Sep 21, 2011
|Asylum, IR stoushes confront leaders|
|Labor and Coalition troops aren't happy, with Julia Gillard and Tony Abbott both facing internal party pressures over key policy areas.|
Julia Gillard is in Canberra for the parliamentary sitting day.
The PM has brought on debate over her government's Migration Act amendments to this morning. The Australian reports the legislative stand-off has sparked new speculation about Ms Gillard's leadership, while the Sydney Morning Herald reports the government has briefed the cross bench on the Malaysia deal in the hope it can secure passage for the legislation through the lower house.
Tony Abbott will speak on the Migration Act amendments during the debate.
Mr Abbott is under pressure on the industrial relations reform front, with the drums still beating in the party. The Australian reports business groups and Liberal MPs Jamie Briggs and Kelly O'Dwyer have told the party it must look at IR refrom, while former Howard government minister Peter Reith made similar comments (not for the first time) on the ABC's Lateline program (transcript) (story). And former WA Liberal leader Bill Hassell has warned Mr Abbott in The West Australian it would be "political suicide'' to oppose the government's migration amendments.
Reshuffle: A revamp of Tony Abbott’s office is under way. Capital Circle has previously reported political adviser David Wawn is leaving the Abbott office to work for Chevron, while Team Abbott recently advertised fo
A change could be underway at the top at Hewlett-Packard. The company's board convened on Wednesday to discuss the possibility of ousting CEO Leo Apotheker after less than a year on the job and may appoint former eBay chief Meg Whitman to fill in as interim CEO, a source familiar with the matter told Reuters. HP's board of directors has come under increasing pressure in recent months after a raft of controversial decisions has left investors uncertain of the company's leadership.
Newly minted Apple CEO Tim Cook will try his hand as star presenter at an October 4 company event widely expected to include the launch of the latest version of the tech behemoth's iPhone handset, according to a report on AllThingD. Sources told the website that the plan is to make the iPhone 5 available to consumers within weeks of the event. Apple has yet to officially announce or even acknowledge that the new device exists at all. For those tired of yet another story about a rumored release date, there was something akin to a confirmation on Wednesday from an unlikely source: former U.S. Vice President Al Gore. Gore, an Apple board member, apparently told a tech conference that the next-generation phone will indeed be available next month. Oops?!
Google Executive Chairman Eric Schmidt traveled to Washington on Wednesday to face critics who say his company has become a dominant and potentially anti-competitive force on the Internet. Schmidt told a Senate antitrust hearing that his company has not "cooked" its search results to favor its own products and listings, despite accusations to the contrary from senators and other Web companies. "Google is in a position to determine who will succeed and who will fail on the Internet," said Republican Senator Mike Lee, a member of the Senate Judiciary Committee's antitrust panel. Google has been broadly accused of using its clout in the search market to stomp rivals as it moves into related businesses, like travel search.
Dust your library cards off, Kindle users. Amazon announced on Wednesday its Kindle ebooks will now be available for borrowing from more than 11,000 libraries across the U.S. Borrowing a book seems pretty simple: customers find the book they want on their local library’s website and choose the “Send to Kindle” option, which will then redirect them to Amazon.com where they must log in to complete the check out. Amazon then gives customers the option of delivering the book wirelessly to their device of choice – the books are compatible with all Kindle models and mobile apps - or transferring it manually using a USB drive.
Netflix and Discovery Communications reached an agreement to bring episodes of popular TV adventure shows including "Man vs. Wild" and "River Monsters" to the streaming service, the companies confirmed to Reuters correspondent Paul Thomasch on Wednesday. The two-year deal covers only material from prior seasons of the TV shows and is limited to Netflix subscribers in the United States. Discovery has an option for a third year.
|Schmidt says Google has not "cooked" search results|
|September 21, 2011 04:33 PM ET|
|WASHINGTON (Reuters) - Google Inc has not "cooked" its search results to favor its own products and listings, Executive Chairman Eric Schmidt told a Senate hearing examining if the search giant abuses its power. | Full Article|
|Full Tilt Poker rejects Ponzi allegations: lawyer|
|September 21, 2011 03:59 PM ET|
|NEW YORK (Reuters) - A lawyer for Full Tilt Poker rejected on Wednesday allegations made by federal prosecutors that the company and its board of directors operated the company as a global Ponzi scheme. | Full Article|
|Netflix, Discovery in streaming deal for TV shows|
|September 21, 2011 02:14 PM ET|
|NEW YORK (Reuters) - Netflix Inc and Discovery Communications Inc reached an agreement to bring episodes of popular TV adventure shows including "Man vs. Wild" and "River Monsters" to the streaming service, the companies confirmed on Wednesday. | Full Article|
|Google spurns Oracle $2.2 billion Android damage claim|
|September 21, 2011 04:45 PM ET|
|(Reuters) - Google Inc urged a federal judge to reject an Oracle Corp expert's recommendation that it pay more than $2.2 billion for infringing patents for Java technology used in the Android operating system. | Full Article|
Personal Finance Daily
SEPTEMBER 21, 2011
Obama's debt plan may hit your retirement
- Obama's debt plan may hit your retirement
- U.S. stock futures edge down ahead of Fed decision
- Google faces antitrust grilling in Congress
- Europe faces big hit from debt crisis
— Anne Stanley , Managing Editor, Personal Finance
Obama's debt plan may hit your retirement
If you're wealthy or you receive Medicare, President Obama's proposal to cut the federal deficit could very well either raise your taxes or cut your benefits. There's no winning if you're both rich and a Medicare beneficiary.
Read more: Obama's debt plan may hit your retirement.
Grantham: ‘No market for young men'
Hey, Young Turks on trading desks, up-and-coming money managers and Wall Street stock jockeys: You want the truth about the global markets today? Listen to Jeremy Grantham, chairman of Boston-based investment manager GMO LLC: You can't handle the truth.
Read more: ‘No market for young men.'
Why the insiders have quit buying stocks
Just a few weeks ago, insiders were buying up shares in their own companies with both hands. Now they've disappeared, writes Brett Arends.
Read more: Why the insiders have quit buying stocks.
Africa: The final frontier for growth investors
While everyone has been getting excited about the potential in the BRIC nations, Africa has been quietly emerging as a real growth story.
Read more: Africa: The final frontier for growth investors.
ECONOMY & POLITICS
Sales of existing homes surge 7.7% in August
Sales of existing homes climbed 7.7% to a five-month high in August, as previously delayed deals closed, prices fell and rents rose, according to data released Wednesday.
Read more: Sales of existing homes surge 7.7% in August.
Google faces antitrust grilling in Congress
Google Inc.'s executive chairman will be in the congressional hot seat on Wednesday as a Senate antitrust subcommittee opens a hearing on whether the search giant squashes competition.
Read more: Google faces antitrust grilling in Congress.
Europe faces big hit from debt crisis: IMF
European banks face as much as a 300-billion-euro ($410 billion) hit from debt-ravaged countries, and global financial conditions have become more unstable in recent months, the International Monetary Fund says.
Read more: Europe faces big hit from debt crisis.
Latest News At Time Of Postinn
3:15 PM ET Reuters
3:14 PM ET NYTimes
3:09 PM ET Reuters
By BINYAMIN APPELBAUM
The Federal Reserve is shifting $400 billion from short- to long-term Treasury securities to push interest rates down and encourage companies to borrow and spend.
- Wall Street Falls After Fed Meeting 3:10 PM ET
- Central Banks Face New Constraints 11:27 AM ET
- Political Pressure on the Fed Can Backfire 3:26 PM ET
By FLOYD NORRIS
The I.M.F. and World Bank meet in Washington at a time when political sniping has reduced the ability of central bankers to act.
- Economix: What to Expect From the Fed 10:53 AM ET
By CHRISTINE HAUSER
Stocks declined Wednesday after the Federal Reserve said it would pressure down long-term interest rates to help bolster the economy.
The ratings agency said Washington was more likely "to allow a large bank to fail should it become financially troubled."
By STEVE LOHR and CLAIRE CAIN MILLER
The company's chairman, Eric E. Schmidt, testified on Wednesday before a Senate committee on whether Google competes fairly in its various businesses.
By QUENTIN HARDY
Directors of the company were considering Meg Whitman, the former chief of eBay, to replace Léo Apotheker, sources said.
U.S. stocks tumble after Fed offers no surprises: Stocks & Markets in The News | MarketWatch - Market Pulse
By Laura Mandaro
SAN FRANCISCO (MarketWatch) -- U.S. stocks dropped sharply Wednesday, with the major indexes notching deep losses in the last hour of trading, in the wake of a Federal Reserve statement that was largely in line with market expectations. The Dow Jones Industrial Average DJIA -2.49% lost 283.82 points, or 2.5%, to 11,124.84. The S&P 500 SPX -2.94% fell 35.33 points, or 2.9%, to 1,166.76. The Nasdaq Composite COMP -2.01% lost 52.05 points, or 2.01%, to 2,538.19. The Federal Reserve announced a $400 billion debt swap that will extend the average maturity of the securities it holds, a bid to lower long-term rates that had been widely expected. "The Fed disappointed in a big way. They had a chance to go big and they wimped out," said Keith Springer, president of Springer Financial Advisors in Sacramento, Calif.
The Economist | Selected New Articles: Schumpeter: Playing against type / Babbage: A nightclub on your smartphone....and more
Schumpeter: Playing against type
It's hard to talk to Greek banks and not come away feeling sorry for them
read more »
Badoo, a London-based start-up, has a shot at becoming one of Europe's leading internet firms
read more »
Eastern approaches: Putin's win in Strasbourg
A mixed human-rights court ruling on the dismemberment of Yukos will go down well in Moscow
read more »
Gulliver: Flying above the clouds
Aircraftmakers look beyond the current economic storms and see blue skies ahead. And airlines are navigating the turbulence well
read more »
Prospero: Michael Ondaatje, author
A conversation about his new novel "The Cat's Table", and his preference for prose over poetry
read more »
Which MBA?: School of the dark arts
Russia's only internationally recognised business school focuses on how to get things done
read more »
Audio: Dan Kurtzer on Palestinian statehood
A former American ambassador to Israel and Egypt says diplomacy hasn't run its course in the Middle East peace process
Daily chart: Debt, deficits and the markets
New forecasts for the government debt and budget balances of rich countries
read more »
Online debate: The yuan
Will the yuan replace the dollar?
read more »
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — The Federal Reserve on Wednesday, fearful of a “slow” economy, decided to start a program to twist the yield curve by swapping shorter-maturity government securities for longer-dated ones.
In a statement, the Fed said it will buy $400 billion of Treasury securities in the 6- to 30-year range and sell an equal amount of maturities of 3 years or less. The purchases would be completed by the end of June 2012.
The Fed also announced a new plan to purchase agency mortgage-backed securities with proceeds of maturing securities.
The Fed said that it was acting in view of “significant downside risks to the economic outlook, including strains in global financial markets.”
Markets dropped after the release of the statement with the Dow Jones Industrial Average DJIA -2.49% ending 284 points in the red. Yields on the 10-year government bond 10_YEAR -4.12% dropped to a record closing low of 1.87% and the 30-year 30_YEAR -6.68% plunged, while those for the 2-year 2_YEAR +18.82% rose — the direction the Fed is intending. See Market Snapshot
Jonathan Basile, director of economics at Credit Suisse, said the market was disappointed the Fed did not undertake an outright purchase of securities, or QE3. “The Fed moved their chips around but didn’t put any new money on the table,” Basile said.
Not all Fed officials were convinced. There were three dissents from Wednesday’s decision, which was on the aggressive side of market expectations. Voting against the action were Dallas Fed President Richard Fisher, Narayana Kocherlakota of Minneapolis and Charles Plosser of Philadelphia.
The Fed move has been nicknamed “Operation Twist” because it mirrors a effort in 1961 to buy longer-dated bonds and sell shorter-dated securities.
With the dissents, the new program should be called “twist and shout,” said Robert Brusca, chief economist at FAO Economics, referring to another song of that era.
Many thought the Fed would not purchase so many securities, at least initially.
While there was movement in the bond market Wednesday, rates already are at or close to record lows.
“I don’t think it is worth much,” said Brusca. Pushing down mortgage rates doesn’t help consumers with low credit scores, he added.
Economists thought the Fed would select the swap idea from other options, in part because it isn’t expected to draw as many howls of protest politically that outright bond purchases would encounter, and also because inflation hawks who fear the size of the Fed’s balance sheet would be less likely to oppose an operation that doesn’t change it.
But the Fed might not be able to avoid political criticism.
On Monday, the congressional Republican leadership sent a letter to Bernanke urging him to refrain from any more easing moves, saying that the U.S. economy should be driven by consumer confidence and worker innovation and not by central bank policy. Read “Republicans warn Fed not to ease again.”
The additional easing comes as the U.S. economy seems to be teetering on the edge of a double-dip recession. Even if the economy manages to avoid a new downturn, the outlook is for tepid growth not strong enough to bring down high unemployment.
In its statement, the Fed said growth remains slow with the latest data pointing to continued weakness in the labor market.
The Fed said that inflation has moderated and they expect it to settle below its implicit target of around 2%.
In August, the Fed surprised markets and said that its forecasts expected short-term rates to stay near-zero until mid-2013. At that time, the Fed decided to tack on an extra day to its meeting this week to examine the costs and benefits of additional easing.
The central bankers said they would review the size and composition of its $2.8 trillion balance sheet and make other adjustments as appropriate.
Basile said that Congress must try to bridge party divides to craft a new plan to bring down the unemployment rate.
So far, policymakers haven’t been able to come up with the necessary recipe of monetary and fiscal policy to get the economy moving.
Greg Robb is a senior reporter for MarketWatch in Washington.
Morning Market Briefing
With traders looking ahead to the Federal Reserve’s policy statement, stocks may show a lack of direction in early trading on Wednesday. The major index futures are currently pointing to a slightly lower open, with the Dow futures down by 11 points. (Sep 21, 2011) Full Article
Japan posted a merchandise trade deficit of 775.3 billion yen in August, the Ministry of Finance said on Wednesday - moving into the red after two straight months of surplus as the recovery from the devastating earthquake and tsunami on March 11 may have stalled. (Sep 21, 2011) Full Article
Confidence among British consumers hit a four-month low in August, as households' assessment of the economic prospects worsened amid deteriorating global economic conditions and tight fiscal policy, reports said Wednesday citing a consumer survey by the Nationwide Building Society. (Sep 21, 2011) Full Article
Bank of England policymakers voted unanimously for a second consecutive meeting to retain the benchmark interest rate at record low, while signaling that they are exploring the possibility of adding more stimulus in the face of deteriorating economic prospects both at home and abroad, the minutes of the September 8 policy meeting revealed Wednesday. (Sep 21, 2011) Full Article
Oracle Corp. (ORCL) Tuesday posted a higher first-quarter profit on the back of a 17 percent growth in new software license sales. Both adjusted earnings and revenues exceeded Street expectations. (Sep 21, 2011) Full Article
Adobe Systems Inc. (ADBE) said Tuesday third-quarter profit declined year-over-year on the impact of shrinking margins and higher non-operating expense. Adjusted earnings, however, beat analysts' estimates but revenues fell short. The company also issued its fourth-quarter financial outlook. (Sep 21, 2011) Full Article
General Mills Inc. (GIS) reported Wednesday a lower first-quarter profit as a result of higher input costs and a change in business mix. Both adjusted earnings and revenues topped the market view. The company also reaffirmed its fiscal 2012 adjusted earnings outlook. (Sep 21, 2011) Full Article
Apache Corp. (APA) Wednesday announced an agreement that sees its subsidiary Apache North Sea Ltd. acquire Mobil North Sea LLC's assets from Exxon Mobil Corp. (XOM) for $1.75 billion. The transaction is expected to close by year-end 2011, and may lift Apache's North Sea production by 54 percent. (Sep 21, 2011) Full Article
Broker Ratings Changes
RBC Capital Markets Starts Buckeye Technologies Inc (BKI) At Outperform With $33 Price Target
(Sep 21, 2011)
RBC Capital Markets Starts Georesources Inc. (GEOI) At Sector Perform With $29 Price Target
(Sep 21, 2011)
RBC Capital Markets Starts Kodiak Oil & Gas Corp. (KOG) At Outperform With $9 Price Target
(Sep 21, 2011)
RBC Capital Markets Starts NORTHERN OIL & GAS, INC. (NOG) At Outperform With $30 Price Target
(Sep 21, 2011)
Todays WS Events
Apache Investor Conference Call At 11:30 AM ET
Apache Corp. (APA) will host a investor conference call at 11:30 AM ET on September 21, 2011, to discuss its acquisition of Exxon Mobil Corporation's Mobil North Sea LLC assets. To access the live webcast, log on at www.apachecorp.com To listen to the replay, dial (855) 859-2056 or (404) 537-3406 using conference ID 12249939. (Sep 21, 2011)
Bed Bath & Beyond Q2 11 Earnings Conference Call At 5:00 PM ET
Bed Bath & Beyond Inc. (BBBY) will host a conference call at 5:00 PM ET, September 21, 2011, to discuss its Q2 11 earnings results. To access the live webcast, log on at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=97860&eventID=3739510 To hear the live call, dial 1-800-281-7973 (US) or 913-981-5546 (International). A replay of the call can be heard by dialing 1-888-203-1112 (US) or 719-457-0820 (International) with access code 8400546. (Sep 21, 2011)
Ford To Present At Citi Global Industrials Conference; Webcast At 10:30 AM ET
Ford Motor Co. (F) will present at the 2011 Citi Global Industrials Conference. The event is scheduled to begin at 10:30 AM ET on September 21, 2011. To listen to the live webcast, log on at www.shareholder.ford.com (Sep 21, 2011)
General Mills Q1 12 Earning Conference Call At 8:30 AM ET
General Mills (GIS) will host a conference call at 8:30 AM ET on September 21, 2011, to discuss Q1 12 earnings results. To access the webcast, log on to www.generalmills.com (Sep 21, 2011)
Goodyear To Present At Citi Global Industrials Conference; Webcast At 3:05 PM ET
The Goodyear Tire & Rubber Company (GT) will present at the 2011 Citi Global Industrials Conference in Boston. The event is scheduled to begin at 3:05 PM ET on September 21, 2011. To access the live webcast, log on at www.goodyear.com/investor (Sep 21, 2011)
Red Hat Q2 12 Earnings Conference Call At 5:00 PM ET
Red Hat Inc. (RHT) will host a conference call at 5:00 PM ET, September 21, 2011, to discuss its Q2 12 earnings results. To access the live webcast, log on at http://investors.redhat.com (Sep 21, 2011)
Verizon To Present At Goldman Sachs Conference; Webcat At 8:50 AM ET
Verizon Communications Inc. (VZ) CEO, Lowell McAdam will present at the Goldman Sachs Communacopia conference. The event is scheduled to begin at 8:50 AM ET on September 21, 2011. To access the webcast, log on at www.verizon.com/investor (Sep 21, 2011)
Walt Disney To Present At Goldman Sachs Conference; Webcast At 1:15 PM ET
Walt Disney Co. (DIS) CFO Jay Rasulo, will present at the at Goldman Sachs 20th Annual Communacopia Conference. The event is scheduled to begin at 1:15 PM ET, September 21, 2011. To access the live webcast, log on to www.disney.com/investors (Sep 21, 2011)
|Futures flat ahead of Fed statement|
|NEW YORK (Reuters) - Stock index futures were little changed on Wednesday as investors waited to see if the Federal Reserve launches a fresh effort to boost the sluggish economy. | Full Article|
|Greece to outline more austerity to secure loan|
|September 21, 2011 07:24 AM ET|
|ATHENS (Reuters) - The Greek cabinet was expected to outline major public sector layoffs, more spending cuts and tax increases on Wednesday to secure a bailout installment crucial to avoid running out of money next month. | Full Article|
|Exclusive: Netflix, Discovery in new streaming deal|
|September 21, 2011 07:26 AM ET|
|NEW YORK (Reuters) - Netflix Inc and Discovery Communications Inc have reached an agreement to bring episodes of popular TV adventure shows including "Man vs. Wild" and "River Monsters" to the streaming service, according to people close to the deal. | Full Article|
|SABMiller agrees to buy Foster's for $10.2 billion|
|September 21, 2011 06:17 AM ET|
|LONDON (Reuters) - Brewing giant SABMiller Plc agreed to buy Foster's Group for an increased price of A$5.10 a share valuing the Australian beermaker at A$9.9 billion ($10.2 billion) and putting SABMiller at the head of Australia's beer market. | Full Article|
|General Mills profit slips|
|September 21, 2011 07:28 AM ET|
|(Reuters) - General Mills Inc reported a lower quarterly profit on Wednesday, as the food company was hit by higher ingredient and fuel costs. | Full Article|
Wonkbook: Nice central bank you got here. Shame if something should happen to it.: Ezra Klein's Wonknook | The Washington Post
On Tuesday, House Speaker John Boehner, Senate Minority Leader Mitch McConnell, and their respective number twos sent an extraordinary letter to Federal Reserve Chairman Ben Bernanke. "It is our understanding that the Board Members of the Federal Reserve will meet later this week to consider additional monetary stimulus proposals," they say. "We write to express our reservations about any such measures."
It is not intrinsically illegitimate for congressional leadership to convey its preferences to the Federal Reserve. The Fed is protected from political interference, not from the opinions of politicians. But it is quite unusual for the leaders of a major political party to make a public, unified request of the chairman, and to ask that their request "be shared with each Member of the Board."
And let's be honest. The implication of this letter is that Ben Bernanke backs off or political interference comes next. As Bernanke knows, Boehner and McConnell have a posse. Gov. Rick Perry has threatened to "treat him pretty ugly" if he engages in further monetary easing, and Gov. Rick Perry may soon be President Rick Perry. John Taylor, the most popular monetary economist on the right, is writing op-eds saying the Fed should be stripped of its dual mandate. Rep. Ron Paul, who wants to "end the Fed," was put in charge of the House Subcommittee that oversees the Federal Reserve.
So sure, this letter isn't threatening to do anything now. It's just making clear that the Republican leadership in Congress is strongly opposed to any further attempts to help the economy. It's the subtext that Bernanke and others will find threatening: The Republican Party is unified in its backlash to the Federal Reserve, and they may well be in power two years from now. Does Bernanke really want to provoke them? Is that really a good thing for his institution?
In other words: Nice central bank you got here. Shame if something should happen to it.
Of course, if Bernanke chose to by cynical about it, the irony of this letter is that it strongly underscores the political case for easing. The worse the economy is, the better Republicans will do in the 2012 election. If the economy is really bad, a hardliner like Rick Perry, rather than a presumed moderate like Mitt Romney, becomes a likely bet for the presidency. And if the economy is really, really bad, there will be the impetus to do something, anything, to show major action is being taken. "Mend the Fed" could quickly become a rallying cry among the newly dominant Republican Party.
That suggests Bernanke would be wise to do whatever he can to help the economy, and to do it quickly. But of course, that's his job anyway. So the fact that this letter, and its implied threat to his institution, will be lodged in the back of his brain isn't going to matter either way, right? Right? Bueller?
Five in the morning
1) GOP leaders have asked the Fed to refrain from further efforts to support the economy, reports Corey Boles: "Top Republican congressional leaders, in a rare effort to directly influence Federal Reserve policy, expressed reservations about the central bank taking additional steps to spur the recovery, saying further action could harm the economy. House Speaker John Boehner (R., Ohio), Senate Minority Leader Mitch McConnell (R., Ky.), and two other GOP leaders, in a letter Monday to Fed Chairman Ben Bernanke, urged Fed officials to 'resist further extraordinary intervention in the U.S. economy.' The four lawmakers wrote that it wasn't clear the Fed's earlier attempts to support the economy through large purchases of government bonds, called quantitative easing, had 'facilitated economic growth or reduced the unemployment rate.'...'This is a heavyhanded attempt to meddle in the Fed's independent stewardship of monetary policy,' said New York Sen. Charles Schumer, a member of the Democratic leadership team."
Read the full letter: http://on.wsj.com/mR6pOn
2) A dispute over disaster relief spending could cause a government shutdown, reports Suzy Khimm: "House Republicans are demanding spending cuts for Hurricane Irene relief, proposing a $1.5 billion cut to clean-energy loans in exchange for $3.5 billion emergency disaster relief in its stopgap budget. Democrats aren’t happy about the offset — or any offset at all, in fact. Traditionally, disaster aid has not been offset in the budget, and they worry about setting a new precedent. So last week, Senate Democrats passed a $6.9 billion bill to provide relief without strings attached. All this sets up confrontation between the House GOP and the Senate Dems that could balloon into another government shutdown fight."
3) Medicaid appears to be emerging from the deficit conversation unscathed, reports Sarah Kliff: "As Washington’s debate over deficit reduction ramped up a few months ago, Medicaid advocates panicked that the health insurance program for low-income Americans could quickly find itself on the cutting room floor. Everyone was searching for big spending cuts. Other entitlements, like Medicare, have a stronger lobbying presence on the Hill. Democratic lawmakers were vexingly quiet on the issue. As one worried Medicaid advocate said to Politico in June, 'The message has been Medicare, Medicare, Medicare.' Lately though, the balance between the entitlement programs seems to have shifted. Medicare, the health insurance program serving 50 million seniors, could face big cuts from the White House and Congress. Under the deficit reduction proposal that President Obama outlined yesterday, seniors would pay more for the Medicare benefits they currently receive. Obama also proposes cuts to Medicaid, which provides health insurance to 60 million low income Americans. But the spending reductions are much smaller than what Medicare saw and Medicaid advocates feared."
4) The IMF is warning another global slowdown could be at hand, reports Howard Schneider: "The IMF warned that the global economy was in a 'dangerous new phase' of slowing growth and eroding confidence -- partly because of Europe’s inability to solve a set of problems arising from high public debt, a weakened financial system and slow economic growth...The IMF’s latest forecast shows the Greek economy contracting by 5 percent this year, with the recession continuing through the end of 2012. That’s a significant change from July, when the agency projected a downturn of only 3.75 percent and said the Greek economy would expand slightly next year...In its semiannual World Economic Outlook, the IMF said concerns about a possible Greek default are already affecting the world economy. Coupled with the economic slowdown in the United States and the impact of the Japanese earthquake, Europe’s debt crisis is putting the global recovery at risk, the IMF said.
5) Cuts to Medicare providers could hurt patients too, reports Robert Pear: "President Obama and some members of Congress assert that, in cutting Medicare and Medicaid, they can whack health care providers while protecting beneficiaries. But experts say it is not so simple. Experience, they say, shows that some cuts in payments to providers hurt beneficiaries, as more doctors refuse to take Medicaid patients or limit the number of new Medicare patients they will accept. Hospitals curtail services. Beneficiaries may have more difficulty getting therapy services after a stroke, traumatic brain injury or hip fracture. By contrast, the experts say, other cuts force health care providers to become more efficient, saving money for beneficiaries, taxpayers and the government...Even some of Mr. Obama’s allies said his Medicaid proposals could harm beneficiaries."
Music video interlude: Washed Out's "Amor Fati."
Got tips, additions, or comments? E-mail me.
Still to come: Republicans are attacking Dodd-Frank on the stump; other countries are raising taxes on the rich; Medicaid doesn't come in for major cuts under Obama's debt plan; liberals and Tea Partiers are teaming up against an immigration enforcement program; the EPA is okaying more offshore drilling in the arctic; and a monkey wrestles a dog.
Republicans are frequently attacking Dodd-Frank on the campaign trail, reports Edward Wyatt: "On the stump, words like 'Obamacare' roll off the tongue. 'Swap execution facility,' not so much. That has not stopped Republican presidential candidates from using the Dodd-Frank Act, the sprawling regulatory effort to address the causes of the financial crisis, as their newest anti-Obama target for what ails the economy. Republicans have repeatedly invoked the law’s 848-page girth -- and its rules on, among other things, trading derivatives and swaps -- as a symbol of government overreach that is killing jobs. But in trying to turn Dodd-Frank into the new Obamacare, the disparaging term that opponents use to refer to the new health care law, Republicans are largely ignoring the basic trade-off that the financial law represents, supporters say."
Other countries are raising taxes on the rich, reports David Kocieniewski: "President Obama’s proposal for a new tax on millionaires echoes a call in many countries struggling with budget deficits and overwhelming debts to make the wealthy pay more. Britain and France have imposed new taxes on their highest earners -- and Italy, Spain, Greece and Japan are considering similar moves, despite some protests...They are being promoted as a step toward economic fairness at a time when governments are cutting spending on social programs like pensions, health care and education...Whether a higher tax rate would stifle business and economic growth continues to be debated. Britain raised its top tax rate to 50 percent after the 2008 financial crisis, and a number of economists and others have said that it inhibited investment and hiring. They are asking that the issue be reconsidered if the additional money generated proves less than projected."
I am a job creator who creates no jobs, writes Dana Milbank. "I am not a job creator in the sense that I actually create jobs. I have never knowingly created a job, and my long-term business plan, approved unanimously by my board of directors, does not call for the creation of a single one. But I am a job creator in the sense Republicans mean when they say 'don’t tax our job creators more' (House budget committee Chairman Paul Ryan) or 'we cannot increase taxes on the job creators' (House Speaker John A. Boehner). This is because, in the eyes of the government, I am a small business — and, as the House Republicans like to say, 'small businesses are the job creators.' Like the overwhelming majority of small businesses, I am a one-man operation. And, like most small businesses, I would not hire anybody even if the government dropped my tax rate to zero."
There are better ways to tax the rich than Obama's proposed hikes, writes Reihan Salam: "It should be obvious that we want to encourage savings and investment and discourage excessive consumption...But the current tax code does the opposite, and the president’s proposals could make matters worse...Economists from the left, like Robert Frank of Cornell University’s Johnson School of Management, and from the right, like Mitt Romney adviser and Columbia Business School professor Glenn Hubbard and Alan Viard of the American Enterprise Institute, have called for a progressive consumption tax that would eliminate taxes on savings and investment. Rich spendthrifts, who spend every dollar they have in the present, will wind up paying taxes on their total income, as per usual. Rich penny-pinchers, who use their hard-earned money to help grow new businesses, will only pay taxes on what they actually spend."
Obama's debt reduction plan is hardly balanced, writes Keith Hennessey: "It appears Team Obama wants you to conclude that there is no difference between the President and Congressional Republicans on the amount of proposed deficit reduction, and that the President wants a prospective deficit reduction approach balanced between spending cuts and tax increases. Both conclusions are false. The policy changes the President is proposing are significantly less deficit reduction than that proposed by (House) Republicans, and almost all of the President’s new proposed deficit reduction comes from tax increases...It’s a legitimate liberal policy position to propose new net deficit reduction of about $1.4 T over the next ten years, almost all of which comes from tax increases on the rich. That is the President’s policy...[Team Obama] are instead pretending to propose $4T of deficit reduction over the next ten years, balanced between 'real, serious spending cuts' and tax increases."
Our economic pain is just starting, writes John Judis: "Today's recession does not merely resemble the Great Depression; it is, to a real extent, a recurrence of it. It has the same unique causes and the same initial trajectory. Both downturns were triggered by a financial crisis coming on top of, and then deepening, a slowdown in industrial production and employment that had begun earlier and that was caused in part by rapid technological innovation...in contrast to the usual post-World War II recession, our current downturn, like the Great Depression, is global in character...When the recession is global, you get what John Maynard Keynes called the 'paradox of thrift' writ large: As all nations cut their spending and attempt to devalue their currencies (which makes their exports cheaper), global demand shrinks still more, and the recession deepens."
Adorable animals doing battle interlude: A monkey wrestles a dog.
States aren't happy with federal proposals for "partnerships" on health exchanges, reports Sam Baker: "A meeting of state and federal health officials turned tense this week as state regulators raised objections to the Obama administration’s proposals for insurance exchanges. A person who attended the two-day meeting said states complained about proposals for a “partnership” model in which states and the federal government would jointly operate some exchanges...Among states’ objections: They were told that a partnership might technically have to be considered a federally run exchange. Although HHS clearly wants states to handle as much of their own exchanges as possible, a partnership would legally be considered a federal exchange. And that’s not how conservative governors want to describe the exchange to their constituents."
Liberals and Tea Partiers are teaming up against an immigration enforcement program, reports Miriam Jordan: "Conservative, tea-party and libertarian groups have joined liberals in fighting a signature Republican bill in Congress that would crack down on illegal-immigrant workers. The legislation, they argue, would hurt businesses and employees while expanding government regulation. The bill, by Judiciary Chairman Lamar Smith (R., Texas), would require all employers to use E-Verify, an electronic government database that checks whether new hires are eligible to work in the U.S...Last week, a coalition of regional and national groups that champion less government, privacy protection and small-business interests wrote a letter to members of Congress urging them to vote against the bill...Judson Phillips, founder of Tea Party Nation and one of the letter's 27 signatories, said that his movement strongly opposed illegal immigration but that 'it's not private enterprise's job to enforce immigration.'"
Google is facing antitrust scrutiny, reports Jia Lynn Yang: "Google dominates Internet searches, online advertising and now mobile devices. But one of the biggest threats to the tech juggernaut these days isn’t another competitor. It’s Washington. Enter Eric Schmidt, Google’s former chief executive and the man tasked Wednesday with reassuring lawmakers on the Senate Judiciary antitrust subcommittee that the search company is not illegally abusing its power, even as government antitrust officials have begun investigating the firm. Getting grilled on Capitol Hill has become a rite of passage for many big companies that draw scrutiny. The moment is a very public test for Google, which has largely worked behind the scenes in recent years to build up its presence in Washington. This will be Schmidt’s first time testifying on the Hill, but in many ways, Schmidt, a Washington native, is hardly a political neophyte."
Some Senators want the supercommittee to revive the line item veto, reports Scott Wong: "Sens. John McCain (R-Ariz.) and Tom Carper (D-Del.) have tried unsuccessfully for years to give the president line-item veto authority to cut wasteful spending. Now, they believe the congressional supercommittee trying to hatch a massive deficit reduction plan presents a new opportunity for their cause. McCain, Carper and Sens. Dan Coats (R-Ind.) and Mark Udall (D-Colo.) delivered a letter Tuesday to the supercommittee’s co-chairmen, urging the 12-member bipartisan panel to consider the line-item veto. The Reduce Unnecessary Spending Act, backed by 40 senators, would give the president the authority to cut earmarks, duplicative programs and other non-entitlement spending from appropriation bills sent to him by Congress. The president’s changes then would get a vote in Congress."
Milestone interlude: Jack Strouss, a gay World War II veteran, commemorates the end of Don't Ask Don't Tell.
Solyndra executives are taking the Fifth on the Hill, report Steven Mufson and Joe Stephens: "Solyndra’s two top executives plan to invoke their Fifth Amendment rights and refuse to answer questions when they testify Friday before a House Energy and Commerce Committee panel investigating the failed solar panel maker, which received more than $500 million in federally backed loans. But in a statement, the company asserted that it “is not aware of any wrongdoing by Solyndra officers, directors or employees in conjunction with the [Energy Department] loan guarantee.” Solyndra said it is cooperating fully with a criminal investigation by the U.S. Attorney for the northern district of California. The Solyndra executives had been asked to testify last week but delayed their appearance, saying they would cooperate this week and promising not to invoke their rights to avoid self-incrimination."
The debate over Solyndra hasn't grappled with the policy behind Solyndra, writes Brad Plumer: "Ever since Solyndra went bankrupt in August, there’s been a pseudo-debate in Washington over loan guarantees for energy projects. It’s a pseudo-debate because neither party really believes that energy should be left to the whims of the free market. The GOP has long backed loan guarantees for nuclear power plants, and, as the New York Times reports today, key Republicans such as Sen. Mitch McConnell (R-Ky.) have been begging the Energy Department for loans for clean-energy projects in their own districts. In practice, the Solyndra squabble is more about scoring a political hit on the Obama administration than a genuine policy dispute. Still, it’s worth revisiting the underlying question: Why should the federal government back risky energy projects?"
The EPA is allowing expanded Arctic offshore drilling, reports Ben Geman: "The Environmental Protection Agency on Monday granted Royal Dutch Shell air pollution permits the company needs to begin drilling in Arctic waters off Alaska’s coast next year. The permits allow the company to operate the Discoverer drillship and supporting icebreakers, oil spill response vessels and other ships in the Beaufort and Chukchi Seas, according to EPA. The permits follow the Interior Department’s conditional approval of Shell’s exploration plan for the Beaufort Sea in August, bringing the oil giant closer to drilling in the region that environmentalists argue should be off-limits. The company still needs various other federal approvals, such as Interior Department drilling permits, to begin exploration next year. EPA is also still weighing a permit Shell needs to operate its Kulluk drilling rig in the Beaufort Sea next year."
Environmental regulations can actually be good for economic growth, reports Josh Boak: "The liberal-leaning Economic Policy Institute has found the compliance costs for all of the administration’s new Environmental Protection Agency regulations represent just 0.1 percent of the economy -- a burden for some but not the job-killing death blow that many Republicans complain about...Laurie Johnson, chief economist at the Natural Resources Defense Council, said improved rules for ozone pollution might have actually spurred industrial demand across the economy. If better standards were in place, she estimates that businesses sitting on $2 trillion in cash reserves would have bought and installed new equipment, possibly generating tens of thousands of jobs...A 2010 EPA analysis said the tighter standards should cost $19 billion to $25 billion, while generating economic benefits of up to $37 billion."
Congress needs to mandate flex-fuel cars, write Robert McFarlane and James Woolsey: "A solution is at hand; it lies in Detroit’s making more flex-fuel cars -- cars able to use gasoline, ethanol, methanol or any mixture of these. And because this flex-fuel option costs less than $100 per car, making such a change is not exorbitant. Indeed, some 90 percent of all cars sold in Brazil last year are flex-fuel cars, and many of them were made by Ford, Chrysler and General Motors...Although the American manufacturers have stated publicly their willingness to make flex-fuel vehicles up to 50 percent of their production, they’re just not doing it. Hence the need for Congress to require that new vehicles allow the use of alternative fuels. In some corners of Washington, that raises a cry against 'mandates.'...Doing nothing is equivalent to mandating a monopoly by a single fuel (whose price is set by a foreign cartel)."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.