Geithner: Taxes on ‘Small Business’ Must Rise So Government Doesn’t ‘Shrink’

By Terence P. Jeffrey

fROM: ( - Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.”


The administration’s plan to raise the tax rate on small businesses is part of its plan to raise taxes on all Americans who make more than $250,000 per year—including businesses that file taxes the same way individuals and families do.

Geithner’s explanation of the administration's small-business tax plan came in an exchange with first-term Rep. Renee Ellmers (R.-N.C.). Ellmers, a nurse, decided to run for the U.S. House of Representatives in 2010 after she became active in the grass-roots opposition to President Barack Obama’s proposed health-care reform plan in 2009.

“Overwhelmingly, the businesses back home and across the country continue to tell us that regulation, lack of access to capital, taxation, fear of taxation, and just the overwhelming uncertainties that our businesses face is keeping them from hiring,” Ellmers told Geithner. “They just simply cannot.”

She then challenged Geithner on the administration’s tax plan.

“Looking into the future, you are supporting the idea of taxation, increasing taxes on those who make $250,000 or more. Those are our business owners,” said Ellmers.

Geithner initially responded by saying that the administration’s planned tax increase would hit “three percent of your small businesses.”

Ellmers then said: “Sixty-four percent of jobs that are created in this country are for small business.”

Geithner conceded the point, but then suggested the administration’s planned tax increase on small businesses would be “good for growth.”

“No, that's right. I agree with that,” said Geithner. “But just to put it in perspective, it's important to recognize why are we doing this. You know, our deficits are 10 percent of GDP, higher than they've been since any time in the postwar period really. We have a big hole to dig out of, and we have to figure out how to do that in a way that's balanced, good for growth, fair to people as a whole.”

Geithner, continuing, argued that if the administration did not extract a trillion dollars in new revenue from its plan to increase taxes on people earning more than $250,000, including small businesses, the government would in effect “finance” what he called a “tax benefit” for those people.

“We're not doing it because we want to do it, we're doing it because if we don't do it, then, again, I have to go out and borrow a trillion dollars over the next 10 years to finance those tax benefits for the top 2 percent, and I don't think I can justify doing that,” said Geithner.

Not only that, he argued, but cutting spending by as much as the “modest change in revenue” (i.e. $1 trillion) the administration expects from raising taxes on small business would likely have more of a “negative economic impact” than the tax increases themselves would.

“And if we were to cut spending by that magnitude to do it, you'd be putting a huge additional burden on the economy, probably greater negative economic impact than that modest change in revenue,” said Geithner.

When Ellmers finally told Geithner that “the point is we need jobs,” he responded that the administration felt it had “no alternative” but to raise taxes on small businesses because otherwise “you have to shrink the overall size of government programs”—including federal education spending.

“We're not doing it because we want to do it, we're doing it because we see no alternative to a balanced approach to reduce our fiscal deficits,” said Geithner.

“If you don't touch revenues and you leave in place the tax cuts for the top 2 percent that were put in place by President Bush, if you leave those in place and you're trying to bring our deficits down over time, then you have to do exceptionally deep cuts in benefits for middle-class Americans and you have to shrink the overall size of government programs, things like education, to levels that we could not accept as a country,” said Geithner.

“So to do a balanced approach to reduce our deficits you have to make modest changes in revenues,” he said. “There's no realistic opportunity to do alternatives to doing that.”

According to historical budget tables published by the White House Office of Management and Budget, federal spending has climbed from $2.89 trillion in 2008—the year President Obama took office—to $3.82 trillion this year, an increase of approximately $930 billion.

Meanwhile, according to the National Center for Educational Statistics, although federal education spending in inflation-adjusted dollars has jumped from $71.64 billion in 1995—when Bill Clinton was president--to $163.07 billion in 2009—when Barack Obama was president—federal spending still accounted for only 8.2 percent of spending for public primary and secondary education in America in the 2007-2008 school year. Historically and presently in the United States, local and state governments have funded the cost of public education. is not funded by the government like NPR. is not funded by the government like PBS. relies on individuals like you to help us report the news the liberal media distort and ignore. Please make a tax-deductible gift to today and your gift will be doubled, dollar-for-dollar, by a generous contributor. Your continued support will ensure that is here reporting THE TRUTH, for a long time to come.


How is it possible that our fiscal leaders ( and do not even start me on that lightweight Geithner)have no clue about the economy. Do any of them go to the grocery store, or is that function limited to their chauffeurs?

The economy's continuing struggles aren't just confounding ordinary Americans. They've also stumped the head of the Federal Reserve, and no wonder he is living in a bubble that does not penetrate his head.

Fed Chairman Ben Bernanke told reporters Wednesday that the central bank had been caught off guard by recent signs of deterioration in the economy. And he said the troubles could continue into next year. No kidding, you thought the economy is are definitely in the top ten list of idiots, Mr. Bernanke!

Just drive around the neighborhood or go to a mall, and count the number of empty stores for a start or empty industrial buildings....and mention the same to your boss, Obama.

"We don't have a precise read on why this slower pace of growth is persisting," Bernanke said. He said the weak housing market and problems in the banking system might be "more persistent than we thought."

It was the Fed chief's most explicit warning yet that the economy will face serious challenges next year. For several months, he had said the factors working against economic growth appeared to be "transitory."

(AP) Federal Reserve Chairman Ben Bernanke holds a news conference after a Federal Open Market Committee...
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The Fed cut its forecast for economic growth this year to a range of 2.7 percent to 2.9 percent from an April forecast of 3.1 percent to 3.3 percent. It also cut its forecast for next year to a range of 3.3 percent to 3.7 percent from an earlier 3.5 percent to 4.2 percent. The Fed also said unemployment would stay higher than it had expected earlier.

In a policy statement issued at the end of a two-day meeting, the Fed blamed the worsening economic outlook in part on higher energy prices and the earthquake and tsunami in Japan, which slowed production of cars and other products.

But at a press conference afterward, the second of what the Fed says will be regular question-and-answer sessions with reporters, Bernanke conceded the economy's troubles are more puzzling and potentially more long-lasting than a pair of temporary shocks.

The Fed announcement, at 12:30 p.m., had little effect on the stock and bond markets. Bernanke began speaking at 2:15, and stocks started falling at about 2:30, when he acknowledged that some of the economy's problems could linger into next year. The Dow Jones industrial average closed down 80 points for the day.

The Fed's statement Wednesday stood in contrast to the Fed's more upbeat view when officials last met, eight weeks ago. At that time, the central bank said the job market was gradually improving.

(AP) Federal Reserve Chairman Ben Bernanke arrives for a news conference after a Federal Open Market...
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Since then, the economic news has been gloomy. The government reported that the economy grew at an annual rate of only 1.8 percent in the first three months of the year. It isn't expected to grow much faster in the current quarter. The economy added 54,000 jobs in May, far fewer than in the previous two months. Consumer spending has weakened, too.

The bad economic news is taking a political toll on President Barack Obama. For the first time this year, an Associated Press-GfK poll found that fewer than 50 percent of respondents believe Obama deserves re-election. Obama's overall approval rating fell to 52 percent in the new poll. It had risen as high as 60 percent after the U.S. raid last month in Pakistan that killed Osama bin Laden.

The new Fed statement acknowledged a slowdown over the past two months. "They see the weakness," said Bruce McCain, chief investment strategist at Key Private Bank. "You can hear their concern about economic weakness despite their hope it is likely to be temporary."

The Fed stuck to its plan to bring an end this month to a program to help the economy by buying $600 billion in government bonds. The Fed also intends to keep short-term interest rates near zero "for an extended period," a phrase it has been using the past two years. Though the central bank noted that inflation has risen, it expects that to be temporary as well.

The Fed has kept rates at ultra-low levels since December 2008. Abandoning the promise to keep them there for an "extended period" would be viewed as a signal that the Fed is preparing to raise interest rates. Many private economists think it will be another full year before the economy has recovered enough for the Fed to do it.

Economists looking for clues to the Fed's next move didn't get much help Wednesday. "There's no obvious hint of tightening here," said Jim O'Sullivan, chief economist at MF Global. "There's no hint of new easing."

The bond-buying program has been controversial. Supporters say the bond purchases have kept interest rates low and encouraged spending. Low long-term rates make it easier to buy homes and cars and for companies to expand.

They also argue that those lower rates fueled a stock rally. Since Bernanke outlined plans for the program last August, the Standard & Poor's 500 index is up 24 percent. Lower rates made stocks more attractive to investors than bonds, whose yields were falling.

The average rate on a 30-year mortgage has stayed below 5 percent for all but two weeks this year and was 4.5 percent last week. But low rates haven't helped home sales much. They fell in May to the lowest level since November.

Critics, including some Fed officials, saw things differently. They warned that by pumping so much money into the economy, the Fed increased the risks of high inflation later.



Now it has been discovered that, OOPS!

President Barack Obama's health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.

The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services department.

Up to 3 million more people could qualify for Medicaid in 2014 as a result of the anomaly. That's because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility. It might be compared to allowing middle-class people to qualify for food stamps.

Medicare chief actuary Richard Foster says the situation keeps him up at night.

"I don't generally comment on the pros or cons of policy, but that just doesn't make sense," Foster said during a question-and-answer session at a recent professional society meeting.
[ For complete coverage of politics and policy, go to Yahoo! Politics ]

"This is a situation that got no attention at all," added Foster. "And even now, as I raise the issue with various policymakers, people are not rushing to say ... we need to do something about this."

Indeed, administration officials and senior Democratic lawmakers say it's not a loophole but the result of a well-meaning effort to simplify rules for deciding who will get help with insurance costs under the new health care law. Instead of a hodgepodge of rules, there will be one national policy.

"This simplification will stop people from falling into coverage gaps and may cause some to be newly eligible for Medicaid and others to no longer qualify," said Brian Cook, spokesman for the Centers for Medicare and Medicaid Services.

But states have been clamoring for relief from Medicaid costs, complaining that just these sorts of federal rules drive up spending and limit state options. The program is now one of the top issues in budget negotiations between the White House and Congress. Republicans are pushing for a rollback of federal requirements that block states from limiting eligibility.

Medicaid is a safety net program that serves more than 50 million vulnerable Americans, from low-income children and pregnant women to Alzheimer's patients in nursing homes. It's designed as a federal-state partnership, with Washington paying close to 60 percent of the total cost.

Early retirees would be a new group for Medicaid. While retirees can now start collecting Social Security at age 62, they must wait another three years to get Medicare, unless they're disabled.

Some early retirees who worked all their lives may not want to be associated with a health care program for the poor, but others might see it as a relatively painless way to satisfy the new law's requirement that all Americans carry medical insurance starting in 2014. It would help tide them over until they turn 65 and qualify for Medicare.

The actuary's office said the 3 million early retirees who would become eligible for Medicaid are on top of an estimated 16 million to 20 million people that Obama's law would already bring into the program, by opening it to childless adults with incomes near the poverty level. Federal taxpayers will cover all of the initial cost of the expansion.

A spokeswoman for the Senate Finance Committee, which wrote much of the health care law, said if the situation does become a problem there's plenty of time to fix it later.

"These changes don't take effect until 2014, so we have time to review all possible cases to ensure Medicaid meets its mission of serving only the neediest Americans," said Erin Shields.

But Republicans already see a problem.

Former Utah governor Mike Leavitt said adding early retirees will "just add fuel to the fire," bolstering the argument from Republican governors that some of Washington's rules don't make sense.

"The fact that this is being discovered now tells you, what else is baked into this law?" said Leavitt, who served as Health and Human Services secretary under President George H.W. Bush. "It clearly begins to reveal that the nature of the law was to put more and more people under eligibility for government insurance."

The Medicare actuary's office roughed out some examples to illustrate how the provision would work. A married couple retiring at 62 in 2014 and receiving the maximum Social Security benefit of $23,500 apiece could get $17,000 from other sources and still qualify for Medicaid with a total income of $64,000.

That $64,000 would put them at about four times the federal poverty level, which for a two-person household is $14,710 this year. The Medicaid expansion in the health care law was supposed to benefit childless adults with incomes up to 133 percent of the poverty level. A fudge factor built into the law bumps that up to 138 percent.

The actuary's office acknowledged its $64,000 example would represent an unusual case, but nonetheless the hypothetical couple would still qualify for Medicaid.

Just another example of stupid government policies.


Cook taxpayers owe $108 billion, county Treasurer Pappas says: by: Greg Hinz

The average Chicago household now owes a staggering $63,525 to cover local government debt, according to Cook County Treasurer Maria Pappas.

Suburbanites are deeply in the red, too, with the average household owing $32,901, according to the treasurer.

Among the biggest reasons: $25 billion in unfunded pension liability.

In comments after an appearance Tuesday before the Civic Federation, a watchdog group that has released somewhat similar numbers in recent years, Ms. Pappas said she was "stunned" to learn that county taxpayers on the whole owe more than $108 billion toward local debt.

The figures were derived from a recently passed debt disclosure law. Ms. Pappas said the numbers have never before been compiled in this fashion.

"This goes well beyond big cities," she said. "These fiscal problems permeate townships, villages, school districts, park districts, fire protection districts and more, and the taxpayers are on the hook."

Overall, she said, municipalities have $61 billion in debt. And educational districts, $20 billion. Cook County owes $18 billion, and various sanitary districts collectively owe $4.4 billion.

In some ways the problem is actually worse than it appears. Ms. Pappas' report does not include totals from 55 of the county's 553 local units of government, which failed to report their debt figures to her.

On pensions, only one-quarter of the Cook County government units involved have at least 80% of the assets on hand needed to pay expected retirement plans for public employees, she said. Most financial watchdogs say 80% or even 90% is appropriate.

State lawmakers last year adopted changes that will reduce pension liabilities over time, but only for new employees. A bill that would reduce benefits or increase payments for current workers failed to pass in the spring legislative session but may come up this fall.

James J. wrote:
It won't be long before the concept of a "mortgage payment" is replaced with a "pension payment" and people will flock to communities with a low "pension payment"... house payment will be small compared to the "pension tax".

Mark E. wrote:
My sources tell me the City will declare bankruptcy and restructure its obligations. There is no way the retirees are getting this money. If I was them I would get back to work quickly.

Lview G. wrote:
Yet more proof that liberals and unions = failure. Sadly, the incompetent politicians in Cook County never learn and keep spending and taxing and spending and taxing. The money trough is empty, very tough times ahead for this cesspool of a county.

Tim M. wrote:
Can we use this a reason to FINALLY END NEW PENSIONS, and severely restructure existing ones....or people can collect nothing. Take your pick.

Alec M. wrote:
Where was the press on this for all these years? Didn't anyone bother to look? Seems to me the Better Government Ass'n has been predicting this, though in less dire terms, for some time now. But no one picked up the story and tried to run with it.

Was the impending bankruptcy of government at all levels not considered an important story? Was the desire for 'happy talk' drowning out this kind of unhappy talk? Do editors just think their readers are dumb?

The press has some explaining to do here.

Robert S. wrote:
So the state apparently has $100bn+ of unfunded obligations and Cook County alone has over $100bn? Honestly, this is the most ridiculous thing I've seen in my life. The worst part is that aside from my usual anti-Union bias, there are good, honest union folk who have punched the clock and done a good job for their working lives and now they are going to get the rug pulled from under them right at the exact moment they are set to retire.

Let's be clear: there is no level of taxes and/or fees that can pay for this. None. So the only way this obligation can get cut is to cut benefits.

Vincent L. wrote:
Yet Cook County will keep letting the crooked democratic machine run it. What do these things have in common?
- State of Illinois
- Cook County
- Chicago
All have been under complete democratic control. The state being 12 YEARS of complete Dem control, and the other two have been for a generation. The sheep Dem voters have to at some point wake up

Rick K. wrote:
Gonna be a lot of old folks moving in with their kids!

What is the told unfunded liability for every unfunded program that has been promised by the unions. I have to believe the number is getting closer to 1 million dollars when you throw in the national debt and all other government promised programs. And that number is higher if you take out the 40% of Americans who pay no taxes.

Glad to see so many public employees joining the ranks for the private sector, get a real job.

Paul M. wrote:
Sooner or later the taxpayers of Illinois will wake up and elect leaders like Wisconsin did when they brought in Gov. Scott Walker. Only a few weeks ago the Democrats and Unions there were literally painting him as the devil. Now, every day Wisconsin citizens are seeing what a true fiscal savior he has become.
We Illinoisans are waiting too long to bring in someone like Walker to tackle the unbelievable and unsustainable feeding by Democrats and Unions at the public trough. Every day we wait means more money will escape from our pocketbooks and into the hands of the cronies.
It's $108 billion today. How bad will it be tomorrow?

Ben S. wrote:
Love the headline of this article.

Bankruptcy? I somehow doubt that. Chicago would be the laughing stock of the country if they did that and Rahm's not going to put up with that (I am by no means sticking up for him).


If the government can dictate what you can put in your own window, there's no limit to what it can do. The Institute for Justice was forced last week to end its constitutional challenge to a Dallas city ordinance that prohibited small businesses from displaying large window signs advertising specials or even specifying the store's hours of operation. To prevent the case from going to trial, Dallas bureaucrats threatened a mom-and-pop vacuum store, travel agency, uniform store and dry cleaner each with $300,000 in fines.

The ordinance specifies that no sign may appear in the upper two-thirds portion of any window or glass door. In the space that remains, signage may not take up more than 15 percent of the available window space. The ordinance carefully carves out an exemption for artistic and political speech. So a gigantic "Vote Obama" sign is acceptable, but one that states "20 percent off on Wednesdays" is not. "To claim that the citizens of Dallas were harmed to the tune of $300,000 per business is just ludicrous," Institute for Justice attorney Matt Miller told The Washington Times.

Typical big-box stores like Wal-Mart and Best Buy have plenty of money to advertise specials and mail out flyers that inform customers about upcoming sales. For the little guy, a notice in the window is often the only cost-effective way to entice passersby to try out their products or services. That's why the small shops in the case only asked for $1 in damages. Their only goal was overturning an ordinance they believe violates the First Amendment. Rather than allowing the case to go to a jury, the city unleashed code-enforcement officers who levied $1,000 in "nuisance" fines for each of the 300 days the businesses were in violation of the ordinance during the litigation.

It's hard to imagine who is harmed or offended by a large "open" or "sale" sign, but the city actually asserted the sign ordinance "promotes safety by preventing signs from obstructing firefighting or police surveillance or creating traffic hazards." That absurd claim was sufficient for a federal judge to refuse to issue a preliminary injunction while the case was pending. "It's surreal to have a conversation about this," Mr. Miller said. "The last thing this city needs to be doing is harassing small businesses. They have been here for 10, 20, 30 years. They're good businesses, they're good public citizens."

The cumulative effect of countless - and pointless - petty rules imposed by busybodies at the federal and state level on down to cities and towns takes a massive toll on the people who are trying to fulfill the American Dream. While the 7.7 percent unemployment rate in Dallas is below the national average, it ought to be much lower. It makes no sense to maintain a regulation whose sole effect is to cut off business opportunities for the types of firms most vulnerable in a weak economy. It makes even less sense to use vindictive, mob-style tactics to gain advantage in a constitutional disagreement.

Instead of wasting time looking for new ways to micromanage the use of private property, Dallas ought to look for ways to make the city a more welcoming place for entrepreneurs to come and set up shop. Repealing this ordinance would be a sign of progress.


Tornado-hit family denied FEMA grant to repair home... because of 'insufficient damage'

By Daily Mail Reporter

Displaced families in tornado-ravaged Alabama are outraged after being denied federal aide to rebuild their flattened homes - due to 'insufficient damage'.

Jefferson County resident Jonathan Stewart said he laughed in shock after the Federal Emergency Management Agency (FEMA) claimed the house his family lost in the deadly April 27 twister was 'not unsafe to live in'.

The devastating reality is the house is now a concrete slab surrounded by rubble.
Shocked: Jonathan and Lisa Stewart and their children, Haley and Noah, lost their house in the April 27 tornado that devastated Pleasant Grove. FEMA denied the Stewart's request for aide due to 'insufficient damage'

Shocked: Jonathan and Lisa Stewart and their children, Haley and Noah, lost their house in the April 27 tornado that devastated Pleasant Grove. FEMA denied the Stewart's request for aide due to 'insufficient damage'

Mr Stewart told a FEMA inspector saw first-hand the Pleasant Grove residence he shared with his wife, Lisa, and their two children was ripped from the ground.

Three days after the visit, however, he received a letter reading: 'Based on your FEMA inspection, we have determined that the disaster has not caused your home to be unsafe to live in.

'Although the disaster may have caused some minor damage it is reasonable to expect you or your landlord to make these repairs. At this time you are not eligible for FEMA housing assistance.'

Mr Stewart told the website: 'Lisa and I looked at the letter and laughed.'

While he has since found out his insurance coverage will replace his house, the family is not alone.

Lashunta Tabb's home 15 miles away in North Smithfield Manor was stripped of its siding, and more than half of her roof blew off with tornado-force winds.
Devastated: Overnight tornadoes on April 27 left Birmingham suburbs in ruins

Devastated: Overnight tornadoes on April 27 left Birmingham suburbs in ruins

She too, received a letter claiming there was 'insufficient damage' - the number one reason in Alabama the people are determined ineligible for FEMA grants, worth up to $30,200.

It is not yet known how many Alabama tornado victims received the letter.

FEMA deputy branch director for individual assistance Lynda Lowe said finding of insifficient damage are often correct, and many of those who filed for assistance did not have damage.

FEMA officials encourage whose who believe they were wrongly declared ineligible to file for an appeal through local disaster recovery centres.

Spokesman Renee Bafalis said: 'If you have a question why you received a determination of ineligibility, go in there and let them look it up and help you file an appeal.'

A report issued on Wednesday, however, revealed few disaster victims follow through.
Demolished: Homes were flattened by the blistering winds that ripped through the area, leaving thousands displaced

Demolished: Homes were flattened by the blistering winds that ripped through the area, leaving thousands displaced

It showed less than one percent of the 25,081 applicants initially declared ineligible for any reason had appealed, leaving the potential for millions of dollars in federal aide to go unclaimed.

An applicant has 60 days from the date of the determination letter to appeal.

It was not known at press time how many applicants were declared ineligible in Alabama due to insufficient damage. However, similar findings have occurred after nearly every recent disaster.

When a disaster victim applies for a FEMA grant, an inspector is dispatched to the applicant's property.

Inspectors carry laptops connected to a database called NEMIS (National Emergency Management Information System), which guides them through measuring rooms and assessing damage.

Items marked for repair or replacement are priced depending on the geographic region.

Letters are issued based on the computerised report, telling an applicant whether he qualifies for FEMA assistance.

An applicant has 60 days from the date of the determination letter to appeal.

What qualifies as 'insufficient damage' remains unclear.

A pending lawsuit accusing FEMA of improperly denying thousands of farm workers in Texas money to repair their homes after Hurricane Dolly struck in 2008 based on the insufficient damage finding claims that FEMA used a concept called 'deferred maintenance' to back the rejections.

Deferred maintenance is not referenced in any regulation, Jerry Wesevich, an attorney with Texas Rio Grande Legal Aid who represents the plaintiffs, told

Mr Wesevich described deferred maintenance as a 'shorthand term that FEMA uses when it determines somehow that a condition of a home prior to the disaster caused the damage after the storm'.

An Alabama inspectors' coordinator for FEMA said deferred maintenance is no longer used in assessing damage, although there is a place for inspectors to note 'pre-existing' conditions.

FEMA has been on close watch since the 2004 hurricanes that devastated Florida and Hurricane Katrina, which struck the Gulf in 2005, when the General Accounting office accused it of squandering millions of dollars awarding emergency grants to unqualified home owners.

Claire B. Rubin, a disaster researcher and consultant in the Washington, D.C., area, explained: 'In Katrina they lost so much money because they were not careful about payout," Rubin said. The GAO hit them hard.'

Read more:


The Chinese ratings house has accused the United States of defaulting on its massive debt, state media said Friday, a day after Beijing urged Washington to put its fiscal house in order.

"In our opinion, the United States has already been defaulting," Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.

Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies -- eroding the wealth of creditors including China, Guan said.

The US government will run out of room to spend more on August 2 unless Congress bumps up the borrowing limit beyond $14.29 trillion -- but Republicans are refusing to support such a move until a deficit cutting deal is reached.

Ratings agency Fitch on Wednesday joined Moody's and Standard & Poor's to warn the United States could lose its first-class credit rating if it fails to raise its debt ceiling to avoid defaulting on loans.

A downgrade could sharply raise US borrowing costs, worsening the country's already dire fiscal position, and send shock waves through the financial world, which has long considered US debt a benchmark among safe-haven investments.

China is by far the top holder of US debt and has in the past raised worries that the massive US stimulus effort launched to revive the economy would lead to mushrooming debt that erodes the value of the dollar and its Treasury holdings.

Beijing cut its holdings of US Treasury securities for the fifth month in a row to $1.145 trillion in March, down $9.2 billion from February and 2.6 percent less than October's peak of $1.175 trillion, US data showed last month.

Foreign ministry spokesman Hong Lei on Thursday urged the United States to adopt "effective measures to improve its fiscal situation".

Dagong has made a name for itself by hitting out at its three Western rivals, saying they caused the financial crisis by failing to properly disclose risk.

The Chinese agency, which is trying to build an international profile, has given the United States and several other nations lower marks than they received from the the big three.

So far they have been the only rating agency to call the shots, just like they are, without the political spin...we are a deadbeat with no hopes of ever paying back our loans, and the largest buyer of our debt has been the FEDERAL RESERVE!!!!


Green Buildings Hazardous to Health? Report Cites Risks of Weatherization

The government mandated buildings commonly referred to as "green" could actually be hazardous to your health, according to a new report.

That's one of many warnings out of a new report from the Institute of Medicine, which tracked the potential impact of climate change on indoor environments.

The report cautions that climate change can negatively and directly affect indoor air quality in several ways. But the scientists behind the study warn that homeowners and businesses could also be making the problem worse by pursuing untested or risky energy-efficiency upgrades.

"Even with the best intentions, indoor environmental quality issues may emerge with interventions that have not been sufficiently well screened for their effects on occupant safety and health," the report said.

To save costs and cut down on emissions, building owners typically find ways to seal off potential leaks and conserve energy. But in "weatherizing" the buildings, they also change the indoor environment.

By making buildings more airtight, building owners could increase "indoor-air contaminant concentrations and indoor-air humidity," the report said. By adding insulation, they could trigger moisture problems. By making improvements to older homes, crews could stir up hazardous material ranging from asbestos to harmful caulking -- though that problem is not unique to energy improvements.

The report did not dissuade homeowners and businesses from making the energy-efficiency upgrades. Rather, it called for a more comprehensive approach, urging organizations to track the side effects of various upgrades and minimize the "unexpected exposures and health risks" that can arise from new materials and weatherization techniques.

Read more:

I have found this out myself long before there was even such a term as "green buildings".

I had just purchased a weekend lake cottage and since it was a vintage 1905 three story home, I hired a group of local carpenters to "weatherize it", installing new insulation, siding, windows and interior wall panels throughout the top two floors.

It seemed like a great idea; seal it up tight and save on energy bills, right? WRONG!

What happened was that the top floors were so airtight, that there was "bad air" or NO AIR circulating up there! Guests staying in the upper bedrooms were unable to BREATHE!

Normally buildings have an airspace to create adequate ventilation and air circulation, even though we do no realize it. Who knew?

So becoming "green" before it was in vogue to "be green" just proved the point....government mandates, as usual are never any good for people....proven again!


It may not come as surprising news to many of you that the United Nations doesn’t approve of our Second Amendment. Not one bit. And they very much hope to do something about it with help from some powerful American friends. Under the guise of a proposed global “Small Arms Treaty” premised to fight “terrorism”, “insurgency” and “international crime syndicates” you can be quite certain that an even more insidious threat is being targeted – our Constitutional right for law-abiding citizens to own and bear arms. ( POSTED BY BELL-FORBES).

What, exactly, does the intended agreement entail?

While the terms have yet to be made public, if passed by the U.N. and ratified by our Senate, it will almost certainly force the U.S. to:

Enact tougher licensing requirements, creating additional bureaucratic red tape for legal firearms ownership.
Confiscate and destroy all “unauthorized” civilian firearms (exempting those owned by our government of course).
Ban the trade, sale and private ownership of all semi-automatic weapons (any that have magazines even though they still operate in the same one trigger pull – one single “bang” manner as revolvers, a simple fact the ant-gun media never seem to grasp).
Create an international gun registry, clearly setting the stage for full-scale gun confiscation.
In short, overriding our national sovereignty, and in the process, providing license for the federal government to assert preemptive powers over state regulatory powers guaranteed by the Tenth Amendment in addition to our Second Amendment rights.

Have no doubt that this plan is very real, with strong Obama administration support. In January 2010 the U.S. joined 152 other countries in endorsing a U.N. Arms Treaty Resolution that will establish a 2012 conference to draft a blueprint for enactment. Secretary of State Hillary Clinton has pledged to push for Senate ratification.

Former U.N. ambassador John Bolton has cautioned gun owners to take this initiative seriously, stating that the U.N. “is trying to act as though this is really just a treaty about international arms trade between nation states, but there is no doubt that the real agenda here is domestic firearms control.”

Although professing to support the Second Amendment during her presidential election bid, Hillary Clinton is not generally known as a gun rights enthusiast. She has been a long-time activist for federal firearms licensing and registration, and a vigorous opponent of state Right-to-Carry laws. As a New York senator she ranked among the National Rifle Association’s worst “F”-rated gun banners who voted to support the sort of gunpoint disarmament that marked New Orleans’ rogue police actions against law-abiding gun owners in the anarchistic aftermath of Hurricane Katrina.

President Obama’s record on citizen gun rights doesn’t reflect much advocacy either. Consider for example his appointment of anti-gun rights former Seattle Mayor Greg Nickels as an alternate U.S. representative to the U.N., and his choice of Andrew Traver who has worked to terminate civilian ownership of so-called “assault rifles” (another prejudicially meaningless gun term) to head the Bureau of Alcohol, Tobacco, Firearms and Explosives.

Then, in a move unprecedented in American history, the Obama administration quietly banned the re-importation and sale of 850,000 collectable antique U.S.-manufactured M1 Garand and Carbine rifles that were left in South Korea following the Korean War. Developed in the 1930s, the venerable M1 Garand carried the U.S. through World War II, seeing action in every major battle.

As an Illinois state senator, Barack Obama was an aggressive advocate for expanding gun control laws, and even voted against legislation giving gun owners an affirmative defense when they use firearms to defend themselves and their families against home invaders and burglars. He also served on a 10-member board of directors of the radically activist anti-gun Joyce Foundation in Chicago during a period between 1998-2001when it contributed $18,326,183 in grants to anti-Second Amendment organizations.

If someone breaks into your home when you are there, which would you prefer to have close at hand: 1) a telephone to call 911, or 2) a loaded gun of respectable caliber? That’s a pretty easy question for me to answer. I am a long-time NRA member, concealed firearms license holder and a regular weekly recreational pistol shooter. And while I don’t ordinarily care to target anything that has a mother, will reluctantly make an exception should an urgent provocation arise. I also happen to enjoy the company of friends who hunt, as well as those, like myself, who share an abiding interest in American history and the firearms that influenced it.

There are many like me, and fewer of them would be alive today were it not for exercise of their gun rights. In fact law-abiding citizens in America used guns in self-defense 2.5 million times during 1993 (about 6,850 times per day), and actually shot and killed 2 1/2 times as many criminals as police did (1,527 to 606). Those civilian self-defense shootings resulted in less than 1/5th as many incidents as police where an innocent person was mistakenly identified as a criminal (2% versus 11%).

Just how effectively have gun bans worked to make citizens safer in other countries? Take the number of home break-ins while residents are present as an indication. In Canada and Britain, both with tough gun-control laws, nearly half of all burglaries occur when residents are present. But in the U.S. where many households are armed, only about 13% happen when someone is home.

Recognizing clear statistical benefit evidence, 41 states now allow competent, law-abiding adults to carry permitted or permit-exempt concealed handguns. As a result, crime rates in those states have typically fallen at least 10% in the year following enactment.

So the majority in our Senate is smart enough to realize that the U.N.’s gun-grab agenda is unconstitutional, politically suicidal for those who support it, and down-right idiotic—right? Let’s hope so, but not entirely count on it. While a few loyal Obama Democrats are truly “pro-gun”, many are loathe to vote against treaties that carry the president’s international prestige, causing him embarrassment.

Also, don’t forget that Senate confirmation of anti-gun Obama nominee Supreme Court Justice Sonia Sotomayor. Many within the few who voted against her did so only because of massive grassroots pressure from constituents who take their Constitutional protections very seriously.

Now, more than ever, it’s imperative to stick by our guns in demanding that all Constitutional rights be preserved. If not, we will surely lose both.


The US Treasury, will have to convince REAL buyers to buy our Treasury that is a surprise! Would you want to purchase the securities of a country that can never pay off its present and mounting debt? If you were a lender, would you lend money to a country that will keep morons like Rep. Weiner and Senators like Schumer in charge of the economy?

The U.S. Treasury next month will go back to relying on the kindness of strangers like never before to purchase the nation's burgeoning debts — and taxpayers may have to pay higher interest rates to attract enough foreign investors, analysts say.

Though a significant rise in interest rates could be toxic for a softening U.S. economy, the Federal Reserve has said it will end its program of purchasing $600 billion in U.S. Treasury bonds as planned on June 30. The Fed is estimated to have bought about 85 percent of Treasury's securities offerings in the past eight months.

That leaves the Treasury, which is slated to sell near-record amounts of new debt of about $1.4 trillion this year, without its main suitor ( can you believe it we are buying our own bonds????) and recent source of support, and forces it back into the vagaries of global markets. Among the countries that will have to step forward to prevent a debilitating rise in interest rates are China, Japan and Saudi Arabia — and even hostile nations such as Iran and Venezuela with petrodollars to invest, according to one analysis.

The central bank launched the unusual ( and if it was not the government doing this, it would be considered FRAUD) bond-buying campaign last fall in an effort to lower interest rates and boost the sagging economy — and it was successful at drawing down long-term interest rates to record lows last winter. In particular, 30-year fixed mortgage rates fell to unprecedented lows near 4 percent and spawned a refinancing wave that helped consumers to discharge debts, purchase homes and increase spending.

But by the start of the year, a pickup in inflation — led by a surge in oil and other commodity prices that some economists blamed on the Fed's easy money policies — wiped out the boon for consumers and home buyers and started to weigh on the economy. With the economy relapsing back to tepid rates of growth around 2 percent, some Fed officials argue that it should continue the easing program, but fear that the commodity boom could turn into a serious inflation threat makes it difficult for the Fed to do so.

Federal Reserve Chairman Ben S. Bernanke said in a speech Tuesday that the Fed remains on track to withdraw from the Treasury market, stressing that the central bank must remain vigilant against inflation at the same time it tries to nurture the economy back to healthy growth.

This guy is clueless...remember it was his wife's credit card account that was stolen and used for fraudulent purchases. He can not even manage his own finances, and every time he open his mouth, he has no answers other than to BUY more of our own debt...we are buying our own debt!!!!! Can you think of anything more stupid????

The end of the Fed's program would never be easy given the huge onslaught of scheduled Treasury borrowing, but the task will be more difficult because foreign investors in the past six months have been reducing their sizable holdings of U.S. debt, not increasing them.

That means to get those buyers back, the Treasury may have to raise the rates it pays on the debt. Every deadbeat has to pay more in interest, that is a fact....look at Greece and Ireland for instance.

"With the Fed pretty much out of the picture after June, it seems clear that foreign demand for Treasuries holds the key going forward," said David Greenlaw, an analyst at Morgan Stanley. "Continued heavy buying by the largest foreign holders of Treasuries will probably be necessary" to prevent interest rates from rising, he said.

Now ask yourself this...why would they want to buy securities that are never going to be repaid????

China and Japan remain the largest foreign buyers of Treasury debt, followed by oil exporters such as Saudi Arabia and Qatar. Even oil exporters that are hostile to the U.S. such as Iran and Venezuela have been among the buyers supporting the Treasury in the past, according to Morgan Stanley estimates.

China and many of the oil exporters often channel their investments through London and such offshore investment havens as the Channel Islands, so the origin of the funding is sometimes difficult to track. The uncertainty of where the money is coming from in itself will cause rates to rise and increase volatility in the Treasury market after the Fed exits, Mr. Greenlaw said.

Brazil, Taiwan and Russia also are among the Treasury's major creditors. But many countries have been cutting back on their purchases of U.S. securities in the past six months out of concern about the rapid decline of the U.S. dollar and rising inflation, which hurts their investment values.

Vassillli Serebriakov, an analyst at Wells Fargo, said many foreigners were put off by the Fed's bond-purchase program, which appeared to trigger a foreign sell-off of about $100 billion in Treasury holdings since last fall.

In some countries, the program was portrayed as the Fed "printing money" to finance profligate congressional spending and tax cuts — a charge the Fed vehemently denies.

Still, given the wariness overseas about the Fed's policies and untamed federal deficits, going back to relying on foreign buyers to finance the lion's share of the debt could be tricky, he said.

"The key question is to what extent one can expect the recent deterioration in the long-term capital flows to be reversed," he said.

Foreign investors have applauded the Fed's decision to end the program as it improves the prospects for keeping a lid on inflation. But they will continue to be concerned about uncontrolled deficits and declines in the dollar that diminish the value of their investments, he said.

"Some of the reduction in Fed Treasury purchases could be replaced by increased demand from foreign investors, but this channel is less certain," he said.

Peter Schiff, president of Euro Pacific Capital, said he does not expect enough foreign or private buyers to step forward and purchase Treasury's huge slate of debt offerings — a potentially catastrophic development that he thinks will force the Fed to backpedal and renew its bond-buying program.

"Do they expect the Chinese to reverse course on their current policy and start heavily buying U.S. debt once again?" he asked.

"That seems extremely unlikely given" that China has been investing less in Treasury bonds partly in response to demands from the United States that it stop skewing trade relations between the countries by hoarding huge surpluses of dollars it earned through trade and reinvesting them in Treasuries.

Mr. Schiff noted that Bill Gross, the head of America's own Pimco bond fund, the largest buyer of bonds worldwide, recently reduced Pimco's holdings of Treasuries to zero out of concern that they weren't yielding enough given the risks of inflation and deficit spending.

"It is not clear what would convince Gross to get back into the market with both feet, but one might expect at minimum it would take much higher interest rates," Mr. Schiff said.

Jeffrey Kleintop, chief market strategist at LPL Financial, said he is not worried about the Treasury finding buyers or about other market disruptions as the Fed pulls back.

"While interest rates are likely to rise modestly, we do not anticipate a spike resulting from the lack of Fed buying that would put the economy at risk," he said.

A failure by Congress and the White House in coming weeks to agree on a plan to curb deficits would be a much bigger problem for the markets, Mr. Kleintop said.

"The budget and debt-ceiling debate may be of more importance since fiscal policy could tighten sharply or a failure to control the deficit could spike interest rates, in either case putting the economy at risk," he said.



More than 77,000 federal government employees throughout the country — including computer operators, more than 5,000 air traffic controllers, 22 librarians and one interior designer — earned more than the governors of the states in which they work.

The findings, from a Congressional Research Service report requested by Sen. Tom Coburn, Oklahoma Republican, were released at a time when public workers' salaries and benefits are under scrutiny across the country as governments try to streamline.

CRS reviewed 2009 salary figures, the most recent available, and found 77,057 employees who earned more in annual pay than their respective governors. Of those workers, 18,351 were doctors — the highest percentage. The second-highest total was for 5,170 air traffic controllers — likely both front-line controllers and their supervisors.

In Maryland, 7,283 federal employees — about 7 percent of all full-time federal employees in the state — earned more than Gov. Martin O'Malley's $150,000 salary. Maryland was topped by Colorado, which in 2009 had 10,875 employees who made more than the $90,000 salary of the governor, Bill Ritter.

"Across America, governors are being asked to do more with less, often at lower pay than federal employees in their states. The pay gap between governors and federal employees should prompt Congress to take a closer look at federal salaries," Mr. Coburn said. "With our debt and deficits spiraling out of control, now is the time to ask agencies — not just governors — to do more with less."

Government workers' salaries and benefit packages have come under fire at the local, state and national levels as agencies seek places to cut.

The workers have disputed charges that they earn, on average, more than their private-sector counterparts, but critics point out total compensation, including health care and pensions.

On average, the age of the federal work force is older, and thus likely to be higher paid, than those in the private sector. A higher percentage of federal workers than private-sector employees hold management jobs.

President Obama late last year proposed a two-year salary freeze for federal workers, following on the heels of his announcement soon after he took office in 2009 that he was freezing salaries of top White House employees.

Both houses of Congress voted this year to cut their own budgets, too.

The federal Office of Personnel Management declined to comment on the CRS report's findings.

But Beth Moten, legislative and political director for the American Federation of Government Employees, the union that represents 625,000 federal employees, said the bigger problem is the amount of money that contractors can collect. She said contractors can be reimbursed up to $693,000 toward salaries for their top five executives, and even more for other employees doing government work.

"So the government's paying $700,000 and more for contractor salaries, and Sen. Coburn worries about the pay of physicians who care for wounded soldiers?" Ms. Moten said. "If those governors want to make more money, they should either become contractors or try applying to medical school."

Mr. Coburn asked for the review to use governors' salaries, figuring a state's chief executive's pay would be a good yardstick for top-end salaries in each state.

California's governor made the highest salary at $212,179 in 2009, though Arnold Schwarzenegger did not accept pay. Just 703 federal workers in California earned more than that level of pay, and all but 34 of them were in medicine.

Maine's governor, by contrast, made the lowest salary at $70,000. CRS said 3,423 federal employees in the state made more than that, including seven pipe fitters, and three people engaged in plastic fabrication work.

For individual occupations, the CRS report did not break down the states where they worked, so it was impossible to determine where the one interior designer who made more than the governor was employed.

CRS said nationwide there were 122 park rangers, 271 environmental protection specialists, 14 chaplains and one prison guard who earned more than their governors. There were also 21 archaeologists, three sociologists, 48 social workers, four food service workers and five civil rights analysts who made more than their governors.

CRS said some locales are likely to have a higher concentration of well-paid employees. For example, 942 of the medical and public health workers who made more than their governors were from Georgia, the location of the federal Centers for Disease Control and Prevention.

Air traffic controllers, who were the second-biggest group to get salaries higher than their governors, also generally have high salaries. That category likely includes both front-line controllers and their supervisors. The Bureau of Labor Statistics said the median salary for an air traffic controller in May 2008 was $111,870, while the top 10 percent earned $161,010 or more a year.