"Fight of the Century" is the sequel to hip-hop economics video The Boom and Bust Rap, which went viral last year…
Monday, April 25, 2011
as if the senseless budget bickering of the congresscritters werent enough for our troubled nation to endure, insult has been added to the ongoing injury this past week with the announcement by standard & poors that our country's debt now has an outlook of "negative", meaning there's a chance that they'll lower our credit rating from AAA sometime in the future...and although many economists lampooned the S&P move, & the markets completely shrugged it off (10 year Treasuries hit a high for the month this week), the action itself gave the mindless media fits & the deficit hawks new ammunition in their ongoing attacks on entitlements...but if you read the press release of the S&P warning, you'll see that it really has nothing to do with our ability to pay our debt, but it's concern is that "policymakers might not reach an agreement on how to address" it...in other words, S&P is warning about politcal gridlock, not about the full faith & credit of the US...a country that prints its own money can't go bankrupt; it can always print more to pay off old debts (such printing may eventually debase the currency & cause inflation, but that's not within the balliwick of the S&P rating)
so what it has now come down to is that the main risk of default by the US Treasury is not big government, not spending more than we take in, but that a handful of faux fiscal conservatives in the house will hold the country hostage to an arbitrary debt ceiling, playing chicken with the full faith & credit of the country at the whim of some ideological ideas of what the country should look like...we can be certain this has nothing to to do with true fiscal restraint, simply because the house Republican budget passed late last week, the so-called ryan plan to privatize medicare & cut taxes for the rich, would actually add $6 trillion to the debt over the next decade...(btw, a talking point on ryan medicare is that "it's the same plan congress has" - except that the congressional plan is indexed to health care costs, & the ryan plan is indexed to the suspect CPI, and it wont cost the average congressman half his income to buy health insurance with his vouchers)...there is also a bi-partisan debt reduction scheme being planned in the senate by "the gang of six"..in that plan, social security is on the table, but tax increases are not...i also noticed that the Treasury intends to sell AIG at a loss this month, and also sell GM at a loss by the summer, and wonder if this debt ceiling stalemate is part of the motivation for these early sales...
let look at this idea of US debt...the barely readable pie graph i've included here shows who the holders of the debt are as of the end of the fiscal year; the big blue wedge, 42% of what is outstanding, is owed to US individuals & institutions...this could be banks, mutual funds, pension funds or wealthy individuals....the next biggest wedge is 18%, and that's money we owe to the social security trust fund..."all other countries" is 11.7%, followed by china & japan, other domestic retirement funds, OPEC & brazil...but those foreign holdings of US debt do not indicate that we need china, japan or OPEC to buy our debt, rather that they're pretty much stuck with dollars by virtue of their trade surpluses & our current account deficit...and china is going to continue to be stuck with dollars as long as they want to keep selling us trinkets through walmart...and although they may use some of those dollars to buy oil (which is priced in dollars) they still have 3 trillion dollars of foreign reserves they have to put somewhere...with the yen radioactive & the euro unraveling, there isnt really anywhere else to go...so rather than sticking them under the big chinese mattress, they buy Treasuries so they can earn a nominal amount of interest... & even if china buys brazilian reals, brazil just turns around & buys dollars to keep their own currency down...as long as all these countries continue to be interested in gaining trade advantage over us & one another, our capital inflows will continue, and our debt will be automatically funded...for them to quit accumulating dollars, trade would have to be rebalanced, & we'd replace imports with domestically produced goods, increasing employment and tax receipts, ultimately bringing our GDP to debt ratio down that way....
and speaking of domestic employment, new data from the commerce department's BEA showed that the cash-heavy US multinational companies have added 2.4 million employees overseas while cutting domestic employment by 2.9 million over the last decade...most of those jobs cut were of the better paying variety, while jobs being added this decade have tended to be in the low paying service sectors...employment in the US by foreign based multinationals also fell, with a half million jobs eliminated in 2009 alone...in more specific news, toyota announced it will extend its US production cutbacks through june due to parts shortages; employees will not be laid off; rather they'll work 4 hour shifts 3 days a week...toyota japan does not expect full production to resume until the end of the year...
a new type of legislation first enacted in michigan is starting to spread thru republican dominated state capitals, which gives state appointed emergency financial managers powers to take over municipalities, fire the elected officials, cancel worker contracts, & end municipal services they disapprove of, including safety net assistance to those in need; benton harbor michigan was taken over this week, and michigan is training state "SWAT teams" to take over other cities; scott walker in wisconsin has introduced a similar financial martial law... ohio and other states are sending companies who had previously received state development grants under precious administrations bills to claw back funds thus received...
we knew the Fed, the treasury and the OCC were going to be soft on the banks in re mortgage & foreclosure fraud abuses, but there now seems to be an explanation for why the 50 state investigation, which started out gangbusters on the case several months ago, appears to have gone soft & fallen apart; matt taibbi at rolling stone followed the money, and found that iowa attorney general tom miller, who was leading the negotiations for the 50 state AGs, has since received an 88 fold increase in campaign contributions from bank friendly donors...
at least there were two more judicial rulings against MERS this week, one in a california bankruptcy court, and another in PA; there were also 3 more home-price indexes reported the past week; the FHFA index, which tracks prices of of homes sold or guaranteed by Fannie & Freddie, showed home prices down 1.6% February over January and 5.7% YoY; the FNC index has single family homes down .7% in the same period, and radarlogic, which tracks home prices in 25 cities by price per square foot, was at its lowest since 2003, down 4.3% from last year and 36% from the peak...with distressed properties amounting to 40% of existing home sales, it doesnt seem the downward price spiral will let up anytime soon...new home starts were up slightly, but completions were at an all time low...moody's also reported commercial real estate prices were down 3.3% in February, and now down 44.7% from the 2007 peak...according to the analytics firm Trepp, CRE made up 77% of the non-performing loans at the recently failed banks, much as elizabeth warren warned about over a year ago..
there was a blog post this week on one of the new regional Fed blogs; the NY Fed's Liberty blog attempted to discover the reasons behind recent increases in inflationary expectations, and decided that people are too oversensitive to food and energy prices...right. people are just too damn oversensitive to eating and heating their homes...people oughtta just stop eating & heating and then they'll see that inflation isnt a threat, just as the Fed & their apologists has always told them...
jim hamilton at econbrowser took another look at the WTI-brent spread this week, and we now have more details on why we're paying the Brent price for oil rather than the WTI price...as i mentioned previously, the keystone pipeline project, from the alberta tar sands through the north dakota bakken shale over the great plains ogallala aquifer and to the gulf coast is still a few years from completion, so much of our domestic crude is landlocked at the WTI storage terminal in Cushing OK...however, conoco phillips owns the seaway pipeline, which is bringing even more crude from louisiana to cushing...it turns out that a lot of US refiners are paying $17 over the WTI price because conoco-phillips refuses to reverse the flow on the seaway pipeline, because it would benefit their competitors more than it would them...so the price of willison sweet from north dakota is only $96 because of the added transport costs, while US coast refiners are paying $124 for imported oil...meanwhile, obama is blaming the high price of gas on speculators...
the european crisis continued to accelerate this week; it seems like i saw an article each day that greek borrowing costs had hit a new record...it started last week with a few german officials and IMF opining that greece would need to restructure its debt, meaning bondholders would not be paid back in full...and the prospect of a further bailout turned the tide in the finnish election, and it now looks like they'd opt out of any further package...at any rate, by the end of the week greek ten years bonds were near 15%, & their cost to borrow for two years was 23%...similarly, irish 10 yr debt hit a record 10.5% and portuguese a record 9.5%...credit default swaps, the cost to insure the bonds of both greek & portuguese debt, also hit records, with the price of CDS on greek debt said to be pricing in a 67% likelihood of a greek default within 5 years...rumors were that the restructuring might even occur this weekend, so as i write this i dont even know if its already underway or not...
the above is my weekly commentary that accompanied my sunday morning links mailing, which in turn was selected from my weekly blog post on the global glass onion…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me...
Wednesday, April 20, 2011
school districts around the country have been hit with a triple whammy of cuts to their funding this year...first, the direct aid in the form of federal ARRA has run its course, so they're no longer receiving that supplement; second, the states have budgetary problems for the same recession-related reasons that federal revenues have declined, and as a result a significant number of them have cut their funds for education and local governments...and most recently, the decline in housing & commercial property values accompanying the bubble bursting has started to translate into declining property tax revenues...but even last year, while school districts were supposed to be getting direct aid from the federal stimulus, i was seeing about a half dozen articles a week from districts around the country where cutbacks to their educational programs were being made...this year, now that federal aid has been cut off, the problem seems to have gotten worse...
there was a brief media flurry this recent december when students from the US scored 17th on the OECD"s standardized PISA tests (Program for International Student Assessment), a test where 15 year old students from Shanghai, Korea, Finland, Hong Kong & Singapore ran away with the honors, and the US got trounced in math... there were a few calls for education reform, and a mcgraw hill study showed that in the high achieving educational systems it was "a tremendous honor to be a teacher, and teachers are afforded a status comparable to what doctors, lawyers and other highly regarded professionals enjoy in the US"; but for the most part the temporary urgency was overshadowed by concern for holiday retail sales..then, as the year ended, the Education Trust issued a report indicating that nearly a quarter of all applicants to the Armed Forces, despite having a high-school diploma, can’t pass the necessary military entrance exam; not having “the reading, mathematics, science, and problem-solving abilities” to become a bona fide private in the U.S. Army...it wasnt until the state of the union, when obama invoked sputnik challenge metaphor, that education was again in the spotlight...and even ben bernanke got into the act in early march, when he waded into the state & local budget debates with a speech stressing the need for a competitive high-quality workforce, lauding the benefits of early childhood education in achieving that goal...but for all the offficial oratory, not a program has been introduced, and as you’ll see below, further cuts have continued...
according to the recent BLS Employment Situation Summary, local governments have lost 416000 jobs since an employment peak in September 2008....the lions share of those job losses have resulted from school district cutbacks, and more than half of the total jobs lost were educators (see earlier chart by Kash)...but it's not normally a national story; typically, its a local story, where upset parents show up at the school board meeting and each district cuts something different, some cut teachers, some spec ed, some cut sports, or art & music, or field trips, still others have cut over a month off the school year...so im going to try to tell this larger story with links to a number of small ones which have appeared since the beginning of the year...
Legislative fight expected on class-size limit — Among proposed solutions to the state's massive budget deficit is changing a Texas law that holds most elementary school classes to no more than 22 students. But teachers groups, backed by Democrats in the House and Senate, say any change will reverse academic gains in elementary schools and force the elimination of as many as 12,000 teaching jobs.
Number Of Homeless Students In State Climbs To 21,000 - They sleep in cars. In parks. In shelters. On the sofas of generous relatives or friends. They are the more than 1.3 million homeless children nationwide. Of that total, more than 21,000 live in Washington state, according to numbers submitted to the federal government this past week. According to the Office of Superintendent of Public Instruction, the numbers show that during the 2009-10, the state reported 21,826 homeless students
State colleges and universities bracing for budget storm - Officials at Connecticut's public colleges and universities are bracing for another tough budget year as the legislature and new governor grapple with next year's $3.67 billion deficit. "Public universities are definitely on the firing line,"
Birmingham school district faces $30 million deficit in FY 2012 – Birmingham school officials say the city school system faces a $30 million deficit in the coming fiscal year with no reserve fund to make up the difference. Chief financial officer Arthur Watts tells The Birmingham News the city is paying $17 million in salaries and benefits this year with one-time federal stimulus money. That won't be available when fiscal year 2012 starts on Oct. 1.
State superintendent declares California schools in 'state of emergency" -- Saying schools are in a "state of financial emergency," the Superintendent of Public Instruction on Thursday called on Californians to get involved in local schools and support tax measures that benefit education. He said $18 billion in education cuts over the past three years have caused thousands of layoffs, increased class sizes, shortened school years in many districts and eliminated or reduced programs such as libraries, art and music. He said 174 of the state's 1,077 school districts are in financial distress, signaling they may not be able to pay their bills in the next three years
Detroit Public Schools Facing Budget Apocalypse - Detroit Public Schools would close nearly half of its schools in the next two years, and increase high school class sizes to 62 by the following year, under a deficit-reduction plan filed with the state. The plan, part of a monthly update Emergency Financial Manager Robert Bobb gives the Department of Education, was filed late Monday to provide insight into Bobb’s progress in his attempt to slash a $327 million deficit in the district to zero over the next several years. Under it, the district would slim down from 142 schools now to 72 during 2012-13.
Campus Notes - UNC estimates more job losses - A 5 percent cut to the UNC system budget - which officials say is a reasonable expectation - could result in the loss of 900 jobs across the state. Of those, 400 would like be faculty cuts, according to data being presented this morning to the UNC system's Board of Governors. After several years of budget cuts, the system appears ready to reduce its budget again, doing its part to help the state patch a hole in its budget estimated now at more than $3.5 billion. A 10 percent cut would more than double those job eliminations - to 2,000 positions across the UNC system, including 1,000 professor slots.
City, schools can't count on help to close budget gaps - Rochester faces a $48.5 million budget gap. The City School District is short about twice that amount — representing 14 percent of its budget. And the state, which has bailed out local governments in the past, is in a $10 billion hole that could grow to $11 billion if lawmakers don’t start making cutbacks. Coming off a decade in which state aid to the city increased about 50 percent, or more than $30 million in inflation-adjusted dollars, the city is now in the midst of midyear budget cuts. “We’ve hitched our wagon to the state,” “Given the state’s fiscal situation, we’re that much more at risk.”
York City School District could seek tax exceptions - The York City School Board on Wednesday discussed the possibility of raising property taxes beyond its state-mandated limit for next year. The city school district is facing a $15 million deficit for the 2011-12 school year. The board voted 7-2 Wednesday to move forward with advertising a preliminary budget in order to seek state exceptions to raise taxes by more than 2.2 percent, the limit set for the district. Districts can ask for special exceptions for a variety of reasons in order to raise taxes higher than their state-set limit.
New Britain Schools Could Lose More Than 100 Teachers To Budget Cuts — After losing about 50 teachers to budget cuts last year, the city's financially battered school system faces the prospect of laying off another 100 or more this summer, the board of education said Wednesday night. The system faces a projected $11 million gap in the coming budget, the result of a staggering reduction in federal grants and the likelihood of bare-bones funding from city government, board members said.
School officials say cuts could be 'devastating' - School officials say programs and people would be two unavoidable casualties of the 10 percent across-the-board cut to education funding proposed Wednesday by S. Dakota Gov. Dennis Dauggard. "For us, it amounts to a $1.4 million loss. If we would try to accomplish that in one year, it would have a devastating effect. He says he has real numbers. What he doesn't see is that real numbers affect real people." For Rapid City, 10 percent means $7 million."There's no way we can salvage $7 million in the general fund.”
Bad Budget May Halt School Construction In Wash. State Gov. Chris Gregoire's austere budget proposal could mean that school construction projects approved by local voters might not get built, state lawmakers were told Monday. Facing a $4.6 billion deficit in a $36 billion operating budget and pressures to other spending plans, Gregoire has said she's left with no other options but to make deep cuts to education and health care.
SC House Budget Subcommittees Beginning Hearings - South Carolina's public schools and college systems will make pitches to House budget writers as legislators deal with a projected $829 million budget shortfall for the upcoming fiscal year. Federal bailout cash during the past two years has helped schools and colleges avoid the deep spending cuts other agencies have seen. But that money is no longer available, and legislators say schools and colleges have to deal with reductions.
UC President Warns Of Possible Layoffs, Program Cuts— University of California campuses may have to layoff hundreds of faculty members and enroll more out-of-state students to deal with Gov. Jerry Brown's budget cuts. The UC Board of Regents met yesterday in San Diego to talk about their next steps. Brown has hit the UC system with potentially $500 million in state-budget cuts. Regents say the UC is grappling with an additional $500 million in costs associated with UC pensions and rising utility bills. Altogether, the UC-budget gap stands at $1 billion. Regents say access, affordability and the quality of the UC system will be severely affected
Sandoval Speech Focuses on Budget Crisis, Education - Governor Brian Sandoval gave his State of the State Address in Carson City Monday night, and the outlook was grim. Sandoval focused on several key issues facing the state, including the budget crisis and education. The governor focused on the $1.2 billion budget hole he inherited. Turning to education, the governor said the system is broken. Sandoval outlined several proposals he says will fix the system, including ending teacher tenure, holding back students who fall behind and reforming how K through 12 schools are governed.
Dallas ISD now preparing for $260 million funding cut - Dallas school officials are now bracing to lose as much as $260 million each of the next school years as lawmakers slash education funding to close a multibillion-dollar deficit. The numbers keep getting worse. A month ago, Superintendent Michael Hinojosa thought Dallas ISD might be out $120 million each of the next two school years. The city of Dallas had two mandatory furlough days in 2009, which saved the city $2.6 million. Trustee Nancy Bingham said this afternoon she favors furloughs because employees wouldn't lose their jobs.
Pension costs to hurt Dearborn Schools next year - Increased pension costs could hit Dearborn Public Schools hard next year, even if the state does not cut school funding. State officials estimate retirement costs could jump almost 31 percent next school year, or an additional $7.9 million for Dearborn, The district’s total budget this year is about $225 million. The amount of the pension increase is tentative and could drop if the state can keep a new law that school employees contribute 3 percent of their income toward retirees’ health insurance, Cipriano said. A lawsuit from employees seeks to block the contribution.
Think $113 Million AISD Deficit Is Bad? Consider This Armageddon Scenario --Austin School Trustees acknowledged they were left with no easy choices last night as they voted 9-0 to approve a plan that would eliminate 485 jobs next school year, mostly teachers. The decision was based on a plan to reduce the $113 million projected budget gap without cutting full day pre-K. But all those plans could go out the window depending on how the legislature decides to distribute cuts to education funding. At issue is how lawmakers go about defunding education.
Wyoming Representatives Introduce Legislation To Videotape Teacher Performance Statewide - From the release of 12,000 teacher scores in New York, to California's educational overhaul that hopes to see payoff by 2025, schools are scrambling to find a way to gauge teacher performance with accuracy and accountability. The Casper Star-Tribune reported on two pieces of legislature presented to Wyoming's senate that present a new way to view educators in action: through the lens of a video camera. "It isn't an Orwellian thing."
Detroit Public Library's 'Unprecedented' Fiscal Crisis Could Mean Closures, Layoffs -The Detroit Public Library is considering "all options" in a feverish attempt to address a looming budget crisis, according to spokesman A.J. Funchess. Could that mean branch closures? Layoffs? Reduced operating hours? "All options,"
Oklahoma bill would mandate educators question evolution in classes - Educators in Oklahoma would be forced to openly question in their classes the legitimacy of the scientific theory of evolution should a new bill become state law. “It’s a simple fact that the presentation of some issues in science classes can lead to controversy, which can discourage teachers from engaging students in an open discussion of the issues,” The legislation (HB 1551) titled the “Scientific Education and Academic Freedom Act” singled out “biological evolution, the chemical origins of life, global warming, and human cloning” as topics that are controversial and thus questionable.
Long Beach Unified prepares to send out 621 preliminary layoff notices to teachers - Administrators at the Long Beach Unified School District say proposed budget cuts are likely to force the district in the next month to send out more than 600 Reduction In Force notices to employees with teaching credentials. If the proposed layoffs are made final by summer, the ensuing teacher cuts would mean a minimum class size increase of five students in kindergarten, first, second and third grades. The increase would lead to 30-students classes in those grades. Classes in grades sixth through 12th grade would increase by two students to 34 students per class.
Superintendent: 'Perfect storm' threatens Arlington school system - Hicks said due to the looming $10 billion deficit in Albany, the district is projecting a cut in state aid next year of at least 5 percent or $2.4 million. On top of the drop in state aid, next school year is when the federal stimulus money runs dry. This school year, Arlington was provided more than $4 million in revenue through the American Recovery and Reinvestment Act of 2009. "We're not going to count on a bailout from the federal government,"
Nothing Off Limits On OPS Budget - Class sizes could go up. Some programs, such as summer school or programs for the gifted, could be scaled back. And new textbooks could wait a year. All of those are options as Omaha Public Schools look to make budget cuts next school year. District administrators are seeking to make cuts totaling $22.2 million, including $11.1 million from programs funded by federal stimulus money that runs out after this year. Teachers, school board members and administrators say the list is intended to ignite discussions with the public and OPS staff about where to make cuts. “There's nothing that's off the table at this point,”
Pennsylvania schools could lose $1 billion - Less than three weeks after taking office, Gov. Tom Corbett is swinging the budget axe at public schools. Schools may lose up $1 billion in state aid in the coming school year, setting up one of three scenarios. Homeowners could see substantial property tax increases. School boards may slash programs and jobs in the coming school year. Or families may take a hit to their wallets and still see school programs or jobs wiped out. How big is a $1 billion loss? It amounts to about a fifth of the $5.1 billion that the state budgeted for basic education this year.
New York City May Fire 21,000 Teachers - New York City could lose $1 billion in education aid from the state, forcing the nation's largest school system to cut more than 21,000 teachers, Mayor Michael Bloomberg said Friday.. If the governor proposes a $1 billion cut and the Legislature approves it, the mayor estimated the city would be forced to cut 15,000 teachers, most of which would be accomplished through layoffs. That's on top of plans, outlined by the mayor in November, to cut 6,166 teachers in the fiscal year beginning July 1.
Schools say proposed cuts devastating - When it comes to school funding, the contrast between the haves, and those who don't have quite as much, often shows up in art class. At Forest Hills Northern Middle School, the art classroom recently was renovated, and features new track lighting, digital imaging computers and ergonomic stools. At Sparta Middle, there are just a few dollars for supplies for each young artist. -- A chart of Kent County school funding levels in 2009, 2010 and proposed for 2012 -- But leaders at both school districts say Gov. Rick Snyder's budget proposal would hurt all students -- no matter the district -- and likely would lead to eliminating teachers, maybe a lot of them. "The bottom line is, it is going to come down to, I would say, hurting students,"
Oakland school district might release hundreds of layoff notices - The Oakland school district for years has relied on high teacher attrition rates and one-time funds to avoid the layoffs of tenured K-12 classroom teachers.This year could be different. A letter from Superintendent Tony Smith that was posted on the district's website Tuesday said a "significant" number of teachers, as well as nonteaching staff, soon will receive a notice in the mail that they might not have a job next school year. The district also plans to notify all principals and some other managers that they might be reassigned to a new position in the fall.
LA school board contemplates up to 5000 layoffs - The Los Angeles school board is set to vote on authorizing layoff warning notices for more than 5,000 employees, including 4,000 teachers, in a bid to close a $408 million budget deficit for the 2011-2012 academic year. The board will vote Tuesday on the warning notices, which by state law must be sent by March 15. The notices do not mean that all employees who receive them will lose their jobs on June 30. The exact number of layoffs will depend on whether voters approve state budget balancing measures on the ballot in June.
Study Predicts 3300 Teacher Layoffs On LI - Teacher jobs on Long Island may be in jeopardy after a new study estimated more than 3,300 layoffs over the next two years. The study, done by the New York State School Board Association, estimates that Nassau County will have to lose more than 1,500 teacher positions while Suffolk County will need to cut more than 1,800. The study credits the governor’s proposed cap on property taxes and a reduction in school aid for the probable cause of the layoffs.
School District Cuts 778 Jobs, $24.4M In Anticipation Of Reduced State Budget - In response to what the Long Beach Unified School District is quite accurately calling "the state's unmitigated budget disaster," the LBUSD Board of Education on Tuesday voted to cut $24.4 million and 778 jobs to reduce expenses. Class sizes in nearly all grades will rise with the loss of hundreds of teachers. There will also be reductions to elementary school busing and transportation. The board voted a few weeks ago to close two elementary schools and cut an addition $27 million. The LBUSD has cut more than $200 million since 2008, and studies suggest that things are not likely to improve any time soon.
AISD trustees discuss slashing more than 1,000 jobs - Austin school board members Monday talked about possibly axing more than 1,000 jobs and declaring financial exigency, or a state of fiscal emergency, to clear the way to do so. Chief Financial Officer Nicole Conley-Abram told trustees Monday that the proposed cuts would increase class sizes at elementary schools, require secondary teachers to teach 174 students a day, cut athletic spending by 5 percent and, pending state approval, mandate two-day unpaid furloughs for district workers.
$60M deficit makes school budget picture grim - School Board members knew when they adopted their current spending plan that $47 million of it would not be available again next year. It came from sources such as federal stimulus funds and a local property tax that voters rejected for renewal. Now Florida lawmakers are talking about cuts beyond that amount, perhaps an additional $11 million. And the state Department of Education has asked the district to repay nearly $7 million for students who did not enroll as projected this year, as well as for enrollment adjustments found in audits of past years.
Schools face more financial woes -School district officials planning for a tough budget year recently got some bad news. They were hoping for a share of a $387 million federal stimulus grant awarded to the state this year to help schools minimize staff cuts. But Gov. Tom Corbett recently directed that the Education Jobs Fund grant be used, instead, to shore up the current state education budget. He also requested that $364 million in PA state funds be diverted from the education budget into the general fund to help offset a projected $4 billion deficit.
Funding cuts may mean huge district deficit— Hazleton Area School District administrators are bracing for the impact of deep cuts in state education funding. A preliminary 2011-12 budget, approved by the board of education Wednesday, and its $15 million deficit reflect how deep the cuts may go and the effect they would have on both district operations and taxpayer pockets. In advance of Gov. Tom Corbett's March 8 state budget address, Ryba said he has been advised by state agencies to plan for next year's state funding to be equivalent to the funding levels of 2006-07 or 2007-08.
Significant 2011-2012 deficit projected for VBPS – Board may need to cut as much as $5,000,000 - At the regular meeting of the Van Buren Public Schools Board of Education, consultant Mike Dixon presented a grim budget update to the board. Early projections for the 2011-2012 school year show an excess of expenses over revenues of $5,328,329.Mr. Dixon explained the key factors driving the projected deficit. On the revenue side, an estimated drop in students from 5,582 to 5,518 would decrease revenue by $371,840. The loss of federal funding (from ARRA and Edujobs federal sources) is projected to total $1,774,213 in decreased revenue compared to the current school year. On the expense side, rising retirement costs present a significant financial burden to the district.
Cutting Pell Grants - President Obama and his aides have spent a good bit of time over the last several weeks talking about the importance of education. Now they announce that they plan to cut spending on Pell grants, the big student-aid program that helps students in (roughly) the bottom half of the income distribution. As Jackie Calmes explains: Pell grants for needy college students would be eliminated for summer classes, and graduate students would start accruing interest immediately on federal loans, though they would not have to pay until after they graduate; both changes are intended to help save $100 billion over 10 years
Detroit Ordered to Close Half Its Public Schools Amid Budget Crisis - The Detroit public school system has been ordered to close half its schools to make up for a $327 million deficit. The schools will be shuttered over the next four years, causing class sizes to bulge to 60. The plan, mandated by state education officials, will reduce the number of schools in the district from 142 to 72. Robert Bobb, the district's emergency financial manager, said he doesn't think the plan will be effective because it's likely to drive students out of the district, making the fiscal crisis worse.
Elk Grove schools face massive budget cuts, layoffs - More than 400 jobs are on the chopping block as the Elk Grove Unified School District wrangles with a $40 million budget deficit, according to a list of cuts scheduled to be considered by the school board. "Morale is low. We've been fending off cuts for a number of years" The district is recommending increasing class sizes to 30 next year. "With just four extra students, I can tell the difference. Now the expectation of teachers is that we continue to teach as if we still had just 20,"
Pennsylvania school districts brace for severe cutbacks - Nearly three of every four Pennsylvania school districts spend more than they take in, a problem likely to worsen next year when $1.4 billion in federal stimulus money ends, according to state data. More than 370 school districts will spend a total of about $450 million more than they collect in taxes this year, data show. With the state facing a $4 billion deficit, school officials worry lawmakers and the governor won't replace the lost federal dollars, which they say could lead to severe budget cuts. The School District of Philadelphia, with an operating budget of about $3 billion, will lose the most stimulus money -- $246 million.
'Draconian' Cuts Considered For Schools (Jacksonville) At a special board meeting Tuesday, members went through a 25-page list of suggestions from staff of ways to trim the budget. In addition to cutting art, music and PE in primary schools, other money-saving ideas being considered include making the school week four 10-hour days, consolidating smaller schools, reducing bus routes to some magnet and alternative schools, limiting middle school athletics to four days a week, and cutting field trips to the Marine Science Education Center.
Providence plans to pink slip all teachers. The school district plans to send out dismissal notices to every one of its 1,926 teachers, an unprecedented move that has union leaders up in arms. Supt. Tom Brady wrote that the Providence School Board on Thursday will vote on a resolution to dismiss every teacher, effective the last day of school. In an e-mail sent to all teachers and School Department staff, Brady said, “We are forced to take this precautionary action by the March 1 deadline given the dire budget outline for the 2011-2012 school year in which we are projecting a near $40 million deficit for the district,” Brady wrote. “Since the full extent of the potential cuts to the school budget have yet to be determined, issuing a dismissal letter to all teachers was necessary to give the mayor, the School Board and the district maximum flexibility to consider every cost savings option, including reductions in staff.”
San Jose's budget deficit points to likelihood branch libraries will be open just three days a week - Several years ago, all of the branches were open six days a week, with a few open on Sundays. With the recent huge deficits, that number dropped to 5½, more recently to 4½ and after June 30--the end of this fiscal year--it may drop to three days a week. Depending on the budget--and things don't look good--officials running the library are looking at options, one of which is opening branch library doors three days per week.
Wisconsin Budget Would Slash School and Municipal Aid - Gov. Scott Walker1, whose push to limit collective bargaining rights and increase health and pension costs for public workers has set off a national debate, proposed a new budget for Wisconsin on Tuesday that called for deep cuts to state aid to schools and local governments, provoking a new wave of fury. Mr. Walker, a Republican, called for no tax or fee increases, but cuts of $1.5 billion to items like the schools and local governments — the preferable choice, he said, for solving a deficit expected to arise in the two-year budget period that begins in July.
TN lawmakers may soften teachers union bill - State lawmakers may soften a controversial bill that would put an end to mandatory negotiations between school districts and the teachers union. Leaders in the state House of Representatives are considering an amendment that would give local school boards the option of deciding whether to negotiate contracts with their teachers. The behind-the-scenes discussions are meant to smooth passage for a bill that would overturn the 1978 law that gave teachers the right to bargain as a group with districts.
Nearly 500 in S.F. schools to get pink slips - Nearly 500 San Francisco teachers, aides and administrators will find pink slips in their mailboxes within the next two weeks as the school board works to backfill an estimated $27 million shortfall if the state's worst-case budget scenario pans out later this year.If the layoffs hold, class sizes would go up and overall support for students would decline, district officials said Tuesday night. The board voted 6-1 to send notices to 140 teachers, nurses and counselors, 194 teacher aides and 139 administrators.
Poverty levels spike in local schools - Seven out of 10 elementary students in Santa Rosa City Schools qualify for free or reduced-price lunches, reflecting a rising level of poverty in the city's core schools, according to guidelines established by the federal government. Less than a decade ago, about half of the elementary students in Sonoma County's largest school district were eligible for subsidized lunches. Today, at four of the district's 10 elementary schools, income levels are so low that more than 90 percent of students get help in paying for their lunches.
Williams says NYS budget could mean 750 layoffs - Buffalo Schools Superintendent Dr. James Williams threatens to leave if Albany imposes a salary cap on school superintendents. Williams is predicting dire consequences for the Buffalo School District. If Governor Cuomo's current budget proposal passes, Dr. Williams says there will be massive layoffs. "You're looking at about 750 people," said Dr. Williams.
District 205 Teacher Layoffs Could Cut into Tenured Ranks - Six Rockford schools will close. The developments are sending shock waves throughout the affected areas. Emotions ran high as more than 500 people came to the special board meeting to hear the fate of the district. Due to widespread interest in district cuts, the board meeting was moved there to accommodate a large crowd. In all the board voted to close six schools, repurpose two, and decided to leave the fates of three schools alone.
U.C. Davis Braces For Cuts - Up to 500 jobs could be eliminated, and students could face higher fees under a proposal being circulated by U.C. Davis Chancellor Linda Katehi. In a letter released by her office, Katehi projects a shortfall of $107 million next year, as a result of Gov. Jerry Brown's proposed budget cuts.
Tight Budgets Mean Squeeze in Classrooms - Millions of public school students across the nation are seeing their class sizes swell because of budget cuts and teacher layoffs, undermining a decades-long push by parents, administrators and policy makers to shrink class sizes. Over the past two years, California, Georgia, Nevada, Ohio, Utah and Wisconsin have loosened legal restrictions on class size. And Idaho and Texas are debating whether to fit more students in classrooms. Los Angeles has increased the average size of its ninth-grade English and math classes to 34 from 20. Eleventh- and 12th-grade classes in those two subjects have risen, on average, to 43 students.
CMS Budget Cuts Could Mean Hundreds Of Teacher Layoffs - Charlotte-Mecklenburg Schools is preparing to lay off hundreds more teachers, and Goodwin said she thinks veteran teachers have the advantage. “If you are an untenured teacher, unless you're in a critical area, really, start going ahead, making plans (and) looking at other options,” she said. The 2011-12 proposed budget calls for a $100 million reduction. The cuts could cost up to 600 teachers their jobs.
Layoffs Approved at FUSD; Averted in Clovis - Fresno Unified teachers and their supporters showed up in force Wednesday night as the district's Board of Trustees met to discuss their budgetary options in the face of a multi-million dollar shortfall. Despite the outcry to avoid impacting the classroom by targeting teachers, the board voted to send out more than 300 layoff notices, which by law need to be in the mail by March 15th.
San Diego School Board May Warn 900 Teachers Of Layoffs - California's budget crisis threatens to devastate the public-education system. Deep budget cuts are forcing school districts throughout the state to lay off thousands of teachers, expand class sizes and close programs. San Diego Unified, the state's second largest school district, will decide Thursday on whether to send layoff warnings to 900 teachers and 600 non-teaching staff to close a $120-million budget deficit. “The state treasurer started throwing around the notion of a 130-day school year. That would mean school would end at the end of March. Five months of the year, kids are out of school,"
Education Secretary: 82% of US public schools may ‘fail’ this year - In testimony to Congress Wednesday, US Education Secretary Arne Duncan made a startling claim: This year, up to 82 percent of public schools could 'fail' the government's 'No Child Left Behind' standards. Last year, just 32 percent of schools were failing the government's rigorous testing standards.
UC Riverside leaders consider sweeping cuts in face of budget crisis - Should library hours be cut? Could some academic programs be closed or merged? Will turning down air conditioners and fixing leaky sprinklers save much money? UC Riverside administrators are mulling such questions as they face an expected reduction in the campus' core budget next year of at least 8%, or $38 million, even as they cope with higher pension costs and energy bills. The decisions could affect the livelihoods of employees and quality of education for more than 20,000 students at the Inland Empire campus. The 10 UC campuses have been through similar drills over the last three years of state budget crises, and alarms rang again recently with Gov. Jerry Brown's call to cut $500 million from the UC system for the 2011-12 school year.
Union: 19000 educators get pink slips in Calif.—California school districts have issued at least 19,000 layoff notices to teachers and other school employees amid heightened uncertainty over the state budget, the teachers union said Tuesday. The California Teachers Association announced its estimate of preliminary notices on the day school districts must let employees know they could lose their jobs. Many districts have not reported how many pink slips they have issued as they prepare for worst-case budget scenarios, said CTA President David Sanchez. He expects the number to surpass 20,000 when the union has a more complete count by week's end.
California Schools Hold Rallies To Protest Layoffs -- The state budget crisis has been hard on teachers. The latest numbers are out and according to the California Teachers Association 19,000 pink slips have gone out. Tuesday is the deadline for school districts to notify teachers. Districts have warned that unless more money gets directed to schools hundreds of thousands of teachers statewide will lose their jobs. Some districts have warned that budget cuts will not only cost jobs, but will also mean an end to art, music and other programs.
Schools Running Out Of Money - More than 100 school districts throughout New York state do not have enough reserves to offset Gov. Andrew Cuomo's proposed $1.5 billion (7.3 percent) cut to the state's education budget, a study released Thursday by state Comptroller Thomas P. DiNapoli indicates. According to DiNapoli, "Most districts have big enough reserves to cover the proposed cuts for one year," . "But after that, the reserves would be gone and without other actions, the expenses would still need to be addressed. And more than 100 districts across the state don't have enough reserves for even one year."
Facing $80M In Budget Cuts, CPS Hears Public's Input - About 200 people packed a Cincinnati School Board meeting Monday night, many of them to talk about the district's finances. Cincinnati Public Schools is trying to figure out how it will balance its budget in the face of an expected loss in revenue next year of nearly $80 million, or 17 percent. The district, like schools across the state, is bracing for deep cuts to education funding when Gov. John Kasich releases his biennium budget today. It's also facing losses in federal funding and rising expenses. The district made no decisions Monday night. The forum was intended to get the public's opinion on what they think the core mission of the district should be and what programs are important to the community.
Louisiana Governor's Budget Assumes College Tuition Hike - Gov. Bobby Jindal's budget would be costly to Louisiana's college students. Tucked in the pages of the $24.9 billion spending plan are provisions for spending more than $98 million that Jindal hopes the state's colleges will get through tuition hikes. Separate legislation would need to be passed to enact the cost increases, and higher education leaders are supporting the bills. The tuition and fee increases would come on top of $60 million in increased costs for students already set to take effect this fall for the 2011-12 school year.
Christie's budget cuts left N.J. schools unable to provide 'thorough and efficient' education - Gov. Chris Christie's deep cuts to state school aid last year left New Jersey's schools unable to provide a "thorough and efficient" education to the state's nearly 1.4 million school children, a Superior Court judge found today. Christie slashed state aid by $820 million last year, and Doyne found that altogether, the state would have needed twice that much — $1.6 billion — to fully fund the School Funding Reform Act formula.
Hundreds of Layoffs at Montgomery Public Schools - Hundreds of employees will be laid off from Montgomery Public Schools at the end of the school year. The Montgomery Co. school board approved the layoffs of 270 non-tenured personnel. Most of those being laid off are teachers. Spokesman Tom Salter says there are fewer teachers being let go this year compared to last year. The cuts started in the central office, and then worked toward classrooms.
Tentative schools budget includes 2500 layoffs, pay cuts, larger classes - The mood was somber as Jeff Weiler, chief financial officer for the Clark County School District, finished a presentation Thursday night at a School Board meeting. Sitting in front of a standing-room-only crowd, Weiler served as the bearer of bad news: As part of a tentative 2012 budget, $411 million would be cut from the district and nearly 2,500 employees would lose their jobs.The tentative budget includes a 7.8 percent reduction in salaries for all employees, a 25 percent cut in funding for textbooks and supplies, a 20 percent cut in administrative department budgets, an increase in health insurance costs for employees and an increase in class sizes by three to seven students.
150 Michigan school systems on verge of going broke More than 150 school districts and charter schools in Michigan are teetering on the edge of going broke, a situation that is likely to get worse under Gov. Rick Snyder's proposed cuts of $470 per pupil. These are the districts that have so little set aside in rainy day funds that Snyder's cuts -- coupled with a huge increase in retirement costs this summer -- could put them in a deficit, joining the 43 districts and charters already there. It's a situation that has mobilized school leaders -- testifying in Lansing, writing lawmakers and sending letters to parents. They say that after years of closing schools, laying off staff and slashing programs, there's little left to cut.
Massive enrollment cuts at CSU expected = The nation’s largest university – California State University – is shrinking as state funding is cut. CSU trustees on Tuesday heard a series of proposals to cope with a cut of $500 million in state support – or possibly as much as $1 billion if some taxes set to expire June 30 are not extended. The state budget proposed by Gov. Jerry Brown calls for the $500 million in cuts to CSU, but the university says it will actually need to address a $550 million total gap in funding once $50 million in mandatory costs, including increased energy and employee health premiums, have been factored in. The $500 million cut reduces CSU's state funding by 18 percent from last year and equates to funding for over 85,000 students across the state, it says.
Fresno State to turn away 600 as CSUs ordered to make cuts - The California State University system plans to enroll about 10,000 fewer students as part of its response to anticipated cuts in state funding, school officials said Tuesday. That includes about 600 fewer students at the Fresno campus. At the CSU Board of Trustees meeting in Long Beach, administrators outlined strategies for the 23-campus system to cope with the $500 million, or 18 percent, cut proposed in Gov. Jerry Brown's state budget plan. The system received about $2.8 billion in state funding for the current fiscal year. In addition to the enrollment cuts, the 23 campuses are being asked to reduce their budgets by a total of $281 million, officials said. Those cuts could lead to fewer course sections and fewer faculty and staff.The 600-student decrease would be in addition to cuts that have already been made.
Rich District, Poor District - To balance New York State’s budget, Gov. Andrew Cuomo wants to cut a record $1.5 billion from the $23 billion budget for grades K-12. The cuts would scarcely affect wealthy districts that rely primarily on local taxes to support lavishly appointed schools. But they would be catastrophic for impoverished rural districts that have been starved of state aid for decades and are still reeling from cuts levied last year when David Paterson was governor. Already struggling to furnish even basic course offerings, the poorest districts would need to cannibalize themselves to keep the doors open and the lights on.
Some Rochester parents set to fight school budget cuts - Now, armed with hard numbers released on Tuesday, parents citywide are analyzing figures and mobilizing to protest what could be some of the biggest budget cuts in Rochester School District history."There's going to be a deterioration in the services offered our children," . "I can appreciate that there are concerns about the budget getting out of hand. But our first obligation is to teach our children. That's my central concern. I think they've forgotten about the students." The plan calls for cutting 900 jobs — 15 percent of the district workforce — to bridge an $80 million budget gap.
Farmington Board of Education Makes Budget Cuts- Board of education members trimmed $494,103 Monday from the proposed education budget, including cuts to sports and reading programs, summer school, proposed facility improvements and transportation. The cuts were in response to reductions that the town council made during budget workshops last month. The proposed education budget is $53,978,296, which is 4.83 percent more than last year's budget. A budget referendum is planned for May 5. "After four years of reductions, we are at a point that if you make a reduction, it really begins to hit up against programs and class size,"
Norfolk school budget cuts 159 positions - The School Board voted 4-3 on Wednesday to approve a budget for next year that would eliminate 159 positions and ask the city for $822,000 more than the $104 million Norfolk currently provides. It retained cuts including literacy teachers, school deans, media assistants, career/technical teachers and other positions, and closes Dreamkeepers and Oakwood elementary schools. Some board members noted that Norfolk's city government has a projected $32 million budget shortfall that could make the requested increase in school funding a hard sell..
Kansas school teachers brace for cuts - Kansas teachers and administrators say there is little reason for optimism from the 2011 Legislature where lawmakers are preparing to make deep cuts to public schools.Their concern is this won't be the last reduction as demands for educating students and meeting ever-increasing achievement mandates increase. Republican Gov. Sam Brownback proposed cutting school spending by $232 per student in next year's budget. The House and Senate budget plans largely follow that recommendation, reflecting tight state revenues and the end of federal dollars sent to states to support education budgets.
School budget cuts take a painful human toll -The two were among seven teachers at a magnet program at LBJ High School, who learned last month that their jobs are being eliminated as part of an Austin school district plan to cut 1,153 positions — 471 of them teaching jobs — to close a $94 million budget hole for 2011-12. Districts across Texas are contemplating similar actions as state lawmakers move forward with a proposed budget that would reduce aid by billions of dollars. On Friday, the Round Rock district announced it will terminate about 350 employees, including 234 classroom teachers.
Schools potentially face tremendous cuts - With budget negotiations in Sacramento in tatters, the bloodletting is starting to come into focus. The state is facing the threat of a damaged credit rating and even more cuts to the poor, disabled and elderly. And now California schools are also grappling with a nightmare scenario: $1,000-per-student cuts, 30 days shaved off the school year and school districts falling into bankruptcy. On Wednesday, the budget crisis of 2011 entered Phase Two. Gov. Jerry Brown and Democratic lawmakers have said all along that they would have little option but to slash education spending if voters didn't extend sales, income and auto taxes in a June election. K-12 education had been protected in the $8.2 billion in cuts -- mostly affecting the state's most vulnerable populations -- signed by Brown last week.
Cleveland Metropolitan School Board Votes to Close 7 Schools - The Cleveland Metropolitan School Board voted 6-2 Tuesday evening to close seven schools, and layoff 702 Cleveland Teachers Union employees, including 643 classroom teachers in the district. Additional layoffs will be considered at an April 26 meeting, officials said.
Public education funding in the spotlight - A small, but passionate group gathered Saturday to discuss the funding shortfall crisis facing public education for the upcoming school year. “If you can read this, thank a teacher.” “Hey Austin, leave our kids alone.”And a sign reading “Is this the way to fix Education?” made out of duct tape in a telling comparison of how educators feel the state government is just trying to patch up what’s badly broken.TSTA members say that if HB 1 becomes law, it would cut $8 billion dollars state wide from public education. Members claim this will result in the firing of teachers, packing kids into overcrowded classrooms and closing neighborhood schools in many districts.
Detroit to send layoff notices to all its public teachers (Reuters) - The emergency manager appointed to put Detroit's troubled public school system on a firmer financial footing said on Thursday he was sending layoff notices to all of the district's 5,466 unionized employees.In a statement posted on the website of Detroit Public Schools, Robert Bobb, the district's temporary head, said notices were being sent to every member of the Detroit Federation of Teachers "in anticipation of a workforce reduction to match the district's declining student enrollment." Bobb said nearly 250 administrators were receiving the notices, too.The district is unlikely to eliminate all the teachers. Last year, it sent out 2,000 notices and only a fraction of employees were actually laid off. But the notices are required by the union's current contract with the district. Any layoffs under this latest action won't take effect until late July.
Denver Schools $800 Million Sale to Help Escape JPMorgan Swap - The Denver public school system is borrowing $800 million to restructure pension debt and help escape part of a money-losing interest-rate swap with JPMorgan Chase & Co. (JPM) Denver City & County School District No. 1, Colorado’s second-largest by enrollment, is issuing taxable securities with about $400 million in fixed-rate bonds today and about $400 million of variable-rate next week, to replace $750 million variable-rate debt and terminate a swap agreed with JPMorgan in April 2008. The district is being forced to restructure the debt in the form of certificates of participation, because it is losing its standby purchase agreement with Dexia Credit Local, a unit of Dexia SA (DEXB), April 23. “This is the best deal the board could unanimously agree on,” . “It was important for us to go forward with a united voice.”
Corbett says cash-strapped school districts need to consolidate - Ailing school districts such as Duquesne and Clairton, facing a drop in state aid and a withering tax base, need to consider consolidation, Gov. Tom Corbett said today. "Frankly, I think school districts around the state are going to have to start looking at can they continue to exist?" Corbett said his dip in popularity -- recent polls show has an approval rating of around 35 percent -- is a reaction to the steep cuts in state spending he proposed to close a projected $4.2 billion deficit without any tax increases. "Nobody, including myself, wants to just go in there and cut. ... We didn't have any painless choices," Corbett said. "A lot of people don't understand how bad it is." Corbett's budget proposal cuts K-12 spending by about $1 billion, but he acknowledged that could change as the Legislature writes the state's 2011-12 spending plan.
i wonder what kind of message we are sending to our young people when at the first sign of budget troubles, it is funding their education that we chose to cut...and how many promising young educators are being discouraged or let go in the process......the continuing decimation of our human capital is certainly a national problem worse than our crumbling infrastructure...while there are those in congress who pretend to be worried about leaving debt for the next generation, they are leaving the next generation without the tools to compete in an increasingly challenging future...and now recently, as linda beale has outlined, there is a plan afoot to lay off even more teachers, in the theory that flooding the labor market with qualified workers will bring down wages even more, and thus encourage companies to start hiring again...maybe the plan goes even farther than that, with both maine and missouri rolling back child labor laws to allow children to work up to 50 hours a week at a lower "training wage", it may be possible that children of the middle & lower classes will deliberately be left uneducated so they can again be subjected to the kind of slave labor that they were in the early 19th century...
in all seriousness, the funding to correct this is easy to come by...the top 25 hedge fund earners took in $22.07 billion in 2010...a tax loophole lets these billionaires pay a top tax rate of 15 percent instead of 35 percent..closing that loophole on just those 25 guys would raise $4.4 billion, which is enough to rehire 126,000 laid-off teachers....
Tuesday, April 19, 2011
Monday, April 18, 2011
we now have a clearer picture of what is being eliminated from the budget for the remainder of this fiscal year, thanx to the house republicans publishing a complete list of what cuts they won; the nine completely itemized pages are here, but few low points include the $855 million cut of WIC (womens, infants & children; thats health care referrals, food and nutrition education for low-income pregnant women & children under 5 in poverty), the cut of the funds for the NOAA tsunami warning stations & climate service, which was to replace the national weather service, funding for replacement NOAA weather satellites, which the agency needs to maintain weather advisories & warnings; also cuts for job training, many dept of education programs, & funds for AIDS, hepatitis, STD & TB prevention...also cut are funds for environmental protection, conservation & wetlands; it also includes a rider to reinstate Bush’s wilderness drilling policy; also cut are all the funds for high speed rail, & many state & local programs, including redevelopment projects, low-income housing, public transportation and police, fire, and emergency medical response...there also was language to eliminate the obama administration positions identified by the title "Czar"...in addition, included in the $38 billion package were also items which were budgeted but would have never been spent anyway, such as unused funds for the census, and bookkeeping tricks, which amount to over $27B of the total agreement, so this whole hullabaloo amounted to barely $10 billion out of the $3.5 trillion budget, or about a third of a percent...
the next congressional inanity will involve a standoff over the debt ceiling, which has the potential to put the full faith & credit of the US at risk, & possibly blow up the Treasury bond market, sending interest rates across the economy skyrocketing...since there is no actual budget items being considered, the demands being made by the tea party members are all over the board; some want a balanced budget amendment passed before they'll vote for it, some are demanding a repeal of health care reform for their vote, some demand a "complete cultural change in washington" whatever that means...boehner, who's been around longer than most of the rest, was reported to have consulted with wall street execs to find out how far the standoff could be pushed without sending interests rates soaring and stock prices crashing, and they werent happy at the prospect of going down to the wire...
some in congress are still under the illusion that the federal budget is analogous to a family budget, and think we are "living beyond our means"...but the real problem is that we've allowed "our means" to have the kind of country we would like to live in slowly slip away...the deterioration really started with the reagan tax cuts, when the stealth plan was to stop taxing the rich and borrow from them instead, & pay them back with interest...but even after a dozen years of coddle the rich voodoo economics, job & income growth alone was sufficient to balance by the last years of the 90s...then early this decade came the bush tax cuts which gave more back to the rich, which thereby put the US further into debt to them...rather than living beyond our means, a more appropriate analogy for what our national family has done over the past ten years has been to forego the pay raises we've had coming to us, but continued to spend as before, going into debt, & then we started working only part time...with not even 46% of americans now employed, a big part of the budget problem could be solved by creating jobs so people are contributing to the economy and paying taxes rather than collecting unemployment...
and even from here, we can get out of the hole without pain: annie lowrey of slate presented a "do nothing budget plan" which made the rounds this week; holding to the CBO baseline, it turns out if we let all the laws currently in effect expire as scheduled, starting with the bush-obama tax cuts for the wealthy; also expiring would be the alternative minimum tax patch and the "doc fix", which allows medicare doctors annual raises every year...combine those with the saving under the affordable care act, and the federal budget comes into balance by the end of the decade...
after being challenged by pundits who praised the ryan plan to gut medicaid & put medicare on life support, obama rose to the occasion and made his first campaign/budget speech of the 2012 campaign...wanting to show he was just as serious about the budget as paul ryan, he canned the budget he proposed in february & he modeled his new proposals around the earlier template of the bowles-simpson catfood commission's recommendations, adding letting the bush tax cuts expire to that, as if he couldnt have done that last december...there was some smoke & mirrors in his speech, too, the $400 billion over 10 years he promised to cut from the defense budget is achieved simply by holding their planned increases to the growth of inflation over those years...he did point out what i've reiterated above; that we were well on track to becoming debt free before the bush tax cuts were initiated and medicare part D was enacted without appropriating funds for it, but the rest of the speech betrayed that he'd either bought into the "living beyond our means" delusion of the current debate, or was out to position himself as an acceptable tea party candidate for 2012...
an interesting sidenote to that debate; last week there was a puff profile piece on paul ryan on NPR's "all things considered"...it turned out that mr ryan, who wants to cut government benefits for everyone else, actually paid for his own education with money saved from the social security benefits he received after his father died young of a heart attack...
since this is already crowded with graphs, i want to make sure you note the Case Shiller 100 year chart at the big picture; it's clear we have another leg down in housing prices before we reach the historical mean...
the Fed seems to have actually moved against the rampant mortgage servicer abuse we've been observing these recent months, levying fines against 10 big banks that amount to a wrist slap, and instructing those banks to "initiate steps to establish mortgage loan servicing and foreclosure processes that treat customers fairly, are fully compliant with all applicable law, and are safe and sound"...a similar strongly worded consent decree was issued by the office of comptroller of the currency, so we now can rest assured the banks have got their just desserts...in investigating the banks, senator carl levin called goldman sacks on the carpet for their criminal activity leading up to the financial crisis, and subsequently matt taibbi & eliot spitzer appeared on anderson cooper to discuss why no one is going to jail...i posted that video on MW666 as why aint the perps in jail? which is worth watching just for taibbi’s analogy what goldman did as a car dealer selling cars with defective breaks and then buying life insurance on the drivers; its as close to the truth of what actually happened as ive heard yet...
if you havent heard already, earlier this week the fukushima nuclear crisis was raised to a "level 7 emergency"; a level only matched by chernobyl (3 mile island was a level 5)...plans continue to eventually entomb the entire site in concrete, as was done with chernobyl, but as fukushima has 6 damaged reactors, that project will will be considerably more complex than the temporary sealing of chernobyl, which took 11 specially constructed giant cement trucks several months to complete...the spent fuel pond at reactor 4, which had never been mentioned previously, has also now started to overheat...it's now clear that factories and homes within at least a 18 mile radius will have to be abandoned, and TEPCO has started the process of compensating the homeowners for their losses...in europe, a french agency has issued an alert on iodine 131 levels in rainwater and milk, and advised that pregnant or breastfeeding women should avoid consuming vegetables with large leaves, fresh milk or creamy cheese...in the US, levels of I-131 in milk found in arkansas and tap water in philadelphia are still considered below the danger level by our EPA...
in it's beige book, the Fed made note of the economic impacts of the japanese triple disaster that are already being felt in this country...all 12 Fed districts reported some disruptions, most notably in the minneapolis district, where 41% of the factories reported that they had been impacted unfavorably...the boston district reported shortages of electronic components, and atlanta noted interruptions in the auto and IT sectors...
the IEA released its oil supply numbers for march, and they were down .7 million brls/day, as instead of making up the lost libyan productions as they had promised, saudi production was actually down...the IMF rolled out it's world economic outlook this week which included a chapter on energy; the summary is worth quoting: "global oil markets have entered a period of increased scarcity. Given the expected rapid growth in oil demand in emerging market economies and a downshift in the trend growth of oil supply, a return to abundance is unlikely in the near term..."
with german officials openly talking about a greek restructuring wherein bond holders would get a haircut, it was no surprise to see greek 10 year borrowing costs skyrocket over 13% to at least 13.8%, and over 18% for 2 year notes, and with portugal's situation politically tenuous, their costs hit a record 9%...after an irish downgrade, their 10 year bonds were priced to yield 9.7%...as usual, several dozen links to european crisis news & new british banking regulations can be found at the end of this week's blog post...
the above is my weekly commentary that accompanied my sunday morning links mailing, which in turn was selected from my weekly blog post on the global glass onion…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me...