Wow. So here we are again.
Washington is spoiling for a fight over the country’s debt ceiling — less than a year after a showdown that induced a credit downgrade, rocked the markets and eroded confidence in Congress.
Last week, House Speaker John Boehner said he would not permit another increase in the country’s legal borrowing limit without a larger amount of spending cuts and reforms approved in tandem.
"I suspect blood pressure readings went up [that] afternoon," said budget expert Joe Minarik, senior vice president of the Committee for Economic Development.
That would be understandable given how damaging the last debt ceiling showdown turned out to be.
But we’ll get to that in a minute. First, it pays to remember just how the debt ceiling actually works.
What is the debt ceiling exactly? It’s a legal cap set by Congress on the amount of money the federal government can borrow. The ceiling applies to debt owed to the public (i.e., anyone who buys U.S. bonds) plus debt owed to federal government trust funds such as those for Social Security and Medicare.
The first limit, established in 1917, was set at $11.5 billion, according to the Committee for a Responsible Federal Budget. By setting a limit, Congress gave the Treasury Department authority to borrow money as needed. Previously, Congress had to sign off every time the federal government issued debt.
How high is the debt limit right now? The ceiling is currently set at $16.394 trillion. The country’s accrued debt subject to the limit as of Friday was $15.670 trillion. (Here’s where the Treasury posts daily updates of the number.)
When will we hit it? Treasury Secretary Tim Geithner has said he estimates that U.S. borrowing could hit the debt ceiling by the end of 2012.
Fiscal cliff: What you need to know
But by taking "extraordinary measures" — such as suspending investments in federal retirement funds — Geithner might be able to buy enough time to keep borrowing below the legal limit until early 2013.
How is the ceiling determined? They never admit it, but every time lawmakers vote to hike spending or cut taxes and not pay for them, they’re tacitly acknowledging that the debt ceiling will need to raised in the future.
So arguing over the debt ceiling after the fact is essentially arguing over whether to pay the bills the country has already incurred and which Congress has already approved.
How many times has the ceiling been raised? Since March 1962, debt ceiling increases have been enacted 76 times, according to the Congressional Research Service. Congress has voted to raise the ceiling 11 of those times since 2001.
Fiscal cliff: Market sting may come sooner
Expect more of the same over the next decade. Barring major changes to spending and tax policies, "Congress would repeatedly face demands to raise the debt limit," CRS wrote.
Why does Congress even bother to set a debt limit? In theory, the limit is supposed to help Congress control spending. In reality, it doesn’t.
Every time the debt limit needs to be raised, lawmakers and the president are forced to take stock of the country’s fiscal direction, which in theory isn’t a bad thing.
But the decision about how high to set the ceiling is usually a political one — depending on how quickly the minority party wants to raise the issue again for political gain or to extract concessions.
In any case, the vote usually comes after lawmakers have already passed the spending hikes and tax cuts that necessitate an increase in the first place.
What happens if Congress doesn’t raise the debt ceiling? Treasury would not be able to borrow any more money no fax pay day loans.
That means the government would fall short of what it needs to pay all its bills in full, which include funding government operations and paying creditors and contractors.
During last year’s debate, Geithner’s critics said he could prevent default by simply paying the interest due to bondholders.
But since average spending — minus interest — outpaces revenue by about $115 billion a month, Geithner would have to pick and choose whom to pay and whom to put off every day.
And there’s no guarantee that paying interest while shirking other legal obligations will protect the country from the perception of default.
Geithner said it would be akin to a homeowner who pays his mortgage but puts off his car loan and credit cards. Translation: the homeowner’s credit could still be damaged.
Ultimately, if lawmakers fail to raise the ceiling, they will have two choices, both awful.
They could immediately enact massive spending cuts or tax increases. Or they could acknowledge that the country would be unable to pay what it owes in full and the United States could effectively default on some of its obligations.
The first option is impossible to execute without serious economic repercussions. And the second option could cripple the economy and send world markets into a tailspin.
"Not only the default but efforts to resolve it would arguably have negative repercussions on both domestic and international financial markets and economies," according to the CRS.
Will reaching the debt ceiling cause a government shutdown? Technically, no.
A government shutdown occurs if lawmakers fail to appropriate money for federal agencies and programs.
By contrast, if the debt ceiling is breached, Uncle Sam would still have revenue coming in that could be used to fund the government, noted Rudolph Penner, a former Congressional Budget Office director.
But if Geithner is coming up short by $115 billion on average every month, and lawmakers just decide to cut spending by that amount, that could effectively mean a partial government shutdown.
So what happened last year? The 2011 debt ceiling showdown resulted in a three-part increase to the debt ceiling in exchange for, among other things, at least $2.1 trillion in debt reduction over 10 years.
The debt ceiling deal — known as the Budget Control Act — also empowered a so-called super committee of lawmakers from both parties to negotiate how to achieve at least $1.2 trillion of that debt reduction.
That committee failed, however, thereby triggering a sequester of nearly $1 trillion in automatic spending cuts, mostly across defense and nondefense discretionary spending. That latter category pays for many common and popular governmental functions, from food inspections to the operation of national parks. Those cuts are set to start taking effect in January 2013.
Many lawmakers hate those cuts– but apparently not enough yet to negotiate a bipartisan deal to replace them.
The debt ceiling showdown of 2011 also created a lot of bad blood between the parties and between Republicans and the White House.
And it sparked the first-ever downgrade of the U.S. credit rating by Standard & Poor’s, which cited political brinksmanship as the chief cause.
That, in turn, caused one of the most volatile weeks in world markets and left Americans and investors with the sense that Congress can’t handle even the most elemental tasks without a lot of destructive drama.
Lending cash to individuals looking for cash advance or payday loans.
My first ride in Google’s self-driving car was, all at the same time, thrilling, fascinating and a little disappointing.
The car was in Washington DC where Google (, Fortune 500) representatives met with groups like the AARP and the National Council for the Blind, groups which might have an interest in cars that that could act as chauffeurs for those who, for one reason or another, can’t drive themselves.
I got to ride along on a loop around several DC blocks with two Google engineers in the front seats. Google’s "self-driving cars" must always have someone seated at the controls, whether in Nevada — which recently licensed Google’s cars — or anywhere else.
The drive was thrilling and fascinating because, come on, the car drives itself. In traffic! Disappointing because it’s clearly not going to be ready for public use for years and years.
For now, at least, the car only drives routes it’s been trained to drive. My ride in Washington DC was along a route that Google engineers had driven with the car earlier. Google refused to allow the car to be driven anywhere beyond this well-studied environment, at least not with the media tagging along.
Still, that doesn’t mean it was a cake walk.
No Google engineer taught the car that a bunch of kids on a field trip would march out in front of it at an intersection. It stopped and waited for them on its own. And no-one told it that, right after that, another car would run the four-way stop sign right in front of it. It handled that, too, avoiding a collision all on its own.
At first, those interactions seemed boringly normal to me until I remembered… no-one was driving! The car had done that all itself while the man in the driver’s seat sat passively watching.
All of this is made possible by an array of sensors that would make a spy satellite jealous. The Google car has three GPS antennae, radar systems, cameras to read street signs and traffic lights and it’s topped with fast-spinning laser eye that looks like something out of a cheap ’50s sci-fi movie. That all-seeing eye scans for cars, pedestrians and obstacles.
Gallery: Ferrari, Rolls Royce among exotic cars selling fast in China
Google doesn’t make cars or sensors, though, so the part the California tech company is really interested in is the software that ties all this together to let it make — we hope — safe and rational driving decisions.
Since the Google car only just got its learner’s permit, it drives accordingly faxless cash advances. During our test loop, it stopped a few times for phantom threats, like a parked truck that was just a little wider than the cars around it. Then there was the jerking halt on a side street caused by a car that stopped a little abruptly almost two car lengths ahead.
When it wasn’t sure what to do, the car would hand control back to the driver, announcing it was doing so in a friendly female voice. (The driver can always take control at any time by just by moving the steering wheel or touching the pedals, even slightly.) "Self driving" was resumed by pushing a big green button on the Prius’s center console near the even bigger red "kill switch."
Surprisingly, one thing the car can’t do all on its own is use the turn signals. The driver still has to do that.
"That’s been on our to-do list for a long time now," said the engineer riding shotgun.
Back-seat "driver": I had to ride in the back. A second Google engineer rode in the shotgun seat with a laptop computer. On his screen was a triangle — representing us — surrounded by a vast army of colored boxes, representing cars, people and stationary objects, all sliding across a black screen. It was reminiscent of the old arcade game "Tank Commander," minus the explosions.
Times when the car lost its nerve and let the engineer take over, such as when it encountered an on-coming car on a narrow street and wasn’t sure there was room to get around it, weren’t just useless glitches, I was assured. The data from each situation would be ingested and analyzed so the car could learn what to do in the future. Those lessons could, hopefully, be applied to a broad range of driving conundrums.
Before Google realizes the dream of a truly "driverless car" there are many steps yet to be taken and some of those steps remain far off. The first will be allowing the car to stray from routes that it has been specifically trained to drive. Until then, this is all just baby steps.
But the biggest step will be to create a car that will let me just sit in the back seat with no-one at all in the driver’s seat. That step still seems — to me — many years off. If Google can get there before a major automaker beats them to it, I’ll be really impressed.
Payday loans no faxing fall on the less risky side simply because the money loaned to you is a percentage of your next paycheck.
The discussion started before Michael B. Kennedy was born. By last year, his patience had wore thin.
“I serve on a lot of committees, and I felt like I kept having the same conversation. It took hours and hours of repeating the same thing. And every time, I felt like I had to start all over again,” said the architect and president of KAI Design and Build.
Founded by his father, Michael E. Kennedy, 32 years ago, KAI is recognized as one of the leading minority-owned architectural firms in the country. The senior Kennedy serves as chairman and chief executive.
To the younger Kennedy, 34, the exchanges with contractors, government officials, trade unions, developers and fellow designers inevitably returned to the shortage of minority contractors and trade participation on local construction projects.
The problem has vexed St. Louis, publicly at least, since the afternoon of July 14, 1964, when Percy Green and another activist climbed a leg of the yet-to-be-completed Gateway Arch to protest the lack of African Americans working on the landmark.
Nor has the situation shown much sign of improvement. A March study by the Associated General Contractors of St. Louis that pegged the number of minority workers on local construction jobs at approximately seven percent.
African Americans account for 49 percent of St. Louis City residents and 23 percent of those in St. Louis County.
Kennedy didn’t need census data to drive the point home.
He found proof in the overwhelming number of white faces encountered on visits to area construction sites, particularly those outside the city.
The time had come, he concluded, to move the conversation from board rooms and business meetings to a broader audience.
“I thought if I could capture everything that is being said in these meetings on video, and then get that video in (the right) hands, then maybe we can finally move onto some viable solutions,” Kennedy said.
“Building a Better St. Louis” was initially envisioned as a “ten-minute clip.”
But once Kennedy and the production company, headed by Bobby Edwards Media Group, began the interviews, they learned just how much local business and community leaders, both black and white, had to say about minority hiring.
Thirty hours worth to be exact.
Edited to 41 minutes, the film takes unsparing shots at the insularity of white-dominated local trade unions, the shortcomings of public education in St. Louis and the chronic racial divide.
“Anyone who says St. Louis is not a segregated community is someone who has had his head stuck up his you-know-what for too many years,” volunteers Terry Nelson, the outspoken head of the Carpenters’ District Council of Greater St. Louis.
St. Louis City License Collector Mike McMillan offered a more measured analysis: “What we’ve found at every level of business or corporations or government is that if (change) is not pushed from top and implemented all the way down, then women and minorities, who have always been left out of the picture, will continue to be left out of the picture.”
In an interview this week, Kennedy cited additional factors he believes shift the odds against minority contractors and workers. High on the list are the social and economic forces separating the city and outlying suburbs.
He praises adherence to the ordinance stipulating that minorities perform 25 percent of the work on projects within the city. But frets at how the threshold is rarely met on construction sites in the surrounding counties free credit score online.
Kennedy says a fair share of the blame goes to minority contractors and laborers themselves.
Construction, like all businesses, is about relationships.
African American contractors and laborers, Kennedy charges, don’t forge the necessary connections while working side-by-side with non-minorities on city projects.
The upshot, he says, is that construction companies choose to do business with white subcontractors when jobs materialize in St. Louis, St. Charles, Jefferson and Lincoln counties.
“Building a Better St. Louis” points out that minorities compete for just one percent of the opportunities to participate on area construction jobs.
“It’s not a black and white issue, it’s a cultural issue,” Kennedy says, singling out the “where’d you go to high school?” question. “It’s about the St. Louis cliques. St. Louis is not friendly to outsiders, white or black.”
“Building a Better St. Louis” makes a stab at answering the overarching question of how, or if, minority contractors can ever achieve equity.
It’s a tall order.
Kennedy believes it will occur organically.
He points out that the white males that have dominated the construction trades are retiring. With many of their children exhibiting little interest in continuing the family tradition, the door will swing open for African Americans.
The key, Kennedy says, is getting young minorities interested and prepared to step into the breach.
He sees “Building a Better St. Louis” as prompting a dialogue to move the black community in that direction.
The video was screened this week for a group of contractors and Kennedy ultimately hopes to bring it to a wider audience of government officials, civic groups and – his big goal – an airing on a public broadcasting station.
“This industry lags farther behind any other industry that I’ve seen,” Kennedy says in the video. “The more I talked to people the more I decided other people needed to hear what I was hearing. And that was to listen to the voices of reason.”
QUOTE OF THE WEEK
“… workforce professionals we interviewed said that some employers are reluctant to hire older workers. Because of legal prohibitions against age discrimination, employers are unlikely to explicitly express a lack of interest in hiring older workers; however, one workforce professional told us that local employers had asked her to screen out all applicants over the age of 40.” - U.S. Government Accountability Office on plight of older Americans suffering bouts of long-term unemployment.
Source: U.S. Government Accountability Office
BY THE NUMBERS
7.3 percent - Missouri’s seasonally-adjusted unemployment rate in April, the lowest in 40 months.
Source: Missouri Department of Economic Development
FINAL WORD
“There has been a lack of progress on this issue, and too many families are struggling right at the time when they should be celebrating the birth of a new family member. Working parents should have the benefit of these programs.” Vicki Shabo, director of work and family programs at the National Partnership for Women & Families on study that found only 11 percent of privately-owned companies provide paid family leave for new parents.
Source: The Chicago Tribune
China
Claims for unemployment benefits declined last week to the lowest level in a month, easing concern that the U.S. labor market is faltering.
First-time claims dropped by 1,000 to 367,000 in the period ended May 5, the Labor Department said today in Washington. Other reports showed that a gauge of consumer confidence declined to a three-month low, and the trade deficit widened on rising demand for imports from oil to autos.
Claims are returning to levels reached in February and March, indicating a surge last month probably reflected difficulty in adjusting the data for an Easter holiday that came earlier this year than last. Declines in dismissals point to a brighter labor market that would help sustain consumer spending after payroll growth slowed last month.
With Facebook hurtling toward a spectacular initial public offering in the $100-billion range May 18, it
U.S. stock market futures are basically flat ahead of the government release of April employment data.
Dow Jones industrial average futures are up 4 points at 13,147. Standard & Poor’s 500 futures are up 1.17 to 1,387. Nasdaq 100 futures are gaining 2.75 points to 2,694.75.
In Europe, Britain’s FTSE 100 index, Germany’s DAX and France’s CAC-40 are all down, as traders waited for the U.S. jobs figures and fretted ahead of weekend elections in France and Greece that could impact Europe’s debt crisis instant payday loan. Earlier Asian markets were mixed, with the Nikkei in Tokyo gaining, while Hong Kong’s Hang Seng and South Korea’s Kospi both ended down.
U.S. stock to watch include Berkshire Hathaway Inc. Warren Buffett’s investment vehicle reports quarterly results after the market opens.
For Pennsylvanians with natural gas wells on their land, chances are they won’t know if a safety violation occurs on their property.
That’s because the state agency charged with regulating the wells — the Department of Environmental Protection (DEP) — does not have to notify landowners if a violation is discovered. Even if landowners inquire about safety violations, DEP records are often too technical for the average person and incomplete.
While some landowners would like more transparency around safety issues, as a group they are not pushing for stronger regulations. Landowners, who are paid royalties by the companies that drill on their property, generally want the drilling to proceed.
Violations: In February, CNNMoney spoke with four families in Lycoming County, Pa., about violations issued against natural gas wells on or near their property.
The families have a total of 26 natural gas wells among them. They’ve received royalties from the wells, ranging from the low hundreds to hundreds of thousands of dollars over the last few years.
How fracking works
Yet none said they had ever been notified by the DEP or any of the well operators that wells near their homes had been cited for what DEP’s website said were 62 safety violations over four years.
"We had no idea that there were any violations," said Dan Bower, who lives next door to his mother, Jane, and her five wells.
"We should have been contacted or something," echoed Neil Barto, another well owner.
DEP says that in cases in which violations pose risk to human health, they "certainly notify landowners."
The violations range from simple things such as improper signage to serious infractions such as subpar cementing — which according to DEP can allow gas to seep out of a well and in some cases "has the potential to cause a fire or explosion."
While the violations are posted online, the digital records are short on specifics — most importantly whether a violation poses a health risk.
A time consuming process: If landowners want to inquire about all violations on their property, DEP says they should do an in-person file review of the state regulator’s documents relating to each well.
The agency declined multiple interview requests, but assured CNNMoney that an in-person review would contain records of any communication with landowners about violations. CNNMoney conducted a file review in late March.
The process required a visit to the regional DEP office, which had to be scheduled weeks in advance.
But even then, the details discovered were largely in legal and technical language.
In approximately 1,000 pages of documents for the 26 permitted wells, there was only one record of any communication DEP had with a landowner about a violation.
A letter was sent to indicate that a spill of fluid used for drilling on Jane Bower’s property had been cleaned up, but the recipient’s name was redacted.
Both Jane and Dan say they never received such a letter, even though DEP fined Chief Oil and Gas, the operator of the well at the time, $2,100 for the five barrel spill. There were no details of this spill on the DEP website.
The file review revealed there was also a spill of 294 gallons of ‘frac fluid’ at the same Bower well. The fluid is what is used in hydraulic fracturing, a process where water, sand and a small amount of chemicals, are injected into shale deep underground to fracture the rock and release gas.
There was no mention of this spill in DEP’s online records, and the paper records did not clearly indicate whether the ground water was tested after the spill.
It is not clear from the physical records whether these spills, or any other violations reviewed, ever posed a threat to human health.
Obama tightens oil and gas drilling regulations
The well operator at the time, Chief, said it did not.
But David Yoxtheimer, a hydrogeologist at Penn State’s Marcellus Center for Outreach and Research, said there’s not enough information to say for certain.
He said that if the Bower spills had gotten into surface or ground water then they "could have a water quality impact of low to moderate severity," but that such a risk would depend on site-specific factors not available in the files.
Landowner apathy: Despite the violations, it’s not clear that the landowners are doing all in their power to check for violations on their property.
Neither the Bowers nor the Bartos have a computer to check for violations, and neither plans on changing that.
"I sure as hell am not gonna buy one to check DEP," Neil Barto said.
All four families continue to support the drilling and note it has been a boon to the local economy. The Bartos, who have six wells on their property, say they have made about $150,000 in royalties off of the wells on their property in the last three years.
Plus, increased regulation is not a priority for them. That’s a fairly common viewpoint among landowners.
"In our experience, landowner groups have been focused on advancing expanded drilling to maximize royalty payment opportunities, and have generally been opposed to increased regulation," said Kate Sinding at the Natural Resources Defense Council.
And that, says the NRDC, could be delaying further regulation for the industry, or taking pressure off regulators to report violations more clearly.
"Advocacy for those kinds of protections would undoubtedly carry more weight were they to come from landowners themselves, as opposed to the environmental community," Sinding said.
– with additional reporting by CNN’s Poppy Harlow
U.K high street lender Lloyds Banking Group on Tuesday reported a modest net profit of 2 million pounds ($3.2 million) in the first quarter when its performance beat market expectations.
The company, 40 percent owned by U.K. taxpayers, also recorded a pretax profit of 288 million pounds ($467 million) in the first quarter, which included a 375 million provision to compensate customers for missold insurance.
In the previous quarter, it made a 316 million pounds net profit and a loss of 3.5 billion pounds in the same period last year. Its 2 million pound net profit compares with a 2.4 billion pound net loss last year and a 37 million pound profit in the previous quarter.
Lloyds has taken a total provision of 3.575 billion pounds, by far the biggest of any British bank, to compensate customers who were sold payment protection insurance which they didn’t need.
Total income net of insurance claims was down 6 percent to 4.49 billion pounds.
Lloyds shares were up 1.6 percent at 31.5 pence in early trading.
The U.K. government injected much needed capital into Lloyds at the height of the financial crisis in 2008. It is now looking to sell off its shares, but only when their price has reached a certain level.
“The likelihood of reaching the government’s 70 pence-plus break-even point seems a long way off, even if Lloyds is making slow and steady progress, whilst the absence of a dividend is another drag on enticing potential buyers,” said Richard Hunter, head of equities, Hargreaves Lansdown Stockbrokers payday loans in one hour.
Total impairments improved from 2.6 billion pounds a year ago to 1.66 billion pounds. Within that total, the charge in the first quarter in the bank’s wealth and international division was 705 million pounds compared to 1.5 billion pounds a year earlier, primarily because of lower charges in its Irish and Australasian businesses.
Nonetheless, with two-thirds of the Irish portfolio classed as impaired, the bank warned that “further vulnerability exists.”
Customer deposits were up 6 percent year-on-year to 412 billion pounds. The core tier 1 capital ratio_ a key gauge of underlying financial strength _ was up from 10 percent last year to 11 percent in the first quarter.
Lloyds is still seeking to clinch a deal to sell 632 branches to meet the European Commission’s conditions for receiving state aid. While continuing to talk to the Co-operative Group, the bank’s preferred bidder, Lloyds said last week it was open to other offers.
A new report says Apple Inc. uses subsidiaries in Ireland, the Netherlands and other low-tax nations as part of a strategy that enables the technology giant to cut its global tax bill by billions of dollars every year.
A New York Times article published Sunday outlines legal methods used by Cupertino, Calif.-based Apple to avoid paying millions of dollars in federal and state taxes.
It cites a study by a former Treasury Department economist that estimates Apple’s federal tax bill would have been $2 payday loans.4 billion higher last year without such tactics.
The newspaper says Apple paid $3.3 billion in cash taxes globally on $34.2 billion in profits last year. That’s a tax rate of 9.8 percent.
Apple tells the Times that it complies with all laws and accounting rules.
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