G20 Wants to Wean Global Economy Off U.S. Spending
2011 Budget Cut Bill Breakdown
S. African president: Gadhafi accepts terms of agreement
Tripoli, Libya (CNN) — Embattled Libyan leader Moammar Gadhafi, in negotiations with the African Union, has agreed in principal to a deal that would end the conflict in the nation he’s ruled for 42 years, South African President Jacob Zuma told reporters Sunday.
Negotiations remained under way Sunday night between Gadhafi and the African Union delegation.
Details of the agreement were not available, though it is believed to include an immediate ceasefire in the nearly two-month long war between Gadhafi’s forces and those fighting to unseat him. In his comments, Zuma also discussed an end to NATO airstrikes aimed at enforcing a no-fly zone and targeting Gadhafi’s troops.
After staying overnight in Tripoli, the African Union delegation will fly Monday to the Libyan rebel stronghold of Benghazi to meet with opposition leaders there.
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Comments »Medicare reform genuinely discussed by CNN correspondent
Comments »House Budget Chairman Paul Ryan’s 2012 budget resolution turned the floodlights on Medicare, the health care program for seniors that is projected to take increasingly bigger bites out of the federal budget in the coming decades.
Ryan’s proposals for overhauling the program are dramatic. Democrats claim they will dismantle it. Ryan claims they will save it.
Love or hate his ideas, though, they are sparking a necessary debate. The ugly math suggests Medicare is unsustainable in its current form.
Medicare is financed through a combination of payroll taxes, premiums and general revenue. The problem is that spending has been growing faster than the economy and is projected to do so indefinitely.
The reasons for that are simple: The number of people expected to enroll in the program will surge as the population ages and health care costs continue to grow far faster than inflation.
In just the next decade, the Congressional Budget Office estimates, enrollment in Medicare will grow by a third and spending per enrollee will jump by 50%.
Between 1975 and 2010, the number of enrollees doubled to 47 million, and the real cost per enrollee quadrupled, according to data from the Centers for Medicare and Medicaid Services, the agency that runs the program.
By 2040, Medicare will cover 88 million people and the cost will be nearly three times higher than in 2010.
Not surprisingly, payroll tax revenue and premiums aren’t keeping pace with the program’s increasing costs. And that means the draw on federal coffers will grow larger barring any policy changes.
To wit, in 1975, the program’s income from revenue and premiums covered 69% of total Medicare disbursements. In 2010, they covered 40%. By 2040, they’ll only cover 30%.
So how to fix it?
Figuring out how to make the program’s finances sustainable over time while continuing to provide seniors with adequate coverage and quality care is difficult.
The House Republican budget resolution proposes converting Medicare from a fee-for-service program into a “premium-support” system for everyone under 55 today. When they become seniors, they would choose from a Medicare-approved list of private insurance plans and the cost of their chosen plan would be subsidized in part by the federal government.
The plan would also gradually raise the Medicare eligibility age from 65 to 67 by the 2030s.
The changes would reduce federal health spending commitments and make them more predictable, according to the CBO.
But the agency also said “most elderly people would pay more for their health care than they would under the current Medicare system.” And they would assume greater financial risk if their health care needs turn out to be greater than expected.
Robert Reischauer, president of the nonpartisan Urban Institute and a trustee of the Social Security and Medicare Trust Funds, commends Ryan for coming up with an overall debt-reduction plan that he characterized as “significant” and “serious.”
But the burden Ryan’s Medicare proposals would shift to enrollees in the program concern him.
For one thing, Reischauer said, Medicare today “is not a particularly generous program. Most seniors buy or get supplemental coverage.”
Currently, Medicare covers half of seniors’ health costs, said Tricia Newman, director of the Medicare Policy Project at the nonpartisan Kaiser Family Foundation.
She and Reischauer worry that proposals like Ryan’s presume that seniors should “have more skin in the game.”
“People in Medicare already have plenty of skin in the game,” Newman said. “They won’t have a great capacity to absorb higher costs.”
They contribute to the program first as workers through their payroll taxes, then as seniors through premiums. Newman noted, too, that out-of-pocket spending on health expenses is already rising for people on Medicare, with one in four now spending at least 30% of their incomes on health expenses.
Newman and Reischauer both note that making Medicare sustainable will require more than curbing federal payments to seniors and increasing cost-sharing. It will require figuring how to bring health care costs down generally.
Ryan’s plan, however, calls for the repeal of the entire new health reform law, which includes a number of delivery system changes that potentially may reduce Medicare costs and improve care, such as reducing reimbursements for hospitals with high infection rates.
“These seeds haven’t really been planted yet,” Newman said.
The deficit watchdog group Concord Coalition in a statement commended Ryan for putting out an overall plan that “fits the magnitude of the fiscal challenge we face.”
But it, too, noted concern that his efforts to control Medicare costs are not paired with efforts to control health costs. Without both, seniors’ ability to afford health care will go down over time.
“While setting spending targets for federal health care programs provides an incentive for efficiency, and increasing out-of-pocket costs for retirees provides an incentive for economizing, we will still need cost controls, delivery system reforms, and research on best practices to have any chance of reaching those targets,” said Josh Gordon, Concord’s policy director.
U.S. General to Congress: North Korea may be considering additional attacks
Dennis Kucinich Claims Tax Dollars are Being Stolen
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Jamie Dimon: “The Wealthy Should Pay th Largest Portion of U.S. Taxes”
Send Your War IOU to Congress (video)
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Comments »Peter Morici discusses government shutdown
Comments »NEW YORK (TheStreet) — The economic consequences of a government shutdown can’t be calibrated on a spreadsheet with an economic model. It all depends on who wins public opinion — congressional Republicans or the president and Democrats.
Federal spending is out of control. From 2007, the last full year before the financial crisis, to 2011, the second full year of economic recovery, spending has jumped $1.1 trillion, or 40%, when a $200 billion increase would have satisfied inflation.
For any other country, a deficit exceeding 10% of GDP would force austerity by sending interest rates on government bonds through the roof. Alas, the U.S. prints the world’s currency — the dollar — so it can inflate its way to solvency, and the bond market is starting to take that bet.
Enter the Tea Party, that troublesome bunch of youngsters pushing elder Republicans to stand up for fiscal solvency, end the madness or halt funding for the government.
Closing federal offices for a few days won’t have a great, lasting impact. When they reopen, checks will go out. What counts, though, is whether the newly elected conservative majority in the House of Representatives keeps its mandate as measured by the polls.
Through 2012, the projected cumulative deficit is $11 trillion, and House Republicans are crafting a plan to cut that figure by $4 or $6 trillion — reports vary on the amount. The means are hardly attractive — vouchers for poor folks to purchase health care and block grants to the states to replace and reduce much of federal Medicare spending. That would morph President Obama’s vision of universal coverage into a victimization plan for the poor and even bigger budget crises for the states.
Americans pay too much for health care, spending 18% of GDP for less effective service than the Germans and Dutch receive spending only 12 percent. Instead of taking on higher U.S. drug prices, bloated health insurance and hospital administrative costs, and malpractice abuse, Republicans will tell the poor and the states to bargain with the big guys directly. Good luck with those ideas.
As for Social Security — hush, Republicans have a secret plan! The GOP will save money, but so far it not revealed how. Private investment accounts, the favorite among free marketeers, would leave brokers smiling but the old poorer, judging by how most IRAs have faired since 2000.
If the President comes out of the government shutdown politically stronger, then its business as usual, but can it be?Thanks to huge deficits, inflation expectations are rising, and bond investors are becoming wary that the secular trend on 20- and 30-year U.S. Treasury rates is up and up. Not just a cyclical adjustment this summer, as unemployment falls and the Federal Reserve ends quantitative easing, but up and up over the next several years because the size of deficits President Obama’s budgets project are on the low side. He assumes too much cost savings and additional revenue from health care reforms and a 4% percent growth rate for the next four years — something few economists would endorse.
As the long rate on Treasuries rises, interest payments will absorb more and more federal revenue, and austerity will be forced on the U.S. government in the manner of Greece or Portugal. At that point, slashing will prevail over reason. Thoughtful reforms of health care and Social Security will become even more difficult.
It’s tough to forecast the consequences of a fiscal train wreck, but if the Democrats win the day in a government shutdown, it only postpones the inevitable reckoning to an ultimate day of calamity.
The choices is clear. We can make responsible reforms to health care that harness drug, administrative and tort costs now, and ensure solvency for Social Security by raising the retirement age to 70, or the bond vigilantes will ultimately end the party. If it’s the latter, moer draconian changes will be forced on the American people, who simply refuse to live within their means.
Geithenr: America Faces Severe Hardships if Debt Limit is Not Raised
BoJ Ranks Central Banks as Key Influence in Climbing Commodity Prices
Libyan Rebel Commander: ‘Cut Gaddafi’s Throat, Then Establish an Islamic State’
Wow. Perhaps Gaddafi wasn’t lying when he stated that Al Qaeda was responsible for the uprising.
“Whereas American officials have been straining to make out “flickers” of intelligence suggesting a jihadist influence in the eastern Libyan rebellion against the rule of Muammar al-Gaddafi, Fouchet encountered a flagrant jihadist presence and met with participants who talked openly about their dedication to jihad and/or their desire to establish an Islamic state.”
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Comments »New GOP Budget Claims to Cut 6.2 Trillion in Spending Over 10 Years
Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president’s budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.
A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage’s analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.
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Comments »IMF Chief Dominique Strauss-Kahn: “The Washington consensus is now behind us”
March Madness: U.S. Gov’t Spent More Than Eight Times Its Monthly Revenue
(CNSNews.com) – The U.S. Treasury has released a final statement for the month of March that demonstrates that financial madness has gripped the federal government.
During the month, according to the Treasury, the federal government grossed $194 billion in tax revenue and paid out $65.898 billion in tax refunds (including $62.011 to individuals and $3.887 to businesses) thus netting $128.179 billion in tax revenue for March.
At the same, the Treasury paid out a total of $1.1187 trillion. When the $65.898 billion in tax refunds is deducted from that, the Treasury paid a net of $1.0528 trillion in federal expenses for March.
That $1.0528 trillion in spending for March equaled 8.2 times the $128.179 in net federal tax revenue for the month.
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Comments »Webster Tarpley: U.S. Wants Arab World Destabilized
Qaddafi Envoy To Turkey Seeks Cease-Fire Truce Deal
US Deeply Concerned by Violence in Ivory Coast
WASHINGTON (AP) — Secretary of State Hillary Rodham Clinton says the U.S. is “deeply concerned” about the situation in the Ivory Coast and reports of human rights abuses and a massacre of more than 1,000 people.
In a statement Sunday, Clinton called on Laurent Gbagbo (luh-RAHN’ BAHG’-boh), the entrenched incumbent who lost a November vote, to step down immediately. She also says forces loyal to the internationally recognized President Alassane Ouattara (AL’-ah-sahn wah-TAHR’-ah) must respect the rules of war and stop attacks on civilians.
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Comments »AT&T Purchase of T-Mobile: Ma Bell All Over Again?
Executive Summary: the FCC is going to help reconstitute Ma Bell all over again. Let’s call it Ma Bell 2.0.
The damage to the economy will be significant as it results in less competition, less risk-taking, less entrepreneurship, and less innovation. Higher prices for consumers and a step backwards for the U.S.
I can prove it.
Think of the most unregulated marketplace in the U.S. One with the least government intervention. If you answered software and Internet applications, you’re a winner.
Over the last 25 years, the largely unregulated world of software has created untold trillions in value creation: Amazon, Microsoft, Google, eBay, Oracle, Facebook… the list goes on and on. Anyone with a good idea and some hacking skills can create a business worth tens or hundreds of millions of dollars.
No regulation. Unfettered competition.
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