California workers loose cellphones

Governor Jerry Brown is starting to slash the California state budget and, on the chopping block, he has targeted cellphones.

He is requiring the return of 48,000 government-paid cell phones by June 1. He said he found it difficult to believe that 40% of state employees needed a work phone.

Does a small expense like a cellphone really make a difference?

Heck yes. This move is going to save the state $20 million.

On January 10th, Brown announced a budget that will slash $12.5 billion in spending and extend $12 billion in tax hikes.

Brown, who assumed office a week ago, has to contend with a $25.4 billion shortfall over the next 18 months. California’s fiscal year starts July 1.

Small Business isn’t Celebrating Health-care Reform

In March, Congress enacted the Patient Protection and Affordable Care Act (PPACA), a 2,000-plus-page law designed to dramatically change how health insurance is provided in this country. The law might have been more aptly named the Small Business Health Insurance Act because its effects—both good and bad—will fall most heavily on small companies.

That’s because we have an employment-based health-care system and small businesses are less likely than large ones to provide employee health insurance. In 2010, the Kaiser Family Foundation, which keeps tabs on health insurance coverage, reported that 99 percent of businesses with 200-plus employees provided workers with health insurance, as compared with only 68 percent of businesses with 3 to 199 employees. Given these numbers, it’s fair to focus on small businesses when looking at the impact of the new law.

Read the complete story at Business Week

 

Republicans plan to repeal Obamacare

The struggle is not over for the Healthcare Reform Bill. Republicans unveiled repeal legislation Monday night — two days before they officially take charge of the House. They plan a key procedural vote on Friday and a final vote the following Wednesday, according to House GOP sources.

Democrats say the GOP is pandering to their base. Well, if their voters elected them with the expectation that they would repeal the bill, then they should probably try to repeal it.

Passage of the health care overhaul is widely viewed as Obama’s signature domestic achievement. Most political analysts believe that while a repeal of the measure can pass the new Republican House, it has no chance of surviving the Democratic-controlled Senate or overcoming a presidential veto.

Outgoing House Speaker Nancy Pelosi, D-California, cited projections from the nonpartisan Congressional Budget Office noting that the Democrats’ overhaul will lower the federal deficit over the long term.

As a result, she argued, a GOP-led health care reform repeal would “do very serious violence to the national debt” — undermining a central Republican pledge of fiscal responsibility.

The Republicans “will employ budget gimmicks” and “Enron-type accounting” to make the claim that a repeal of health care reform won’t increase the debt, predicted Rep. Chris Van Hollen, D-Maryland. “That kind of flim-flam” is what people came to expect of Republicans the last time they ran Congress, he said.

Republicans insist that they are moving forward with their push to repeal the health care law because the measure is hampering an economic recovery.

“Obamacare is a job killer for businesses small and large, and the top priority for House Republicans is going to be to cut spending and grow the economy and jobs,” said Brad Dayspring, spokesman for incoming House Majority Leader Eric Cantor, R-Virginia.

“Further, Obamacare failed to lower costs as the president promised that it would, and does not allow people to keep the care they currently have if they like it.”

 

 

US sells Citi stake for profit

The last of the US Treasury’s shares of Citigroup Inc sold at $10.5 billion. This means taxpayers will reap a profit of $12 billion on their $45 billion cash investment in Citigroup. It also allows the bank to shake its reputation as a ward of the state.

James Angel, a finance professor at Georgetown University said: “It signals the company has been fully privatized and that their parole is over.”

Last year, the Treasury intended to sell off their 7.7 billion shares steadily over the course of six to 12 months, but had only sold 4.4 billion by October. The results of the November elections seemed to express discontent with government involvement in private business. As a result, the Treasury has increased its speed in selling off its 61% stake in General Motors.

The government still holds $3 billion in Citigroup stock.

Senate passes Bill on Food Safety

The Senate passed a bill giving federal regulators new powers over food safety on Tuesday. It cleared the Senate on a 73-25 vote.

The Food and Drug Administration would gain the power to order food recalls, which are voluntary. The FDA would also gain more authority to track fruit and vegetable shipments and mandates that producers write safety plans.

Final passage of the bill is not a sure thing, however, due to the tight schedule of Congress’s lame-duck session.

The idea is to have faster responses to contamination outbreaks. The bill is backed by the US Chamber of Commerce and major business groups representing food producers and grocery stores.

Small farms have held up the legislation, warning of higher prices to comply with the new rules. Consumers may lose local produce if small farms can’t keep up. The response: an amendment exempting small farms and food processors with annual sales under $500,000 from the new regulations if they sell their goods directly to consumers or restaurants no more than 275 miles away. The exemption could be removed in emergency cases.

Budget cuts and no tax increases

The 2010 midterm elections resulted in a big change of leadership throughout the country.  More than a dozen governors have promised to balance their states’ budgets. These state chiefs, nine of whom were elected two weeks ago, will have little choice but to slash spending in order to bring their budgets in line, experts say.

All of them are Republican, save for New York’s Gov.-elect Andrew Cuomo.

While left-leaning advocates fear that the vulnerable will lose their safety nets, their GOP counterparts see the Republican landslide as an opportunity to overhaul state services. Even without Democrats standing in their way, these governors will be fighting an uphill battle. They still have to deal with powerful public employee unions. Some bargaining groups are agreeing to concessions over salary and benefits. But others are not, which governors say force them to make layoffs and deeper budget cuts.

What is the plan?

Ohio Gov.-elect John Kasich pledged during his campaign that he would reduce taxes. His answer to solving the budget problem is to make the state more business-friendly, which will result in greater revenues.

Kasich also wants to reduce the size of the state government by reforming programs and shedding those that don’t work, said his press secretary, Rob Nichols. Though he didn’t provide many specifics, Nichols said everything would be examined.

The governor-elect said the election gave him a mandate to overhaul state services. He will have to tackle a budget gap is estimated to be between $4 billion and $10 billion.

“We took a step forward to shrinking government and making it better,” Kasich said in his acceptance speech. “Ohio has said it wants to run our state in a new way.”

In Pennsylvania, Gov-elect Tom Corbett has called for reducing state administrative operations by 10% and for cutting the state automotive fleet by 20%, which would save $140 million over 10 years. He also wants to eliminate per diems given to certain state workers and require all elected officials to contribute to their health care coverage.

Republicans now control the governor’s mansion and both houses, ousting Democrats who ran all three. They will have their work cut out for them since they are facing a budget gap of at least $2.4 billion and Corbett has promised not to raise taxes.

“We have the opportunity to bring fiscal discipline to Pennsylvania, to bring limited government and to bring free enterprise to Pennsylvania,” Corbett said in his acceptance speech.

Republicans, however, aren’t the only ones calling for a freeze in tax hikes.New York Gov.-elect Andrew Cuomo has also pledged not to raise corporate or personal taxes or sales taxes, even though the state is facing a $10 billion deficit. He also wants to put a ceiling on local property tax increases.

To get the Empire State’s fiscal house in order, Cuomo said he would freeze salary increases for state employees and impose a cap on state spending. He would also reduce the number of state agencies, commissions and authorities by at least 20% through consolidation or elimination.

He also wants to take over the administration of Medicaid from the counties, in hopes of better controlling participants’ use of the program. And Cuomo wants to reduce ever-escalating pension costs by providing less generous benefits to new hires.

Where does your governor stand?

 

 

Deepwater drilling ban ends

The Obama administration on Tuesday lifted its ban on deepwater drilling seven weeks ahead of schedule, saying new rules cut the risk of a repeat of the BP oil spill, the worst ever to hit the United States.

Restarting deepwater drilling could be slow, however, as oil companies will need to comply with the new regulatory regime and demonstrate they can adequately respond to blowouts before drilling can resume, the Interior Department said.

“The oil and gas industry will be operating under tighter rules, stronger oversight, and in a regulatory environment that will remain dynamic as we continue to build on the reforms we have already implemented,” Interior Secretary Ken Salazar said in a statement.

The Obama administration is lifting the controversial drilling ban as his Democrats prepare for a tough mid-term election in November, amid concerns over the economy and unemployment.

The ban drew sharp protests from Gulf of Mexico lawmakers and a court challenge from companies that complained the moratorium cost jobs and stalled an industry with a relatively good record.

While the reopening of the prized, deep Gulf waters will be good news for drillers such as Transocean Ltd and explorers like Royal Dutch Shell, analysts warn it will take months or years to return to the pace of activity prior to the Macondo disaster on April 20.

 

Health insurance premiums to rise

Health insurers plan to raise premiums for some Americans as a direct result of the health overhaul, complicating Democrats’ efforts to trumpet their signature achievement before the midterm elections.

Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators.

Congress’s refashioning of U.S. health coverage is causing them to pass on more costs to consumers than Democrats predicted.

The rate increases largely apply to policies for individuals and small businesses and don’t include people covered by a big employer or Medicare.

About 9% of Americans buy coverage through the individual market, according to the Census Bureau. About one-fifth of people who get coverage through their employer work at companies with 50 or fewer employees, according to the Kaiser Family Foundation. People in both groups are likely to feel the effects of the proposed increases, even as they see new benefits under the law, such as the elimination of lifetime and certain annual coverage caps.

Obama plans new stimulus to tune of $50 billion

President Barack Obama proposed a six-year plan to rebuild infrastructure with a $50 billion investment and prepared new business tax cuts.

“We are going to rebuild 150,000 miles of our roads — that’s enough to circle the world six times. … We’re going to lay and maintain 4,000 miles of our railways — enough to stretch coast-to-coast,” Obama told a labor rally in Milwaukee where several thousand supporters cheered his every line.

The infrastructure plan received immediate criticism from Republicans. Obama is under pressure to do more to create jobs and bring down the stubbornly high 9.6 percent unemployment rate, even as economists agree he has few good options left.

An administration official said Obama will propose on Wednesday in Cleveland that businesses be allowed to write off all their new investments in plant and equipment through 2011.

The plan would cut business taxes by some $200 billion over two years, the official said. The administration hope is that businesses worried about the sagging U.S. economy will nonetheless want to take advantage of the tax break by going ahead with plans for plant and equipment investments.

Obama will also announce on Wednesday a proposal for the U.S. Congress to increase and permanently extend a tax credit for business research and development. It would cost $100 billion over 10 years.

Economists are skeptical any measures Obama takes now will make a swift difference in the $13.2 trillion U.S. economy. They point out that investments in infrastructure, for example, typically do not stimulate the economy quickly.

While Obama declared some jobs would be created immediately by the infrastructure overhaul, a senior administration official told reporters the plan would not create jobs until 2011.

“This is not a stimulus, immediate-jobs plan,” the official said.

A step in the conservative direction?

While the Obama administration was marked by expansive government over the past two years, Obama must now take conservative action.

The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions. Conservatives have long supported tax cuts, as it is a direct way to stimulate the economy.

The president’s economic team has met frequently in recent days to list ways to bolster the struggling recovery, according to government officials.

On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It’s not clear what those tax breaks would target or how much they might cost in lost revenue to the government.

Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.

Regardless of politics, the economy works in predictable ways. More spending from the public sector does little to bolster the economy, apparent with the failure of Obama’s stimulus plan.

Efforts to boost growth have taken on urgency as the economy has shown signs of flagging and is among voters’ chief concerns ahead of November’s midterm elections.

The White House is struggling with whether to propose ideas that would appeal to Republicans, and thus get support on Capitol Hill—such as tax cuts—or whether to promote ideas that officials believe could have more economic impact but might hit political resistance, such as more aid for states and more infrastructure funding.