Government Spending Per Household Exceeds Median Income

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“As reported in my new book, “Completely Predictable,” the combined spending of federal, state and local governments per American household actually exceeded the median household income for 2010, which is the latest year for which all relevant government data are available.

In fiscal 2010, according to numbers published by the Census Bureau and the Office of Management and Budget (OMB), net spending by all levels of government in the United States was $5,942,988,401,000. That equaled $50,074 for each one of the 118,682,000 households in the country.

In that same year, according to the Census Bureau, the median household income was $49,445.

That means total net government spending per household ($50,074) exceeded median household income (49,445) by $629.

Government in the United States, of course, has not always spent more per year than the median household earns. As recently as 2000, the relationship between government spending and household income was dramatically different.

Data from the Census Bureau and the OMB show that in that year net spending by all levels of government was $3,239,913,876,000. That equaled $29,941 for each of the nation’s then 108,209,000 households. In 2000, the median household income was $41,990.

Thus, between 2000 and 2010, government in this country went from spending $12,049 less than the median household income to spending $629 more.

This is how I derived these startling numbers…”

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Disability Claims Melt Up 44%

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“The number of Americans getting some type of disability check from the federal government is soaring.
Since 2003, there’s been a 29% jump in Americans with little or no work experience getting disability payments, according to the Social Security Administration. Over the same time, there’s been a 44% increase in disability claims by people formerly in the workplace.

Disability claims among veterans are up 28% since 2008, according to the Department of Veterans Affairs.

All told, the federal government spent nearly $250 billion in 2011 paying more than 23 million Americans some type of disability claim. That’s about 7% of the overall population, and 16% of the workforce.

Those numbers don’t even include people out on worker compensation claims — which are mostly paid for by private companies. Five states also offer short term disability, and there are nearly 1 million workers receiving private disability insurance.

But the Social Security-administered program that pays disability claims will likely run out of money by 2016, forcing politicians to either cut Social Security benefits, raise taxes or, most likely, dip into general Social Security funds for the money.

There are many reasons for the increase in disability claims, most notably the recession, an aging population, advances in medical technology and a decade of war.

The recession: The economic downturn in 2008 and early 2009 is thought to be the major reason for the jump in disability payments to people who were formerly working….”

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The Fed Admits Student Debt is a Huge Risk to Recovery

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“Policy makers on the Federal Reserve’s interest-rate setting panel have for the first time identified high student debt burdens as a risk to economic growth, adding to a growing chorus of government officials concerned about households’ education borrowings.

At $1.1 trillion, according to the Consumer Financial Protection Bureau, outstanding student loan debt is the largest consumer debt class after home mortgages. Financial regulators, the U.S. Treasury and the New York Fed have all warned about the possible danger student loans pose to financial stability and the broader economy.

But prior to its March meeting, the Federal Open Market Committee, which sets interest rates that affect trillions of dollars of loans and securities, had never before mentioned student loans as a possible downside risk to the economy, according to a review of past meeting minutes.

According to newly released minutes from the March meeting, some members of the panel mentioned “the high level of student debt” as a risk to aggregate household spending over the next three years.

“There is increasing consensus that student loan debt is having a broader impact on the economy than we think,” Rohit Chopra, the CFPB official responsible for the student loan marketplace, said in an interview.

The committee’s mention of student debt burdens is likely to further discussion in Washington over what, if anything, policy makers should do to rein in what has been diagnosed as a growing problem….”

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Too Big to Fail or Jail Sends Too Small to Survive or Stay Alive to the Gallows

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What does it day about our society when we trade stocks that go higher by putting debtors in prison? Certainly not all of these people are cheaters of not paying their debts…..fun times indeud.

 

“(MoneyWatch) Thousands of Americans are sent to jail not for committing a crime, but because they can’t afford to pay for traffic tickets, medical bills and court fees.

If that sounds like a debtors’ prison, a legal relic which was abolished in this country in the 1830s, that’s because it is. And courts and judges in states across the land are violating the Constitution by incarcerating people for being unable to pay such debts.

Ask Jack Dawley, 55, an unemployed man in Ohio who between 2007 and 2012 spent a total of 16 days in jail in a Huron County lock-up for failing to pay roughly $1,500 in legal fines he’d incurred in the 1990s. The fines stemmed from Dawley’s convictions for driving under the influence and other offenses. After his release from a Wisconsin correctional facility, Dawley, who admits he had struggled with drugs and alcohol, got clean. But if he put his substance problems behind him, Dawley’s couldn’t outrun his debts.

Struggling to find a job and dealing with the effects of a back injury, he fell behind on repayments to the municipal court in Norwalk, Ohio. He was arrested six years ago and sent to jail for not paying his original court fines. Although Dawley was put on a monthly payment plan, during his latest stint behind bars in 2012 the court ordered him to pay off his entire remaining debt.

” I called my brother, and they told him I have to pay off the whole fine in order for me to get out,” he said. “That was $900. So I sat my whole 10 days [in jail.]”

Such stories are by no means unusual. Rather, they reflect a justice system that in effect criminalizes poverty. “It’s a growing problem nationally, particularly because of the economic crisis,” said Inimai Chettiar, director of the justice program at New York University School of Law’s Brennan Center for Justice.

Roughly a third of U.S. states today jail people for not paying off their debts, from court-related fines and fees to credit card and car loans, according to the American Civil Liberties Union. Such practices contravene a 1983 United States Supreme Court ruling that they violate the Constitutions’s Equal Protection Clause….”

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42 Things About Motivation

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“When it comes to motivation and performance, few focus on what they’re doing or how to improve it. They might respond to specific feedback from a boss, but rarely examine what motivates them to do their best at their job or in life.

Luckily, there’s a large body of research focusing on how people can get the most out of themselves, and how managers can unlock employee potential.

For example, making too many decisions in a day depletes your willpower, setting goals can backfire, and employees have a hard time working for managers who emphasize their own power….”

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Consumer Confidence Falls to a Six Week Low

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“Confidence among U.S. consumers fell to a six-week low and claims for jobless benefits rose more than forecast, highlighting the risks to the economy posed by federal government budget cuts.

The Bloomberg Consumer Comfort Index dropped to minus 34.4 in the week ended March from minus 33.9 as Americans’ views of the economy deteriorated to the lowest point since early February. Applications for unemployment insurancebenefits rose by 16,000 to 357,000 last week, the Labor Department said.

The figures represent a blemish for an economy that has shown signs of strengthening on the heels of a housing marketrebound and a pickup in manufacturing. Federal Reserve policy makers are concerned the automatic reductions in government spending that began this month may impede the progress of the expansion after a fourth-quarter slowdown.

“There will be some impact from the sequester, and certainly the second quarter should look somewhat softer than the first quarter,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities in New York. At the same time, “it’s domestic growth that’s driving the economy — it’s housing, it’s consumer spending, it’s business consumption.”

Stocks rose, sending the Standard & Poor’s 500 Index above its record closing level, as the reopening of banks in Cyprus helped ease concern about Europe’s debt crisis. The S&P 500 climbed 0.2 percent to 1,566.18 at 12:14 p.m. in New York.

Fourth Quarter…”

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Welcome to the Era of Squeeze

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“Next time you find yourself staring at an empty savings account, feel free to blame the era you live in.

Middle-income households would havesaved roughly $1,400 more a year by 2005if their incomes had grown at the same rate as the top 10 percent of earners from 1980 to 2008, a new paper finds.

By comparing the income data of top-earning households with everyone except the poorest 10 percent, University of Chicago professors Marianne Bertrand and Adair Morse discovered that the growing levels of U.S. income inequality had caused about a 3 percent decrease in middle-income household savings by the mid-2000s. Altogether, the U.S. personal savings rate for all Americans declined from around 10 percent of disposable income in the early 1980s to just 1.5 percent in 2005, the researchers write….”

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Your Tax Dollars at Work: Waste, Fraud, & Abuse

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“After U.S. and allied warplanes destroyed a key bridge carrying 15 oil and gas pipelines in northern Iraq during the 2003 conflict there, officials in Washington and Baghdad made its postwar reconstruction a top priority. But instead of spending two months to rebuild the span over the Tigris River at an estimated cost of $5 million, they decided for security reasons to bury the pipelines beneath it, at an estimated cost more than five times greater.

What ultimately happened there tells the story — in a microcosm — of a substantial chunk of the massive nine-year U.S. effort to reconstruct Iraq, the second-largest such endeavor in history (only  the U.S. investment in Afghanistan has been larger).

Studies conducted before the digging of the new pipelines started showed that the soil was too sandy, but neither the Army Corps of Engineers overseeing the effort nor the main contractor at the site, Kellogg Brown and Root (KBR), heeded the warning.  As a result, “tens of millions of dollars [were] wasted on churning sand” without making any headway, as Special Inspector General for Iraq Reconstruction Stuart W. Bowen Jr., described it in his recently published final report on the U.S. occupation.

By the time the digging effort was halted, and the old bridge and piping repaired — more than three years later — the bill had reached more than $100 million. “Because of the nature of the original contract, the government was unable to recover any of the money wasted on this project,” Bowen said.  More than $1.5 billion in oil revenues may have been lost as a result of the delays. KBR did not respond to a request for comment.

The episode is, in short, emblematic of the contracting abuses and mismanagement that wasted at least $8 billion of the $60 billion spent by Washington on Iraq’s post-war recovery, under the guidance of what Bowen describes in his report as “adhocracy” largely controlled by the U.S. military — a structure  that never “coalesced into a coherent whole” and often failed to achieve its aims.

With the U.S. military now gone from Iraq and the 10th anniversary of the invasion only days away, Bowen’s retrospective summary of his audits offers useful insights into how well the U.S. government managed its occupation and the legacy it left behind. The mostly downbeat tone is set early, when the report summarizes final interviews Bowen conducted with 44 top U.S. and Iraq officials, who addressed the simple question of whether the decade-long project left Iraq in better shape.

Most of the Americans he spoke to were rueful, noting multiple miscalculations, poor planning, disorganization in Washington, and inadequate consultation with Iraqis. James Jeffrey, the U.S. ambassador in Iraq from 2010 to 2012, told Bowen that “the U.S. reconstruction money used to build up Iraq was not effective … We didn’t get much in return.”

Only retired Army Gen. David Petraeus, who commanded U.S. forces in Iraq before shifting to Afghanistan and then briefly directing the CIA, was ebullient, claiming the effort had brought “colossal benefits to Iraq.”

Virtually every senior Iraqi, in sharp contrast, said the decade-long U.S. occupation was beset by huge misspending and waste, and had accomplished little. The biggest footprint Americans left behind, most of these Iraqi officials said, was more corruption and widespread money-laundering. Such a huge investment “could have brought great change in Iraq,” Prime Minister Nuri al-Maliki said, but the gains were often “lost.”

Billions here, billions there

The bill for Iraq is hard to divide into neat categories, but in rough terms: Washington spent more than $15 billion to try and improve Iraq’s power and water supply, revive its schools, and repair its roads and housing; it spent another $9 billion on health care, law enforcement, and humanitarian assistance; it spent $20 billion training and re-equipping Iraqi security forces; it spent roughly $8 billion to enhance the rule of law and battle narcotics; and it spent $5 billion helping to prop up the economy….”

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Thank You For Your Service

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“Sequestration Slashes Scholarships for Children of Iraq and Afghanistan War Casualties and Military Members

On the 10-year anniversary of the start of the Iraq War, scholarships for children of troops who died fighting in that conflict are being cut by thousands of dollars, thanks to sequestration.

The awards, called the Iraq and Afghanistan War Grants, go to undergraduate students whose moms or dads died “as a result of military service performed in Iraq or Afghanistan after the events of 9/11,” according to the Department of Education.

Awards that have already been established are safe, but as of March 1, the dollar amount for each new grant is being reduced by 37.8 percent from what a student would have received last year.

That means young adults will receive up to $2,133.81 less if they apply for a grant for the first time this year.

The Iraq War officially ended in December 2011, but these grants are not only for children of recent casualties. Children whose parents were killed in earlier years of the wars when they were very young are now old enough to go to college and could be eligible for the grants….”

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Study Shows Workers Saving Too Little to Retire

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“Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement.

New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.

Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008.

The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study’s 23-year history.

The same forces are weighing on corporate balance sheets. Based on another recent report, the Society of Actuaries said that rising life expectancies could add as much as $97 billion to corporate pension liabilities in coming years, an increase of up to 5%.

While Americans are living longer, the extended life spans will make it tougher for workers trying to stretch retirement savings and put additional strains on pension plans….”

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U.S. to Boost Missile Defenses in Response to North Korea

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“WASHINGTON—The Pentagon is preparing to strengthen its missile defense systems on the West Coast in response to increased threats from North Korea and rising tensions on the Korean peninsula.

The U.S. plans to boost its ground-based missile interceptors in Alaska and California by one-third, adding 14 additional systems to the 30 already in place on the West Coast, a senior defense official said Friday. Interceptors are vehicles that are launched to intercept intercontinental missiles in flight.

The expansion in the system was due to be announced by Defense Secretary Chuck Hagel at a news conference Friday.

The decision comes as North Korea has issued a series of threats to attack the U.S. and South Korea over new international sanctions and joint military exercises in the region.

Earlier this month, North Korea threatened to launch a pre-emptive nuclear strike on the U.S. and South Korea. While American officials don’t believe North Korea is capable of launching a long-range attack, the threat is seen as a concerning sign of the nation’s state of mind.

Pentagon officials signaled the possible expansion days earlier. “North Korea’s shrill public pronouncements underscore the need for the U.S. to continue to take prudent steps to defeat any future North Korean ICBM,” James Miller, undersecretary of defense for policy, said in a speech last week at the Atlantic Council….”

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Consumer Sentiment Falls In March

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“U.S. consumer sentiment tumbled to its lowest since December 2011 in early March, hit by dissatisfaction with government economic policies and as fewer Americans expected to see improvements in growth or the labor market, a survey released on Friday showed.

The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment dropped to 71.8 from 77.6 in February, short of expectations for 78.

(Click here to track the U.S. stock market reaction to the economic report.)

Across-the-board government spending cuts of $85 billion went into effect at the beginning of the month after U.S. lawmakers failed to come to a new deal.

A record 34 percent of respondents made unfavorable references to government economic policies, beating January’s prior record of 31 percent.

“The frustrations expressed by consumers essentially involve how little consideration has been given to how the government’s inability to reach a compromise affects people’s economic situation,” survey director Richard Curtin said in a statement.

The barometer of current economic conditions fell to 87.5 from 89, while the gauge of consumer expectations tumbled to 61.7 from 70.2, its weakest since November 2011….”

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Obama Introduces Fix for Medicare

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“However, the specifics of that proposal don’t spring to mind as easily as the reforms being bandied about in Republican circles, such as providing seniors with vouchers to pay for premiums or raising the retirement age.

That’s partly because Obama last laid out his reforms in February 2012 as part of his budget proposal. The president did little more than touch on these plans on the campaign trail last year and again in last month’s State of the Union address.

But as policy makers dig in for an extended battle on deficit reduction, Obama’s Medicare reform plans are likely to get a lot more attention soon. Rep. Paul Ryan is expected to release his budget, which will update the GOP’s proposals to rein in health care spending on the elderly, on Tuesday.

The president’s plan focuses mainly on reducing payments to drug companies and hospitals, though he would also raise revenue by asking wealthy seniors and new beneficiaries to pay more. All told, his reforms would cut health care spending by $400 billion, according to updated estimates by the White House.

Here’s are some of the key things that Obama would do:

Pay less for drugs: Increase the rebates the government receives for Medicare beneficiaries’ medications so they are the same as the rebates given under the Medicaid program. This would save $140 billion.

Reduce payments for post-hospital care: Bring payments for skilled nursing and rehabilitation facilities, long-term care hospitals and home health care more in line with costs. Reduce payments to facilities with high rates of hospital readmission. Reduce payments to rehab centers for certain conditions, such as knee replacements and hip fractures, so they are more comparable with skilled nursing homes. Make sure centers are treating patients with greater need. This would save $50 billion….”

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Bifurcation: A Golden Age for Corporation vs a Pitfall for Main Street

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“With the Dow Jones industrial Averageflirting with a record high, the split between American workers and the companies that employ them is widening and could worsen in the next few months as federal budget cuts take hold.

That gulf helps explain why stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high.

With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers.

”So far in this recovery, corporations have captured an unusually high share of the income gains,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. ”The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.”

The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.

These factors, along with the Federal Reserve’s efforts to keep interest rates ultra-low and encourage investors to put more money into riskier assets, prompted traders to send the Dow past 14,000 to within 75 points of a record high last week.

While buoyant earnings are rewarded by investors and make American companies more competitive globally, they have not translated into additional jobs at home.

Other recent positive economic developments, like a healthier housing sector and growth in orders for machinery and some other durable goods, have also encouraged Wall Street but similarly failed to improve the employment picture. Unemployment, after steadily declining for three years, has been stuck at just below 8 percent since last September…..”

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Lawmakers Make a Push for Interweb Tax

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“The Marketplace Fairness Act grants states the authority to compel online and catalog retailers (“remote sellers”), no matter where they are located, to collect sales tax at the time of a transaction – exactly like local retailers are already required to do. However, there is a caveat: States are only granted this authority after they have simplified their sales tax laws.

Simplification is required because of two Supreme Court rulings (Bellas Hess and Quill, described below) cite concern that collecting sales tax for multiple states would be too difficult.

The Marketplace Fairness Act requires that states must simplify their sales tax laws in order to ease those concerns and make multistate sales tax collection easy. Specifically, states seeking collection authority have two options for simplifying their sales tax laws.

Option 1: A state can join the twenty-four states that have already voluntarily adopted the simplification measures of the Streamlined Sales and Use Tax Agreement (SSUTA), which has been developed over the last eleven years by forty-four states and more than eighty-five businesses with the goal of making sales tax collection easy. Any state which is in compliance with the SSUTA and has achieved Full Member status as a SSUTA implementing state will have collection authority on the first day of the calendar quarter that is at least 90 days after enactment.

Option 2: Alternatively, states can meet essentially five simplification mandates listed in the bill. States that choose this option must agree to:

  1. Notify retailers in advance of any rate changes within the state
  2. Designate a single state organization to handle sales tax registrations, filings, and audits
  3. Establish a uniform sales tax base for use throughout the state
  4. Use destination sourcing to determine sales tax rates for out-of-state purchases (a purchase made by a consumer in California from a retailer in Ohio is taxed at the California rate, and the sales tax collected is remitted to California to fund projects and services there)
  5. Provide free software for managing sales tax compliance, and hold retailers harmless for any errors that result from relying on state-provided systems and data

 

With states adhering to these provisions or the similar measures in SSUTA, retailers across the country will find collecting sales tax for multiple states much easier than it has ever been in the past.

 

How did we get here?….”

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Your Company May Kick Your Spouse to the Curb

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“By denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act. This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26), but husbands and wives are optional. “The question about whether it’s obligatory to cover the family of the employee is being thought through more than ever before,” says Helen Darling, president of the National Business Group on Health. See: When your boss doesn’t trust your doctor.

While surcharges for spousal coverage are more common, last year, 6% of large employers excluded spouses, up from 5% in 2010, as did 4% of huge companies with at least 20,000 employees, twice as many as in 2010, according to human resources firm Mercer. These “spousal carve-outs,” or “working spouse provisions,” generally prohibit only people who could get coverage through their own job from enrolling in their spouse’s plan.

Such exclusions barely existed three years ago, but experts expect an increasing number of employers to adopt them: “That’s the next step,” Darling says. HMS, a company that audits plans for employers, estimates that nearly a third of companies might have such policies now. Holdouts say they feel under pressure to follow suit. “We’re the last domino,” says Duke Bennett, mayor of Terre Haute, Ind., which is instituting a spousal carve-out for the city’s health plan, effective July 2013, after nearly all major employers in the area dropped spouses.

But when employers drop spouses, they often lose more than just the one individual, when couples choose instead to seek coverage together under the other partner’s employer. Terre Haute, which pays $6 million annually to insure nearly 1,200 people including employees and their family members, received more than 20 new plan members when a local university, bank and county government stopped insuring spouses, according to Bennett. “We have a great plan, so they want to be on ours. All we’re trying to do is level the playing field here,” he says….”

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Fact Checking the State of the Union Address

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“President Obama put a rosy spin on several accomplishments of his administration in his 2013 State of the Union address.

  • The president claimed that “both parties have worked together to reduce the deficit by more than $2.5 trillion.” But that’s only an estimate of deficit reduction through fiscal year 2022, and it would be lower if the White House used a different starting point.
  • Obama touted the growth of 500,000 manufacturing jobs over the past three years, but there has been a net loss of 600,000 manufacturing jobs since he took office. The recent growth also has stalled since July 2012.
  • He claimed that “we have doubled the distance our cars will go on a gallon of gas.” Actual mileage is improving, but Obama’s “doubled” claim refers to a desired miles-per-gallon average for model year 2025.
  • Obama said the Affordable Care Act “is helping to slow the growth of health care costs.” It may be helping, but the slower growth for health care spending began in 2009, before the law was enacted, and is due at least partly to the down economy.

The president also made an exaggerated claim of bipartisanship. He said that Republican presidential candidate Mitt Romney agreed with him that the minimum wage should be tied to the cost of living. But Romney backed off that view during the campaign.

Analysis

President Barack Obama gave his State of the Union address to Congress Feb. 12, laying out his legislative agenda for the coming year and achievements of his time in office. But Obama puffed up his record.

Deficit Reduction

Obama said the administration and Congress “have worked together to reduce the deficit by more than $2.5 trillion.” A bipartisan group called the estimate “very reasonable.” But it is only an estimate — and a debatable one at that — for deficit reduction from budgets through fiscal year 2022. Exactly how much will be cut will be up to future Congresses.

And, even if Congress meets those deficit-reduction goals, deficit spending will continue and the federal debt will grow larger — unless much more is done.

Obama: Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion — mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans. As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.

Obama has cited the $2.5 trillion figure on numerous occasions, including at a Jan. 14 news conference. It is based largely on two pieces of legislation: the Budget Control Act of 2011, which placed caps on discretionary spending beginning in 2012, and the American Taxpayer Relief Act of 2012, which prevented tax hikes on most Americans in 2013 but allowed rates to go up on the top 1 percent of taxpayers. There was some additional savings from reductions in discretionary spending in the fiscal 2011 appropriations bills.

Republicans challenge the $2.5 trillion figure with some justification, because the amount of savings depends heavily on the baseline — that is, the starting point of comparison. The White House told us it used the Office of Management and Budget’s January 2011 baseline…..”

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Government Spending Per Household Exceeds Median Income

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“As reported in my new book, “Completely Predictable,” the combined spending of federal, state and local governments per American household actually exceeded the median household income for 2010, which is the latest year for which all relevant government data are available.

In fiscal 2010, according to numbers published by the Census Bureau and the Office of Management and Budget (OMB), net spending by all levels of government in the United States was $5,942,988,401,000. That equaled $50,074 for each one of the 118,682,000 households in the country.

In that same year, according to the Census Bureau, the median household income was $49,445.

That means total net government spending per household ($50,074) exceeded median household income (49,445) by $629.

Government in the United States, of course, has not always spent more per year than the median household earns. As recently as 2000, the relationship between government spending and household income was dramatically different.

Data from the Census Bureau and the OMB show that in that year net spending by all levels of government was $3,239,913,876,000. That equaled $29,941 for each of the nation’s then 108,209,000 households. In 2000, the median household income was $41,990.

Thus, between 2000 and 2010, government in this country went from spending $12,049 less than the median household income to spending $629 more.

This is how I derived these startling numbers…”

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Disability Claims Melt Up 44%

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“The number of Americans getting some type of disability check from the federal government is soaring.
Since 2003, there’s been a 29% jump in Americans with little or no work experience getting disability payments, according to the Social Security Administration. Over the same time, there’s been a 44% increase in disability claims by people formerly in the workplace.

Disability claims among veterans are up 28% since 2008, according to the Department of Veterans Affairs.

All told, the federal government spent nearly $250 billion in 2011 paying more than 23 million Americans some type of disability claim. That’s about 7% of the overall population, and 16% of the workforce.

Those numbers don’t even include people out on worker compensation claims — which are mostly paid for by private companies. Five states also offer short term disability, and there are nearly 1 million workers receiving private disability insurance.

But the Social Security-administered program that pays disability claims will likely run out of money by 2016, forcing politicians to either cut Social Security benefits, raise taxes or, most likely, dip into general Social Security funds for the money.

There are many reasons for the increase in disability claims, most notably the recession, an aging population, advances in medical technology and a decade of war.

The recession: The economic downturn in 2008 and early 2009 is thought to be the major reason for the jump in disability payments to people who were formerly working….”

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The Fed Admits Student Debt is a Huge Risk to Recovery

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“Policy makers on the Federal Reserve’s interest-rate setting panel have for the first time identified high student debt burdens as a risk to economic growth, adding to a growing chorus of government officials concerned about households’ education borrowings.

At $1.1 trillion, according to the Consumer Financial Protection Bureau, outstanding student loan debt is the largest consumer debt class after home mortgages. Financial regulators, the U.S. Treasury and the New York Fed have all warned about the possible danger student loans pose to financial stability and the broader economy.

But prior to its March meeting, the Federal Open Market Committee, which sets interest rates that affect trillions of dollars of loans and securities, had never before mentioned student loans as a possible downside risk to the economy, according to a review of past meeting minutes.

According to newly released minutes from the March meeting, some members of the panel mentioned “the high level of student debt” as a risk to aggregate household spending over the next three years.

“There is increasing consensus that student loan debt is having a broader impact on the economy than we think,” Rohit Chopra, the CFPB official responsible for the student loan marketplace, said in an interview.

The committee’s mention of student debt burdens is likely to further discussion in Washington over what, if anything, policy makers should do to rein in what has been diagnosed as a growing problem….”

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Too Big to Fail or Jail Sends Too Small to Survive or Stay Alive to the Gallows

65 views

What does it day about our society when we trade stocks that go higher by putting debtors in prison? Certainly not all of these people are cheaters of not paying their debts…..fun times indeud.

 

“(MoneyWatch) Thousands of Americans are sent to jail not for committing a crime, but because they can’t afford to pay for traffic tickets, medical bills and court fees.

If that sounds like a debtors’ prison, a legal relic which was abolished in this country in the 1830s, that’s because it is. And courts and judges in states across the land are violating the Constitution by incarcerating people for being unable to pay such debts.

Ask Jack Dawley, 55, an unemployed man in Ohio who between 2007 and 2012 spent a total of 16 days in jail in a Huron County lock-up for failing to pay roughly $1,500 in legal fines he’d incurred in the 1990s. The fines stemmed from Dawley’s convictions for driving under the influence and other offenses. After his release from a Wisconsin correctional facility, Dawley, who admits he had struggled with drugs and alcohol, got clean. But if he put his substance problems behind him, Dawley’s couldn’t outrun his debts.

Struggling to find a job and dealing with the effects of a back injury, he fell behind on repayments to the municipal court in Norwalk, Ohio. He was arrested six years ago and sent to jail for not paying his original court fines. Although Dawley was put on a monthly payment plan, during his latest stint behind bars in 2012 the court ordered him to pay off his entire remaining debt.

” I called my brother, and they told him I have to pay off the whole fine in order for me to get out,” he said. “That was $900. So I sat my whole 10 days [in jail.]”

Such stories are by no means unusual. Rather, they reflect a justice system that in effect criminalizes poverty. “It’s a growing problem nationally, particularly because of the economic crisis,” said Inimai Chettiar, director of the justice program at New York University School of Law’s Brennan Center for Justice.

Roughly a third of U.S. states today jail people for not paying off their debts, from court-related fines and fees to credit card and car loans, according to the American Civil Liberties Union. Such practices contravene a 1983 United States Supreme Court ruling that they violate the Constitutions’s Equal Protection Clause….”

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42 Things About Motivation

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“When it comes to motivation and performance, few focus on what they’re doing or how to improve it. They might respond to specific feedback from a boss, but rarely examine what motivates them to do their best at their job or in life.

Luckily, there’s a large body of research focusing on how people can get the most out of themselves, and how managers can unlock employee potential.

For example, making too many decisions in a day depletes your willpower, setting goals can backfire, and employees have a hard time working for managers who emphasize their own power….”

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Consumer Confidence Falls to a Six Week Low

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“Confidence among U.S. consumers fell to a six-week low and claims for jobless benefits rose more than forecast, highlighting the risks to the economy posed by federal government budget cuts.

The Bloomberg Consumer Comfort Index dropped to minus 34.4 in the week ended March from minus 33.9 as Americans’ views of the economy deteriorated to the lowest point since early February. Applications for unemployment insurancebenefits rose by 16,000 to 357,000 last week, the Labor Department said.

The figures represent a blemish for an economy that has shown signs of strengthening on the heels of a housing marketrebound and a pickup in manufacturing. Federal Reserve policy makers are concerned the automatic reductions in government spending that began this month may impede the progress of the expansion after a fourth-quarter slowdown.

“There will be some impact from the sequester, and certainly the second quarter should look somewhat softer than the first quarter,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities in New York. At the same time, “it’s domestic growth that’s driving the economy — it’s housing, it’s consumer spending, it’s business consumption.”

Stocks rose, sending the Standard & Poor’s 500 Index above its record closing level, as the reopening of banks in Cyprus helped ease concern about Europe’s debt crisis. The S&P 500 climbed 0.2 percent to 1,566.18 at 12:14 p.m. in New York.

Fourth Quarter…”

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Welcome to the Era of Squeeze

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“Next time you find yourself staring at an empty savings account, feel free to blame the era you live in.

Middle-income households would havesaved roughly $1,400 more a year by 2005if their incomes had grown at the same rate as the top 10 percent of earners from 1980 to 2008, a new paper finds.

By comparing the income data of top-earning households with everyone except the poorest 10 percent, University of Chicago professors Marianne Bertrand and Adair Morse discovered that the growing levels of U.S. income inequality had caused about a 3 percent decrease in middle-income household savings by the mid-2000s. Altogether, the U.S. personal savings rate for all Americans declined from around 10 percent of disposable income in the early 1980s to just 1.5 percent in 2005, the researchers write….”

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Your Tax Dollars at Work: Waste, Fraud, & Abuse

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“After U.S. and allied warplanes destroyed a key bridge carrying 15 oil and gas pipelines in northern Iraq during the 2003 conflict there, officials in Washington and Baghdad made its postwar reconstruction a top priority. But instead of spending two months to rebuild the span over the Tigris River at an estimated cost of $5 million, they decided for security reasons to bury the pipelines beneath it, at an estimated cost more than five times greater.

What ultimately happened there tells the story — in a microcosm — of a substantial chunk of the massive nine-year U.S. effort to reconstruct Iraq, the second-largest such endeavor in history (only  the U.S. investment in Afghanistan has been larger).

Studies conducted before the digging of the new pipelines started showed that the soil was too sandy, but neither the Army Corps of Engineers overseeing the effort nor the main contractor at the site, Kellogg Brown and Root (KBR), heeded the warning.  As a result, “tens of millions of dollars [were] wasted on churning sand” without making any headway, as Special Inspector General for Iraq Reconstruction Stuart W. Bowen Jr., described it in his recently published final report on the U.S. occupation.

By the time the digging effort was halted, and the old bridge and piping repaired — more than three years later — the bill had reached more than $100 million. “Because of the nature of the original contract, the government was unable to recover any of the money wasted on this project,” Bowen said.  More than $1.5 billion in oil revenues may have been lost as a result of the delays. KBR did not respond to a request for comment.

The episode is, in short, emblematic of the contracting abuses and mismanagement that wasted at least $8 billion of the $60 billion spent by Washington on Iraq’s post-war recovery, under the guidance of what Bowen describes in his report as “adhocracy” largely controlled by the U.S. military — a structure  that never “coalesced into a coherent whole” and often failed to achieve its aims.

With the U.S. military now gone from Iraq and the 10th anniversary of the invasion only days away, Bowen’s retrospective summary of his audits offers useful insights into how well the U.S. government managed its occupation and the legacy it left behind. The mostly downbeat tone is set early, when the report summarizes final interviews Bowen conducted with 44 top U.S. and Iraq officials, who addressed the simple question of whether the decade-long project left Iraq in better shape.

Most of the Americans he spoke to were rueful, noting multiple miscalculations, poor planning, disorganization in Washington, and inadequate consultation with Iraqis. James Jeffrey, the U.S. ambassador in Iraq from 2010 to 2012, told Bowen that “the U.S. reconstruction money used to build up Iraq was not effective … We didn’t get much in return.”

Only retired Army Gen. David Petraeus, who commanded U.S. forces in Iraq before shifting to Afghanistan and then briefly directing the CIA, was ebullient, claiming the effort had brought “colossal benefits to Iraq.”

Virtually every senior Iraqi, in sharp contrast, said the decade-long U.S. occupation was beset by huge misspending and waste, and had accomplished little. The biggest footprint Americans left behind, most of these Iraqi officials said, was more corruption and widespread money-laundering. Such a huge investment “could have brought great change in Iraq,” Prime Minister Nuri al-Maliki said, but the gains were often “lost.”

Billions here, billions there

The bill for Iraq is hard to divide into neat categories, but in rough terms: Washington spent more than $15 billion to try and improve Iraq’s power and water supply, revive its schools, and repair its roads and housing; it spent another $9 billion on health care, law enforcement, and humanitarian assistance; it spent $20 billion training and re-equipping Iraqi security forces; it spent roughly $8 billion to enhance the rule of law and battle narcotics; and it spent $5 billion helping to prop up the economy….”

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Thank You For Your Service

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“Sequestration Slashes Scholarships for Children of Iraq and Afghanistan War Casualties and Military Members

On the 10-year anniversary of the start of the Iraq War, scholarships for children of troops who died fighting in that conflict are being cut by thousands of dollars, thanks to sequestration.

The awards, called the Iraq and Afghanistan War Grants, go to undergraduate students whose moms or dads died “as a result of military service performed in Iraq or Afghanistan after the events of 9/11,” according to the Department of Education.

Awards that have already been established are safe, but as of March 1, the dollar amount for each new grant is being reduced by 37.8 percent from what a student would have received last year.

That means young adults will receive up to $2,133.81 less if they apply for a grant for the first time this year.

The Iraq War officially ended in December 2011, but these grants are not only for children of recent casualties. Children whose parents were killed in earlier years of the wars when they were very young are now old enough to go to college and could be eligible for the grants….”

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Study Shows Workers Saving Too Little to Retire

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“Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement.

New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.

Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008.

The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study’s 23-year history.

The same forces are weighing on corporate balance sheets. Based on another recent report, the Society of Actuaries said that rising life expectancies could add as much as $97 billion to corporate pension liabilities in coming years, an increase of up to 5%.

While Americans are living longer, the extended life spans will make it tougher for workers trying to stretch retirement savings and put additional strains on pension plans….”

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U.S. to Boost Missile Defenses in Response to North Korea

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“WASHINGTON—The Pentagon is preparing to strengthen its missile defense systems on the West Coast in response to increased threats from North Korea and rising tensions on the Korean peninsula.

The U.S. plans to boost its ground-based missile interceptors in Alaska and California by one-third, adding 14 additional systems to the 30 already in place on the West Coast, a senior defense official said Friday. Interceptors are vehicles that are launched to intercept intercontinental missiles in flight.

The expansion in the system was due to be announced by Defense Secretary Chuck Hagel at a news conference Friday.

The decision comes as North Korea has issued a series of threats to attack the U.S. and South Korea over new international sanctions and joint military exercises in the region.

Earlier this month, North Korea threatened to launch a pre-emptive nuclear strike on the U.S. and South Korea. While American officials don’t believe North Korea is capable of launching a long-range attack, the threat is seen as a concerning sign of the nation’s state of mind.

Pentagon officials signaled the possible expansion days earlier. “North Korea’s shrill public pronouncements underscore the need for the U.S. to continue to take prudent steps to defeat any future North Korean ICBM,” James Miller, undersecretary of defense for policy, said in a speech last week at the Atlantic Council….”

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Consumer Sentiment Falls In March

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“U.S. consumer sentiment tumbled to its lowest since December 2011 in early March, hit by dissatisfaction with government economic policies and as fewer Americans expected to see improvements in growth or the labor market, a survey released on Friday showed.

The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment dropped to 71.8 from 77.6 in February, short of expectations for 78.

(Click here to track the U.S. stock market reaction to the economic report.)

Across-the-board government spending cuts of $85 billion went into effect at the beginning of the month after U.S. lawmakers failed to come to a new deal.

A record 34 percent of respondents made unfavorable references to government economic policies, beating January’s prior record of 31 percent.

“The frustrations expressed by consumers essentially involve how little consideration has been given to how the government’s inability to reach a compromise affects people’s economic situation,” survey director Richard Curtin said in a statement.

The barometer of current economic conditions fell to 87.5 from 89, while the gauge of consumer expectations tumbled to 61.7 from 70.2, its weakest since November 2011….”

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Obama Introduces Fix for Medicare

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“However, the specifics of that proposal don’t spring to mind as easily as the reforms being bandied about in Republican circles, such as providing seniors with vouchers to pay for premiums or raising the retirement age.

That’s partly because Obama last laid out his reforms in February 2012 as part of his budget proposal. The president did little more than touch on these plans on the campaign trail last year and again in last month’s State of the Union address.

But as policy makers dig in for an extended battle on deficit reduction, Obama’s Medicare reform plans are likely to get a lot more attention soon. Rep. Paul Ryan is expected to release his budget, which will update the GOP’s proposals to rein in health care spending on the elderly, on Tuesday.

The president’s plan focuses mainly on reducing payments to drug companies and hospitals, though he would also raise revenue by asking wealthy seniors and new beneficiaries to pay more. All told, his reforms would cut health care spending by $400 billion, according to updated estimates by the White House.

Here’s are some of the key things that Obama would do:

Pay less for drugs: Increase the rebates the government receives for Medicare beneficiaries’ medications so they are the same as the rebates given under the Medicaid program. This would save $140 billion.

Reduce payments for post-hospital care: Bring payments for skilled nursing and rehabilitation facilities, long-term care hospitals and home health care more in line with costs. Reduce payments to facilities with high rates of hospital readmission. Reduce payments to rehab centers for certain conditions, such as knee replacements and hip fractures, so they are more comparable with skilled nursing homes. Make sure centers are treating patients with greater need. This would save $50 billion….”

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Bifurcation: A Golden Age for Corporation vs a Pitfall for Main Street

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“With the Dow Jones industrial Averageflirting with a record high, the split between American workers and the companies that employ them is widening and could worsen in the next few months as federal budget cuts take hold.

That gulf helps explain why stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high.

With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers.

”So far in this recovery, corporations have captured an unusually high share of the income gains,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. ”The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.”

The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.

These factors, along with the Federal Reserve’s efforts to keep interest rates ultra-low and encourage investors to put more money into riskier assets, prompted traders to send the Dow past 14,000 to within 75 points of a record high last week.

While buoyant earnings are rewarded by investors and make American companies more competitive globally, they have not translated into additional jobs at home.

Other recent positive economic developments, like a healthier housing sector and growth in orders for machinery and some other durable goods, have also encouraged Wall Street but similarly failed to improve the employment picture. Unemployment, after steadily declining for three years, has been stuck at just below 8 percent since last September…..”

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Lawmakers Make a Push for Interweb Tax

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“The Marketplace Fairness Act grants states the authority to compel online and catalog retailers (“remote sellers”), no matter where they are located, to collect sales tax at the time of a transaction – exactly like local retailers are already required to do. However, there is a caveat: States are only granted this authority after they have simplified their sales tax laws.

Simplification is required because of two Supreme Court rulings (Bellas Hess and Quill, described below) cite concern that collecting sales tax for multiple states would be too difficult.

The Marketplace Fairness Act requires that states must simplify their sales tax laws in order to ease those concerns and make multistate sales tax collection easy. Specifically, states seeking collection authority have two options for simplifying their sales tax laws.

Option 1: A state can join the twenty-four states that have already voluntarily adopted the simplification measures of the Streamlined Sales and Use Tax Agreement (SSUTA), which has been developed over the last eleven years by forty-four states and more than eighty-five businesses with the goal of making sales tax collection easy. Any state which is in compliance with the SSUTA and has achieved Full Member status as a SSUTA implementing state will have collection authority on the first day of the calendar quarter that is at least 90 days after enactment.

Option 2: Alternatively, states can meet essentially five simplification mandates listed in the bill. States that choose this option must agree to:

  1. Notify retailers in advance of any rate changes within the state
  2. Designate a single state organization to handle sales tax registrations, filings, and audits
  3. Establish a uniform sales tax base for use throughout the state
  4. Use destination sourcing to determine sales tax rates for out-of-state purchases (a purchase made by a consumer in California from a retailer in Ohio is taxed at the California rate, and the sales tax collected is remitted to California to fund projects and services there)
  5. Provide free software for managing sales tax compliance, and hold retailers harmless for any errors that result from relying on state-provided systems and data

 

With states adhering to these provisions or the similar measures in SSUTA, retailers across the country will find collecting sales tax for multiple states much easier than it has ever been in the past.

 

How did we get here?….”

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Your Company May Kick Your Spouse to the Curb

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“By denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act. This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26), but husbands and wives are optional. “The question about whether it’s obligatory to cover the family of the employee is being thought through more than ever before,” says Helen Darling, president of the National Business Group on Health. See: When your boss doesn’t trust your doctor.

While surcharges for spousal coverage are more common, last year, 6% of large employers excluded spouses, up from 5% in 2010, as did 4% of huge companies with at least 20,000 employees, twice as many as in 2010, according to human resources firm Mercer. These “spousal carve-outs,” or “working spouse provisions,” generally prohibit only people who could get coverage through their own job from enrolling in their spouse’s plan.

Such exclusions barely existed three years ago, but experts expect an increasing number of employers to adopt them: “That’s the next step,” Darling says. HMS, a company that audits plans for employers, estimates that nearly a third of companies might have such policies now. Holdouts say they feel under pressure to follow suit. “We’re the last domino,” says Duke Bennett, mayor of Terre Haute, Ind., which is instituting a spousal carve-out for the city’s health plan, effective July 2013, after nearly all major employers in the area dropped spouses.

But when employers drop spouses, they often lose more than just the one individual, when couples choose instead to seek coverage together under the other partner’s employer. Terre Haute, which pays $6 million annually to insure nearly 1,200 people including employees and their family members, received more than 20 new plan members when a local university, bank and county government stopped insuring spouses, according to Bennett. “We have a great plan, so they want to be on ours. All we’re trying to do is level the playing field here,” he says….”

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Fact Checking the State of the Union Address

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“President Obama put a rosy spin on several accomplishments of his administration in his 2013 State of the Union address.

  • The president claimed that “both parties have worked together to reduce the deficit by more than $2.5 trillion.” But that’s only an estimate of deficit reduction through fiscal year 2022, and it would be lower if the White House used a different starting point.
  • Obama touted the growth of 500,000 manufacturing jobs over the past three years, but there has been a net loss of 600,000 manufacturing jobs since he took office. The recent growth also has stalled since July 2012.
  • He claimed that “we have doubled the distance our cars will go on a gallon of gas.” Actual mileage is improving, but Obama’s “doubled” claim refers to a desired miles-per-gallon average for model year 2025.
  • Obama said the Affordable Care Act “is helping to slow the growth of health care costs.” It may be helping, but the slower growth for health care spending began in 2009, before the law was enacted, and is due at least partly to the down economy.

The president also made an exaggerated claim of bipartisanship. He said that Republican presidential candidate Mitt Romney agreed with him that the minimum wage should be tied to the cost of living. But Romney backed off that view during the campaign.

Analysis

President Barack Obama gave his State of the Union address to Congress Feb. 12, laying out his legislative agenda for the coming year and achievements of his time in office. But Obama puffed up his record.

Deficit Reduction

Obama said the administration and Congress “have worked together to reduce the deficit by more than $2.5 trillion.” A bipartisan group called the estimate “very reasonable.” But it is only an estimate — and a debatable one at that — for deficit reduction from budgets through fiscal year 2022. Exactly how much will be cut will be up to future Congresses.

And, even if Congress meets those deficit-reduction goals, deficit spending will continue and the federal debt will grow larger — unless much more is done.

Obama: Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion — mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans. As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.

Obama has cited the $2.5 trillion figure on numerous occasions, including at a Jan. 14 news conference. It is based largely on two pieces of legislation: the Budget Control Act of 2011, which placed caps on discretionary spending beginning in 2012, and the American Taxpayer Relief Act of 2012, which prevented tax hikes on most Americans in 2013 but allowed rates to go up on the top 1 percent of taxpayers. There was some additional savings from reductions in discretionary spending in the fiscal 2011 appropriations bills.

Republicans challenge the $2.5 trillion figure with some justification, because the amount of savings depends heavily on the baseline — that is, the starting point of comparison. The White House told us it used the Office of Management and Budget’s January 2011 baseline…..”

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