Daily Digest 7/13 - More Debt Ceiling Drama, Italy and Spain Under Fire In Debt Crisis, MN Shutdown Debate Over Payroll
- Obama: No Social Security Guarantee In August If GOP Doesn’t Back Down
- Markets May Turn Turbulent Waiting for Debt Deal
- White House: Debt deal needed in "matter of days"
- McConnell, Boehner increase criticism of Obama
- Give Obama New Debt Limit Power, GOP Leader Says
- Italy, Spain under fire as debt crisis spreads
- EU Hunts for Debt-Cut Tools in Overhaul to Tame Spreading Crisis
- Fed Officials Divided on Further Stimulus
- Greece needs more aid by September 15 - Minister
- Pa. Budget Cuts Economic Development By 35 Percent
- Union: prison cuts will result in riots, violence
- Oregon agency to close 3 sex offender units
- Budget cuts hit Louisiana state parks, museums
- 26 Percent Property Tax Hike Approved for DeKalb County
- Ethiopian Inflation Rate Climbs to 38.1% as Food Prices Soar
- Ireland cut to 'junk' status on bailout fears
- Cal State Hikes Tuition 12 Percent
- Census: Share of children in US hits record low
- Minnesota shutdown stirs debate over who gets paid
- Spanish bank IPOs threatened by worsening crisis
- Euro states should hand over debt powers-Bini Smaghi
- Seattle May Fix Battered Streets With Big Increase In Car Tab Fees
- Kane tacks $10 onto traffic fines to fund child center
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For the first time in public, President Obama has warned that crucial benefits for retirees, veterans, and disabled people might not go out early next month if Republicans don't relent in the debt limit fight.
"This is not just a matter of Social Security checks," Obama told CBS News in an interview that will air Tuesday night. "These are veteran's checks, these are folks on disability and their checks. There are about 70 million checks that go out each month. I can not guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it."
The concern, say analysts at Barclays, is the deep spending cuts that will accompany any agreement to raise the U.S. debt limit. Federal spending accounts for 8 percent of gross domestic product, a broad measure of the economy.
A debt limit agreement that includes cutting $2 trillion in spending is sure to weigh on the recovery. Goldman Sachs economists say it could shave 0.8 percentage points off economic growth next year.
The White House said on Tuesday a debt deal needs to be reached in a "matter of days" because of the looming Aug. 2 deadline for raising the national debt ceiling to avoid default.
White House spokesman Jay Carney also rejected as "unfortunate" a comment by Senate Republican leader Mitch McConnell that a real solution to the U.S. debt problem is probably not possible as long as President Barack Obama remains in office.
The top two Republicans in Congress sought Tuesday to put the onus on President Barack Obama for failure to resolve a fight over how to increase the government's borrowing authority. Senate Minority Leader Mitch McConnell said a deal with Obama is "probably unattainable" and House Speaker John Boehner said the specter of default is "his problem." The unusually blunt and combative language came just hours ahead of another White House meeting aimed at finding an accommodation on a package of spending cuts to accompany an increase the debt limit. It further complicated an already convulsive bargaining environment, with the Aug. 2 debt limit extension deadline fast approaching.
With compromise talks at a vituperative standstill, Senate Republicans unexpectedly offered Tuesday to hand President Barack Obama new powers to avert the first-ever government default threatened for Aug. 2.
Under a proposal outlined by Sen. Mitch McConnell of Kentucky, Obama could request increases of up to $2.4 trillion in the government's borrowing authority in three separate installments over the next year, as long as he simultaneously proposed spending cuts of greater size.
In essence, McConnell's proposal would greatly enhance Obama's authority to avoid a default, while also virtually absolving Republicans of responsibility if one occurred.
Key Italian and Spanish government bond yields hit their highest levels in 14 years on Tuesday on worries euro zone policymakers were stalling over efforts to resolve the debt crisis and avert a disorderly Greek default.
Italian 10-year yields jumped more than 30 basis points on the day to break above 6 percent for the first time since 1997, approaching the 7 percent level analysts see as an unsustainable cost for Italy's borrowing needs. They later slipped back below 6 percent on market talk the European Central Bank was buying Italian and Spanish bonds even though bond traders who normally see the trades said there was no sign of such purchases.
European finance chiefs hunted for ways to cut Greece's debt burden, floating ideas from bond buybacks to a temporary default in an overhaul of a strategy that has failed to contain the debt panic.
As a surge in bond yields in Italy and Spain brought the crisis closer to the heart of the euro area, Europe dusted off previously discarded plans under the glare of markets that have lost confidence in governments' ability to still the turmoil. "They are taking it one step a time and you never get ahead of the snowball," said Matt King, Citigroup Inc.'s global credit strategy head in London.
Federal Reserve policy makers disagreed on whether additional monetary stimulus will be needed even if the outlook for economic growth remains weak, minutes of their meeting last month showed.
“A few members noted that, depending on how economic conditions evolve, the committee might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run,” the Federal Open Market committee said in the minutes of its June 21-22 meeting, released today in Washington.
“On the other hand, a few members viewed the increase in inflation risks as suggesting that economic conditions might well evolve in a way that would warrant” the FOMC “taking steps to begin removing policy accommodation sooner than currently anticipated.”
Greece needs a fresh tranche of international aid by Sept. 15 and is prepared to push new austerity measures and privatisations to secure the lifeline to deal with its debt crisis, its finance minister said on Tuesday.
Evangelos Venizelos said world financial markets were using Greece as an excuse for an attack on the euro and that whatever Athens did, markets would never be satisfied.
Attracting out-of-state businesses and helping revitalize communities is getting a bit tougher for state officials under a new Pennsylvania budget that cuts more than $114 million from the Department of Community and Economic Development.
Unionized prison guards are warning of inmate riots and other violence inside Connecticut's lockups if the government goes ahead with planned budget cuts.
Gov. Dannel P. Malloy has asked the Department of Correction to cut the equivalent of 1,019 positions and trim $62.9 million from its budget in the current fiscal year and $78 million in the next. The state plans to close the Bergin in Mansfield this summer and the Enfield Correctional Institution by October.
As a result of budget cuts, Oregon officials plan to close three cottages that house sex offenders at MacLaren Youth Correctional Facility in Woodburn.
The Oregonian newspaper reports that plans call for transferring about 75 convicted sex offenders to other "close custody" units or possibly to less secure halfway houses run by private nonprofit agencies. Three other youth corrections units are slated to close, two in Salem and one in Albany.
In the heart of the summer tourism and vacation season, Louisiana's state-run recreational areas, parks and educational pastimes are shrinking visitors' hours and cutting staff to cope with lessened funding as the new budget year began July 1.
Military history enthusiasts and fans of football great Eddie Robinson can explore museums celebrating their interests only three days each week. Children on summer vacation will have less time to splash and swim in state-run pools. Visitors to Louisiana's historic sites and a trail of small museums crisscrossing the state will find trimmed-down schedules.
Tuesday, the DeKalb County Board of Commissioners approved a 4.35 mill tax hike 4-3. The 26 percent tax hike for the 2011 budget will add $50 million in revenue, according to the AJC. According to Commissioner Elaine Boyer, who voted against the hike, a home worth $300,000 that had no change in value would see a more than $400 tax increase.
“Each dollar that goes to DeKalb County government is one less dollar available to feed a family, fill up a gas tank or look for a job,” Boyer said in a press release. “Utility bills are higher and food is skyrocketing. We are all cutting our budgets, yet the county has refused to embrace layoffs or significant budget reductions.”
Ethiopia's inflation rate climbed to 38.1 percent in June from a year earlier as food costs increased and the central bank boosted the money supply.
Inflation accelerated from 34.7 percent in May, the Central Statistical Agency, based in the capital, Addis Ababa, said in an e-mailed statement today. Food prices surged 45.3 percent in June after rising 40.7 percent in the previous month, it said.
Ratings agency Moody's on Tuesday cut Ireland's bonds to junk status and warned of further downgrades as the eurozone economy struggles to pull out of a financial crisis. Moody's Investors Service said it reduced Ireland's government debt ratings by one notch, to Ba1 from Baa3, saying there was a "growing possibility" that the country will need more bailout aid in late 2013 when the current European Union-International Monetary Fund support program ends.
Tuition will be going up by another 12 percent for undergraduate students at California State University campuses, the university's Board of Trustees decided Tuesday, insisting the hike is necessary due to cuts in state funding.
"The enormous reduction to our state funding has left us with no other choice if we are to maintain quality and access to the CSU,'' Chancellor Charles B. Reed said.
Children now make up less of America's population than ever before, even with a boost from immigrant families.
And when this generation grows up, it will become a shrinking work force that will have to support the nation's expanding elderly population — even as the government strains to cut spending for health care, pensions and much else.
Currently, the share of children in the U.S. is 24 percent, falling below the previous low of 26 percent of 1990. The share is projected to slip further, to 23 percent by 2050, even as the percentage of people 65 and older is expected to jump from 13 percent today to roughly 20 percent by 2050 due to the aging of baby boomers and beyond.
While thousands of Minnesota employees go without paychecks because the state government is shut down, many lawmakers are still being paid. And the list of workers whose services are deemed "essential" includes the governor's housekeeper and his personal chef.
The shutdown began its 11th day Monday, keeping 22,000 state employees at home without pay. The impasse has halted 100 road projects, closed 66 state parks, barricaded numerous highway rest stops and cut off many services. In that time, Dayton and GOP leaders have met just twice to discuss their differences.
The worsening euro zone debt crisis threatens to sink the share flotations of two Spanish savings banks needing to raise billions of euros, analysts said on Tuesday. Both Bankia and Banca Civica are offering steeply discounted prices to investors, under pressure to get the deals done because they are seen as a key test of whether Spain is managing to strengthen its banks which were laid low by reckless lending during the country's property boom.
Euro zone countries should let a supranational organisation issue their sovereign debt, European Central Bank Executive Board member Lorenzo Bini Smaghi said in a German newspaper on Tuesday.
"In a certain framework, the euro zone states should pass the emission of sovereign bonds to a supranational organisation," Bini Smaghi said in a guest contribution for Handelsblatt newspaper. "That would ensure that each individual country would not take on more debt than agreed in the framework of stability programmes. We would have a real debt brake."
Though the city of Seattle committed $3 million to fix potholes and broken pavement this week, city leaders are considering a huge increase in the fee to license cars to help with the costs of fixing battered streets.
Seattle car owners already pay an extra $20 fee for their license tabs, and now the mayor and City Council are thinking about adding an additional $80 to that fee. “Wow, that's a lot. I mean considering we're in hard times, I guess who needs more taxes, right?” said driver Dewayne Daviow.
The cost of speeding and other petty offenses in Kane County is going up by $10, after the County Board passed a resolution Tuesday to add a fee that would fund the Child Advocacy Center.
The county already added a $30 additional fee to criminal and misdemeanor offenses, following state guidelines on funding for child centers. Several board members Tuesday objected to the additional fine, saying a nonprofit organization should not be funded through the traffic system.
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