Tuesday, November 30, 2010
Quantitative Easing Redux
You can also get QE explained by going to YouTube and searching for "malekanoms". While you are there, watch "Taking a Load off Fannie" and you can actually see the Fed printing money.
QE Explained in Simple Terms
In The Great Recession Conspiracy we pointed out that inflation was the most likely outcome for the government's misguided policies. Here are two characters explaining exactly the same thing. And it is hilarious.
http://aguanomics.com/2010/11/quantitative-easing-explained.html
http://aguanomics.com/2010/11/quantitative-easing-explained.html
Saturday, November 27, 2010
Obama Can't Seem To Get Anything Right
In The Great Recession Conspiracy (www.scribd.com/doc/16864582/The-Great-Recession-Conspiracy and it is available as a Kindle book, a Google Book and at Barnes & Noble's online store) we pointed out that lots of American workers are going to have to be re-trained to fill the new jobs in new industries and in the few rapidly growing industries. We also described how community colleges were the perfect vehicle to do much of that re-training, and we provided examples of exactly how that was working already.
So now we still have 15 million unemployed Americans and another 15 million under-employed, and our government has not figured out any sensible action to take to deal with this deplorable situation.
So it turns out that exactly the wrong actions are being taken by the government. Read this story from the Washington Post and weep for all the unemployed people who are trying to correct their own situations on their own.
Workers seek new skills at community colleges, but classes are full
By Peter Whoriskey
Washington Post Staff Writer
Saturday, November 27, 2010; 12:24 AM
LAS VEGAS - The gambling economy here has crapped out, but at the swelling community college, workers are in the grip of new aspirations.
In one small anatomy lab, there's a craps dealer training to become an anesthetist, a cocktail waitress who wants to be a dental hygienist, and a former stripper seeking to become a nurse.
"People are always going to be going to the dentist," explained Misty Stevenson, 36, the aspiring hygienist, a mother of three and a cocktail waitress for 16 years, explaining her career choice after her income plunged during the downturn.
The trouble is getting a seat in class.
All over the United States, community college enrollments have surged with unemployed and underemployed people seeking new skills.
But just as workers have turned to community colleges, states have cut their budgets, forcing the institutions to turn away legions of students and stymieing the efforts to retrain the workforce.
Unemployment is highest among the nation's lesser-educated workers, and for them, community colleges offer a critical pathway to new jobs: Classes are open, relatively cheap and often tailored to picking up job skills.
The process of retraining these workers is considered vital to rebuilding the economy.
The institutions are "a gateway for millions of Americans to good jobs and a better life," President Obama said at a community college summit in the fall.
But with waning state budgets, that gateway is narrowing.
Even as community college enrollments have climbed during the recession, 35 states cut higher education budgets last year, and 31 will cut them for next, according to survey data from the National Association of State Budget Officers. Those shortages are expected to worsen next year when federal stimulus money that had plugged holes in state budgets is no longer available.
In California, with a budget cut of 8 percent across the board, the community colleges turned away 140,000 students last year. In Colorado, the waiting lists for nursing programs at some of the state's community colleges have grown to as long as 3.5 years. In May, New York's community colleges stopped accepting applications for the fall semester and added students instead to a wait list.
"It's a personal tragedy for someone seeking the skills to become a nurse or a firefighter or whatever it may be," said California Community Colleges Chancellor Jack Scott. "But in the long run, it's a tragedy for the economy."
Here in Las Vegas, with among some of the nation's highest unemployment, the College of Southern Nevada last fall turned away 5,000 students who sought classes that were filled.
For a single biology class, "BIO 189," a prerequisite for most of the degrees in the popular health-care fields, more than 2,450 students applied for 950 seats. The college now turns away students from every class in biology, the physical sciences and math, said Sally Johnston, dean of the School of Science and Mathematics at the College of Southern Nevada.
"Unfortunately, many say the heck with it and walk away," President Michael D. Richards said.
A reshaped economy
In Las Vegas, as well as nationally, some of the most overgrown portions of the bubble economy will not need as many workers as before, economists say, forcing workers to find jobs in other fields.
Here, it is the gambling and construction industries that have shrunk. Gambling revenue remains down about 15 percent on the Strip, and the once-booming construction industry in Nevada, where more than 27,000 homes a year were being built, has ground to a halt. One condo-hotel project on the Strip, the Echelon, has been left an unfinished 12-story concrete shell.
For the workers affected, it was as if an era has ended.
"There were just no more tips," said Stephanie Stone, 27, a mother of three who was a cocktail server at the Palomino Club, a strip club. "And I've always wanted to be a nurse."
Eriqua Horgan, 26, who has worked in the nightclub business as well said that before the bust, people were buying $1,000 bottles of champagne. "Mortgage brokers, everybody wrapped up in the real estate business had money. Now. . .they're not buying anything," she said.
The reshaping of the economy here has pushed countless workers to community colleges where they hope to build a new career.
Among the most popular programs at the college here are those that offer immediate employment, such as in health care - respiratory therapy, ultrasound technology, dental hygienist - and some technical and accounting fields, college officials said.
The appeal of community colleges is also financial: At a time of rocketing college costs, community colleges have remained a bargain compared with four-year schools.
That's partly because community college budgets have grown more slowly than at other institutions, according to an analysis of federal education statistics by the Delta Cost Project. In 2008, the education-related spending for an average full-time student at a community college was $10,400 while it was about 20 percent to 50 percent higher at public universities and at least 50 percent more at private four-year colleges.
Many of those already constrained community college budgets are now being cut - sometimes severely - despite the growing enrollments.
In Virginia, a series of reductions since 2008 has dropped annual state funding for community colleges by $105 million, while enrollment has grown by 26,000 students. In Maryland, state funding per full-time student has dropped 12 percent over the last three years.
Here in Las Vegas, state funding for the College of Southern Nevada has dropped more than 17 percent while the number of students, on a full-time basis, has risen 12 percent. While a federal stimulus bill provided funding to community colleges, that money is about to run out, too.
"In Nevada, we have to accommodate state budget priorities such as Medicare, public safety, including corrections, and K-12 education," Richards said. "Higher education comes in fourth or fifth in the list."
To combat the budget cuts, the College of Southern Nevada has increased the proportion of cheaper adjunct faculty, closed two of 11 learning centers in the community, and held classes at midnight to maximize the use of class space.
"Some of the time, we simply do not have enough physical space to accommodate everyone," Richards said.
Nationally, the tightened budgets have come as the U.S. workforce has been falling behind some other countries by some key measures of educational attainment.
In the early 1980s, the United States once led the world in terms of the proportion of young people it graduated from universities. Now it ranks 14th, according to figures from the Organization of Economic Cooperation and Development.
President Obama has highlighted the international comparisons and pledged that by 2020, "America will once again have the highest proportion of college graduates in the world."
It won't be cheap, however, and the cutting of community college budgets signals politicians' lack of enthusiasm for higher education spending at a time of budget deficits.
Said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce: "The bottom line is, we're closing off access to education to a large group of people."
An uneasy return
In conversations with dozens of workers seeking new skills here at the College of Southern Nevada, it is clear that many are aware that investing the money and time into classes requires sacrifice. As a result, their faith that the training is worth the trouble is often fragile.
Many haven't sat in a classroom for decades. Some are frustrated in their efforts to find a babysitter or have to juggle a full-time job. Many wonder whether they are just too old to make a change.
As a result, waiting lists and other hassles caused can easily push students to abandon college plans.
Katheryn Holligan, 42, used to be a cocktail waitress at Circus Circus, wearing high heels and carrying a heavy tray until she was physically worn out, and her wait station was cut. She is simultaneously preparing to get a real estate license and to get into a nursing program. In the meantime, she and her husband have tapped their savings and have started to have smaller Christmases for their three children.
She fears that even with a nursing degree, she will have difficulty competing with younger students. That she couldn't get into a class recently was especially discouraging, she said.
"I'm going to be 43 soon, and I look around the class and see these 20-year-olds that I'm going to be competing against. I know that I'm good. But physically. . .well, I'm realist."
Anthony Yurkonis, 27, a burly construction worker who was laid off a year ago, said he and his wife have no health insurance for the first time in their lives.
"It's not a simple thing to go to school yourself when you have three kids," he said.
Yurkonis, who is taking classes in finance and accounting, holds a part-time job helping new students find their way through registration. He sees lots of construction workers coming in.
"I see tons of guys who are exactly like me. They've been doing construction jobs their whole life and raking it in," said Yurkonis, who was earning about $75,000. "We thought it was never going to end. But now they don't even know how to work a computer. They don't know what a mouse is. They look at the thing and say, 'What the heck is this?'
"I see them coming through the front door here, and they just look lost," he said.
Even so, some of them, like Yurkonis, decided there were few other options than to go to school.
"I just walked in here and said, 'Listen, I got to find something else to do.' "
So now we still have 15 million unemployed Americans and another 15 million under-employed, and our government has not figured out any sensible action to take to deal with this deplorable situation.
So it turns out that exactly the wrong actions are being taken by the government. Read this story from the Washington Post and weep for all the unemployed people who are trying to correct their own situations on their own.
Workers seek new skills at community colleges, but classes are full
By Peter Whoriskey
Washington Post Staff Writer
Saturday, November 27, 2010; 12:24 AM
LAS VEGAS - The gambling economy here has crapped out, but at the swelling community college, workers are in the grip of new aspirations.
In one small anatomy lab, there's a craps dealer training to become an anesthetist, a cocktail waitress who wants to be a dental hygienist, and a former stripper seeking to become a nurse.
"People are always going to be going to the dentist," explained Misty Stevenson, 36, the aspiring hygienist, a mother of three and a cocktail waitress for 16 years, explaining her career choice after her income plunged during the downturn.
The trouble is getting a seat in class.
All over the United States, community college enrollments have surged with unemployed and underemployed people seeking new skills.
But just as workers have turned to community colleges, states have cut their budgets, forcing the institutions to turn away legions of students and stymieing the efforts to retrain the workforce.
Unemployment is highest among the nation's lesser-educated workers, and for them, community colleges offer a critical pathway to new jobs: Classes are open, relatively cheap and often tailored to picking up job skills.
The process of retraining these workers is considered vital to rebuilding the economy.
The institutions are "a gateway for millions of Americans to good jobs and a better life," President Obama said at a community college summit in the fall.
But with waning state budgets, that gateway is narrowing.
Even as community college enrollments have climbed during the recession, 35 states cut higher education budgets last year, and 31 will cut them for next, according to survey data from the National Association of State Budget Officers. Those shortages are expected to worsen next year when federal stimulus money that had plugged holes in state budgets is no longer available.
In California, with a budget cut of 8 percent across the board, the community colleges turned away 140,000 students last year. In Colorado, the waiting lists for nursing programs at some of the state's community colleges have grown to as long as 3.5 years. In May, New York's community colleges stopped accepting applications for the fall semester and added students instead to a wait list.
"It's a personal tragedy for someone seeking the skills to become a nurse or a firefighter or whatever it may be," said California Community Colleges Chancellor Jack Scott. "But in the long run, it's a tragedy for the economy."
Here in Las Vegas, with among some of the nation's highest unemployment, the College of Southern Nevada last fall turned away 5,000 students who sought classes that were filled.
For a single biology class, "BIO 189," a prerequisite for most of the degrees in the popular health-care fields, more than 2,450 students applied for 950 seats. The college now turns away students from every class in biology, the physical sciences and math, said Sally Johnston, dean of the School of Science and Mathematics at the College of Southern Nevada.
"Unfortunately, many say the heck with it and walk away," President Michael D. Richards said.
A reshaped economy
In Las Vegas, as well as nationally, some of the most overgrown portions of the bubble economy will not need as many workers as before, economists say, forcing workers to find jobs in other fields.
Here, it is the gambling and construction industries that have shrunk. Gambling revenue remains down about 15 percent on the Strip, and the once-booming construction industry in Nevada, where more than 27,000 homes a year were being built, has ground to a halt. One condo-hotel project on the Strip, the Echelon, has been left an unfinished 12-story concrete shell.
For the workers affected, it was as if an era has ended.
"There were just no more tips," said Stephanie Stone, 27, a mother of three who was a cocktail server at the Palomino Club, a strip club. "And I've always wanted to be a nurse."
Eriqua Horgan, 26, who has worked in the nightclub business as well said that before the bust, people were buying $1,000 bottles of champagne. "Mortgage brokers, everybody wrapped up in the real estate business had money. Now. . .they're not buying anything," she said.
The reshaping of the economy here has pushed countless workers to community colleges where they hope to build a new career.
Among the most popular programs at the college here are those that offer immediate employment, such as in health care - respiratory therapy, ultrasound technology, dental hygienist - and some technical and accounting fields, college officials said.
The appeal of community colleges is also financial: At a time of rocketing college costs, community colleges have remained a bargain compared with four-year schools.
That's partly because community college budgets have grown more slowly than at other institutions, according to an analysis of federal education statistics by the Delta Cost Project. In 2008, the education-related spending for an average full-time student at a community college was $10,400 while it was about 20 percent to 50 percent higher at public universities and at least 50 percent more at private four-year colleges.
Many of those already constrained community college budgets are now being cut - sometimes severely - despite the growing enrollments.
In Virginia, a series of reductions since 2008 has dropped annual state funding for community colleges by $105 million, while enrollment has grown by 26,000 students. In Maryland, state funding per full-time student has dropped 12 percent over the last three years.
Here in Las Vegas, state funding for the College of Southern Nevada has dropped more than 17 percent while the number of students, on a full-time basis, has risen 12 percent. While a federal stimulus bill provided funding to community colleges, that money is about to run out, too.
"In Nevada, we have to accommodate state budget priorities such as Medicare, public safety, including corrections, and K-12 education," Richards said. "Higher education comes in fourth or fifth in the list."
To combat the budget cuts, the College of Southern Nevada has increased the proportion of cheaper adjunct faculty, closed two of 11 learning centers in the community, and held classes at midnight to maximize the use of class space.
"Some of the time, we simply do not have enough physical space to accommodate everyone," Richards said.
Nationally, the tightened budgets have come as the U.S. workforce has been falling behind some other countries by some key measures of educational attainment.
In the early 1980s, the United States once led the world in terms of the proportion of young people it graduated from universities. Now it ranks 14th, according to figures from the Organization of Economic Cooperation and Development.
President Obama has highlighted the international comparisons and pledged that by 2020, "America will once again have the highest proportion of college graduates in the world."
It won't be cheap, however, and the cutting of community college budgets signals politicians' lack of enthusiasm for higher education spending at a time of budget deficits.
Said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce: "The bottom line is, we're closing off access to education to a large group of people."
An uneasy return
In conversations with dozens of workers seeking new skills here at the College of Southern Nevada, it is clear that many are aware that investing the money and time into classes requires sacrifice. As a result, their faith that the training is worth the trouble is often fragile.
Many haven't sat in a classroom for decades. Some are frustrated in their efforts to find a babysitter or have to juggle a full-time job. Many wonder whether they are just too old to make a change.
As a result, waiting lists and other hassles caused can easily push students to abandon college plans.
Katheryn Holligan, 42, used to be a cocktail waitress at Circus Circus, wearing high heels and carrying a heavy tray until she was physically worn out, and her wait station was cut. She is simultaneously preparing to get a real estate license and to get into a nursing program. In the meantime, she and her husband have tapped their savings and have started to have smaller Christmases for their three children.
She fears that even with a nursing degree, she will have difficulty competing with younger students. That she couldn't get into a class recently was especially discouraging, she said.
"I'm going to be 43 soon, and I look around the class and see these 20-year-olds that I'm going to be competing against. I know that I'm good. But physically. . .well, I'm realist."
Anthony Yurkonis, 27, a burly construction worker who was laid off a year ago, said he and his wife have no health insurance for the first time in their lives.
"It's not a simple thing to go to school yourself when you have three kids," he said.
Yurkonis, who is taking classes in finance and accounting, holds a part-time job helping new students find their way through registration. He sees lots of construction workers coming in.
"I see tons of guys who are exactly like me. They've been doing construction jobs their whole life and raking it in," said Yurkonis, who was earning about $75,000. "We thought it was never going to end. But now they don't even know how to work a computer. They don't know what a mouse is. They look at the thing and say, 'What the heck is this?'
"I see them coming through the front door here, and they just look lost," he said.
Even so, some of them, like Yurkonis, decided there were few other options than to go to school.
"I just walked in here and said, 'Listen, I got to find something else to do.' "
Friday, November 26, 2010
Yes, You Are Poorer Now
Here are the numbers in 2009 dollars for U.S. households.
Median Income 1999: $54,058
Median Income 2009: $50,223
Source: U.S. Census
So you got less income in the last decade while the richest 1% got a lot richer.
49% of all adult Americans think that their children will not have lives as good as their parents have had.
These are some very, very bad facts!!!
Median Income 1999: $54,058
Median Income 2009: $50,223
Source: U.S. Census
So you got less income in the last decade while the richest 1% got a lot richer.
49% of all adult Americans think that their children will not have lives as good as their parents have had.
These are some very, very bad facts!!!
Wednesday, November 24, 2010
And So It Goes (with apologies to Kurt Vonnegut)
15 Million Americans are unemployed.
15 Million more are under-employed or have given up looking.
The Fed and Uncle Ben say, "Tough, get used to it".
For decades now, small businesses have been the major generator of new jobs. Everybody seems to agree with that fact, but nobody wants to do anything serious about the real problem, i.e., small businesses have declining profits (down 5% from two years ago)
Contrast this with big businesses where profits are up 21% over the same period.
Sales at all companies with sales under $20 million are down 5% compared with last year. In construction, revenue (sales) is down 14% following a 10% decline in 2009.
Only education, health and finance businesses have seen growing revenues.
Almost 400,000 small businesses have simply disappeared since 2008.
And exactly what is Obama's administration doing about this ongoing disaster?
Absolutely nothing. TALF is a bad joke. Check it out for yourself. Most of the money is still sitting in Washington.
If you have been reading this rant, you KNOW what the government should be doing.
Instead, we can look forward to two more years of increasing homelessness, ill health, broken families and many other social ills. A full one third of all home sales last month were foreclosure sales, e.g., more families without homes.
15 Million more are under-employed or have given up looking.
The Fed and Uncle Ben say, "Tough, get used to it".
For decades now, small businesses have been the major generator of new jobs. Everybody seems to agree with that fact, but nobody wants to do anything serious about the real problem, i.e., small businesses have declining profits (down 5% from two years ago)
Contrast this with big businesses where profits are up 21% over the same period.
Sales at all companies with sales under $20 million are down 5% compared with last year. In construction, revenue (sales) is down 14% following a 10% decline in 2009.
Only education, health and finance businesses have seen growing revenues.
Almost 400,000 small businesses have simply disappeared since 2008.
And exactly what is Obama's administration doing about this ongoing disaster?
Absolutely nothing. TALF is a bad joke. Check it out for yourself. Most of the money is still sitting in Washington.
If you have been reading this rant, you KNOW what the government should be doing.
Instead, we can look forward to two more years of increasing homelessness, ill health, broken families and many other social ills. A full one third of all home sales last month were foreclosure sales, e.g., more families without homes.
Monday, November 22, 2010
Road Trip redux
In an earlier report on a five week road trip, I pointed out that three of the Obama administration's failures were visible from the road. One was bad roads, two was overweight people and three was ag subsidies for corn. Well, it turns out that numbers two and three are closely tied together. Read this piece to see how.
Who Eats Cotton Anyway?
Updated November 21, 2010, 07:00 PM
Brian Riedl is the Grover M. Hermann Fellow in federal budgetary affairs at the Heritage Foundation.
Farm subsidies represent a solution in search of a problem.
Fruit, vegetable, livestock and poultry operations receive nearly no payments, yet still produce two-thirds of the farm economy.
We are told the farm economy cannot function without subsidies. However, nearly all subsidies go to growers of just five crops: wheat, cotton, corn, soybeans and rice. By contrast, fruit, vegetable, livestock and poultry operations receive nearly nothing, yet still produce two-thirds of the farm economy, with stable prices and healthy incomes. Why can’t the Big Five crops function in the same free market?
We are told food is too vital to national security to leave to the free market. This is the same misguided logic that has induced calls for a federal takeover of health care. It’s unclear how a centrally planned, bureaucratic, economically illiterate farm subsidy system that doesn’t help the farm economy aids national security. (And who eats cotton, anyway?)
We are also told that subsidies alleviate farmer poverty. Setting aside the Norman Rockwell imagery, farm subsidies are America’s largest corporate welfare program. Congress targets most subsidies toward large commercial farmers, which report an average annual income of nearly $200,000.
By promoting corn and soy, rather than fruits and vegetables, subsidies contribute to obesity and rising health costs.
More than merely ineffective, farm policies impose substantial harm. They cost Americans $25 billion in taxes and another $12 billion in higher food prices annually. Environmental damage results from farmers overplanting crops in order to maximize subsidies. By undermining America’s trade negotiations, subsidies raise consumer prices and restrict U.S. exports. Cotton subsidies undercut African farmers, keeping them in desperate poverty. And as Michael Pollan, author of “The Omnivore’s Dilemma,” has written, by promoting corn and soy (from which sugars and fats are derived) rather than healthier fruits and vegetables, farm subsidies contribute to obesity, rising health care costs, and early death.
The real problem is that farmers’ incomes fluctuate yearly due to crop and weather unpredictability. This can be solved inexpensively with Farmer Savings Accounts and improved crop insurance. With a $1.2 trillion deficit, outdated, unnecessary farm subsidies must be included in broad-based budget reforms.
Who Eats Cotton Anyway?
Updated November 21, 2010, 07:00 PM
Brian Riedl is the Grover M. Hermann Fellow in federal budgetary affairs at the Heritage Foundation.
Farm subsidies represent a solution in search of a problem.
Fruit, vegetable, livestock and poultry operations receive nearly no payments, yet still produce two-thirds of the farm economy.
We are told the farm economy cannot function without subsidies. However, nearly all subsidies go to growers of just five crops: wheat, cotton, corn, soybeans and rice. By contrast, fruit, vegetable, livestock and poultry operations receive nearly nothing, yet still produce two-thirds of the farm economy, with stable prices and healthy incomes. Why can’t the Big Five crops function in the same free market?
We are told food is too vital to national security to leave to the free market. This is the same misguided logic that has induced calls for a federal takeover of health care. It’s unclear how a centrally planned, bureaucratic, economically illiterate farm subsidy system that doesn’t help the farm economy aids national security. (And who eats cotton, anyway?)
We are also told that subsidies alleviate farmer poverty. Setting aside the Norman Rockwell imagery, farm subsidies are America’s largest corporate welfare program. Congress targets most subsidies toward large commercial farmers, which report an average annual income of nearly $200,000.
By promoting corn and soy, rather than fruits and vegetables, subsidies contribute to obesity and rising health costs.
More than merely ineffective, farm policies impose substantial harm. They cost Americans $25 billion in taxes and another $12 billion in higher food prices annually. Environmental damage results from farmers overplanting crops in order to maximize subsidies. By undermining America’s trade negotiations, subsidies raise consumer prices and restrict U.S. exports. Cotton subsidies undercut African farmers, keeping them in desperate poverty. And as Michael Pollan, author of “The Omnivore’s Dilemma,” has written, by promoting corn and soy (from which sugars and fats are derived) rather than healthier fruits and vegetables, farm subsidies contribute to obesity, rising health care costs, and early death.
The real problem is that farmers’ incomes fluctuate yearly due to crop and weather unpredictability. This can be solved inexpensively with Farmer Savings Accounts and improved crop insurance. With a $1.2 trillion deficit, outdated, unnecessary farm subsidies must be included in broad-based budget reforms.
Sunday, November 21, 2010
Government MisManagement
If you have been reading this blog very long, you know that one of my concerns is the growing intrusion of government into private business. This concern is not based on any kind of ideology, it is based on the simple observation that government is a lousy manager because it refuses to follow sound management principles and substitutes political advantages for management which leads to lousy management of private industry.
Here is today's awful example.
Nissan has an electric automobile named the Leaf. If you read The Great Recession Conspiracy, you know we are committed to non-petroleum fuels. So electric cars are a generally good thing.
The Leaf is priced at $32,780 and it gets great reviews at edmunds.com. See for yourself.
General Motors also has an electric automobile called the Volt. The Volt is priced at $40,280, and gets lousy reviews at edmunds.com.
So here is the problem. General Motors, which we owned 61% of until last week, is really being managed by the government. See The Great Recession Conspiracy to see who really manages GM and look at their credentials. It is ghastly.
Now the Volt is clearly uncompetitive with the Leaf, so what is the Government Motors response? Is it to lower the price by lowering the costs? No! Is it to improve the performance of the car to get more competitive? No!
The response is a $7,000 credit for anyone buying a Volt. You can do the math. That is exactly the amount necessary to make Volt price competitive with Leaf.
So instead of making a better product, or improving the way it is made, Government Motors is using YOUR MONEY to make a poor product price competitive.
How much more evidence do you need to understand that government is a lousy manager of private sector businesses?
This is not a right or left observation. This is not a Republican or Democrat observation. It is just common sense!! Something lacking that is entirely lacking Washington.
Here is today's awful example.
Nissan has an electric automobile named the Leaf. If you read The Great Recession Conspiracy, you know we are committed to non-petroleum fuels. So electric cars are a generally good thing.
The Leaf is priced at $32,780 and it gets great reviews at edmunds.com. See for yourself.
General Motors also has an electric automobile called the Volt. The Volt is priced at $40,280, and gets lousy reviews at edmunds.com.
So here is the problem. General Motors, which we owned 61% of until last week, is really being managed by the government. See The Great Recession Conspiracy to see who really manages GM and look at their credentials. It is ghastly.
Now the Volt is clearly uncompetitive with the Leaf, so what is the Government Motors response? Is it to lower the price by lowering the costs? No! Is it to improve the performance of the car to get more competitive? No!
The response is a $7,000 credit for anyone buying a Volt. You can do the math. That is exactly the amount necessary to make Volt price competitive with Leaf.
So instead of making a better product, or improving the way it is made, Government Motors is using YOUR MONEY to make a poor product price competitive.
How much more evidence do you need to understand that government is a lousy manager of private sector businesses?
This is not a right or left observation. This is not a Republican or Democrat observation. It is just common sense!! Something lacking that is entirely lacking Washington.
You Solve The Budget/Deficit Problem
I explained earlier that I solve the problem as presented in the New York Times. Here is the summarized results so far. Now you can take a whack at the problem for yourself. Good luck.
How Readers Chose to Fix the Deficit
By DAVID LEONHARDT
Reduce the size of the military rather than reduce pay for noncombat members of the military. Impose a millionaire’s tax rather than cut deductions for high-income households. Cap the growth of Medicare spending rather than raise the eligibility age.
These were among the choices made by readers who completed the online you-fix-the-deficit puzzle that accompanied a Week in Review article last Sunday. Since the puzzle went online, there have been more than one million page views, and more than 11,000 posted Twitter messages about the puzzle, most including their own solution. The Times analyzed those solutions, each of which cut at least $1.345 trillion from the 2030 deficit, to get a sense of readers’ choices.
This sample is obviously not scientific. But many readers asked for a tabulation of the responses, and taken together, they offer a glimpse of specific preferences within two groups: those who far prefer spending cuts, and those who want to mix cuts with tax increases. The responses also point to a deep divide between those two sides, illustrating why a solution is difficult.
The single least popular choice was allowing the expiration of the Bush tax cuts on income below $250,000 a year. Fewer than 10 percent of the solutions included that option. But when it came to tax cuts for incomes above $250,000, people’s opinions appeared to diverge according to their political views. Those who preferred spending cuts — a conservative group, in all likelihood — generally wanted this tax cut to remain in place. Among those who closed the deficit mostly with tax increases — probably a liberal group — the expiration was the single most selected policy.
The most popular option among all respondents? Reducing the military to less than its size before the Iraq war — included in about 80 percent of the solutions posted to Twitter. But cutting pay and benefits for the military was a choice of only 40 percent.
Given that Twitter users skew young, one arguable surprise was the reluctance to raise the eligibility age for Social Security (above 67, as is now scheduled) or Medicare (above 65). The four options that would have increased those ages, to either 68 or 70, were all among the 10 least popular. Making other changes to those programs — like reducing Social Security benefits for high earners and capping Medicare growth by cracking down on high-cost hospitals and doctors — received more support.
In the last week, readers and bloggers have also suggested dozens of cuts that did not appear among the puzzle’s options. Anthony Tedesco, in an e-mail, argued for a tax on sodas and a higher federal tax on alcohol. On Wednesday, a bipartisan group led by Pete Domenici, a former Republican senator from New Mexico, and Alice Rivlin, a Democratic budget expert, released a deficit plan that included a soda tax. It would raise about $15 billion a year in today’s dollars, roughly as much as eliminating farm subsidies or cutting foreign aid in half.
Others wanted more aggressive versions of existing options. Some readers, for example, wanted to cut entire departments, like Agriculture and Education. As is, the puzzle allows readers to cut aid to states 5 percent, cut the pay of civilian workers 5 percent, reduce the size of the federal work force 10 percent and eliminate 250,000 government contractors. Together, those options would close 7 percent of the 2030 budget gap. A larger set of cuts to domestic programs other than Social Security and Medicare might close 15 or 20 percent.
On the tax side, Felix Salmon, a commentator for Reuters, wrote that the options hewed too closely to the current code. He said he wished that he could have imposed a wealth tax or abolish, rather than reduce, the mortgage deduction. Mr. Salmon also suggested subjecting all income to the payroll tax that finances Social Security, rather than merely raising the ceiling on taxable income beyond the current level of $106,800, as the puzzle included.
The puzzle remains online, and version 2.0 may lie in the future. Comments continue to be welcome. Given how far Congress seems from enacting any deficit-reducing proposal, this debate will probably be around for a long time.
How Readers Chose to Fix the Deficit
By DAVID LEONHARDT
Reduce the size of the military rather than reduce pay for noncombat members of the military. Impose a millionaire’s tax rather than cut deductions for high-income households. Cap the growth of Medicare spending rather than raise the eligibility age.
These were among the choices made by readers who completed the online you-fix-the-deficit puzzle that accompanied a Week in Review article last Sunday. Since the puzzle went online, there have been more than one million page views, and more than 11,000 posted Twitter messages about the puzzle, most including their own solution. The Times analyzed those solutions, each of which cut at least $1.345 trillion from the 2030 deficit, to get a sense of readers’ choices.
This sample is obviously not scientific. But many readers asked for a tabulation of the responses, and taken together, they offer a glimpse of specific preferences within two groups: those who far prefer spending cuts, and those who want to mix cuts with tax increases. The responses also point to a deep divide between those two sides, illustrating why a solution is difficult.
The single least popular choice was allowing the expiration of the Bush tax cuts on income below $250,000 a year. Fewer than 10 percent of the solutions included that option. But when it came to tax cuts for incomes above $250,000, people’s opinions appeared to diverge according to their political views. Those who preferred spending cuts — a conservative group, in all likelihood — generally wanted this tax cut to remain in place. Among those who closed the deficit mostly with tax increases — probably a liberal group — the expiration was the single most selected policy.
The most popular option among all respondents? Reducing the military to less than its size before the Iraq war — included in about 80 percent of the solutions posted to Twitter. But cutting pay and benefits for the military was a choice of only 40 percent.
Given that Twitter users skew young, one arguable surprise was the reluctance to raise the eligibility age for Social Security (above 67, as is now scheduled) or Medicare (above 65). The four options that would have increased those ages, to either 68 or 70, were all among the 10 least popular. Making other changes to those programs — like reducing Social Security benefits for high earners and capping Medicare growth by cracking down on high-cost hospitals and doctors — received more support.
In the last week, readers and bloggers have also suggested dozens of cuts that did not appear among the puzzle’s options. Anthony Tedesco, in an e-mail, argued for a tax on sodas and a higher federal tax on alcohol. On Wednesday, a bipartisan group led by Pete Domenici, a former Republican senator from New Mexico, and Alice Rivlin, a Democratic budget expert, released a deficit plan that included a soda tax. It would raise about $15 billion a year in today’s dollars, roughly as much as eliminating farm subsidies or cutting foreign aid in half.
Others wanted more aggressive versions of existing options. Some readers, for example, wanted to cut entire departments, like Agriculture and Education. As is, the puzzle allows readers to cut aid to states 5 percent, cut the pay of civilian workers 5 percent, reduce the size of the federal work force 10 percent and eliminate 250,000 government contractors. Together, those options would close 7 percent of the 2030 budget gap. A larger set of cuts to domestic programs other than Social Security and Medicare might close 15 or 20 percent.
On the tax side, Felix Salmon, a commentator for Reuters, wrote that the options hewed too closely to the current code. He said he wished that he could have imposed a wealth tax or abolish, rather than reduce, the mortgage deduction. Mr. Salmon also suggested subjecting all income to the payroll tax that finances Social Security, rather than merely raising the ceiling on taxable income beyond the current level of $106,800, as the puzzle included.
The puzzle remains online, and version 2.0 may lie in the future. Comments continue to be welcome. Given how far Congress seems from enacting any deficit-reducing proposal, this debate will probably be around for a long time.
Saturday, November 20, 2010
A Second Opinion
In the Letters section of Today's Los Angeles Times, Harvey H. Liss of Irvine, California, wrote;
"I'm appalled that John H. Cochrane, a professor of finance, would parrot the
Republican nonsense about how reducing taxes will result in increased hiring.
I was president of a 30-person engineering firm for 30 years. We had our ups and downs; however our discussions over whether to hire someone never included anything about taxes or healthcare, but did include everything about our project backlog. A government stimulus to fund infrastructure projects, like improving our country's Internet backbone, would have helped our project backlog.
I can't imagine why it would be any different for any other firm, small or large."
That is exactly what I said in the Los Angeles Times three months ago. No small business has EVER, hired an new employee to get a tax break! Period! End of story!
However, I do take a minor exception to Harvey's letter. This is not just a Republican stupidity. It is equally shared by Obama and his cadre of theoretical economists who know absolutely nothing about how the real world works.
You can read earlier posts, or The Great Recession Conspiracy, to learn exactly what the government should be doing.
"I'm appalled that John H. Cochrane, a professor of finance, would parrot the
Republican nonsense about how reducing taxes will result in increased hiring.
I was president of a 30-person engineering firm for 30 years. We had our ups and downs; however our discussions over whether to hire someone never included anything about taxes or healthcare, but did include everything about our project backlog. A government stimulus to fund infrastructure projects, like improving our country's Internet backbone, would have helped our project backlog.
I can't imagine why it would be any different for any other firm, small or large."
That is exactly what I said in the Los Angeles Times three months ago. No small business has EVER, hired an new employee to get a tax break! Period! End of story!
However, I do take a minor exception to Harvey's letter. This is not just a Republican stupidity. It is equally shared by Obama and his cadre of theoretical economists who know absolutely nothing about how the real world works.
You can read earlier posts, or The Great Recession Conspiracy, to learn exactly what the government should be doing.
Friday, November 19, 2010
Here are the numbers that go with the story about the end of benefits
This is from a blog called The Economic Collapse. It was written before the Republicans blocked an extension of unemployment benefits. The Republicans say they must have some place to get the money to fund the extension, which is also a point made by The Economic Collapse blogger. And the answer is truly simple. All the money you could ever need is in the Pentagon budget for bases and programs we DO NOT need.
Also, The Economic Collapse blogger is wrong about globalization. The only "solution" would be to construct extremely high tariff barriers. We tried that in the 1930's. Read about the Smoot-Hawley Act and then see where that got us, and everybody else in the world. Every country put up barriers to protect their interests and world trade came to a screeching halt. It took WWII to bail us out of that piece of utter nonsense.
Any way, read this story for the people and the statistics. Those are bad enough. And you can go to his blog to see the videos.
Tent Cities, Homelessness And Soul-Crushing Despair: The Legacy Of Decades Of Government Debt And Mismanagement Of The Economy
For decades, our politicians have been deeply addicted to government debt, they have stood idly by as millions of our jobs have been shipped overseas and they have passed countless business-crushing regulations and they never thought that it would catch up with us. Well, it has. America has been living in the biggest debt bubble in the history of the world, and now that bubble is starting to pop. There has never been such an extended period of unemployment in the United States since the Great Depression, and millions of Americans are losing their homes. Homelessness is skyrocketing, tent cities are popping up everywhere and countless numbers of American families are experiencing the soul-crushing despair that comes from desperately trying to hang on for month after month after month.
Now, because of the horrific hole that our politicians have dug for us, we are faced with some heartbreaking choices. For example, right now the U.S. Congress is deciding whether or not to extend long-term unemployment benefits for the nation's jobless.
Extending those benefits through the end of February would add another $12.5 billion to the U.S. national debt. But not doing it would cut off the only lifeline that many Americans have just in time for the holidays.
The extension of jobless benefits that was passed last summer expires on December 1st. If these long-term benefits are not renewed, approximately 2 million unemployed Americans will lose their checks.
But what can the U.S. Congress do? Just keep going into endless amounts of debt? As I have written about previously, the United States is never going to see another balanced budget ever again under the current system. The U.S. government is flat out broke. Somehow our politicians desperately need to find a way for the federal budget to stop hemorrhaging red ink.
There is no more "extra money" to spend. The U.S. government has piled up the biggest mountain of debt in the history of the world and we are headed for a complete and total economic disaster because of it.
But what are we going to do? Are we going to let millions of Americans starve in the streets?
It's not just the rapidly rising number of homeless Americans that is the problem. Millions of Americans are not going to be able to heat their homes this winter. Millions of others are going to have to choose between buying medicine and buying food because they will not be able to afford both.
How would you like to be at a point where you could not go to the doctor because you knew that you could not pay the deductible?
How would you like to be at a point where you had to decide whether to buy diabetes medicine or to buy macaroni and cheese to feed your family?
More than 42 million Americans are now on food stamps, and that number keeps going up month after month after month.
Just think about that.
42 million Americans would not be able to eat if the U.S. government did not give them handouts.
The safety net is getting awfully crowded.
If you really want to see some soul-crushing desperation, go check out the flood tunnels under the city of Las Vegas. But do not do this alone - it is very dangerous down there. Today, there are hordes of "tunnel people" who call those dark tunnels home. Nobody knows for sure how many people are down there (some people say that it is well into the thousands), but everyone agrees that the number is rapidly growing.
But in many major U.S. cities there are no flood tunnels to go to. Instead, in many areas of the United States huge tent cities have sprouted. The following is a video news report from the BBC about the tent cities that are popping up all over America....
But it is not just "drug addicts" and the "mentally ill" that are going to these tent cities. One anonymous unemployed woman identified only as "Kaynonymous" is a highly educated professional who figures that she will end up in a tent city soon....
"I'm a 99er too. 53, female, single and once on track with an IT career. No one in their right mind would consider me for an IT position after being gone from the field for over 2 years. I have officially been a 99er since May 2010. In Aug. 2010 all of my savings and retirement funds were finally depleted--not only can I no longer make my mortgage payment, I can no longer afford utilities either. I'm just not sure that the 99ers ever had a voice outside of union organizers and even with them it was too little too late. Guess I'll be seeing ya'll in the soup kitchens and tent cities. I do still have my tent..."
So we should just extend the long-term unemployment benefits, right? Well, according to a recent poll commissioned by the National Employment Law Project, 73 percent of Americans want Congress to continue paying out extended unemployment benefits.
But it is not just that simple.
America is broke.
The entire financial system is dying.
The U.S. government desperately needs to stop spending so much money.
But how can we turn our backs on people who are desperately hurting?
There are millions of Americans that have just about reached the end of their ropes. For example, one 43-year-old woman named Jacqueline recently expressed some of the extreme frustration that she is experiencing on her blog....
I am one of the 6 million poor, unemployed middle-aged Americans struggling without any safety net or income other than food stamps. I have resorted to salvaging scrap metal just to survive while keeping up an increasingly hopeless job search. On May 4th, 2010 just three weeks before my 43rd birthday ago I got slapped with a diagnosis of very early stage glaucoma when I had a six year long overdue optical exam for badly needed new glasses. Without treatment — including ophthalmologist’s glaucoma monitoring exams — I will end up blind and permanently disabled. It’s not a matter of “if”, it’s a matter of when.
As a society, we will be judged by how we treat those who are the most vulnerable. It can seem easy to bash those who have lost everything, but someday you might end up in that position. In the following video, police in St. Petersburg, Florida are seen using box cutters to slice up the tents that the homeless were sleeping in....
Hopefully you were deeply disturbed by that video.
We have gotten ourselves into a giant mess, and things are only going to get worse.
Unfortunately, some extremely painful decisions are going to have to be made.
The truth is that we are so deeply in debt that the U.S. government just cannot be spending any extra money right now.
However, we also cannot turn our backs on millions of American families that are going to lose their homes and go hungry if we do not help them.
So what do we do?
What hurting Americans need most of all are not handouts - what they really need are good jobs.
But good jobs are being shipped overseas at a breathtaking pace. The United States has lost approximately 42,400 factories since 2001. The greatest economic machine in the history of the world is literally having its guts ripped out, and most of you kept voting in jokers who supported all of this deindustrialization.
For decades, our politicians kept telling us how wonderful globalization would be for America. We didn't listen when Ross Perot warned us about "the great sucking sound" that these "free trade" agreements would bring about.
Well, look how all of that turned out. In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year. In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.
In case you can't figure it out, that means that 28 billion dollars of our national wealth was transferred to China in just one month.
This is happening month after month after month.
And yet Barack Obama continues to get up and tell us how wonderful globalism is. During his recent trip to India, Barack Obama made the following statement....
"This will keep America on its toes. America is going to have to compete. There is going to be a tug-of-war within the US between those who see globalization as a threat and those who accept we live in a open integrated world, which has challenges and opportunities."
Yes, globalization is a threat. We should have never merged our economy with the economy of China where workers make less than a tenth of what an American worker makes.
Jobs are flooding out of the U.S. and they are flooding into places like India and China where labor is far, far cheaper.
But without good jobs, how in the world are average Americans going to pay the bills?
The answer is that an increasing number of them are not. 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.
Incomes are going down. According to the U.S. Census Bureau, median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009.
Things are getting worse instead of getting better.
And things are going to continue to get worse because the U.S. government goes into more debt every single month, most state and local governments go into more debt every single month, and thanks to America's exploding trade deficit, tens of billions of our national wealth gets transferred out of the United States every single month.
The U.S. economy is dying. There are going to be even more tent cities and even more hungry Americans. The scale of the economic nightmare that we are facing in the years ahead is going to be unimaginable.
So if you get to enjoy a warm dinner and you get to sleep in a warm bed tonight, please consider yourself to be very fortunate. Someday soon you also may find those things cruelly stripped away from you.
Share and Enjoy:
Also, The Economic Collapse blogger is wrong about globalization. The only "solution" would be to construct extremely high tariff barriers. We tried that in the 1930's. Read about the Smoot-Hawley Act and then see where that got us, and everybody else in the world. Every country put up barriers to protect their interests and world trade came to a screeching halt. It took WWII to bail us out of that piece of utter nonsense.
Any way, read this story for the people and the statistics. Those are bad enough. And you can go to his blog to see the videos.
Tent Cities, Homelessness And Soul-Crushing Despair: The Legacy Of Decades Of Government Debt And Mismanagement Of The Economy
For decades, our politicians have been deeply addicted to government debt, they have stood idly by as millions of our jobs have been shipped overseas and they have passed countless business-crushing regulations and they never thought that it would catch up with us. Well, it has. America has been living in the biggest debt bubble in the history of the world, and now that bubble is starting to pop. There has never been such an extended period of unemployment in the United States since the Great Depression, and millions of Americans are losing their homes. Homelessness is skyrocketing, tent cities are popping up everywhere and countless numbers of American families are experiencing the soul-crushing despair that comes from desperately trying to hang on for month after month after month.
Now, because of the horrific hole that our politicians have dug for us, we are faced with some heartbreaking choices. For example, right now the U.S. Congress is deciding whether or not to extend long-term unemployment benefits for the nation's jobless.
Extending those benefits through the end of February would add another $12.5 billion to the U.S. national debt. But not doing it would cut off the only lifeline that many Americans have just in time for the holidays.
The extension of jobless benefits that was passed last summer expires on December 1st. If these long-term benefits are not renewed, approximately 2 million unemployed Americans will lose their checks.
But what can the U.S. Congress do? Just keep going into endless amounts of debt? As I have written about previously, the United States is never going to see another balanced budget ever again under the current system. The U.S. government is flat out broke. Somehow our politicians desperately need to find a way for the federal budget to stop hemorrhaging red ink.
There is no more "extra money" to spend. The U.S. government has piled up the biggest mountain of debt in the history of the world and we are headed for a complete and total economic disaster because of it.
But what are we going to do? Are we going to let millions of Americans starve in the streets?
It's not just the rapidly rising number of homeless Americans that is the problem. Millions of Americans are not going to be able to heat their homes this winter. Millions of others are going to have to choose between buying medicine and buying food because they will not be able to afford both.
How would you like to be at a point where you could not go to the doctor because you knew that you could not pay the deductible?
How would you like to be at a point where you had to decide whether to buy diabetes medicine or to buy macaroni and cheese to feed your family?
More than 42 million Americans are now on food stamps, and that number keeps going up month after month after month.
Just think about that.
42 million Americans would not be able to eat if the U.S. government did not give them handouts.
The safety net is getting awfully crowded.
If you really want to see some soul-crushing desperation, go check out the flood tunnels under the city of Las Vegas. But do not do this alone - it is very dangerous down there. Today, there are hordes of "tunnel people" who call those dark tunnels home. Nobody knows for sure how many people are down there (some people say that it is well into the thousands), but everyone agrees that the number is rapidly growing.
But in many major U.S. cities there are no flood tunnels to go to. Instead, in many areas of the United States huge tent cities have sprouted. The following is a video news report from the BBC about the tent cities that are popping up all over America....
But it is not just "drug addicts" and the "mentally ill" that are going to these tent cities. One anonymous unemployed woman identified only as "Kaynonymous" is a highly educated professional who figures that she will end up in a tent city soon....
"I'm a 99er too. 53, female, single and once on track with an IT career. No one in their right mind would consider me for an IT position after being gone from the field for over 2 years. I have officially been a 99er since May 2010. In Aug. 2010 all of my savings and retirement funds were finally depleted--not only can I no longer make my mortgage payment, I can no longer afford utilities either. I'm just not sure that the 99ers ever had a voice outside of union organizers and even with them it was too little too late. Guess I'll be seeing ya'll in the soup kitchens and tent cities. I do still have my tent..."
So we should just extend the long-term unemployment benefits, right? Well, according to a recent poll commissioned by the National Employment Law Project, 73 percent of Americans want Congress to continue paying out extended unemployment benefits.
But it is not just that simple.
America is broke.
The entire financial system is dying.
The U.S. government desperately needs to stop spending so much money.
But how can we turn our backs on people who are desperately hurting?
There are millions of Americans that have just about reached the end of their ropes. For example, one 43-year-old woman named Jacqueline recently expressed some of the extreme frustration that she is experiencing on her blog....
I am one of the 6 million poor, unemployed middle-aged Americans struggling without any safety net or income other than food stamps. I have resorted to salvaging scrap metal just to survive while keeping up an increasingly hopeless job search. On May 4th, 2010 just three weeks before my 43rd birthday ago I got slapped with a diagnosis of very early stage glaucoma when I had a six year long overdue optical exam for badly needed new glasses. Without treatment — including ophthalmologist’s glaucoma monitoring exams — I will end up blind and permanently disabled. It’s not a matter of “if”, it’s a matter of when.
As a society, we will be judged by how we treat those who are the most vulnerable. It can seem easy to bash those who have lost everything, but someday you might end up in that position. In the following video, police in St. Petersburg, Florida are seen using box cutters to slice up the tents that the homeless were sleeping in....
Hopefully you were deeply disturbed by that video.
We have gotten ourselves into a giant mess, and things are only going to get worse.
Unfortunately, some extremely painful decisions are going to have to be made.
The truth is that we are so deeply in debt that the U.S. government just cannot be spending any extra money right now.
However, we also cannot turn our backs on millions of American families that are going to lose their homes and go hungry if we do not help them.
So what do we do?
What hurting Americans need most of all are not handouts - what they really need are good jobs.
But good jobs are being shipped overseas at a breathtaking pace. The United States has lost approximately 42,400 factories since 2001. The greatest economic machine in the history of the world is literally having its guts ripped out, and most of you kept voting in jokers who supported all of this deindustrialization.
For decades, our politicians kept telling us how wonderful globalization would be for America. We didn't listen when Ross Perot warned us about "the great sucking sound" that these "free trade" agreements would bring about.
Well, look how all of that turned out. In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year. In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.
In case you can't figure it out, that means that 28 billion dollars of our national wealth was transferred to China in just one month.
This is happening month after month after month.
And yet Barack Obama continues to get up and tell us how wonderful globalism is. During his recent trip to India, Barack Obama made the following statement....
"This will keep America on its toes. America is going to have to compete. There is going to be a tug-of-war within the US between those who see globalization as a threat and those who accept we live in a open integrated world, which has challenges and opportunities."
Yes, globalization is a threat. We should have never merged our economy with the economy of China where workers make less than a tenth of what an American worker makes.
Jobs are flooding out of the U.S. and they are flooding into places like India and China where labor is far, far cheaper.
But without good jobs, how in the world are average Americans going to pay the bills?
The answer is that an increasing number of them are not. 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.
Incomes are going down. According to the U.S. Census Bureau, median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009.
Things are getting worse instead of getting better.
And things are going to continue to get worse because the U.S. government goes into more debt every single month, most state and local governments go into more debt every single month, and thanks to America's exploding trade deficit, tens of billions of our national wealth gets transferred out of the United States every single month.
The U.S. economy is dying. There are going to be even more tent cities and even more hungry Americans. The scale of the economic nightmare that we are facing in the years ahead is going to be unimaginable.
So if you get to enjoy a warm dinner and you get to sleep in a warm bed tonight, please consider yourself to be very fortunate. Someday soon you also may find those things cruelly stripped away from you.
Share and Enjoy:
This Story Speaks For Itself
Michele Bachmann has become known as the Queen of the anti-government Tea Baggers, protesting health care reform and slamming every other government handout as “socialism.” But what her followers don’t know is that Rep. Bachmann is also a queen of another kind—a welfare queen. That’s right, the anti-government insurrectionist has taken more than a quarter-million dollars in government handouts thanks to corrupt farming subsidies she has been collecting for at least a decade.
And she’s not the only one who has been padding her bank account with taxpayer money.
Bachmann, of Minnesota, has spent much of this year agitating against health care reform, whipping up the tea-baggers with stories of death panels and rationed health care. She has called for a revolution against what she sees as Barack Obama’s attempted socialist takeover of America, saying presidential policy is “reaching down the throat and ripping the guts out of freedom.”
But data compiled from federal records by Environmental Working Group, a nonprofit watchdog that tracks the recipients of agricultural subsidies in the United States, shows that Bachmann has an inner Marxist that is perfectly at ease with living on the government dole. According to the organization’s records, Bachmann’s family farm received $251,973 in federal subsidies between 1995 and 2006. The farm had been managed by Bachmann’s recently deceased father-in-law and took in roughly $20,000 in 2006 and $28,000 in 2005, with the bulk of the subsidies going to dairy and corn. Both dairy and corn are heavily subsidized—or “socialized”—businesses in America (in 2005 alone, Washington spent $4.8 billion propping up corn prices) and are subject to strict government price controls. These subsidies are at the heart of America’s bizarre planned agricultural economy and as far away from Michele Bachmann’s free-market dream world as Cuba’s free medical system. If American farms such as hers were forced to compete in the global free market, they would collapse.
However, Bachmann doesn’t think other Americans should benefit from such protection and assistance. She voted against every foreclosure relief bill aimed at helping average homeowners (despite the fact that her district had the highest foreclosure rate in Minnesota), saying that bailing out homeowners would be “rewarding the irresponsible while punishing those who have been playing by the rules.” That’s right, the subsidy queen wants the rest of us to be responsible.
Bachmann’s financial disclosure forms indicate that her personal stake in the family farm is worth up to $250,000. They also show that she has been earning income from the farm business, and that the income grew in just a few years from $2,000 to as much as $50,000 for 2008. This has provided her with a second government-subsidized income to go with her job as a government-paid congresswoman who makes $174,000 per year (in addition to having top-notch government medical benefits). “If she has an interest in a farm getting federal subsidy payments, she is benefiting from them,” Sandra Schubert, director of government affairs for the Environmental Working Group, told Gannett News Service in 2007, when the subsidies to Bachmann were first publicly disclosed.
But Bachmann isn’t the only welfare recipient on Capitol Hill. As it turns out, there is a filthy-rich class of absentee farmers—both in and out of Congress—who demand free-market rules by day and collect their government welfare checks in the mail at night, payments that subsidize businesses that otherwise would fail. Over the past couple of decades, welfare for the super-wealthy seems to be the only kind of welfare our society tolerates.
In the 11 years for which the Environmental Working Group has compiled data, the federal government paid out a total of $178 billion to American farmers. We’re not talking about the Joads here. The bulk of subsidies go to the wealthy, not small farmers, as Ken Cook, the group’s president, explained to the Central Valley (Calif.) Business Times:
American taxpayers have been writing farm subsidy checks to wealthy absentee land owners, state prison systems, universities, public corporations, and very large, well-heeled farm business operations without the government so much as asking the beneficiaries if they need our money. … Even if you live smack in the middle of a big city, type in a ZIP code and you’ll find farm subsidy recipients.
Chuck Grassley, the longtime Republican senator from Iowa who warns his constituents of Obama’s “trend toward socialism,” has seen his family collect $1 million in federal handouts over an 11-year period, with Grassley’s son receiving $699,248 and the senator himself pocketing $238,974. Even Grassley’s grandson is learning to ride through life on training wheels, snagging $5,964 in 2005 and $2,363 in 2006. In the Grassley family they learn early how to enjoy other people’s money.
Sen. Grassley railed against government intervention in the health care market, telling The Washington Times, “Whenever the government does more … that’s a movement toward socialism.” As the top Republican on the Senate Finance Committee, he ought to know, especially because the government has done more for him and his kin than for Americans struggling with high medical bills and mortgages. Even the free-market think tank the Heritage Foundation criticized Grassley on his deep connections to farming interests and his stubborn lack of transparency.
Then there’s Sen. Sam Brownback, R-Kan., whose family has been on the government take for at least the past 11 years, pocketing some $500,000. The senator recently held a “prayercast” with Michele Bachmann to beseech God to kill health care reform as soon as possible because it would bring an evil socialist spirit into America. Like Bachmann, Brownback has a fierce belief in God, the free market and a two-year limit on all welfare benefits—unless it’s welfare to rich Republicans who don’t need it.
Not surprisingly, Blue Dog Democrats are on board with this welfare-for-the-rich thing. Max Baucus, the fiscally conservative Democratic senator from Montana who did his best to sabotage the health care reform process before it ever began, collected $250,000 in taxpayer subsidies to his family’s farm while fighting to keep Americans at the mercy of free-market health insurance. Sen. Blanche Lincoln of Arkansas, another Democrat, also helped hold the line against so-called socialized medicine for Americans who need assistance, even though her family farm business follows the socialized subsidy playbook to a T. The Lincolns pocketed $715,000 in farm subsidies over a 10-year period, and the senator even admitted to using $10,000 of it as petty cash in 2007. Democratic Rep. Stephanie Sandlin of South Dakota stayed true to her conservative free-market roots by voting against the public option. Meanwhile, her daddy, Lars Herseth, a former South Dakota legislator, collected a welfare jackpot of $844,725 paid out between 1995 and 2006.
That’s just the way the game is played these days. Republicans and conservative Democrats bitch and moan about the allegedly Marxist underpinnings of universal health care and do everything they can to deny struggling Americans access to social services. Meanwhile, many of them profit off taxpayers in a massive welfare program.
Farm subsidies have become so corrupt that payments sometimes go to dead people for years. Federal farm subsidies, which were originally meant to help struggling farmers survive, are now little more than taxpayer robbery, taking taxpayer wealth from working Americans and sending it to the have-mores. According to 11 years’ worth of Environmental Working Group data that tracks $200 billion in subsidies, the wealthiest 10 percent of “farmers” have collected 75 percent of the money. That’s exactly the kind of socialism that Rep. Bachmann and her elite ilk like.
And she’s not the only one who has been padding her bank account with taxpayer money.
Bachmann, of Minnesota, has spent much of this year agitating against health care reform, whipping up the tea-baggers with stories of death panels and rationed health care. She has called for a revolution against what she sees as Barack Obama’s attempted socialist takeover of America, saying presidential policy is “reaching down the throat and ripping the guts out of freedom.”
But data compiled from federal records by Environmental Working Group, a nonprofit watchdog that tracks the recipients of agricultural subsidies in the United States, shows that Bachmann has an inner Marxist that is perfectly at ease with living on the government dole. According to the organization’s records, Bachmann’s family farm received $251,973 in federal subsidies between 1995 and 2006. The farm had been managed by Bachmann’s recently deceased father-in-law and took in roughly $20,000 in 2006 and $28,000 in 2005, with the bulk of the subsidies going to dairy and corn. Both dairy and corn are heavily subsidized—or “socialized”—businesses in America (in 2005 alone, Washington spent $4.8 billion propping up corn prices) and are subject to strict government price controls. These subsidies are at the heart of America’s bizarre planned agricultural economy and as far away from Michele Bachmann’s free-market dream world as Cuba’s free medical system. If American farms such as hers were forced to compete in the global free market, they would collapse.
However, Bachmann doesn’t think other Americans should benefit from such protection and assistance. She voted against every foreclosure relief bill aimed at helping average homeowners (despite the fact that her district had the highest foreclosure rate in Minnesota), saying that bailing out homeowners would be “rewarding the irresponsible while punishing those who have been playing by the rules.” That’s right, the subsidy queen wants the rest of us to be responsible.
Bachmann’s financial disclosure forms indicate that her personal stake in the family farm is worth up to $250,000. They also show that she has been earning income from the farm business, and that the income grew in just a few years from $2,000 to as much as $50,000 for 2008. This has provided her with a second government-subsidized income to go with her job as a government-paid congresswoman who makes $174,000 per year (in addition to having top-notch government medical benefits). “If she has an interest in a farm getting federal subsidy payments, she is benefiting from them,” Sandra Schubert, director of government affairs for the Environmental Working Group, told Gannett News Service in 2007, when the subsidies to Bachmann were first publicly disclosed.
But Bachmann isn’t the only welfare recipient on Capitol Hill. As it turns out, there is a filthy-rich class of absentee farmers—both in and out of Congress—who demand free-market rules by day and collect their government welfare checks in the mail at night, payments that subsidize businesses that otherwise would fail. Over the past couple of decades, welfare for the super-wealthy seems to be the only kind of welfare our society tolerates.
In the 11 years for which the Environmental Working Group has compiled data, the federal government paid out a total of $178 billion to American farmers. We’re not talking about the Joads here. The bulk of subsidies go to the wealthy, not small farmers, as Ken Cook, the group’s president, explained to the Central Valley (Calif.) Business Times:
American taxpayers have been writing farm subsidy checks to wealthy absentee land owners, state prison systems, universities, public corporations, and very large, well-heeled farm business operations without the government so much as asking the beneficiaries if they need our money. … Even if you live smack in the middle of a big city, type in a ZIP code and you’ll find farm subsidy recipients.
Chuck Grassley, the longtime Republican senator from Iowa who warns his constituents of Obama’s “trend toward socialism,” has seen his family collect $1 million in federal handouts over an 11-year period, with Grassley’s son receiving $699,248 and the senator himself pocketing $238,974. Even Grassley’s grandson is learning to ride through life on training wheels, snagging $5,964 in 2005 and $2,363 in 2006. In the Grassley family they learn early how to enjoy other people’s money.
Sen. Grassley railed against government intervention in the health care market, telling The Washington Times, “Whenever the government does more … that’s a movement toward socialism.” As the top Republican on the Senate Finance Committee, he ought to know, especially because the government has done more for him and his kin than for Americans struggling with high medical bills and mortgages. Even the free-market think tank the Heritage Foundation criticized Grassley on his deep connections to farming interests and his stubborn lack of transparency.
Then there’s Sen. Sam Brownback, R-Kan., whose family has been on the government take for at least the past 11 years, pocketing some $500,000. The senator recently held a “prayercast” with Michele Bachmann to beseech God to kill health care reform as soon as possible because it would bring an evil socialist spirit into America. Like Bachmann, Brownback has a fierce belief in God, the free market and a two-year limit on all welfare benefits—unless it’s welfare to rich Republicans who don’t need it.
Not surprisingly, Blue Dog Democrats are on board with this welfare-for-the-rich thing. Max Baucus, the fiscally conservative Democratic senator from Montana who did his best to sabotage the health care reform process before it ever began, collected $250,000 in taxpayer subsidies to his family’s farm while fighting to keep Americans at the mercy of free-market health insurance. Sen. Blanche Lincoln of Arkansas, another Democrat, also helped hold the line against so-called socialized medicine for Americans who need assistance, even though her family farm business follows the socialized subsidy playbook to a T. The Lincolns pocketed $715,000 in farm subsidies over a 10-year period, and the senator even admitted to using $10,000 of it as petty cash in 2007. Democratic Rep. Stephanie Sandlin of South Dakota stayed true to her conservative free-market roots by voting against the public option. Meanwhile, her daddy, Lars Herseth, a former South Dakota legislator, collected a welfare jackpot of $844,725 paid out between 1995 and 2006.
That’s just the way the game is played these days. Republicans and conservative Democrats bitch and moan about the allegedly Marxist underpinnings of universal health care and do everything they can to deny struggling Americans access to social services. Meanwhile, many of them profit off taxpayers in a massive welfare program.
Farm subsidies have become so corrupt that payments sometimes go to dead people for years. Federal farm subsidies, which were originally meant to help struggling farmers survive, are now little more than taxpayer robbery, taking taxpayer wealth from working Americans and sending it to the have-mores. According to 11 years’ worth of Environmental Working Group data that tracks $200 billion in subsidies, the wealthiest 10 percent of “farmers” have collected 75 percent of the money. That’s exactly the kind of socialism that Rep. Bachmann and her elite ilk like.
Could This Be Your Story?
One family's plunge from the middle class into poverty
By Wil Haygood
Washington Post Staff Writer
Friday, November 19, 2010; 12:31 AM
FORT MYERS, FLA. -- Chrissanda Walker's bourbon-glazed chicken is just out of the oven. The bread pudding is finished. The collard greens worry her, though; she doesn't want to overcook them. Walker looks at the clock. It's 10 a.m. She's been on her feet since 6.
Walker used to make $100,000 a year as a nursing home executive until she lost her job a year and a half ago. Unable to find a new one, she shed her business suits and high heels and put on an apron and soft-soled shoes. This year, she and her daughter are living on $11,000: her unemployment benefits plus whatever she can earn selling home-cooked dinners for $10 apiece.
Her American Dream has taken a punch to the gut. "I never thought I'd be in a situation like this," she says, smoke from the cooking swirling about her. "My friends say to me: 'Listen to the Lord, Chris.' I say, 'No, I have to have a paycheck.' "
The Census Bureau recently reported that the poverty rate in the United States rose to 14.3 percent last year, the highest level in more than 50 years.
Texas and Florida saw the most people fall below the line. In Florida alone, 323,000 people became newly poor last year, bringing the state's poverty total to 2.7 million.
The numbers tell another tale as well: Nationwide, in black households such as Walker's, income plunged an average of 4.4 percent in 2009, almost three times the drop among whites. The number of blacks living below the official poverty line - $21,756 for a family of four - increased by 7 percent in just one year.
"The whole idea in an improving economy is that everyone will benefit," says Marc Morial, president of the National Urban League. "When the train speeds up, everything does improve, but blacks are still in the caboose. When it slows down - in a bad economy - blacks fall out of the caboose."
Now Walker, 50, feels a part of her future has been snatched. Gone like an old breeze. This year, the last dime of her savings vanished. Her health insurance is a thing of the past.
She has had some kind of job - from babysitter to server at a fast-food restaurant - since she was 12 years old. She has always believed in the work ethic. She retains the ethic, but the work is gone.
"My parents had always worked," she says. "They always provided for us. It was never a 'no.' It's what they always instilled in us: Do your best, strive for excellence. That's why all of this is so hard for me," she says, her words struggling to emerge through the sobs.
Sabrina Goodwin Monday, a college classmate, has held some long, late-night phone conversations with Walker. "It's hard for her to believe in the American Dream anymore because there's nothing dreamy about her life anymore."
'Tired in the fight'
Walker's mother, Betty, was a nurse and her father, Louis, worked for the power company. Their only safety net was their own industriousness. Betty Walker died 11 years ago of Lou Gehrig's disease. Louis Walker, now 70, retired after her death. But lately he has gone back to work, driving a tractor-trailer between Florida, Georgia and the Carolinas. He has bills to pay.
All of the Walker children - Chrissanda; Louis Jr., 48, who works for Federal Express; Sonya, 47, a supervisory probation officer; and Shawn, 42, who works in water-waste management - made their parents proud. But Chrissanda had the most professional success and her financial fall has rattled the family. Many now watch her with a there-but-for-the-grace-of-God-go-I gaze. "She's not the same person that she was," Sonya says. "I see her getting tired in the fight."
In a situation where a family success story is struggling, other wage earners reevaluate their own position. "They begin to think: 'We don't have anybody to turn to now if our situation gets worse," says Margaret Simms, director of the Low-Income Working Families project at the Washington-based Urban Institute. "And that becomes frightening."
'Painful days'
Walker's climb in the nursing home industry began after she graduated from Tennessee State University with a degree in health-care administration and planning. She worked at facilities in Alabama and Tennessee before returning to the Fort Myers area in the late 1980s. "I can go to a challenged building and bring it out of trouble," she says.
"When you walked into one of her nursing homes, you'd see how she always gave everyone a personal gift during the holidays," Sonya says. "My sister would miss half of our Christmases to go back to the nursing home."
In 2007, Walker attained a career goal when she was named administrator of long-term care at Lehigh Acres Health and Rehabilitation Center in a nearby town. Among her responsibilities were marketing, public relations, financial management and staff development. She was appointed to community boards. She purchased nice clothes for her daughter, Ravean Newton. She mentored at-risk youth. She took Sasha, her Shih Tzu, to the groomer almost weekly. She attended swanky events with her Delta Sigma Theta sorority sisters.
Then came March 20, 2009. The day she was fired.
"It was such a shocker," she says. "I could see if I had done something wrong. I had just finished an eight-month construction project for the facility."
Officials at Greystone Healthcare Management, which owns the Lehigh Acres facility, did not return calls seeking comment.
Nadine Kettle, now a nurse at Gulf Coast Medical Center in Fort Myers, worked with Walker at the Lehigh Acres facility. "At staff meetings, managers were always talking about how good she was," Kettle says. "I don't think she had any inkling the company was going to part ways with her."
Walker fretted over how to tell her family and friends. She worried about how it would affect Ravean.
This past May, the junior dance was approaching. Ravean had spotted a beautiful dress. But it cost $500. "I said, 'Ravean, you can't get that dress. We are down to nothing.' "
In 20 months, she had gone from flourishing American Dream to Down to Nothing.
"There have been some painful days," Chrissanda Walker says. "I should have been back working by now. I've had to hold on to my faith. I've gone on job interviews. I know I'm qualified. My record speaks for itself."
She sighs and drops her head.
At a pre-Christmas event last year, some of Walker's sisters in Delta Sigma Theta were discussing their annual holiday charitable effort. Christine Rahmings, 54, president of the local chapter, hatched a plan to help Walker. "My husband Louis would say: 'How can you all help all these other people when one of your own is hurting?" she recalls. Once the gift cards were collected at the sorority planning event, Rahmings stood up and made a speech that ended with the basket's contents being given to Walker.
A short while later, Walker started making meals. During the Depression, many American women, trying to stave off ruin, went to their kitchens and emerged selling dinners - from their porches, windowsills, back yards. "It reminded me of the black women who used to sell dinners to help build churches," Rahmings says. "Chris was selling dinners, though, to pay her utilities, or to get something for Ravean. You've heard that expression: 'By any means necessary.' "
'Something out there'
It's a Friday night and there's a football game. Ravean, 18, is on the cheerleading squad at Fort Myers High School. Ravean, who has a part-time job at Sears, feared she wouldn't make it to cheerleading camp last summer but family members chipped in, helping with the cost.
"Ravean is a very expensive child," Walker says. "In a way, we've made this monster. But it's no different than the way our parents treated us."
It's a pretty night, warm, lit with both moonlight and klieg lights.
Walker has been looking forward to the game. Something to get her mind off the economy, off checking want ads, off collard greens and glazed chicken.
She walks slowly toward the bleachers, limping a little. She was in the emergency room two days ago. A nerve in her back has affected her foot. Those who care about her give their own diagnosis: stress.
She takes a seat but her soliloquy starts right up as acquaintances walk by: "This girl coming is a friend of Ravean's. Her father just lost his job." Then: "See that girl over there? One of her parents is laid off."
On the field, Fort Myers High is falling behind. Kelly Newson, an old high school classmate of Walker's, takes a seat behind her. He starts right in: "You find a job yet?" Walker shakes her head no.
Riverdale scores again.
Newson goes on: "If God wants you to go North, you go North. You can't go Northwest if he wants you to go North, my sister." Walker nods, not sure about the cryptic counseling. "I had a relative in the nursing home Chris was at," Newson begins again, "and she was really happy there. Chris took care of the place. It was clean. I just can't understand why she can't get a job."
The game is over. Riverdale beats Fort Myers, 39 to 20. Newson climbs down off the bleachers and says: "You got to keep looking, Chris. There's something out there for you. I'll be going now. And listen, if I don't see you again down here, I'll see you up there." He points toward heaven. Walker nods.
'What about Christmas?'
The next morning, there's a knock at Walker's door. Maurice Robinson, an airline steward, is home for the weekend and has come to help deliver meals. He could be a character in a Zora Neale Hurston novel: a kind man who grew up in the neighborhood and was always running in and out of Betty and Louis Walker's home. "This is the South," Robinson says. "We're old school. To this very day - God rest her soul - it's always been a privilege to come to Ms. Betty's house."
Robinson tries to help Walker stay optimistic. "We keep saying to Chris: 'This too shall pass.' I came back to town this weekend to say to her: 'Girl, let's do something. Let's get prayed up.' "
He's already been doing publicity for today's dining experience. "I done already put fliers up in the beauty salons."
Walker is in the kitchen. "I'm going to cut my portions back," she tells Robinson. "I usually have big portions. There's a recession."
Walker is running behind; her deliveries should have gone out the door 30 minutes ago. "See," Robinson says, "you always say you don't need no help. That's a lie. That's why I keep coming by. Now those ladies at the beauty parlor gonna be hungry, Chris! And when they get to eating, other ladies come in and see that - and they gonna want to eat, too."
"Maurice," Walker says, "I'm just not gonna be giving no big portions."
"I told you to stop narrating to me," he says. "Do what you gotta do, baby. How you think Paula Deen got started? She wasn't always lights, camera, action."
Walker allows herself a smile.
Six dinners are loaded up. Maurice drives; Ravean holds the meals upright. They travel less than a mile to Sister's Beauty Salon.
"Y'all late," pipes Lynn Smith, one of the salon employees, as they come through the door.
"Y'all didn't call me about selling dinners," a lady under a hair dryer calls out. Ravean scoots over and takes down her order and phone number.
Ten minutes later, they're at Lee County Emergency Management, delivering a meal to Shedrick Whitfield, a fire and ambulance dispatcher who is a hairstylist on the side. He's one of a trio of "hair angels" who make it possible for Walker to get her hair done every week. He says he owes a debt to her. "When I was jobless for eight months, she would feed me," he says. "And whenever I did her hair - when she did have a job - she would always overtip me."
Back home, Walker is in the kitchen, wondering why the phone hasn't been ringing with more orders. It's inching toward noon. "I've got to send out some more text messages," she says.
Robinson takes another dinner and delivers it 10 miles away. He comes back, and says: "Baby, we can't be taking one dinner all the way out there. Tell them people next time they want a dinner they got to order at least six."
By 4 o'clock, Walker has sold 15 dinners. Minnie Jackson, a retired nurse, has come by to pick up a sweet potato pie, and Walker asks her to do a quick diagnosis on her foot and leg. "Nothing's fractured," Jackson says.
A few more dinners are sold. By day's end, Chrissanda Walker, searching for her American Dream through pots of Southern cuisine, has grossed a little more than $220.
She recently received an extension on her unemployment benefits. But they are set to run out again on Dec. 4. "What about Christmas? What are people all over the country to do?" she wonders.
She had a job interview at a nursing home not long ago. The interviewer glowed about her resume. She called a slew of friends. "I said, 'Y'all, we got to be praying.' "
They went with another candidate instead.
Wishes sent aloft
Walker doesn't blame politicians or Wall Street for her situation. She refers to it as "a storm in my life, that she will overcome. There is an overriding regret: "I look at my life and wish I would have saved more money."
Not long ago, Walker was attending a luncheon with some local professional women. Only one was jobless. They laughed and nibbled on refreshments. Then they moved outdoors for an exercise: Each wrote down her immediate wishes on a scrap of paper and put it in a balloon. The balloons were inflated and tied off with the wishes inside. Then they were let go.
In her red balloon, Chrissanda Walker's wishes were clear and direct. "To have grace and mercy. To have finances in order. To have a job."
She watched as the breeze lifted her balloon up and away.
By Wil Haygood
Washington Post Staff Writer
Friday, November 19, 2010; 12:31 AM
FORT MYERS, FLA. -- Chrissanda Walker's bourbon-glazed chicken is just out of the oven. The bread pudding is finished. The collard greens worry her, though; she doesn't want to overcook them. Walker looks at the clock. It's 10 a.m. She's been on her feet since 6.
Walker used to make $100,000 a year as a nursing home executive until she lost her job a year and a half ago. Unable to find a new one, she shed her business suits and high heels and put on an apron and soft-soled shoes. This year, she and her daughter are living on $11,000: her unemployment benefits plus whatever she can earn selling home-cooked dinners for $10 apiece.
Her American Dream has taken a punch to the gut. "I never thought I'd be in a situation like this," she says, smoke from the cooking swirling about her. "My friends say to me: 'Listen to the Lord, Chris.' I say, 'No, I have to have a paycheck.' "
The Census Bureau recently reported that the poverty rate in the United States rose to 14.3 percent last year, the highest level in more than 50 years.
Texas and Florida saw the most people fall below the line. In Florida alone, 323,000 people became newly poor last year, bringing the state's poverty total to 2.7 million.
The numbers tell another tale as well: Nationwide, in black households such as Walker's, income plunged an average of 4.4 percent in 2009, almost three times the drop among whites. The number of blacks living below the official poverty line - $21,756 for a family of four - increased by 7 percent in just one year.
"The whole idea in an improving economy is that everyone will benefit," says Marc Morial, president of the National Urban League. "When the train speeds up, everything does improve, but blacks are still in the caboose. When it slows down - in a bad economy - blacks fall out of the caboose."
Now Walker, 50, feels a part of her future has been snatched. Gone like an old breeze. This year, the last dime of her savings vanished. Her health insurance is a thing of the past.
She has had some kind of job - from babysitter to server at a fast-food restaurant - since she was 12 years old. She has always believed in the work ethic. She retains the ethic, but the work is gone.
"My parents had always worked," she says. "They always provided for us. It was never a 'no.' It's what they always instilled in us: Do your best, strive for excellence. That's why all of this is so hard for me," she says, her words struggling to emerge through the sobs.
Sabrina Goodwin Monday, a college classmate, has held some long, late-night phone conversations with Walker. "It's hard for her to believe in the American Dream anymore because there's nothing dreamy about her life anymore."
'Tired in the fight'
Walker's mother, Betty, was a nurse and her father, Louis, worked for the power company. Their only safety net was their own industriousness. Betty Walker died 11 years ago of Lou Gehrig's disease. Louis Walker, now 70, retired after her death. But lately he has gone back to work, driving a tractor-trailer between Florida, Georgia and the Carolinas. He has bills to pay.
All of the Walker children - Chrissanda; Louis Jr., 48, who works for Federal Express; Sonya, 47, a supervisory probation officer; and Shawn, 42, who works in water-waste management - made their parents proud. But Chrissanda had the most professional success and her financial fall has rattled the family. Many now watch her with a there-but-for-the-grace-of-God-go-I gaze. "She's not the same person that she was," Sonya says. "I see her getting tired in the fight."
In a situation where a family success story is struggling, other wage earners reevaluate their own position. "They begin to think: 'We don't have anybody to turn to now if our situation gets worse," says Margaret Simms, director of the Low-Income Working Families project at the Washington-based Urban Institute. "And that becomes frightening."
'Painful days'
Walker's climb in the nursing home industry began after she graduated from Tennessee State University with a degree in health-care administration and planning. She worked at facilities in Alabama and Tennessee before returning to the Fort Myers area in the late 1980s. "I can go to a challenged building and bring it out of trouble," she says.
"When you walked into one of her nursing homes, you'd see how she always gave everyone a personal gift during the holidays," Sonya says. "My sister would miss half of our Christmases to go back to the nursing home."
In 2007, Walker attained a career goal when she was named administrator of long-term care at Lehigh Acres Health and Rehabilitation Center in a nearby town. Among her responsibilities were marketing, public relations, financial management and staff development. She was appointed to community boards. She purchased nice clothes for her daughter, Ravean Newton. She mentored at-risk youth. She took Sasha, her Shih Tzu, to the groomer almost weekly. She attended swanky events with her Delta Sigma Theta sorority sisters.
Then came March 20, 2009. The day she was fired.
"It was such a shocker," she says. "I could see if I had done something wrong. I had just finished an eight-month construction project for the facility."
Officials at Greystone Healthcare Management, which owns the Lehigh Acres facility, did not return calls seeking comment.
Nadine Kettle, now a nurse at Gulf Coast Medical Center in Fort Myers, worked with Walker at the Lehigh Acres facility. "At staff meetings, managers were always talking about how good she was," Kettle says. "I don't think she had any inkling the company was going to part ways with her."
Walker fretted over how to tell her family and friends. She worried about how it would affect Ravean.
This past May, the junior dance was approaching. Ravean had spotted a beautiful dress. But it cost $500. "I said, 'Ravean, you can't get that dress. We are down to nothing.' "
In 20 months, she had gone from flourishing American Dream to Down to Nothing.
"There have been some painful days," Chrissanda Walker says. "I should have been back working by now. I've had to hold on to my faith. I've gone on job interviews. I know I'm qualified. My record speaks for itself."
She sighs and drops her head.
At a pre-Christmas event last year, some of Walker's sisters in Delta Sigma Theta were discussing their annual holiday charitable effort. Christine Rahmings, 54, president of the local chapter, hatched a plan to help Walker. "My husband Louis would say: 'How can you all help all these other people when one of your own is hurting?" she recalls. Once the gift cards were collected at the sorority planning event, Rahmings stood up and made a speech that ended with the basket's contents being given to Walker.
A short while later, Walker started making meals. During the Depression, many American women, trying to stave off ruin, went to their kitchens and emerged selling dinners - from their porches, windowsills, back yards. "It reminded me of the black women who used to sell dinners to help build churches," Rahmings says. "Chris was selling dinners, though, to pay her utilities, or to get something for Ravean. You've heard that expression: 'By any means necessary.' "
'Something out there'
It's a Friday night and there's a football game. Ravean, 18, is on the cheerleading squad at Fort Myers High School. Ravean, who has a part-time job at Sears, feared she wouldn't make it to cheerleading camp last summer but family members chipped in, helping with the cost.
"Ravean is a very expensive child," Walker says. "In a way, we've made this monster. But it's no different than the way our parents treated us."
It's a pretty night, warm, lit with both moonlight and klieg lights.
Walker has been looking forward to the game. Something to get her mind off the economy, off checking want ads, off collard greens and glazed chicken.
She walks slowly toward the bleachers, limping a little. She was in the emergency room two days ago. A nerve in her back has affected her foot. Those who care about her give their own diagnosis: stress.
She takes a seat but her soliloquy starts right up as acquaintances walk by: "This girl coming is a friend of Ravean's. Her father just lost his job." Then: "See that girl over there? One of her parents is laid off."
On the field, Fort Myers High is falling behind. Kelly Newson, an old high school classmate of Walker's, takes a seat behind her. He starts right in: "You find a job yet?" Walker shakes her head no.
Riverdale scores again.
Newson goes on: "If God wants you to go North, you go North. You can't go Northwest if he wants you to go North, my sister." Walker nods, not sure about the cryptic counseling. "I had a relative in the nursing home Chris was at," Newson begins again, "and she was really happy there. Chris took care of the place. It was clean. I just can't understand why she can't get a job."
The game is over. Riverdale beats Fort Myers, 39 to 20. Newson climbs down off the bleachers and says: "You got to keep looking, Chris. There's something out there for you. I'll be going now. And listen, if I don't see you again down here, I'll see you up there." He points toward heaven. Walker nods.
'What about Christmas?'
The next morning, there's a knock at Walker's door. Maurice Robinson, an airline steward, is home for the weekend and has come to help deliver meals. He could be a character in a Zora Neale Hurston novel: a kind man who grew up in the neighborhood and was always running in and out of Betty and Louis Walker's home. "This is the South," Robinson says. "We're old school. To this very day - God rest her soul - it's always been a privilege to come to Ms. Betty's house."
Robinson tries to help Walker stay optimistic. "We keep saying to Chris: 'This too shall pass.' I came back to town this weekend to say to her: 'Girl, let's do something. Let's get prayed up.' "
He's already been doing publicity for today's dining experience. "I done already put fliers up in the beauty salons."
Walker is in the kitchen. "I'm going to cut my portions back," she tells Robinson. "I usually have big portions. There's a recession."
Walker is running behind; her deliveries should have gone out the door 30 minutes ago. "See," Robinson says, "you always say you don't need no help. That's a lie. That's why I keep coming by. Now those ladies at the beauty parlor gonna be hungry, Chris! And when they get to eating, other ladies come in and see that - and they gonna want to eat, too."
"Maurice," Walker says, "I'm just not gonna be giving no big portions."
"I told you to stop narrating to me," he says. "Do what you gotta do, baby. How you think Paula Deen got started? She wasn't always lights, camera, action."
Walker allows herself a smile.
Six dinners are loaded up. Maurice drives; Ravean holds the meals upright. They travel less than a mile to Sister's Beauty Salon.
"Y'all late," pipes Lynn Smith, one of the salon employees, as they come through the door.
"Y'all didn't call me about selling dinners," a lady under a hair dryer calls out. Ravean scoots over and takes down her order and phone number.
Ten minutes later, they're at Lee County Emergency Management, delivering a meal to Shedrick Whitfield, a fire and ambulance dispatcher who is a hairstylist on the side. He's one of a trio of "hair angels" who make it possible for Walker to get her hair done every week. He says he owes a debt to her. "When I was jobless for eight months, she would feed me," he says. "And whenever I did her hair - when she did have a job - she would always overtip me."
Back home, Walker is in the kitchen, wondering why the phone hasn't been ringing with more orders. It's inching toward noon. "I've got to send out some more text messages," she says.
Robinson takes another dinner and delivers it 10 miles away. He comes back, and says: "Baby, we can't be taking one dinner all the way out there. Tell them people next time they want a dinner they got to order at least six."
By 4 o'clock, Walker has sold 15 dinners. Minnie Jackson, a retired nurse, has come by to pick up a sweet potato pie, and Walker asks her to do a quick diagnosis on her foot and leg. "Nothing's fractured," Jackson says.
A few more dinners are sold. By day's end, Chrissanda Walker, searching for her American Dream through pots of Southern cuisine, has grossed a little more than $220.
She recently received an extension on her unemployment benefits. But they are set to run out again on Dec. 4. "What about Christmas? What are people all over the country to do?" she wonders.
She had a job interview at a nursing home not long ago. The interviewer glowed about her resume. She called a slew of friends. "I said, 'Y'all, we got to be praying.' "
They went with another candidate instead.
Wishes sent aloft
Walker doesn't blame politicians or Wall Street for her situation. She refers to it as "a storm in my life, that she will overcome. There is an overriding regret: "I look at my life and wish I would have saved more money."
Not long ago, Walker was attending a luncheon with some local professional women. Only one was jobless. They laughed and nibbled on refreshments. Then they moved outdoors for an exercise: Each wrote down her immediate wishes on a scrap of paper and put it in a balloon. The balloons were inflated and tied off with the wishes inside. Then they were let go.
In her red balloon, Chrissanda Walker's wishes were clear and direct. "To have grace and mercy. To have finances in order. To have a job."
She watched as the breeze lifted her balloon up and away.
Thursday, November 18, 2010
More Change We Can Believe In, Or NOT!
Settling With S.E.C., Rattner Is Sued by Cuomo
By PETER LATTMAN
Steven Rattner’s settlement will cap an inquiry into kickbacks involving New York’s pension fund.Andrew Harrer/Bloomberg News Steven L. Rattner has agreed to pay $6.2 million in disgorgement and penalties in settling with the S.E.C.
Andrew M. Cuomo, the attorney general and governor-elect of New York, sued the financier Steven L. Rattner on Thursday over his role in kickbacks to secure investments from the New York State pension fund.
The attorney general filed two lawsuits, seeking at least $26 million from Mr. Rattner and a lifetime ban for Mr. Rattner from the securities industry in New York.
Mr. Rattner left his private equity firm, Quadrangle Group, last year to head the Obama administration’s efforts to overhaul the auto industry. He responded to the attorney general’s lawsuit in a statement to DealBook on Thursday morning, addressing charges brought against him under the Martin Act, a sweeping state securities law.
“While settling with the S.E.C. begins the process of putting this matter behind me, I will not be bullied simply because the attorney general’s office prefers political considerations instead of a reasoned assessment of the facts,” Mr. Rattner said. “This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity — and I certainly did not violate the Martin Act. That’s why I intend to clear my name by defending myself vigorously against this politically motivated lawsuit.”
Soon after Mr. Rattner made his statement, a spokesman for the attorney general’s office had a sharp retort: “Mr. Rattner now has a lot to say as he spins his friends in the press, but when he was questioned under oath about his pension fund dealings he was much less talkative, taking the Fifth and refusing to answer questions 68 different times. Anyone who reads the extensive facts laid out in our complaint will understand that Rattner’s claims that he did nothing wrong are ridiculous and belied by the fact that he is paying the S.E.C. $6 million today.”
Mr. Rattner is accused of paying Hank Morris, a top adviser to a former New York State comptroller, Alan G. Hevesi, for his help in securing investments from the $135 billion New York pension fund. According to earlier reports, Mr. Morris is expected to plead guilty to charges related to the case.
Also Thursday, the Securities and Exchange Commission announced a settlement with Mr. Rattner in which he agreed to pay $6.2 million in disgorgement and penalties. He will also be barred from “associating with any investment adviser or broker dealer” for two years.
“Rattner delivered special favors and conducted sham transactions that corrupted the [pension fund's] investment process,” said David Rosenfeld, associate director of the S.E.C.’s New York regional office.
Mr. Rattner, 58 years old, is among the most prominent individuals ensnared by a nationwide inquiry over the investment activities of state pension funds. The so-called pay-to-play investigations, which have been conducted in states including New York, California, New Mexico and Illinois, have focused on the role of midddlemen who are paid fees by money-management firms for helping secure investments from state pension funds. Those payments can be illegal if they are bribes or kickbacks masked as legitimate payments.
Mr. Cuomo’s investigation has led to criminal charges and seven guilty pleas, including one from Mr. Hevesi, who as comptroller had sole control over the state pension fund.
The timing of the attorney’s general lawsuit against Mr. Rattner is especially awkward as it comes on the day of the initial public offering of General Motors. Mr. Rattner had been speaking publicly all week about the revival of G.M. and appeared on CNBC Thursday morning to talk about the I.P.O.
“The attorney general and the S.E.C. have the same information,” said Davidson Goldin, a spokesman for Mr. Rattner. “So picking the day of the G.M. I.P.O after about 500 possible days further demonstrates that the attorney puts politics and maximizing his own media coverage ahead of the public interest.”
The attorney general’s action focuses on Mr. Rattner’s hiring of Mr. Morris to win business from the New York fund, as well as the help Mr. Rattner provided to the brother of a top pension fund official in distributing ”Chooch,” a low-budget movie, through a DVD company owned by the Quadrangle, a private equity firm Mr. Rattner co-founded a decade ago. The complaint also accuses Mr. Rattner of connecting the pension fund official’s brother to IFC, a cable network in which Quadrangle was an investor and on whose board Mr. Rattner sat.
Mr. Cuomo also claims that Mr. Rattner, a major Democratic fund-raiser, arranged for contributions totaling $50,000 to Mr. Hevesi’s re-election campaign, contributions that the attorney general says caused the pension fund to increase its investment with Quadrangle to $150 million, from $100 million. These contributions were made through third parties to conceal Mr. Rattner’s role, Mr. Cuomo’s office says.
“Steve Rattner was willing to do whatever it took to get his hands on pension fund money including paying kickbacks, orchestrating a movie deal and funneling campaign contributions,” Mr. Cuomo said. “Through these lawsuits, we will recover his ill-gotten gains and hold Rattner accountable.”
Last month, Mr. Rattner rejected a settlement offer from Mr. Cuomo that would have had him pay a $20 million penalty. Mr. Rattner and his lawyers have said that amount sought by the attorney general is disproportionate to the money he earned at Quadrangle and to the penalties paid by other executives ensnared by the pension fund investigation.
Mr. Rattner’s team also believes that his compensation related to any income Quadrangle received from the New York State pension fund investment is fully disgorged by the S.E.C. settlement, according to a person familiar with Mr. Rattner’s thinking.
Quadrangle settled with authorities this year, admitting to paying Mr. Morris for his help in securing investments from the New York pension fund. Mr. Morris pleaded guilty in November to selling access to the fund.
The firm paid a $12 million settlement and, as part of the deal, disavowed Mr. Rattner’s actions as ”inappropriate, wrong and unethical.”
Lawyers for Mr. Rattner have disputed Quadrangle’s characterizations, and on Thursday, they fired back at his former partner.
In a filing in New York state court, Mr. Rattner requested documents related to the New York pension-fund inquiry as part of an arbitration claim that he is pursuing against his former firm. The claim seeks damages against Quadrangle and its partners ”for their unlawful conduct and contractual breaches” and for taking advantage of Mr. Rattner’s departure “to seize” money owed to Mr. Rattner.
The filing also says that Mr. Rattner’s former partners effectively threw him under the bus. ”Faced with the investigation, the Quadrangle parties had a choice: they could have either disclosed completely their involvement with the underlying facts,” said the filing, “or they could offer the New York Attorney General a scalp. They chose the latter.”
Before Quadrangle, Mr. Rattner was a former reporter for The New York Times who went on to work as an investment banker at Lazard. He rose as high as vice chairman at Lazard. When he signed on to head the Obama administration’s auto task force, he disclosed a net worth of $188 million to $608 million.
Mr. Rattner, who left Quadrangle in February 2009 to take the government post, has been keeping busy promoting “Overhaul,” his new book on the revamping of the auto industry. He also is working at Willett Advisors, an investment firm dedicated to managing the money of Michael R. Bloomberg, the mayor of New York and a close friend of Mr. Rattner’s.
People close to Mr. Rattner say that the S.E.C. ban will allow him to continue in that role.
By PETER LATTMAN
Steven Rattner’s settlement will cap an inquiry into kickbacks involving New York’s pension fund.Andrew Harrer/Bloomberg News Steven L. Rattner has agreed to pay $6.2 million in disgorgement and penalties in settling with the S.E.C.
Andrew M. Cuomo, the attorney general and governor-elect of New York, sued the financier Steven L. Rattner on Thursday over his role in kickbacks to secure investments from the New York State pension fund.
The attorney general filed two lawsuits, seeking at least $26 million from Mr. Rattner and a lifetime ban for Mr. Rattner from the securities industry in New York.
Mr. Rattner left his private equity firm, Quadrangle Group, last year to head the Obama administration’s efforts to overhaul the auto industry. He responded to the attorney general’s lawsuit in a statement to DealBook on Thursday morning, addressing charges brought against him under the Martin Act, a sweeping state securities law.
“While settling with the S.E.C. begins the process of putting this matter behind me, I will not be bullied simply because the attorney general’s office prefers political considerations instead of a reasoned assessment of the facts,” Mr. Rattner said. “This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity — and I certainly did not violate the Martin Act. That’s why I intend to clear my name by defending myself vigorously against this politically motivated lawsuit.”
Soon after Mr. Rattner made his statement, a spokesman for the attorney general’s office had a sharp retort: “Mr. Rattner now has a lot to say as he spins his friends in the press, but when he was questioned under oath about his pension fund dealings he was much less talkative, taking the Fifth and refusing to answer questions 68 different times. Anyone who reads the extensive facts laid out in our complaint will understand that Rattner’s claims that he did nothing wrong are ridiculous and belied by the fact that he is paying the S.E.C. $6 million today.”
Mr. Rattner is accused of paying Hank Morris, a top adviser to a former New York State comptroller, Alan G. Hevesi, for his help in securing investments from the $135 billion New York pension fund. According to earlier reports, Mr. Morris is expected to plead guilty to charges related to the case.
Also Thursday, the Securities and Exchange Commission announced a settlement with Mr. Rattner in which he agreed to pay $6.2 million in disgorgement and penalties. He will also be barred from “associating with any investment adviser or broker dealer” for two years.
“Rattner delivered special favors and conducted sham transactions that corrupted the [pension fund's] investment process,” said David Rosenfeld, associate director of the S.E.C.’s New York regional office.
Mr. Rattner, 58 years old, is among the most prominent individuals ensnared by a nationwide inquiry over the investment activities of state pension funds. The so-called pay-to-play investigations, which have been conducted in states including New York, California, New Mexico and Illinois, have focused on the role of midddlemen who are paid fees by money-management firms for helping secure investments from state pension funds. Those payments can be illegal if they are bribes or kickbacks masked as legitimate payments.
Mr. Cuomo’s investigation has led to criminal charges and seven guilty pleas, including one from Mr. Hevesi, who as comptroller had sole control over the state pension fund.
The timing of the attorney’s general lawsuit against Mr. Rattner is especially awkward as it comes on the day of the initial public offering of General Motors. Mr. Rattner had been speaking publicly all week about the revival of G.M. and appeared on CNBC Thursday morning to talk about the I.P.O.
“The attorney general and the S.E.C. have the same information,” said Davidson Goldin, a spokesman for Mr. Rattner. “So picking the day of the G.M. I.P.O after about 500 possible days further demonstrates that the attorney puts politics and maximizing his own media coverage ahead of the public interest.”
The attorney general’s action focuses on Mr. Rattner’s hiring of Mr. Morris to win business from the New York fund, as well as the help Mr. Rattner provided to the brother of a top pension fund official in distributing ”Chooch,” a low-budget movie, through a DVD company owned by the Quadrangle, a private equity firm Mr. Rattner co-founded a decade ago. The complaint also accuses Mr. Rattner of connecting the pension fund official’s brother to IFC, a cable network in which Quadrangle was an investor and on whose board Mr. Rattner sat.
Mr. Cuomo also claims that Mr. Rattner, a major Democratic fund-raiser, arranged for contributions totaling $50,000 to Mr. Hevesi’s re-election campaign, contributions that the attorney general says caused the pension fund to increase its investment with Quadrangle to $150 million, from $100 million. These contributions were made through third parties to conceal Mr. Rattner’s role, Mr. Cuomo’s office says.
“Steve Rattner was willing to do whatever it took to get his hands on pension fund money including paying kickbacks, orchestrating a movie deal and funneling campaign contributions,” Mr. Cuomo said. “Through these lawsuits, we will recover his ill-gotten gains and hold Rattner accountable.”
Last month, Mr. Rattner rejected a settlement offer from Mr. Cuomo that would have had him pay a $20 million penalty. Mr. Rattner and his lawyers have said that amount sought by the attorney general is disproportionate to the money he earned at Quadrangle and to the penalties paid by other executives ensnared by the pension fund investigation.
Mr. Rattner’s team also believes that his compensation related to any income Quadrangle received from the New York State pension fund investment is fully disgorged by the S.E.C. settlement, according to a person familiar with Mr. Rattner’s thinking.
Quadrangle settled with authorities this year, admitting to paying Mr. Morris for his help in securing investments from the New York pension fund. Mr. Morris pleaded guilty in November to selling access to the fund.
The firm paid a $12 million settlement and, as part of the deal, disavowed Mr. Rattner’s actions as ”inappropriate, wrong and unethical.”
Lawyers for Mr. Rattner have disputed Quadrangle’s characterizations, and on Thursday, they fired back at his former partner.
In a filing in New York state court, Mr. Rattner requested documents related to the New York pension-fund inquiry as part of an arbitration claim that he is pursuing against his former firm. The claim seeks damages against Quadrangle and its partners ”for their unlawful conduct and contractual breaches” and for taking advantage of Mr. Rattner’s departure “to seize” money owed to Mr. Rattner.
The filing also says that Mr. Rattner’s former partners effectively threw him under the bus. ”Faced with the investigation, the Quadrangle parties had a choice: they could have either disclosed completely their involvement with the underlying facts,” said the filing, “or they could offer the New York Attorney General a scalp. They chose the latter.”
Before Quadrangle, Mr. Rattner was a former reporter for The New York Times who went on to work as an investment banker at Lazard. He rose as high as vice chairman at Lazard. When he signed on to head the Obama administration’s auto task force, he disclosed a net worth of $188 million to $608 million.
Mr. Rattner, who left Quadrangle in February 2009 to take the government post, has been keeping busy promoting “Overhaul,” his new book on the revamping of the auto industry. He also is working at Willett Advisors, an investment firm dedicated to managing the money of Michael R. Bloomberg, the mayor of New York and a close friend of Mr. Rattner’s.
People close to Mr. Rattner say that the S.E.C. ban will allow him to continue in that role.
The Impending Tragedy
In a few more days, 2 MILLION families will lose their unemployment benefits. At that point, they will have no income at all. As a result, we can look forward to more homelessness, more robberies, more domestic violence and some suicides. In April, it will get worse as several more MILLION families lose their unemployment benefits.
Obama's economic genius, Larry Summers, believes that if you are unemployed it is because you are lazy.
The Senate's political genius, Mitch McCollum, believes that if you get unemployment benefits you are too lazy to look for work.
Apparently, nobody in Washington understands that for every job vacancy today, there are five applicants. Is the math here too deep for the people in Washington?
Obama's economic genius, Larry Summers, believes that if you are unemployed it is because you are lazy.
The Senate's political genius, Mitch McCollum, believes that if you get unemployment benefits you are too lazy to look for work.
Apparently, nobody in Washington understands that for every job vacancy today, there are five applicants. Is the math here too deep for the people in Washington?
Want to Know Why We Have a Deficit??
When the "brains" in Washington decided to bail out General Motors, we bought something like 61% of the shares of the company for $44. Yesterday, we sold a majority of those shares for $35.
The Secretary of the Treasury proclaimed that event as a great financial achievement. But then, he is a guy who has trouble paying his taxes.
Still wonder why we have a huge deficit that is growing daily?
The Secretary of the Treasury proclaimed that event as a great financial achievement. But then, he is a guy who has trouble paying his taxes.
Still wonder why we have a huge deficit that is growing daily?
Wednesday, November 17, 2010
Controlling Medical Costs
In The Great Recession Conspiracy, we make the point that 60%-70%-80% of all medical costs are incurred in the last two months, two weeks, two days of life. All of these numbers are right. It just depends on who is counting and what they are counting.
The point remains that we could dramatically reverse our sky rocketing health care costs with a couple of simple and really cheap actions.
*Pay doctors to explain the options to patients and their families. Or it could be a nonMD with special training.
*Pay for Living Wills.
*Pay for DNR requests in writing.
A story in today's Los Angeles Times makes all of these points very clearly about just one disease.
latimes.com
Study examines end-of-life care for cancer patients
Many in their final days receive costly, aggressive treatments they may not want, according to researchers at the Dartmouth Atlas of Health Care. In California, Los Angeles County had the highest percentage of patients dying in hospitals.
By Molly Hennessy-Fiske, Los Angeles Times
November 17, 2010
Advertisement
One in three patients with advanced cancer spend their final days in hospitals receiving costly, aggressive treatments they may not want, according to a major national study released Tuesday.
Researchers at the Dartmouth Atlas of Health Care, whose work on hospital spending has been cited by the Obama administration, reviewed a sample of 20% of Medicare beneficiaries nationwide with advanced cancer who died between 2003 and 2007, including patients at 65 California hospitals.
Of nearly 240,000 terminally ill patients studied, about 29% died in hospitals. The likelihood of dying in a hospital varied significantly depending on where the person was treated, the report found.
In California, Los Angeles County had the highest percentage of advanced cancer patients dying in hospitals at about 41%, followed by Fresno (39%), Bakersfield (37%), San Francisco (36%) and Modesto (36%).
"We as physicians often make assumptions about what patients and their families want," said Dr. David C. Goodman, the report's lead author. "We are particularly uncomfortable with sharing the news that a cure is unlikely. But what patients really want is for physicians to be honest with them and share the full range of treatment choices."
Dartmouth's past reports have been widely circulated on Capitol Hill, generating debate but few policy changes. The latest report has the potential to spark meaningful conversations about end-of-life care, but it could also fuel concern about rationing healthcare if lawmakers use it to propose Medicare cuts or incentives for doctors to discuss less expensive — and less aggressive — treatment with terminal patients, he said.
"Having payment for end-of-life conversations was exactly what led people to start screaming about death panels," said Stephen Zuckerman, a health economist and senior fellow at the Washington, D.C.-based Urban Institute. "If you provide financial incentives for people to move into less aggressive treatment, is that the reaction you're going to get?"
A little more than half of patients surveyed used hospice care during their last month of life, but researchers found that in some cases referrals came so close to death that they were unlikely to have provided much assistance. Terminally ill cancer patients in L.A. County were less likely to be cared for in a hospice at the end of their life than the national average, the report found, with about 40% referred to hospice care.
Barbara Hayes, 70, of Los Angeles was diagnosed with metastatic colon cancer in May and met with a hospice worker Tuesday after suffering a heart attack that sent her to Cedars-Sinai Medical Center's intensive care unit. She signed paperwork refusing life-sustaining, aggressive treatment and said she was leaning toward hospice care.
"I want to just let it go and let nature take its course," said Hayes, who retired from an interior design firm and is covered by Medicare. "I don't want tubes down my throat."
Susan Negreen, executive director of the Sacramento-based California Hospice and Palliative Care Assn., said the Dartmouth report underscores the need for hospice awareness. Statewide, about 35% of Medicare deaths were in hospice, slightly below the national average of about 37% as of 2008, the most recent year for which information was available.
"It's very hard for people to realize they have run out of options," Negreen said. "There's always one more round of chemo or one more procedure they can do."
The report contrasted medical interventions at big-city hospitals with facilities in mid-sized or small cities, often in the Midwest. Cancer patients were more likely to receive "aggressive life-sustaining treatment" — including CPR, feeding and breathing tubes — during the last weeks of their lives in Manhattan (18%), Los Angeles (18%), Orange County (17%) and Chicago (16%) as compared with Minneapolis (4%), Des Moines (5%) and Seattle (6%).
About 6% of the patients nationwide received chemotherapy during their last two weeks of life, 7% in Los Angeles County, the study showed. In some areas, including Santa Barbara County, the rate exceeded 10%.
Dartmouth researchers have drawn criticism in the past for ignoring regional differences in patient health and the cost of providing care and for focusing on the cost of care instead of other measures of hospital quality.
Dr. Michael Langberg, chief medical officer at Cedars-Sinai, said the report was useful for discussion but "I remain concerned about taking their kind of research and from that leaping to policy."
Goodman, the report's author who is also director of Dartmouth's Center for Health Policy Research, said researchers were not "looking to control costs on the backs of people with advanced cancer" or to penalize hospitals for aggressive treatment.
He said the goal of the report was to promote palliative care, which aims to minimize patient suffering and promote quality of life, but is not covered as comprehensively as hospital care by the government private insurers. Medicare covers hospice services but requires patients who choose that option to then forgo most hospital treatment.
Federal officials are offering three-year grants to 15 hospice programs nationwide to serve patients without requiring them to give up hospital treatment.
Dr. Tom Rosenthal, chief medical officer for the UCLA Health System, said the study raises important questions about how doctors manage end-of-life care. The five UC hospitals recently joined Cedars-Sinai in an effort to standardize palliative-care programs and provide patient educators to explain intensive care and other end-of-life options. The project will be paid for by a three-year, $9.9-million federal stimulus grant.
"There really are nationally no norms for end-of-life treatment," Rosenthal said, but he cautioned that comparisons among hospitals are complicated by their mix of patients. "The people who want to die peacefully at home are not the patients pressuring their doctors to send them to a major urban care center."
Cheryl Stratos, 46, of McLean, Va., flies across the country each month to participate in a clinical trial at UCLA's Jonsson Comprehensive Cancer Center in Westwood to treat her metastatic melanoma.
Stratos, who runs a marketing firm and has a 13-year-old son, said she is not sure whether she would want life-sustaining treatment — her energy has been focused on seeking care, first at Georgetown University Hospital, then Memorial Sloan-Kettering Cancer Center in New York City and UCLA.
"It all depends on where I am in the process," she said.
molly.hennessy-fiske@latimes.com
Copyright © 2010, Los Angeles Times
The point remains that we could dramatically reverse our sky rocketing health care costs with a couple of simple and really cheap actions.
*Pay doctors to explain the options to patients and their families. Or it could be a nonMD with special training.
*Pay for Living Wills.
*Pay for DNR requests in writing.
A story in today's Los Angeles Times makes all of these points very clearly about just one disease.
latimes.com
Study examines end-of-life care for cancer patients
Many in their final days receive costly, aggressive treatments they may not want, according to researchers at the Dartmouth Atlas of Health Care. In California, Los Angeles County had the highest percentage of patients dying in hospitals.
By Molly Hennessy-Fiske, Los Angeles Times
November 17, 2010
Advertisement
One in three patients with advanced cancer spend their final days in hospitals receiving costly, aggressive treatments they may not want, according to a major national study released Tuesday.
Researchers at the Dartmouth Atlas of Health Care, whose work on hospital spending has been cited by the Obama administration, reviewed a sample of 20% of Medicare beneficiaries nationwide with advanced cancer who died between 2003 and 2007, including patients at 65 California hospitals.
Of nearly 240,000 terminally ill patients studied, about 29% died in hospitals. The likelihood of dying in a hospital varied significantly depending on where the person was treated, the report found.
In California, Los Angeles County had the highest percentage of advanced cancer patients dying in hospitals at about 41%, followed by Fresno (39%), Bakersfield (37%), San Francisco (36%) and Modesto (36%).
"We as physicians often make assumptions about what patients and their families want," said Dr. David C. Goodman, the report's lead author. "We are particularly uncomfortable with sharing the news that a cure is unlikely. But what patients really want is for physicians to be honest with them and share the full range of treatment choices."
Dartmouth's past reports have been widely circulated on Capitol Hill, generating debate but few policy changes. The latest report has the potential to spark meaningful conversations about end-of-life care, but it could also fuel concern about rationing healthcare if lawmakers use it to propose Medicare cuts or incentives for doctors to discuss less expensive — and less aggressive — treatment with terminal patients, he said.
"Having payment for end-of-life conversations was exactly what led people to start screaming about death panels," said Stephen Zuckerman, a health economist and senior fellow at the Washington, D.C.-based Urban Institute. "If you provide financial incentives for people to move into less aggressive treatment, is that the reaction you're going to get?"
A little more than half of patients surveyed used hospice care during their last month of life, but researchers found that in some cases referrals came so close to death that they were unlikely to have provided much assistance. Terminally ill cancer patients in L.A. County were less likely to be cared for in a hospice at the end of their life than the national average, the report found, with about 40% referred to hospice care.
Barbara Hayes, 70, of Los Angeles was diagnosed with metastatic colon cancer in May and met with a hospice worker Tuesday after suffering a heart attack that sent her to Cedars-Sinai Medical Center's intensive care unit. She signed paperwork refusing life-sustaining, aggressive treatment and said she was leaning toward hospice care.
"I want to just let it go and let nature take its course," said Hayes, who retired from an interior design firm and is covered by Medicare. "I don't want tubes down my throat."
Susan Negreen, executive director of the Sacramento-based California Hospice and Palliative Care Assn., said the Dartmouth report underscores the need for hospice awareness. Statewide, about 35% of Medicare deaths were in hospice, slightly below the national average of about 37% as of 2008, the most recent year for which information was available.
"It's very hard for people to realize they have run out of options," Negreen said. "There's always one more round of chemo or one more procedure they can do."
The report contrasted medical interventions at big-city hospitals with facilities in mid-sized or small cities, often in the Midwest. Cancer patients were more likely to receive "aggressive life-sustaining treatment" — including CPR, feeding and breathing tubes — during the last weeks of their lives in Manhattan (18%), Los Angeles (18%), Orange County (17%) and Chicago (16%) as compared with Minneapolis (4%), Des Moines (5%) and Seattle (6%).
About 6% of the patients nationwide received chemotherapy during their last two weeks of life, 7% in Los Angeles County, the study showed. In some areas, including Santa Barbara County, the rate exceeded 10%.
Dartmouth researchers have drawn criticism in the past for ignoring regional differences in patient health and the cost of providing care and for focusing on the cost of care instead of other measures of hospital quality.
Dr. Michael Langberg, chief medical officer at Cedars-Sinai, said the report was useful for discussion but "I remain concerned about taking their kind of research and from that leaping to policy."
Goodman, the report's author who is also director of Dartmouth's Center for Health Policy Research, said researchers were not "looking to control costs on the backs of people with advanced cancer" or to penalize hospitals for aggressive treatment.
He said the goal of the report was to promote palliative care, which aims to minimize patient suffering and promote quality of life, but is not covered as comprehensively as hospital care by the government private insurers. Medicare covers hospice services but requires patients who choose that option to then forgo most hospital treatment.
Federal officials are offering three-year grants to 15 hospice programs nationwide to serve patients without requiring them to give up hospital treatment.
Dr. Tom Rosenthal, chief medical officer for the UCLA Health System, said the study raises important questions about how doctors manage end-of-life care. The five UC hospitals recently joined Cedars-Sinai in an effort to standardize palliative-care programs and provide patient educators to explain intensive care and other end-of-life options. The project will be paid for by a three-year, $9.9-million federal stimulus grant.
"There really are nationally no norms for end-of-life treatment," Rosenthal said, but he cautioned that comparisons among hospitals are complicated by their mix of patients. "The people who want to die peacefully at home are not the patients pressuring their doctors to send them to a major urban care center."
Cheryl Stratos, 46, of McLean, Va., flies across the country each month to participate in a clinical trial at UCLA's Jonsson Comprehensive Cancer Center in Westwood to treat her metastatic melanoma.
Stratos, who runs a marketing firm and has a 13-year-old son, said she is not sure whether she would want life-sustaining treatment — her energy has been focused on seeking care, first at Georgetown University Hospital, then Memorial Sloan-Kettering Cancer Center in New York City and UCLA.
"It all depends on where I am in the process," she said.
molly.hennessy-fiske@latimes.com
Copyright © 2010, Los Angeles Times
Monday, November 15, 2010
The GoldmanSachs No Reform Financial Bill
If you wondered why I truly disliked the Dodd-Frank phony financial reform bill, read this front page story in today's Los Angeles Times. The ink isn't even dry and the banks are already finding ways around the provisions, so just how good can they be?
latimes.com
Financial reform law offers look at lobbyists' efforts to shape it
Activists for banks, hedge funds and other firms have logged hundreds of meetings with federal regulators since the bill was passed. Many seek exemptions from key provisions.
By Nathaniel Popper, Los Angeles Times
November 15, 2010
Having failed to block financial reform, Wall Street is now focused on the next best thing: ensuring that the law is loosely interpreted and weakly enforced.
Lobbyists for banks, hedge funds and other firms have logged hundreds of meetings with federal regulators since the reform bill was signed into law July 21. The lobbyists are often pushing for exemptions to the bill's key provisions, including measures that would limit risky Wall Street trading and shield consumers from excessive bank fees, records and interviews show.
In an Aug. 18 meeting with Federal Reserve officials, for instance, Citigroup lobbyists warned that new rules restricting trading by hedge funds "may have a significant impact on the competitiveness of U.S. firms," according to a summary released by the Fed.
The incessant appeals — there were 18 separate meetings between lobbyists and government officials Sept. 28 alone — have become a sore spot with some regulators.
"I want to be professional and polite and courteous, and I'll let them say their peace," said Bart Chilton, a member of the Commodity Futures Trading Commission. "But I don't think it's a very valuable use of their time or mine, because that is not the direction we were instructed to go by Congress."
The meetings would normally be cloaked in secrecy. But in keeping with the spirit of financial reform, the Fed, the CFTC and two other agencies have begun disclosing their contacts with lobbyists on the new reform law, providing a rare glimpse behind the curtain.
That glimpse frequently shows companies arguing that their operations shouldn't be covered by the new regulations, or that the regulations should be narrowly written, according to summaries posted by the federal agencies on their websites.
For example, lawyers for investment firm BlackRock met with CFTC officials Sept. 23 to seek an exemption from new restrictions on the trading of derivatives — or investments whose value is tied to an underlying asset. Otherwise, BlackRock warned, it would "be forced to curtail our client-service activities" according to a document posted in connection with the meeting.
Not all of the meetings involve Wall Street firms. Four executives of Ford's consumer finance division met with Fed officials Aug. 14, asking that its vehicle loans "be exempt" from rules that are designed to rein in risky lending, according to documents released by the agency.
And the American Petroleum Institute met with Securities and Exchange Commission officials Sept. 27 to argue that new rules forcing oil and mining firms to report payments made to foreign governments "raises significant practicality and cost-benefit concerns by vastly increasing the amount of data that must be reported."
The names listed most frequently in the logs are Goldman Sachs, with 21 meetings with regulators, and JPMorgan Chase, with 23. Jamie Dimon, chairman and chief executive of JPMorgan, was among those in attendance when a bank contingent met Oct. 8 with Federal Deposit Insurance Corp. Chairwoman Sheila Bair, records show.
In all, regulators have had at least 510 meetings with lobbyists representing 325 organizations since July, according to a Times analysis of meeting logs. That's when the Fed, the SEC, the FDIC and the CFTC first began keeping the logs on their websites, in the spirit of transparency that was a driving factor for the financial reform law.
Despite taking up 2,319 pages, the Wall Street Reform and Consumer Protection Act left key details to regulatory agencies. Consumer groups applauded the decision to release details of the meetings, saying it provides a rare window into the rule-making process.
"It helps to alleviate the sense that all the important decisions are being made behind closed doors," said Barbara Roper, the director of investor protection for the Consumer Federation of America.
Regulators, lobbyists and consumer groups could not recall another instance of government agencies listing such meetings. But the lists appear to have attracted scant public notice — and do not appear to have influenced the rule-making process.
"The meetings recently have been like the meetings we have always had," said Elisse Walter, a member of the SEC.
At the same time, the logs show that consumer interests are heavily outnumbered by Wall Street.
More than 90% of the groups that appear in the meeting logs are banks, hedge funds and other big companies that rely on the financial industry, according to The Times' analysis. Some worry that the imbalance could affect the rules regulators are drafting to implement the law.
"Clearly the big banks have a ton of money to put toward this battle, and the people who are fighting for reform just don't have the resources or the people," said Heather Slavkin, a policy advisor for the AFL-CIO who has attended several meetings with regulators.
Many of the meetings involve arcane facets of the reform law, such as the structure of new trading exchanges that are designed to bring greater transparency to the market for complex securities such as credit default swaps.
Sheila Krumholz, the executive director of the Center for Responsive Politics, is concerned that Wall Street's voice will be especially powerful in discussions on implementing these measures.
"As you get into the nitty-gritty details there aren't a lot of people who can give a countervailing argument," she said.
But what's hammered out in the meetings probably will affect Main Street as well as Wall Street. The recent financial crisis underscored how even obscure activities can have a momentous effect on the pensions and pocketbooks of all Americans. The unregulated investments that banks made in complex, mortgage-based securities, for instance, eventually vaporized billions of dollars in retirement savings.
In addition, the regulators and lobbyists are discussing a wide variety of consumer-related topics such as debit card fees and retail investment brokers.
Industry officials declined to comment on specific meetings. But in general, finance executives say they are trying to educate regulators about the market segments that will be affected by the law, and they note that several of the meetings were convened at the request of regulators.
"The sheer volume of the number of rules that they need to write here is so much greater than in the past that you'll see a lot more outreach — and lot more of these meetings and efforts to lobby," said Robert Pickel, executive vice chairman of the International Swaps and Derivatives Assn.
Wall Street representatives say the risk is that financial reform will put the brakes on the financial recovery.
"The worst-case scenario for the banks is that … we end up with rules that constrain markets, which then impact the economy," said Tim Ryan, CEO of the Securities Industry and Financial Markets Assn. "There is a big risk here of overshooting the mark."
The SEC's Walter said she was bothered by the fact that regulators were not usually good hosts, so she bought a coffee machine for her office for visitors.
"I grew up in a nice Jewish home in New York and if you don't offer someone a cup of coffee you are kind of a jerk," Walter said.
Chilton said he is not always so gracious. In one instance he grew frustrated after seeing the same law firm three times in two weeks — representing three different financial companies but making the same case each time.
"I have to say, the third time I had the meeting my attention span was dwindling," Chilton said. "I want to know how to make this work, and get useful information about how to go forward — not fight battles that they've already lost on Capitol Hill."
nathaniel.popper@latimes.com
Times staff writer Thomas Suh Lauder contributed to this report.
Copyright © 2010, Los Angeles Times
latimes.com
Financial reform law offers look at lobbyists' efforts to shape it
Activists for banks, hedge funds and other firms have logged hundreds of meetings with federal regulators since the bill was passed. Many seek exemptions from key provisions.
By Nathaniel Popper, Los Angeles Times
November 15, 2010
Having failed to block financial reform, Wall Street is now focused on the next best thing: ensuring that the law is loosely interpreted and weakly enforced.
Lobbyists for banks, hedge funds and other firms have logged hundreds of meetings with federal regulators since the reform bill was signed into law July 21. The lobbyists are often pushing for exemptions to the bill's key provisions, including measures that would limit risky Wall Street trading and shield consumers from excessive bank fees, records and interviews show.
In an Aug. 18 meeting with Federal Reserve officials, for instance, Citigroup lobbyists warned that new rules restricting trading by hedge funds "may have a significant impact on the competitiveness of U.S. firms," according to a summary released by the Fed.
The incessant appeals — there were 18 separate meetings between lobbyists and government officials Sept. 28 alone — have become a sore spot with some regulators.
"I want to be professional and polite and courteous, and I'll let them say their peace," said Bart Chilton, a member of the Commodity Futures Trading Commission. "But I don't think it's a very valuable use of their time or mine, because that is not the direction we were instructed to go by Congress."
The meetings would normally be cloaked in secrecy. But in keeping with the spirit of financial reform, the Fed, the CFTC and two other agencies have begun disclosing their contacts with lobbyists on the new reform law, providing a rare glimpse behind the curtain.
That glimpse frequently shows companies arguing that their operations shouldn't be covered by the new regulations, or that the regulations should be narrowly written, according to summaries posted by the federal agencies on their websites.
For example, lawyers for investment firm BlackRock met with CFTC officials Sept. 23 to seek an exemption from new restrictions on the trading of derivatives — or investments whose value is tied to an underlying asset. Otherwise, BlackRock warned, it would "be forced to curtail our client-service activities" according to a document posted in connection with the meeting.
Not all of the meetings involve Wall Street firms. Four executives of Ford's consumer finance division met with Fed officials Aug. 14, asking that its vehicle loans "be exempt" from rules that are designed to rein in risky lending, according to documents released by the agency.
And the American Petroleum Institute met with Securities and Exchange Commission officials Sept. 27 to argue that new rules forcing oil and mining firms to report payments made to foreign governments "raises significant practicality and cost-benefit concerns by vastly increasing the amount of data that must be reported."
The names listed most frequently in the logs are Goldman Sachs, with 21 meetings with regulators, and JPMorgan Chase, with 23. Jamie Dimon, chairman and chief executive of JPMorgan, was among those in attendance when a bank contingent met Oct. 8 with Federal Deposit Insurance Corp. Chairwoman Sheila Bair, records show.
In all, regulators have had at least 510 meetings with lobbyists representing 325 organizations since July, according to a Times analysis of meeting logs. That's when the Fed, the SEC, the FDIC and the CFTC first began keeping the logs on their websites, in the spirit of transparency that was a driving factor for the financial reform law.
Despite taking up 2,319 pages, the Wall Street Reform and Consumer Protection Act left key details to regulatory agencies. Consumer groups applauded the decision to release details of the meetings, saying it provides a rare window into the rule-making process.
"It helps to alleviate the sense that all the important decisions are being made behind closed doors," said Barbara Roper, the director of investor protection for the Consumer Federation of America.
Regulators, lobbyists and consumer groups could not recall another instance of government agencies listing such meetings. But the lists appear to have attracted scant public notice — and do not appear to have influenced the rule-making process.
"The meetings recently have been like the meetings we have always had," said Elisse Walter, a member of the SEC.
At the same time, the logs show that consumer interests are heavily outnumbered by Wall Street.
More than 90% of the groups that appear in the meeting logs are banks, hedge funds and other big companies that rely on the financial industry, according to The Times' analysis. Some worry that the imbalance could affect the rules regulators are drafting to implement the law.
"Clearly the big banks have a ton of money to put toward this battle, and the people who are fighting for reform just don't have the resources or the people," said Heather Slavkin, a policy advisor for the AFL-CIO who has attended several meetings with regulators.
Many of the meetings involve arcane facets of the reform law, such as the structure of new trading exchanges that are designed to bring greater transparency to the market for complex securities such as credit default swaps.
Sheila Krumholz, the executive director of the Center for Responsive Politics, is concerned that Wall Street's voice will be especially powerful in discussions on implementing these measures.
"As you get into the nitty-gritty details there aren't a lot of people who can give a countervailing argument," she said.
But what's hammered out in the meetings probably will affect Main Street as well as Wall Street. The recent financial crisis underscored how even obscure activities can have a momentous effect on the pensions and pocketbooks of all Americans. The unregulated investments that banks made in complex, mortgage-based securities, for instance, eventually vaporized billions of dollars in retirement savings.
In addition, the regulators and lobbyists are discussing a wide variety of consumer-related topics such as debit card fees and retail investment brokers.
Industry officials declined to comment on specific meetings. But in general, finance executives say they are trying to educate regulators about the market segments that will be affected by the law, and they note that several of the meetings were convened at the request of regulators.
"The sheer volume of the number of rules that they need to write here is so much greater than in the past that you'll see a lot more outreach — and lot more of these meetings and efforts to lobby," said Robert Pickel, executive vice chairman of the International Swaps and Derivatives Assn.
Wall Street representatives say the risk is that financial reform will put the brakes on the financial recovery.
"The worst-case scenario for the banks is that … we end up with rules that constrain markets, which then impact the economy," said Tim Ryan, CEO of the Securities Industry and Financial Markets Assn. "There is a big risk here of overshooting the mark."
The SEC's Walter said she was bothered by the fact that regulators were not usually good hosts, so she bought a coffee machine for her office for visitors.
"I grew up in a nice Jewish home in New York and if you don't offer someone a cup of coffee you are kind of a jerk," Walter said.
Chilton said he is not always so gracious. In one instance he grew frustrated after seeing the same law firm three times in two weeks — representing three different financial companies but making the same case each time.
"I have to say, the third time I had the meeting my attention span was dwindling," Chilton said. "I want to know how to make this work, and get useful information about how to go forward — not fight battles that they've already lost on Capitol Hill."
nathaniel.popper@latimes.com
Times staff writer Thomas Suh Lauder contributed to this report.
Copyright © 2010, Los Angeles Times
The Deficit
In reality, solving the deficit problem isn't all that hard. Here is how I solved it in the New York Times Deficit Reduction exercise at their website. Take a whack at it yourself.
Budget Puzzle: You Fix the Budget
Today, you’re in charge of the nation’s finances. Some of your options have more short-term savings and some have more long-term savings. When you have closed the budget gaps for both 2015 and 2030, you are done. Make your own plan, then share it online.
Related Article | Behind The Times’s Deficit Project | Printable PDF Version | Room for Debate: 16 Ways to Cut the Deficit
You solved the deficit!
Domestic programs and foreign aid Projected Savings to Deficit in:
2015 2030
Cut foreign aid in half
At a time when the United States is facing large deficits, some budget analysts argue that the country should significantly reduce the money it spends helping other countries. Others say that foreign aid already represents a smaller share of the budget here than in other rich countries and that it expands American influence.
$17 billion $17 billion
Eliminate earmarks
Earmarks are lawmaker-directed spending items, often to finance local projects favored by a member of Congress.
$14 billion $14 billion
Eliminate farm subsidies
Many economists argue that farm subsidies distort the workings of the market and largely flow to big agricultural businesses. As the Congressional Budget Office has noted, advocates of reducing the subsidies argue that doing so “could help small farms indirectly, slowing the rate” of consolidation. Supporters argue that the subsidies help preserve the American agriculture industry.
$14 billion $14 billion
Cut pay of civilian federal workers by 5 percent
“During the Great Recession, most private-sector employees have seen their wages frozen, and some have even watched wages decline,” the chairmen of the deficit panel wrote. “In contrast, federal workers have seen their wages increase.” This option would be a one-time 5 percent cut in federal civilian workers’ pay; the chairmen called for a three-year freeze on pay, which would have a similar effect.
$14 billion $17 billion
Reduce the federal workforce by 10 percent
This proposal would reduce the size of the federal work force by 200,000, from its current level of more than 2 million. The chairmen of the fiscal commission noted that the federal work force peaked at about 2.3 million in the late 1960s and fell to a low of 1.8 million in 2000. “Under this proposal, the government could hire two new workers for every three who leave service,” the chairmen said. The proposal would not take effect until 2012.
$12 billion $15 billion
Cut 250,000 government contractors
In the past decade, both the number of federal employees and the number of contractors rose. Recent estimates suggest that contractors outnumber federal employees by millions. The chairmen wrote, “While contractors provide useful services — sometimes at a lower cost than the federal government — their numbers are simply too high in light of the current budget deficit.”
$17 billion $17 billion
Other cuts to the federal government
The chairmen called for a series of smaller cuts, including eliminating some agencies, cutting research funds for fossil fuels, reducing funds for the Smithsonian and the National Park Service, eliminating certain regional subsidies, and eliminating the Office of Safe and Drug-Free Schools.
$30 billion $30 billion
Cut aid to states by 5 percent
In the past decade, even before the stimulus bill, state aid rose significantly, as a share of the economy. In 2005, it equaled 3.4 percent of gross domestic product, compared with 2.3 percent in 1990 and 3.3 percent in 1980. Cutting state aid, advocates say, would persuade states to spend more efficiently and reduce waste. Opponents worry about the effects on education, poverty and public safety.
$29 billion $42 billion
Military Projected Savings to Deficit in:
2015 2030
Reduce nuclear arsenal and space spending
Would reduce number of nuclear warheads to 1,050, from 1,968. Would also reduce the number of Minuteman missiles and funding for nuclear research and development, missile development and space-based missile defense.
$19 billion $38 billion
Reduce military to pre-Iraq War size and further reduce troops in Asia and Europe
“This option,” according to the bipartisan Sustainable Defense Task Force, “would cap routine U.S. military presence in Europe and Asia at 100,000 personnel, which is 26 percent below the current level and 33 percent below the level planned for the future. All told, 50,000 personnel would be withdrawn.” The option would also reduce the standing size of the military as the wars in Iraq and Afghanistan wind down.
$25 billion $49 billion
Reduce Navy and Air Force fleets
Under this option, the Navy would build 48 fewer ships and retire 37 more ships than now scheduled. Overall, the battle fleet would shrink to 230 ships, from 286. In addition, the Air Force would retire two tactical fighter wings and reduce the number of fighter jets it planned to purchase.
$19 billion $24 billion
Cancel or delay some weapons programs
This option would cancel the purchase of some expensive equipment, like the F35 fighter jet and MV-22 Osprey, with less expensive equipment that the bipartisan Sustainable Defense Task Force judged to have similar capability. It would delay other purchases. Research and development spending, which the task force considered a relic of the cold war arms race, would be reduced.
$19 billion $18 billion
Reduce noncombat military compensation and overhead
Would change health-care plan for veterans who had not been wounded in battle. Premiums, which have not risen in a decade, would rise. More veterans would receive health insurance from employer. This option would also take some benefits, like housing allowances, into account when tying military raises to civilian pay raises. Currently, increases in those benefits come on top of pay raises. The military would also reduce the length and frequency of combat tours. No unit or person will be sent to a combat zone for longer than a year, and they will not be sent back involuntarily without spending at least two years at home.
$23 billion $51 billion
Foreign troop levels: Choose one or none
Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015
Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015 Today, the United States military has 100,000 troops in Afghanistan and 50,000 in Iraq. The Obama Administration plans to reduce these numbers in coming years but has not specified troop levels. Defense and budget experts say this 60,000 option would be faster than what is now planned. The savings is the difference between the administration's projected spending and the spending under this option.
$51 billion $149 billion
Reduce the number of troops in Iraq and Afghanistan to 30,000 by 2013
Reducing troops by to 30,000 from 60,000 could save an additional $20 billion by 2030.
$86 billion $169 billion
Health care Projected Savings to Deficit in:
2015 2030
Enact medical malpractice reform
Many doctors believe so-called defensive medicine – ordering tests and procedures to avoid lawsuits – is a major reason health costs are so high. This option would begin to reduce the chances of large malpractice verdicts, and supporters believe, also reduce rising medical costs. Opponents say it could reduce doctors’ incentives to avoid errors. The savings estimate comes from the Congressional Budget Office.
$8 billion $13 billion
Medicare costs: Choose one or none
Increase the Medicare eligibility age to 68
Those who favor raising the eligibility age for Medicare often say that Americans are living longer and should work longer. And, some say, the new health-care bill will allow people in their late 60s without employer-provided insurance to buy a policy through an exchange. Opponents say that low-income workers have experienced the lowest increases in longevity, and they need Medicare the most.
$8 billion $56 billion
Increase the Medicare eligibility age to 70
This option would save nearly $50 billion more than increasing the age to 68 would.
$8 billion $104 billion
Reduce the tax break for employer-provided health insurance
This option would reduce the tax break for employer-provided health insurance, by slowly adjusting the cap, so that it increases at the rate of economic growth, rather than the growth in health costs – which tends to be significantly faster. Over time, more employer spending on health insurance would be taxed.
$41 billion $157 billion
Cap Medicare growth starting in 2013
This option would cap the Medicare growth at G.D.P. growth plus 1 percentage point, starting in 2013. Among other things, this would crack down on many hospitals and doctors with the highest costs.
$29 billion $562 billion
Social security Projected Savings to Deficit in:
2015 2030
Changing the retirement age: Choose one or none
Raise the Social Security retirement age to 68
The increase in longevity has caused some to favor higher eligibility ages for Social Security. This option would gradually raise the age from the currently planned 67 to 68. Supporters say that the change would go a long way toward fixing Social Security’s shortfall, by reducing benefits and by encouraging people to work (and thus pay payroll taxes) for longer. Opponents say that longevity increases have been smallest among low-income workers, who need Social Security the most.
$13 billion $71 billion
Raise the Social Security retirement age to 70
This option would gradually raise the age to 70, potentially saving an additional $175 billion.
$13 billion $247 billion
Reduce Social Security benefits for those with high incomes
“Currently, initial Social Security benefits are determined in a way that allows them to grow with economy-wide wage growth,” says the Committee for a Responsible Federal Budget, a private group in Washington. Under this option, workers below the 60th percentile of the lifetime earnings distribution would continue to have their retirement benefits grow over time with average wage increases. But the benefits of top earners would grow more slowly – with inflation – while benefits for workers just above the 60th percentile would grow at a rate between inflation and wage growth.
$6 billion $54 billion
Tighten eligibility for disability
The costs of the disability insurance program, which is administrated by the Social Security Administration, have been rising rapidly. This option would cut disability spending by 5 percent by focusing on states with the loosest standards. Supporters note that growing numbers of workers are classified as disabled, though the average job is less physically taxing. Opponents worry that injured or ill workers with few good job prospects would be harmed.
$9 billion $17 billion
Use an alternate measure for inflation
Some economists believe that the Consumer Price Index overstates inflation, giving Social Security recipients larger cost-of-living increases than necessary. This option would use a different, lower inflation measure both for Social Security and in the tax code (thus pushing more households into higher brackets over time). Supporters say the lower measure is more accurate. Opponents say it is less accurate for the elderly, who buy a different mix of goods and services than other households.
$21 billion $82 billion
Existing taxes Projected Savings to Deficit in:
2015 2030
Modifying estate taxes: choose one or none
The Lincoln-Kyl proposal
For the first time since early in the 20th century, there is no estate tax in 2010 – a feature of the 2001 Bush tax cut. (The tax is scheduled to return in 2011, but this exercise assumes the cut will continue.) A proposal by Senators Jon Kyl, an Arizona Republican, and Blanche Lincoln, an Arkansas Democrat, is the most moderate of the estate-tax options here. It would exempt the first $5 million from any taxable estate and index this level to inflation over time. Any estate value above $5 million would be taxed at a 35 percent rate.
$12 billion $20 billion
President Obama's proposal
President Obama's proposal is more agressive than Kyl-Lincoln, but would still cut the estate tax when compared to the Clinton years. The Obama plan would exempt the first $3.5 million from any taxable estate. Any estate above $3.5 million would be taxed at a 45 percent rate. These are the same provisions that applied in 2009, as part of the 2001 Bush tax cut.
$24 billion $45 billion
Return the estate tax to Clinton-era levels
Under President Bill Clinton, the estate tax exempted $1 million from any taxable estate. This level would not grow with inflation over time, subjecting more estates to the tax. The rate would start at 18 percent and climb to 55 percent, as it did in the 1990s. The 55 percent rate would begin at $3 million. If Congress takes no action, this would become law on Jan. 1, 2011.
$50 billion $104 billion
Investment taxes: Choose one or none
President Obama's proposal
Capital gains and dividends are now untaxed for couples with incomes below $68,000. For everyone else, the tax rate is 15 percent. This option, proposed by President Obama, would raise the rate to 20 percent for households making roughly $250,000 a year and above.
$10 billion $24 billion
Return rates to Clinton-era levels
This option would return rates to their level under President Bill Clinton: 10 percent on capital gains for low-income households and 20 percent for everyone else, while dividends would again be taxed at the same rate as ordinary income.
$32 billion $46 billion
The Bush Tax Cuts
Allow expiration for income above $250,000 a year
This option would allow the expiration, on Jan. 1, of the Bush tax cuts for the top 2 percent or so of households on the income distribution – those making $250,000 or more. On average, the change would equal about 2 percent of a given household’s pretax income.
$54 billion $115 billion
Allow expiration for income below $250,000 a year
This option would allow the expiration, on Jan. 1, of the Bush tax cuts for the bottom 98 percent or so of households on the income distribution – those making $250,000 or less. On average, the change would equal about 2 percent of a given household’s pretax income.
$172 billion $252 billion
Payroll tax: Subject some incomes above $106,000 to tax
When the payroll tax – which finances Social Security and Medicare – was created, it covered 90 percent of all income. Today, with a ceiling at $106,800, it covers closer to 80 percent. This option would gradually raise the ceiling, until 90 percent of income was again subject to the tax.
$50 billion $100 billion
New Taxes and Tax Reform Projected Savings to Deficit in:
2015 2030
Millionaire's tax on income above $1 million
Currently, the top tax brackets starts at about $375,000. In past decades, it started at much higher income level, after inflation is taken into account. This option – which the House passed last year but the Senate did not – would create a new 5.4 percent surtax on income above $1 million.
$50 billion $95 billion
Closing tax loopholes: choose one or none
Eliminate loopholes, reduce rates (Bowles-Simpson plan)
The deficit commission proposed a series of tax overhaul plans. Each one would reduce tax breaks for companies and individuals, while lowering tax rates. On the whole, the plans would raise revenue. One plan would cut all tax breaks other than the child and earned-income tax credits and those for mortgages, health and retirement benefits. The corporate tax would then be cut to 28 percent, from 35 percent, while individual tax rates would be cut for all brackets too.
$75 billion $175 billion
Eliminate loopholes, but keep taxes slightly higher
This option is the same as the previous one – except that tax rates would be cut less, raising more revenue to reduce the deficit.
$136 billion $315 billion
Reduce mortgage-interest deduction by converting to credit
The benefits of the mortgage-interest deduction (and several other tax breaks) flow mostly to high-income households – because they tend to have larger mortgages and have marginal income-tax rates. This option would reduce the value of some of those breaks to high-income households.
$25 billion $54 billion
National sales tax
Nearly every other rich country has a tax on consumption, also known as a value-added tax or national sales tax. This option would impose a 5 percent consumption tax, exempting education, housing and charitable giving.
$41 billion $281 billion
Carbon tax
This option would tax carbon emissions, starting at $23 per ton of CO2. The tax rate would increase at a constant annual rate of 5.8 percent, from 2012 through 2050.
$40 billion $71 billion
Bank Tax
This option would tax banks based on the size of their holdings and the perceived riskiness of those holdings. Larger, riskier banks would pay more tax, both to discourage them from taking big risks and to help cover the costs of future financial crises.
$73 billion $103 billion
Notes: These suggested cuts would need to be implemented gradually over the next 20 years, some taking effect well before 2030 in order to keep the deficit, and thus interest payments on the national debt, at a manageable level between now and 2030. All figures are adjusted for projected inflation and expressed in terms of 2010 dollars. The baseline for this exercise assumes that all current policies continue, even those scheduled to expire, like the Bush tax cuts.
Budget Puzzle: You Fix the Budget
Today, you’re in charge of the nation’s finances. Some of your options have more short-term savings and some have more long-term savings. When you have closed the budget gaps for both 2015 and 2030, you are done. Make your own plan, then share it online.
Related Article | Behind The Times’s Deficit Project | Printable PDF Version | Room for Debate: 16 Ways to Cut the Deficit
You solved the deficit!
Domestic programs and foreign aid Projected Savings to Deficit in:
2015 2030
Cut foreign aid in half
At a time when the United States is facing large deficits, some budget analysts argue that the country should significantly reduce the money it spends helping other countries. Others say that foreign aid already represents a smaller share of the budget here than in other rich countries and that it expands American influence.
$17 billion $17 billion
Eliminate earmarks
Earmarks are lawmaker-directed spending items, often to finance local projects favored by a member of Congress.
$14 billion $14 billion
Eliminate farm subsidies
Many economists argue that farm subsidies distort the workings of the market and largely flow to big agricultural businesses. As the Congressional Budget Office has noted, advocates of reducing the subsidies argue that doing so “could help small farms indirectly, slowing the rate” of consolidation. Supporters argue that the subsidies help preserve the American agriculture industry.
$14 billion $14 billion
Cut pay of civilian federal workers by 5 percent
“During the Great Recession, most private-sector employees have seen their wages frozen, and some have even watched wages decline,” the chairmen of the deficit panel wrote. “In contrast, federal workers have seen their wages increase.” This option would be a one-time 5 percent cut in federal civilian workers’ pay; the chairmen called for a three-year freeze on pay, which would have a similar effect.
$14 billion $17 billion
Reduce the federal workforce by 10 percent
This proposal would reduce the size of the federal work force by 200,000, from its current level of more than 2 million. The chairmen of the fiscal commission noted that the federal work force peaked at about 2.3 million in the late 1960s and fell to a low of 1.8 million in 2000. “Under this proposal, the government could hire two new workers for every three who leave service,” the chairmen said. The proposal would not take effect until 2012.
$12 billion $15 billion
Cut 250,000 government contractors
In the past decade, both the number of federal employees and the number of contractors rose. Recent estimates suggest that contractors outnumber federal employees by millions. The chairmen wrote, “While contractors provide useful services — sometimes at a lower cost than the federal government — their numbers are simply too high in light of the current budget deficit.”
$17 billion $17 billion
Other cuts to the federal government
The chairmen called for a series of smaller cuts, including eliminating some agencies, cutting research funds for fossil fuels, reducing funds for the Smithsonian and the National Park Service, eliminating certain regional subsidies, and eliminating the Office of Safe and Drug-Free Schools.
$30 billion $30 billion
Cut aid to states by 5 percent
In the past decade, even before the stimulus bill, state aid rose significantly, as a share of the economy. In 2005, it equaled 3.4 percent of gross domestic product, compared with 2.3 percent in 1990 and 3.3 percent in 1980. Cutting state aid, advocates say, would persuade states to spend more efficiently and reduce waste. Opponents worry about the effects on education, poverty and public safety.
$29 billion $42 billion
Military Projected Savings to Deficit in:
2015 2030
Reduce nuclear arsenal and space spending
Would reduce number of nuclear warheads to 1,050, from 1,968. Would also reduce the number of Minuteman missiles and funding for nuclear research and development, missile development and space-based missile defense.
$19 billion $38 billion
Reduce military to pre-Iraq War size and further reduce troops in Asia and Europe
“This option,” according to the bipartisan Sustainable Defense Task Force, “would cap routine U.S. military presence in Europe and Asia at 100,000 personnel, which is 26 percent below the current level and 33 percent below the level planned for the future. All told, 50,000 personnel would be withdrawn.” The option would also reduce the standing size of the military as the wars in Iraq and Afghanistan wind down.
$25 billion $49 billion
Reduce Navy and Air Force fleets
Under this option, the Navy would build 48 fewer ships and retire 37 more ships than now scheduled. Overall, the battle fleet would shrink to 230 ships, from 286. In addition, the Air Force would retire two tactical fighter wings and reduce the number of fighter jets it planned to purchase.
$19 billion $24 billion
Cancel or delay some weapons programs
This option would cancel the purchase of some expensive equipment, like the F35 fighter jet and MV-22 Osprey, with less expensive equipment that the bipartisan Sustainable Defense Task Force judged to have similar capability. It would delay other purchases. Research and development spending, which the task force considered a relic of the cold war arms race, would be reduced.
$19 billion $18 billion
Reduce noncombat military compensation and overhead
Would change health-care plan for veterans who had not been wounded in battle. Premiums, which have not risen in a decade, would rise. More veterans would receive health insurance from employer. This option would also take some benefits, like housing allowances, into account when tying military raises to civilian pay raises. Currently, increases in those benefits come on top of pay raises. The military would also reduce the length and frequency of combat tours. No unit or person will be sent to a combat zone for longer than a year, and they will not be sent back involuntarily without spending at least two years at home.
$23 billion $51 billion
Foreign troop levels: Choose one or none
Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015
Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015 Today, the United States military has 100,000 troops in Afghanistan and 50,000 in Iraq. The Obama Administration plans to reduce these numbers in coming years but has not specified troop levels. Defense and budget experts say this 60,000 option would be faster than what is now planned. The savings is the difference between the administration's projected spending and the spending under this option.
$51 billion $149 billion
Reduce the number of troops in Iraq and Afghanistan to 30,000 by 2013
Reducing troops by to 30,000 from 60,000 could save an additional $20 billion by 2030.
$86 billion $169 billion
Health care Projected Savings to Deficit in:
2015 2030
Enact medical malpractice reform
Many doctors believe so-called defensive medicine – ordering tests and procedures to avoid lawsuits – is a major reason health costs are so high. This option would begin to reduce the chances of large malpractice verdicts, and supporters believe, also reduce rising medical costs. Opponents say it could reduce doctors’ incentives to avoid errors. The savings estimate comes from the Congressional Budget Office.
$8 billion $13 billion
Medicare costs: Choose one or none
Increase the Medicare eligibility age to 68
Those who favor raising the eligibility age for Medicare often say that Americans are living longer and should work longer. And, some say, the new health-care bill will allow people in their late 60s without employer-provided insurance to buy a policy through an exchange. Opponents say that low-income workers have experienced the lowest increases in longevity, and they need Medicare the most.
$8 billion $56 billion
Increase the Medicare eligibility age to 70
This option would save nearly $50 billion more than increasing the age to 68 would.
$8 billion $104 billion
Reduce the tax break for employer-provided health insurance
This option would reduce the tax break for employer-provided health insurance, by slowly adjusting the cap, so that it increases at the rate of economic growth, rather than the growth in health costs – which tends to be significantly faster. Over time, more employer spending on health insurance would be taxed.
$41 billion $157 billion
Cap Medicare growth starting in 2013
This option would cap the Medicare growth at G.D.P. growth plus 1 percentage point, starting in 2013. Among other things, this would crack down on many hospitals and doctors with the highest costs.
$29 billion $562 billion
Social security Projected Savings to Deficit in:
2015 2030
Changing the retirement age: Choose one or none
Raise the Social Security retirement age to 68
The increase in longevity has caused some to favor higher eligibility ages for Social Security. This option would gradually raise the age from the currently planned 67 to 68. Supporters say that the change would go a long way toward fixing Social Security’s shortfall, by reducing benefits and by encouraging people to work (and thus pay payroll taxes) for longer. Opponents say that longevity increases have been smallest among low-income workers, who need Social Security the most.
$13 billion $71 billion
Raise the Social Security retirement age to 70
This option would gradually raise the age to 70, potentially saving an additional $175 billion.
$13 billion $247 billion
Reduce Social Security benefits for those with high incomes
“Currently, initial Social Security benefits are determined in a way that allows them to grow with economy-wide wage growth,” says the Committee for a Responsible Federal Budget, a private group in Washington. Under this option, workers below the 60th percentile of the lifetime earnings distribution would continue to have their retirement benefits grow over time with average wage increases. But the benefits of top earners would grow more slowly – with inflation – while benefits for workers just above the 60th percentile would grow at a rate between inflation and wage growth.
$6 billion $54 billion
Tighten eligibility for disability
The costs of the disability insurance program, which is administrated by the Social Security Administration, have been rising rapidly. This option would cut disability spending by 5 percent by focusing on states with the loosest standards. Supporters note that growing numbers of workers are classified as disabled, though the average job is less physically taxing. Opponents worry that injured or ill workers with few good job prospects would be harmed.
$9 billion $17 billion
Use an alternate measure for inflation
Some economists believe that the Consumer Price Index overstates inflation, giving Social Security recipients larger cost-of-living increases than necessary. This option would use a different, lower inflation measure both for Social Security and in the tax code (thus pushing more households into higher brackets over time). Supporters say the lower measure is more accurate. Opponents say it is less accurate for the elderly, who buy a different mix of goods and services than other households.
$21 billion $82 billion
Existing taxes Projected Savings to Deficit in:
2015 2030
Modifying estate taxes: choose one or none
The Lincoln-Kyl proposal
For the first time since early in the 20th century, there is no estate tax in 2010 – a feature of the 2001 Bush tax cut. (The tax is scheduled to return in 2011, but this exercise assumes the cut will continue.) A proposal by Senators Jon Kyl, an Arizona Republican, and Blanche Lincoln, an Arkansas Democrat, is the most moderate of the estate-tax options here. It would exempt the first $5 million from any taxable estate and index this level to inflation over time. Any estate value above $5 million would be taxed at a 35 percent rate.
$12 billion $20 billion
President Obama's proposal
President Obama's proposal is more agressive than Kyl-Lincoln, but would still cut the estate tax when compared to the Clinton years. The Obama plan would exempt the first $3.5 million from any taxable estate. Any estate above $3.5 million would be taxed at a 45 percent rate. These are the same provisions that applied in 2009, as part of the 2001 Bush tax cut.
$24 billion $45 billion
Return the estate tax to Clinton-era levels
Under President Bill Clinton, the estate tax exempted $1 million from any taxable estate. This level would not grow with inflation over time, subjecting more estates to the tax. The rate would start at 18 percent and climb to 55 percent, as it did in the 1990s. The 55 percent rate would begin at $3 million. If Congress takes no action, this would become law on Jan. 1, 2011.
$50 billion $104 billion
Investment taxes: Choose one or none
President Obama's proposal
Capital gains and dividends are now untaxed for couples with incomes below $68,000. For everyone else, the tax rate is 15 percent. This option, proposed by President Obama, would raise the rate to 20 percent for households making roughly $250,000 a year and above.
$10 billion $24 billion
Return rates to Clinton-era levels
This option would return rates to their level under President Bill Clinton: 10 percent on capital gains for low-income households and 20 percent for everyone else, while dividends would again be taxed at the same rate as ordinary income.
$32 billion $46 billion
The Bush Tax Cuts
Allow expiration for income above $250,000 a year
This option would allow the expiration, on Jan. 1, of the Bush tax cuts for the top 2 percent or so of households on the income distribution – those making $250,000 or more. On average, the change would equal about 2 percent of a given household’s pretax income.
$54 billion $115 billion
Allow expiration for income below $250,000 a year
This option would allow the expiration, on Jan. 1, of the Bush tax cuts for the bottom 98 percent or so of households on the income distribution – those making $250,000 or less. On average, the change would equal about 2 percent of a given household’s pretax income.
$172 billion $252 billion
Payroll tax: Subject some incomes above $106,000 to tax
When the payroll tax – which finances Social Security and Medicare – was created, it covered 90 percent of all income. Today, with a ceiling at $106,800, it covers closer to 80 percent. This option would gradually raise the ceiling, until 90 percent of income was again subject to the tax.
$50 billion $100 billion
New Taxes and Tax Reform Projected Savings to Deficit in:
2015 2030
Millionaire's tax on income above $1 million
Currently, the top tax brackets starts at about $375,000. In past decades, it started at much higher income level, after inflation is taken into account. This option – which the House passed last year but the Senate did not – would create a new 5.4 percent surtax on income above $1 million.
$50 billion $95 billion
Closing tax loopholes: choose one or none
Eliminate loopholes, reduce rates (Bowles-Simpson plan)
The deficit commission proposed a series of tax overhaul plans. Each one would reduce tax breaks for companies and individuals, while lowering tax rates. On the whole, the plans would raise revenue. One plan would cut all tax breaks other than the child and earned-income tax credits and those for mortgages, health and retirement benefits. The corporate tax would then be cut to 28 percent, from 35 percent, while individual tax rates would be cut for all brackets too.
$75 billion $175 billion
Eliminate loopholes, but keep taxes slightly higher
This option is the same as the previous one – except that tax rates would be cut less, raising more revenue to reduce the deficit.
$136 billion $315 billion
Reduce mortgage-interest deduction by converting to credit
The benefits of the mortgage-interest deduction (and several other tax breaks) flow mostly to high-income households – because they tend to have larger mortgages and have marginal income-tax rates. This option would reduce the value of some of those breaks to high-income households.
$25 billion $54 billion
National sales tax
Nearly every other rich country has a tax on consumption, also known as a value-added tax or national sales tax. This option would impose a 5 percent consumption tax, exempting education, housing and charitable giving.
$41 billion $281 billion
Carbon tax
This option would tax carbon emissions, starting at $23 per ton of CO2. The tax rate would increase at a constant annual rate of 5.8 percent, from 2012 through 2050.
$40 billion $71 billion
Bank Tax
This option would tax banks based on the size of their holdings and the perceived riskiness of those holdings. Larger, riskier banks would pay more tax, both to discourage them from taking big risks and to help cover the costs of future financial crises.
$73 billion $103 billion
Notes: These suggested cuts would need to be implemented gradually over the next 20 years, some taking effect well before 2030 in order to keep the deficit, and thus interest payments on the national debt, at a manageable level between now and 2030. All figures are adjusted for projected inflation and expressed in terms of 2010 dollars. The baseline for this exercise assumes that all current policies continue, even those scheduled to expire, like the Bush tax cuts.
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