaheen of New Hampshire, Tom Udall of New Mexico, Kay Hagan of North Carolina, Jeff Merkley of Oregon, and Al Franken of Minnesota. This is mainly, but not exclusively, a Democratic trend: the 2008 winners also included 10 Republican opponents of free trade who either held or won seats while campaigning against free trade. Oddly enough, given the condemnations of “protectionism” issuing from the Democratic leadership, this trend seems to be a big winner for the Democrats. For example, after the 2006 election, it was estimated that another 10 to 20 Democratic challengers might have won, if they had attacked free trade. But the Democratic Congressional Campaign Committee was headed by Rahm Emanuel (now President Obama’s chief of staff), a free trader. Emanuel played a leading role in securing Democratic votes to pass NAFTA in 1993 while serving as a staffer under Bill Clinton and decided not to use the issue. But for this decision, Lois Murphy, to take only one example, might well have beaten Jim Gerlach, rated by nonpartisan observers as one of the most vulnerable Republican incumbents in the nation, in Pennsylvania’s 6th district. Instead, Gerlach squeaked back in with 1.2 percent of the vote after the DCCC effectively vetoed a trade-oriented get-out-the-vote program. But people noticed. So after declining to run ads attacking free trade in 2006, the DCCC, startled by the issue’s potency even when neglected, relented and aired spots on the issue in 2008. The main thing currently impeding an even stronger response in the voting booth is simply how deeply conflicted the public’s dislike of free trade is. According to one 2006 poll The public…seems frustrated about where to place responsibility. Close to eight in 10 (78 percent) say the government could do something about protecting American jobs. But a majority (52 percent) do not think it’s realistic for the government to control cor-porate outsourcing. So the voters register their protests when given the chance, but otherwise remain stymied in their attempts to crystallize an opinion of what solution they ultimately want. The most puzzling thing about recent public opinion polls is that while the economy consistently ranks high on voters’ priority lists, trade per se does not, suggesting that voters have yet to become fully convinced that free trade, as opposed to other currently-hot issues like our broken financial system, is the root cause of America’s economic ills. But if trade is at least a big part of the cause, then presumably this will eventually tell upon public opinion and trade will move up voters’ priority lists. This will, if recent trends are any indication, find expression at the polls and drive Congress even further away from free trade. And if nothing stops this trend, not only will it remain impossible to pass new free trade agreements, but existing ones will become vulnerable, with NAFTA the biggest and most obvious target. NAFTA repeal by 2018 is easily a 50-50 possibility at this point. Ian Fletcher is the author of Free Trade Doesn’t Work: What Should Replace It and Why. He is an Adjunct Fellow at the San Francisco office of the U.S. Business and Industry Council, a Washington think tank founded in 1933. He was previously an economist in private practice, mostly serving hedge funds and private equity firms. He may be contacted at atian.fletcher@usbic.net.

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Losing Kennedy Made Obama Find Health-Care Law in Homage to Undying Cause

March 30, 2010

By Kristin Jensen and Edwin Chen March 31 (Bloomberg) — Five days after President Barack Obama ’s inauguration, Tom Daschle requested a meeting with the new president. Daschle, tapped to become Health and Human Services secretary, wanted a commitment that Obama still planned to pursue an overhaul of the health-care system. Top advisers, from Vice President Joe Biden to members of his economic team, were pushing Obama to wait and focus instead on the recession. As Daschle, 62, and Obama huddled in White House Chief of Staff Rahm Emanuel ’s office on the president’s first Sunday in office, Obama assured him the issue was a major priority. “I said, ‘Well, I just need to know: Is this as important to you as you said it was when you asked me to do the job?’” recalled Daschle, who later had to withdraw his nomination over a tax controversy. “And he said, ‘Let me tell you, this is even more important to me.’” That Obama chose to stake his presidency on the U.S. health overhaul will define his legacy even as he risked the careers of many fellow Democrats in doing so. Republicans are now vowing to work toward repeal and make Democrats pay at the polls in November, ensuring that the president will spend almost as much time defending the legislation as he did getting it passed. Obama’s pursuit of health care reflected his desire to succeed where no other president had, as much as a determination to seize the chance to fix a broken system, according to Daschle. “Once committed, he felt he just couldn’t afford to lose,” Daschle said last week. Biggest Since Medicare When Obama, 48, signed the last piece of the legislation yesterday, he cemented the biggest changes to the health system since the 1965 creation of the Medicare insurance program for the elderly. He also brought to a close a year-long fight in which he gambled his presidency and came out on top. The health-care initiative would be marked by missed deadlines and political missteps. Obama rewrote the rules for an industry covering one-sixth of the economy on a partisan basis with public support eroding. He and Democratic leaders revived the effort through legislative crises, party infighting, and opposition from Republicans determined to make it his downfall. “If we’re able to stop Obama on this, it will be his Waterloo,” South Carolina Senator James DeMint said in July. Former Republican vice presidential candidate Sarah Palin warned of “ death panels ” stemming from a provision for end-of-life counseling. The Tea Party movement mobilized voters to confront Democrats at town-hall meetings in August, which drew so much attention they almost sank the bill. Sagging in Polls Polls showed the legislation had become unpopular, and Obama drew the ire of lawmakers in his own party. Many complained that he failed to provide direction at key junctures, shifted his rationale for the bill, and had made a campaign promise to air negotiations on C-Span that was coming back to haunt them because it was impossible to keep. In the end, the insurance industry, which fought Obama’s plans, offered what may have been his biggest boost by doing what he had said it would do: A WellPoint Inc. unit proposed a 39 percent rate increase for some California customers. Still, the deals that had to be cut meant that no one was completely happy with the final product, which Republicans said didn’t come close to putting a dent in rising U.S. health-care costs , already the highest in the world. “We have a bill that is chock full of gimmicks and hidden mandates,” said Representative Paul Ryan , a Wisconsin Republican, before the House’s March 21 vote to approve the measure. “The European-style social welfare state promoted by this legislation is not sustainable.” Significant Changes Democrats focused on the potential for significant changes down the road. They argued that free preventive care would mean less serious health problems; pilot programs designed to change the way Medicare operates would have larger ramifications for the system; and about 32 million uninsured Americans would get coverage. Over the past year, Obama and his aides liked to repeat a prediction credited to White House congressional liaison Phil Schiliro : The health-care effort would be “pronounced dead” four or five times before passage. They were right. The prospects began to look grim enough last summer that Emanuel suggested the president consider a scaled-back version and declare victory, according to one person with knowledge of the discussions. Obama said no. ‘Dead’ The worst day for the White House may well have been Jan. 19, when Democrats were stunned by the loss of a special election to fill a Massachusetts seat that had been held by the late Senator Edward Kennedy for 47 years. The party had been close to finishing a House-Senate compromise bill. Now, Republicans controlled 41 seats in the Senate, enough to kill the plan to push the new measure through both chambers. “Dead,” White House health policy adviser Zeke Emanuel wrote in response to an e-mail days later asking about the bill’s prospects. “F—–g dead.” Obama was already talking about the next steps even before the polls closed the night of the election, meeting with Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi in the Oval Office. Eventually, they would hit on a compromise: The House would pass the Senate bill and both chambers would pass another measure making changes to it. Emanuel, 52, the brother of Rahm Emanuel, said the mood soon turned around as the way forward became clear. The one thing that never wavered was Obama’s determination, said Emanuel as well as others in the White House and on Capitol Hill. “You’re the guy that made it happen,” Biden, 67, said to Obama before the president signed the first of two pieces of health-care legislation into law on March 23. Pessimism At the beginning, Biden and other top aides were pessimistic. They urged him to avoid making health care a top priority in the face of the worst economic recession in seven decades, two wars and the likelihood that special interests would fight any effort to overhaul the system. During one meeting soon after Inauguration Day, Biden said Americans didn’t care enough about health-care coverage to make it a priority, said two people involved in the discussions. Rahm Emanuel, 50, and senior adviser David Axelrod voiced caution, according to three people involved, who like others in this story spoke on condition of anonymity. “I had a whole bunch of political advisers telling me, this may not be the smartest thing to do,” Obama remembered a year later as he spoke in Elyria, Ohio, on Jan. 22. “I had no illusions when I took this on that this was going to be hard. Seven presidents had tried it, seven Congresses had tried it — and all of them had failed.” Obama had been persuaded by the data he had seen and the stories he heard from Americans. He also knew it was the lifelong cause of Kennedy, the Democratic Party icon who had given Obama’s political fortunes an early boost in the presidential primary fight against Hillary Clinton . Not Scoring Points That day in Ohio — three days after the loss of Kennedy’s seat — Obama said he was fighting on because the status quo was unsustainable. He cited soaring medical costs and premiums, Americans without insurance and struggling small businesses. “I didn’t take this on to score political points,” he said. Once Obama decided, his team fell in line. Biden’s chief of staff, Ron Klain , said his boss was “working to bring outside allies on board, and personally persuading key senators and congressmen to support the effort at critical moments — including the close vote on final passage in the House.” A year earlier, it was Daschle himself who set back the timetable as word trickled out that he had to file amended returns and pay $140,000 in back taxes and interest for unreported income. On Feb. 3, 2009, he withdrew his nomination, saying he didn’t want to prove a “distraction.” Missing Kennedy As a former Senate Democratic leader with relationships throughout Congress, Daschle was positioned to head the effort. Obama could ill-afford to lose him as he was already working without the legislative skills of Kennedy, who was suffering from brain cancer and would die at age 77 on Aug. 25. To win passage, a minority of more conservative Democrats overcame the majority’s desire for a government-run insurance program, or public option, that many said was the best way to reduce costs for average Americans. The White House team had studied the failed health-care push in 1993 and 1994 by former President Bill Clinton and his wife, Hillary, now secretary of state. Bill Clinton underlined the continuity of the effort when he stood in for Obama to speak at the Washington Gridiron Dinner on March 20, the night before the House vote, so the president could lobby lawmakers. The former president, who jokingly invoked the words of General Douglas MacArthur by saying, “I shall return,” about his visit to the capital, urged Congress to pass the bill. Winning Over Companies One lesson from the Clinton failure on health care was to try to win the support of health-care companies, many of whom helped destroy the earlier attempt. Obama cut deals with drugmakers and hospitals, ensuring a limited impact on their profits in return for specific dollar contributions to the overhaul effort and a pledge of support. Another lesson they drew was to leave the drafting of the legislation largely to Congress, Axelrod, 55, said in a July interview. That strategy backfired with some lawmakers. Iowa Senator Tom Harkin , 70, the Democratic chairman of the health committee, said Obama should have been more assertive. “The White House took a hands-off position until right before Christmas,” Harkin said in a Jan. 22 interview. “Maybe if they had gotten involved earlier we wouldn’t be in this mess.” ‘Lot of Grousing’ During summer months filled with protests and shouting at congressional town-hall meetings, Axelrod said he went to see Obama and told him, “The polls are difficult and there’s a lot of grousing on the Hill about it, and this is going to cost a lot politically in the short run.” “I know you’re right,” the president said, Axelrod recalled in a March 23 interview on the “ Charlie Rose Show.” Axelrod said Obama then told a story about a woman he had just met in Wisconsin with ovarian cancer. While the married mother of two had insurance, the policy didn’t cover her treatments, and the family was slowly going broke. Axelrod recalled that Obama patted him on the shoulder and said: “So, you know what? We’ve got to keep on fighting.” That September, Democrats came back shaken from encountering angry constituents during the August recess. Obama tried to revive the legislation and address some misconceptions with a Sept. 9 speech to a joint session of Congress. End of Bipartisanship Senator Bob Corker , a Tennessee Republican, said he saw a hardening by Democrats, tracing the end of bipartisanship to that address. Rahm Emanuel called Corker at home the weekend before and said “listen to the speech.” That night, Emanuel sat four rows ahead of Corker and could see he wasn’t applauding much. “He motioned for me to call him on the cell phone, which I did,” Corker, 57, recalled. “I told him that speech is the kind of speech you might hear in an Iowa primary or something. It had nothing to do with advancing policy, it was about consolidating the base.” There were efforts at bipartisanship, even if the prospects of success were slim. The most notable was the group known as the Gang of Six put together by Senate Finance Committee Chairman Max Baucus and his Republican counterpart, Senator Charles Grassley of Iowa. The group met 31 times over 63 hours and much of their work became the basis for the final legislation: They had decided against a public option; it didn’t make the final law. Instead of a straight employer mandate to provide insurance to workers, the final bill used Baucus’s model for penalties on certain companies. The group had moved toward medical industry fees and a tax on high-end insurance plans. Both made the bill. Building Blocks “At the very least, Democrats figured out how much reform their caucus could tolerate,” said Jennifer Duffy , a senior editor at the nonpartisan Cook Political Report in Washington. “At best, the group provided the building blocks of what would become the Senate bill.” That none of the Gang of Six Republicans signed on to the legislation reflects the deep political divide in Washington. On Sept. 16, when Baucus, 68, of Montana finally presented his plan, it was under his own name. Standing alone against a red, white and blue backdrop in Room 215 of the Dirksen Senate Office Building, he lacked the usual phalanx of back-slapping lawmakers involved in such moments. This, he said, “is a bill that can pass.” For the Senate, the following months were filled with special deals and arm-twisting. Reid, 70, needed every one of his Democrats to support the bill and used anyone he could to help. Courting Lincoln Rahm Emanuel asked Hillary Clinton to make dozens of phone calls to lawmakers, said two people familiar with the effort. Biden worked on Arkansas Senator Blanche Lincoln , 49, a friend from his years in the Senate, according to two people with knowledge of the meeting. Lincoln won assurances the bill would be made available to the public for three days before a vote. Louisiana Senator Mary Landrieu , 54, got what she called a “fix” of almost $300 million to help her hurricane-ravaged state fund the Medicaid health program for the poor. To secure the vote of Nebraska Senator Ben Nelson , 68, a former director of the Nebraska Department of Insurance, Reid promised not to include a provision repealing the insurance industry’s antitrust exemption. ‘Cornhusker Kickback’ Reid would have to add another sweetener — special aid for Nebraska’s Medicaid program later dubbed the “Cornhusker Kickback.” And on Dec. 18, he would spend 13 hours wooing Nelson and satisfying him that federal funds wouldn’t be used for abortion, with the help of White House aide Pete Rouse and New York Senator Chuck Schumer . The Senate passed its legislation on Dec. 24, and final approval of a House-Senate compromise looked on track until the Jan. 19 election in Massachusetts. Immediately after Scott Brown ’s victory, House members rebelled at the idea of simply passing the Senate bill, and Pelosi on Jan. 21 said she couldn’t get it through her chamber without changes. At one point, she said she was 63 votes short, according to a person with knowledge of the discussions. Obama took the fight behind closed doors, outwardly focusing on other issues while holding meetings to get health care done. California Rate Hike Within days, the announcement by WellPoint’s Anthem Blue Cross subsidiary in California to raise rates provided new fodder for a White House that billed the legislation as “health insurance reform.” That moment crystallized the fight, said Nancy-Ann DeParle , who ran the overhaul effort for the White House. “Anthem raising the rates in California was like, you must be kidding,” Pelosi said in a March 23 roundtable with seven reporters. “Thank you very much. That’s horrible for the people of California, but it’s great for the passage of our bill.” Democrats came up with a plan. First, the House would pass the Senate bill and then it would approve another bill to fix the things House members didn’t like. The Senate would also take up that second bill under a budget process called reconciliation that only required a simple majority vote. Obama’s Campaign Obama started a lobbying campaign, holding 64 meetings or phone calls with lawmakers between March 15 and March 19. He had no tougher or more effective ally than Pelosi. At one House Democratic caucus, shortly before the showdown votes, tempers flared as some members complained that neither the Senate nor the White House could be trusted, according to a person with knowledge of the meeting. “Do you trust me?” Pelosi replied, changing the tone. New York Representative Anthony Weiner said Pelosi, 70, told the members, “The Senate is going to go along because I am telling you I am going to make sure they go along.” By the time the House passed the Senate bill along with the other measure making changes, it was clear the Democrats would win. Obama had his victory. “When I spoke to him after the vote, he said that he was happier after the vote than he was the night that he won the presidency,” Pelosi said at the March 23 roundtable. “And I said, well, I’m pretty happy, but I’m not happier than the night he won the presidency because if you hadn’t won the presidency, we wouldn’t be here.” To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net ; Edwin Chen in Washington at echen32@bloomberg.net

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Congress Passes Final Changes to Landmark U.S. Health-Care Overhaul Plan

March 25, 2010

By James Rowley and Brian Faler March 25 (Bloomberg) — Congress passed the final part of the landmark U.S. health-care overhaul, capping a partisan battle to deliver the top domestic goal of President Barack Obama ’s first 14 months in office. The House voted 220-207 with no Republican support for a package of revisions to the plan signed March 23 by Obama that is intended to insure tens of millions of Americans, cut costs and bar insurers from rejecting customers with pre-existing medical conditions. The Senate passed the revisions earlier today on a 56-43 vote, and the measure now goes to Obama for his signature. “Americans who wait on tables, pump gas and clean our offices at night” now will be able to give thanks that “every American finally has affordable access to health insurance,” said New Jersey Democrat Robert Andrews . The partisan rift created by the health-care debate promises to be a central issue in the November elections to determine control of Congress. It also threatens to thwart cooperation between the two parties on Obama’s other legislative priorities, such as immigration overhaul, climate change and new financial rules. Republicans continued to denounce the health plan. “Job creators are assessing how much damage has been done to them” by new taxes in the legislation, said California Republican David Dreier . ‘This could not be a worse time to impose job killing tax increases.” 32 Democrats Thirty-two Democrats joined the Republicans in voting against the plan. “The administration and some in Congress would like to think this debate is over,” said Senate Republican leader Mitch McConnell of Kentucky. “We will continue to fight until this bill is repealed and replaced.” Democrats are hailing the health-care law as a historic followup to the 1965 creation of the Medicare program for the elderly and as a way to help tame rising medical costs that comprise a sixth of the U.S. economy. “We all know the importance of this legislation,” Majority Leader Harry Reid said on the Senate floor. “This has been a legislative fight that will be in the record books.” Senate Finance Committee Chairman Max Baucus of Montana said the health plan will create an “income shift” and a “leveling toward lower-income Americans.” Americans’ income distribution has been thrown off in recent years, he said. “The wealthy are getting way too wealthy.” Uninsured Americans The law will require all Americans to get health insurance or pay a penalty. With the revisions, it will expand coverage to 32 million uninsured Americans, according to the Congressional Budget Office. Companies such as health insurer WellPoint Inc. of Indianapolis, medical-device maker Medtronic Inc . of Minneapolis and drugmaker Pfizer Inc. of New York will get millions of new customers with the extension of coverage. Their industries also face billions of dollars in new fees. Under the overhaul, insurers will no longer be able to reject new customers with pre-existing medical conditions. It will place restrictions on insurers’ ability to set premiums. Patients will have greater access to preventive care and young adults can stay on their parents’ insurance until age 26. Taken together, the overhaul and the revisions will cost $940 billion over 10 years, the CBO estimated. The cost is more than made up with a new tax on the highest earners, fees on health-care companies and hundreds of billions of dollars in Medicare savings, which will reduce the federal deficit , according to the CBO. Opinion Polls Republicans universally opposed the legislation, arguing that the Democrats underestimated the cost and pushed through policies that polls show Americans oppose. The revisions passed today add a new tax on investment income and revamp the college student-loan program. The changes were demanded by House Democrats. During more than two days of debate, Senate Democrats fought off dozens of Republican amendments and efforts to derail the revisions . In a move that infuriated Republicans, Democrats used a budget process called reconciliation that enabled them to pass the changes with no Republican votes. Baucus said Republican amendments were nothing more than an attempt to block improvements to the overhaul. ‘Kill Health-Care Reform’ “Make no mistake, the intent of every single amendment on the other side of the aisle is to kill health-care reform,” Baucus said. Three Democrats voted against the measure: Mark Pryor and Blanche Lincoln of Arkansas and Ben Nelson of Nebraska. Republican Johnny Isakson of Georgia was absent. The changes would add a 3.8 percent Medicare tax on investment income, such as dividends, for individuals who earn more than $200,000 a year and joint tax filers who have more than $250,000 in earnings. That adds to a higher Medicare payroll tax already in the law. The reconciliation bill also scales back a tax on high-end insurance plans. Labor unions said the levy would affect too many workers; the reconciliation bill reduces the revenue from the tax by 80 percent by raising the thresholds at which it would apply. The measure also delays the tax until 2018. In revamping the college student-loan program, the legislation would end subsidies to lenders such as Reston, Virginia-based SLM Corp. , commonly known as Sallie Mae, and instead have all students borrow directly from the federal government. Pell Grants Democrats plan to use most of the anticipated savings to expand Pell college tuition grants. The savings also proved critical to meeting the requirement that any health-care reconciliation bill save at least $2 billion over the first five years, the CBO analysis shows. The two separate bills, one on the overhaul itself and the second that included the revisions, became necessary after Democrats lost the 60th vote in the Senate generally needed to push through major legislation. Just weeks after the Senate’s party-line 60-39 vote to approve the overhaul, Democrats were almost finished drafting a House-Senate compromise when Massachusetts Republican Scott Brown won a Jan. 19 special election to fill the seat left vacant by the death of Democrat Edward M. Kennedy . Democratic leaders then agreed the House would pass the Senate’s health-care bill and that both houses would pass the revisions. The budget reconciliation tool allowed the Senate to pass the changes with a simple majority of 51 votes. To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net ; Brian Faler in Washington at bfaler@bloomberg.net .

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