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Voters Don’t Want Anyone to Win


Voters Don’t Want Anyone to Win

Charlie Cook: “One Democratic pollster recently (and aptly) summed up the sentiment: ‘Voters want to punish Republicans but not reward Democrats.’ This dynamic suggests we are in for either a highly muddled election outcome next year–hardly the stuff for a wave, because one party has to be rewarded and looked favorably upon to create a wave–or a highly volatile environment, what a meteorologist might describe as an ‘unstable air mass.’ The latter dynamic could translate into a lot of surprise election outcomes, but not necessarily in any uniform direction.”

 

Joshua Green: “Americans are fast losing faith in the president, his party, and his signature policy achievement. But while they’re open to the idea of handing power to the opposition, Republicans are busy demonstrating that they have no idea how to govern.”

Voters Don’t Want Anyone to Win.

 

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Obama appoints Jeffrey Zients to fix healthcare website | World news | theguardian.com


Obama appoints Jeffrey Zients to fix healthcare website

Officials pledge site will be fixed by late November as Zients says he will provide ‘relentless focus on speed and execution’

Jeffrey Zients

The White House said Zients will assist a team that is said to be working around the clock on the site. Photograph: J Scott Applewhite/AP

The troubled healthcare.gov website will be fixed by late November, the Obama administration said Friday as the US government appointed a new contractor to head the scheme.

Jeffrey Zients, President Obama’s appointee to fix the problems, promised “relentless focus on speed and execution”, nearly a month into the botched healthcare rollout, which has prevented people from signing up for Obama’s landmark program.

Administration officials announced Friday that one of the website’s subcontractors – QSSI – would now lead the initiative to fix the healthcare.gov site. Officials at the centers for Medicare and Medicaid services had previously taken the lead role.

“By the end of November, healthcare.gov will work smoothly for the vast majority of users,” Zients said Friday. “The healthcare.gov site is fixable. It will take a lot of work, and there are a lot of problems that need to be addressed.”

Zients, who has been the president’s go-to man for problem solving, said the government and private-sector team providing the “tech surge” had finished an assessment of the website’s flaws.

Zients said that the volume of applications on the site had caused initial problems. The site received 14.6m visitors in its first days of activity. But Zients added that problems across the site had exacerbated the situation, leading to frozen pages and error messages.

“These are bugs that prevent the software from performing the way it’s supposed to work,” he said. “There’s a punch list of fixes, and we’re going to punch them out one by one.”

Andrew Slavitt, the executive vice-president at QSSI, told Congress this week that the software was now “keeping pace with demand” and had had “error rates close to zero” since October 8.

Healthcare.gov covers people in the 36 states that declined to run their own health-insurance exchanges. About 700,000 applications have been begun nationwide, and half of them have come in through the website. The White House aims to have 7m uninsured Americans covered by the scheme by the end of March.

Senate Democrats wrote to health secretary Kathleen Sebelius calling for an extension of the healthcare law’s open enrolment period while the site’s issues are fixed.

“Given the existing problems with healthcare.gov and other state-run marketplace websites that depend on the federally-administered website, we urge you to consider extending open enrollment beyond the current end date of March 31, 2014,” the senators wrote.

“Extending this period will give consumers critical time in which to become familiar with the website and choose a plan that is best for them. Individuals should not be penalised for lack of coverage if they are unable to purchase health insurance due to technical problems.”

Zients’ announcement follows an acrimonious hearing Thursday where Republicans charged that the government knew about major glitches in the site before launch and contractors said they had warned the government of issues.

 Obama appoints Jeffrey Zients to fix healthcare website | World news | theguardian.com.

 

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House Republican Tells Furloughed Federal Workers To Take Out Loans to Pay Their Bills


House Republican Tells Furloughed Federal Workers To Take Out Loans to Pay Their Bills

By: Jason Easley
Friday, October 11th, 2013

 

furloughed-worker

 

House Republican Rep. Steve Pearce (R-NM) told federal workers who have been furloughed by the government shutdown that they should go into debt by taking out loans to pay their bills.

Here is what the millionaire tea party congressman advised furloughed federal workers to do to make ends meet during the government shutdown (Via Progress Now New Mexico):

pearce-loans

Pearce showed no sympathy for the millions of people being impacted by the government shutdown that he supports. He demonstrated his missing relationship with reality by suggested that, “Financial institutions often offer short-term loans.” It is easy for a rich person like Pearce to walk into a bank and get a loan, but there isn’t a bank in this country that would give a loan to a person who has no current source of income, and no idea when they are going to be paid. (Some banks are stepping up to a degree, but they are placing limits on how much help they are offering.)

Rep. Pearce is also advising people to go into debt during his government shutdown. Notice that the tea party congressman doesn’t offer to help the people that are being economically damaged by the shutdown that he voted for. Federal employees are the innocent victims of the House Republicans’ ideological war against the ACA.

Pearce is one of the House Republicans who refuses to vote for a government funding bill unlesss there are changes to Obamacare.

The reason why this government shutdown is killing the Republican Party is that it is exposing the Republicans for who they really are. Out of touch millionaires like Steve Pearce don’t understand why the government shutdown is hurting people. I suspect that Mr. Pearce is blaming the furloughed workers for their own plight. He assumes that they could get through the shutdown just fine if they would run over to the bank and get some more money. That’s easy, right?

It’s easy if you are a millionaire congressman, but difficult to impossible to survive this type of economic uncertainty if you are anyone else. During the government shutdown, many Americans are learning what people who follow politics understood long ago. House Republicans don’t care about working class people. They don’t care that their shutdown is hurting millions. They don’t care that people can’t eat, or pay their bills.

If House Republicans like Steve Pearce don’t care about you, then you should repay the favor by not voting for them in 2014.

 House Republican Tells Furloughed Federal Workers To Take Out Loans to Pay Their Bills.

 

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Business Groups See Loss of Sway Over House G.O.P. – NYTimes.com


Business Groups See Loss of Sway Over House G.O.P.

By ERIC LIPTON, NICHOLAS CONFESSORE and NELSON D. SCHWARTZ

Published: October 9, 2013
 
WASHINGTON — As the government shutdown grinds toward a potential debt default, some of the country’s most influential business executives have come to a conclusion all but unthinkable a few years ago: Their voices are carrying little weight with the House majority that their millions of dollars in campaign contributions helped build and sustain.

 

Pablo Martinez Monsivais/Associated Press

“We have got to quit worrying about the next election, and start worrying about the country,” said Representative Randy NeugebauerRepublican of Texas.

 

Chip Somodevilla/Getty Images

“It’s clearly this faction within the Republican Party that’s causing the issue right now,” said David M. Cote, chief executive of Honeywell.

 

Jonathan Ernst/Reuters

 “What we want is a conservative business person, but someone who in many respects will be more realistic, in our opinion,” said Bruce Josten, a lobbyist for the  U.S. Chamber of Commerce.

 

Their frustration has grown so intense in recent days that several trade association officials warned in interviews on Wednesday that they were considering helping wage primary campaigns against Republican lawmakers who had worked to engineer the political standoff in Washington.

Such an effort would thrust Washington’s traditionally cautious and pragmatic business lobby into open warfare with the Tea Party faction, which has grown in influence since the 2010 election and won a series of skirmishes with the Republican establishment in the last two years.

“We are looking at ways to counter the rise of an ideological brand of conservatism that, for lack of a better word, is more anti-establishment than it has been in the past,” said David French, the top lobbyist at the National Retail Federation. “We have come to the conclusion that sitting on the sidelines is not good enough.”

Some warned that a default could spur a shift in the relationship between the corporate world and the Republican Party. Long intertwined by mutual self-interest on deregulation and lower taxes, the business lobby and Republicans are diverging not only over the fiscal crisis, but on other major issues like immigration reform, which was favored by business groups and party leaders but stymied in the House by many of the same lawmakers now leading the debt fight.

Joe Echevarria, the chief executive of Deloitte, the accounting and consulting firm, said, “I’m a Republican by definition and by registration, but the party seems to have split into two factions.”

While both parties have extreme elements, he suggested, only in the G.O.P. did the extreme element exercise real power. “The extreme right has 90 seats in the House,” Mr. Echevarria said. “Occupy Wall Street has no seats.”

Moreover, business leaders and trade groups said, the tools that have served them in the past — campaign contributions, large memberships across the country, a multibillion-dollar lobbying apparatus — do not seem to be working.

“There clearly are people in the Republican Party at the moment for whom the business community and the interests of the business community — the jobs and members they represent — don’t seem to be their top priority,” said Dan Danner, the head of the National Federation of Independent Businesses, which spearheaded opposition to President Obama’s health care law among small businesses. “They don’t really care what the N.F.I.B. thinks, and don’t care what the Chamber thinks, and probably don’t care what the Business Roundtable thinks.”

The lawmakers seem to agree. Representative Randy Neugebauer, Republican of Texas and a Tea Party caucus member, said in an interview on Wednesday that if American corporations wanted to send their money elsewhere, that was their choice.

 “We have got to quit worrying about the next election, and start worrying about the country,” said Mr. Neugebauer, who sits on the House Financial Services Committee and is a recipient of significant donations from Wall Street.

Few of the most conservative House lawmakers draw substantial support from business political action committees, and business lobbyists acknowledged that the mere suggestion they were considering backing primary challenges next year could enhance grass-roots support for the very lawmakers they want to defeat. But the dysfunction in Washington has now turned so extreme, they said, that they had few other options.

“What we want is a conservative business person, but someone who in many respects will be more realistic, in our opinion,” said Bruce Josten, the top lobbyist at the U.S. Chamber of Commerce, the single biggest lobbying organization in Washington.

In the two previous battles over the debt limit, many chief executives were reluctant to take sides, banding together in groups like Fix the Debt, which spent millions of dollars on a campaign urging Democrats and Republicans to work toward a “grand bargain” on the budget. But with shutdown a reality, and the clock ticking toward default, some of those same executives now place the blame squarely on conservative Republicans in the House.

“It’s clearly this faction within the Republican Party that’s causing the issue right now,” said David M. Cote, the chief executive of Honeywell and a steering board member of Fix the Debt.

The rift, these industry executives acknowledge, reflects longstanding tensions that sometimes emerge between the agendas of corporate executives and those embraced by the conservative wing of the Republican Party.

“We ask them to carry our water all the time,” said one corporate sector lobbyist, who demanded anonymity in order to speak frankly about the relationship with Republicans. “But we don’t necessarily support them 100 percent of the time. And what has happened is the rise of an ideological wing that is now willing to stand up to business interests.”

Despite their diminished leverage, business leaders said they would step up their appeals for an agreement.

Most of the officials said they agree in principle with conservative lawmakers about the need to cut federal spending or roll back parts of Obamacare, but said using the threat of shutdown — or worse, of a debt default — to extract those concessions was both ineffective and dangerous.

Mr. Josten said he had been on Capitol Hill every day this week counseling compromise.

“The name calling, blame gaming — using slurs like jihadist, terrorist, cowards, that kind of language — it does not get you to a deal,” Mr. Josten said of the advice he is giving to Democrats and Republicans. “The problem is everybody is in the same corner here and everybody has to try to save some face.”

To some extent, the Chamber itself, along with other lobbying groups, helped create the conditions for Washington’s impasse.

After the 2010 elections, the Chamber and other business interests funneled millions of dollars into Republican redistricting efforts around the country, helping draw overwhelmingly safe Republican districts whose occupants — many among the most conservative House members — are now far less vulnerable to challenges from more moderate Republicans.

The Chamber spent more than $32 million on the 2012 election, nearly all of it backing Republicans. Similarly, the American Bankers Association sent 80 percent of its $2.6 million in political action committee donations to Republicans in the last election cycle, compared with 58 percent in 2008, according to data compiled by the Center for Responsive Politics, out of dissatisfaction with Democratic efforts to impose morefinancial regulations.

Now the group’s president, Frank Keating, a former Republican governor from Oklahoma, is among those lamenting Congress’s failure to achieve a deal to avert default. On Thursday, he will testify before the Senate banking committee that “ordinary Americans will bear the brunt of the damage if our leaders do not prevent the United States from defaulting on its debt for the first time in history,” according to an advance copy of his remarks.

To break through to lawmakers, some national trade groups are deploying local business owners, who they believe may have more clout with conservatives than big-name chief executive officers. The National Retail Federation has already begun such efforts in states like Oklahoma and Kentucky, where the Republican Party dominates.

A spokeswoman for the National Association of Manufacturers, Erin Streeter, said the group had decided to sponsor a fund-raising event for Representative Mike Simpson, Republican of Idaho, who is among the 20 House Republicans who have said they will support a budget bill — or at least a temporary measure to reopen the government — without removing funds from the health care program. Mr. Simpson is facing a primary challenge from a more conservative, Tea Party-backed Republican.

“We need to be more aggressive,” Ms. Streeter said.

Michael J. Driscoll, a former managing director of Bear, Stearns & Co. and lifelong Republican from New York, said he would not be surprised if Wall Street executives began to shift some of the giving away from House lawmakers.

“One thing about Wall Street, it is very aware of who is working in their best interest,” he said.

But other lobbyists cautioned that while individual Republican lawmakers may lose financial support, the business community was unlikely to turn its back on the party over all and that donations would continue to flow to campaign committees set up by Republican leaders in the House, including from Wall Street.

“The reason the business community is overwhelmingly pro-Republican is because of the policy positions generally held by the Democratic Party,” said Dirk Van Dongen, president of the National Association of Wholesalers-Distributors. “But there’s a lot of talk around town about the need for Republicans to get into primaries and protect people who are being attacked because they are only 96 percent pure.”

“I, for one, think that would be a healthy exercise,” he added.

 Business Groups See Loss of Sway Over House G.O.P. – NYTimes.com.

 

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What’s the worst that could happen? 7 debt-default doomsday scenarios – NBC News.com


What’s the worst that could happen? 7 debt-default doomsday scenarios

Jeff CoxCNBC.com

Economists are warning that the consequences would be dire if the U.S. defaults on its debt. They would ripple through the economy from Wall Street to Main Street.

Richard Drew / AP

Economists are warning that the consequences would be dire if the U.S. defaults on its debt. They would ripple through the economy from Wall Street to Main Street.

Faced with some Republicans shrugging their shoulders at the thought of the U.S. defaulting on its debt obligations for the first time ever, notable economists are warning that the consequences would be the economic equivalent of a swarm of frogs and a plague of locusts.

The worst of the doomsday scenarios painted by economists involve an outright depression, as the effects of missing a debt interest payment cascade through the economy, financial markets and ultimately to Main Street.

While many analysts agree that a default still remains unlikely, warnings are beginning to intensify that Washington is skating too close to a perilous line.

“The devastation to the United States would be so severe that it would take decades to recover from the Depression caused by a default and the attendant dumping of trillions of dollars of U.S. Treasury securities on the global financial markets,” banking analyst Dick Bove, at Rafferty Capital Markets, said in a report for clients.

Here are seven of the most immediate and severe side-effects if lawmakers fail to raise the debt ceiling in time to avoid default:

1. Depression and unemployment

Financial shockwaves, beginning at the Treasury and Federal Reserve, would make their way through banks and eventually blow a hole through the Main Street economy. Just as in the 2008 financial crisis, businesses would quit hiring amid the uncertainty. The unemployment rate would rise from its current 7.3 percent.

As an illustration, the jobless rate was 5.0 percent in December 2007, about where it had been for the previous 30 months, according to the Labor Department. By the time the Great Recession ended, it was at 9.5 percent, and peaked at 10.0 percent in October 2009.

A slew of other events would slam the economy: A drop in stock market prices, hurting many Americans’ 401(k) investments; the seizing up of bank lending; and the U.S. losing standing in the international marketplace. With U.S. economic growth still below 3 percent, it wouldn’t take that much to send the nation into a financial tailspin.

2. Dollar down, prices and rates up

Among the biggest impacts could be mass selling of the U.S. dollar, an event that would threaten the greenback’s standing as the world’s reserve currency.

That would pound consumers’ buying power by boosting prices for everything from groceries to clothing to the gas we pump into our cars.

“In the event of an actual default, Treasury yields and other borrowing costs would probably rise and remain higher,” warned Julian Jessop, Capital’s chief global economist.

So homeowners and prospective homeowners would have to say goodbye to the low mortgage rates they have enjoyed while the Federal Reserve has kept its foot on the economy’s gas pedal.

“All the money you’re gonna have is under your pillow, and it probably won’t be worth as much as it is today,” Kyle Bass of Hayman Capital Management told CNBC’s Squawk on the Street. “But I don’t think we’re going to get to that apoplectic point in the U.S.”

3. Down go your investments

Stocks have had a rough week, with the S&P 500 and Dow industrials off about 2 percent each and the Nasdaq down nearly 4 percent. That raises worries for many Americans whose nest-eggs are held in company 401(k)s and other retirement accounts.

During the last financial crisis in 2008, major U.S. equity indexes tumbled, with the S&P 500 Index losing 37 percent for the year, which translated into big losses for many 401(k) retirement plan assets, according to the Employee Benefit Research Institute.

Just how individual 401(k) participants were affected by the downturn largely depended on the mix of assets in their funds. For example, investors with a high percentage of their 401(k) in stocks (versus bonds or cash) took a bigger hit than those with more balanced funds.

While many analysts have been trumpeting the market’s refusal to panic over the prospect of a default, that relatively sanguine reaction likely would change.

Estimates among Wall Street analysts are the market would drop between 10 percent and 20 percent — with the upper end at what Wall Street defines as a bear market.

4. Social Security payments halt

The current projection for the government to run out of money to pay its daily bills is Oct. 17. Economists believe, though, that the Treasury would have enough money on hand to pay its $12 billion Social Security payment due that day, as well as another one on Oct. 25.

That may not be the case come Nov. 1, though, when there’s a $25 billion payment due, meaning that checks may not get issued past that date.

Nov. 15 stands as a larger date overall when the Treasury won’t be able to make a $30 billion debt payment.

“We strongly suspect the current impasse over spending and the debt ceiling will have been resolved well before then,” Capital Economics said in a report. “There is also a chance if the shutdown was still in effect at that point then the Treasury, perhaps with the Federal Reserve’s help, would be able to avoid a default somehow. But in a worst case scenario, this is the date to watch.”

5. Banking operations freeze up

One chilling data point: American banks own $1.85 trillion in various government-backed debt, Bove calculated.

The effect, then, of a default on that debt would be devastating.

“If the Treasury and related securities were in default, one does not know what they would be worth,” Bove said. “Assume a Latin American valuation of 10 to 20 cents on the dollar and an estimated $1.28 trillion in U.S. banking equity would be wiped out.”

The potential result?

“It is my strong belief that a true default by the United States Treasury would wipe out bank equity,” he said. “All bank lending to the private sector in the United States would stop, immediately. Existing loans would not be rolled over. Immediate repayment would be demanded.”

6. Money market funds break

The $2.7 trillion money market industry operates on a basic premise: Millions of American depositors won’t lose money.

That agreement broke briefly, with one fund, during the 2008 financial crisis, to destructive effect on investor confidence. It could happen again in the event of a default.

A recent Federal Reserve study said the damage during the crisis eventually could have involved 28 funds that would have “broken the buck.” Bove said a default would hit “virtually every money market fund in the country.”

“At present, (money market funds) that do not actually earn enough money to pay back 100 cents on the dollar are subsidized by the fund management company,” Bove said. “A Treasury default would make this virtually impossible and millions of Americans would lose billions of dollars.”

7. Global markets walloped

Some of our biggest trading partners are equally rattled by the prospect of the U.S. defaulting on its debt. The International Monetary Fund this week warned that a default would push the U.S. economy back into recession and cause “major disruptions” for global markets.

Meanwhile, China and Japan — the largest foreign holders of U.S. Treasury debt — have stepped up calls for quick action. China and Japan held $1.28 trillion and $1.14 trillion in U.S. Treasury securities, respectively, as of July 2013, according to U.S. government data. A fall in U.S. government bond prices would deplete the value of their reserves.

Saber-rattling by China and other foreign investors aside, there is little actual chance the governments who own America’s debt would actually sell it. To do so would cause a panic that would make their investments worthless — the diplomatic equivalent of cutting off their nose to spite their face. That said, investors might see a dip in the value of their international funds.

 What’s the worst that could happen? 7 debt-default doomsday scenarios – NBC News.com.

 

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Thousands of unemployment claims filed in Washington area since government shutdown – The Washington Post


Thousands of unemployment claims filed in Washington area since government shutdown

By Luz Lazo, Published: October 4

 

Thousands of furloughed federal workers in the D.C. area have filed for unemployment benefits this week and thousands more applications are expected if the federal government shutdown that started Tuesday continues, officials said.

Online applications for benefits have increased in the District and Maryland, already surpassing the usual annual claims from federal workers. Local government agencies, meanwhile, have stayed busy responding to inquiries about the shutdown, its impact on local services and workers’ eligibility to receive unemployment compensation.

 “They want to know if someone can help them,” said Maureen O’Connor, a spokeswoman for the Maryland Department of Labor, Licensing and Regulation. “They are unemployed . . . and we will do our best to help them.”

In Maryland, the number of federal claims for unemployment benefits was up to 14,000 as of Friday morning, nearly four times the number of filings from federal workers that the Maryland division of employment insurance receives in a given year, O’Connor said. Also as of Friday morning, more than 9,000 federal workers had filed online claims for benefits through the D.C. Department of Employment Services, said Najla Haywood, an agency spokeswoman.

The Virginia Employment Commission had received 166 paper applications Friday morning from federal workers, said spokeswoman Joyce Fogg. In Virginia, federal workers have to submit their claims on paper, with a copy of their W-2 form or paycheck stub, because the agency cannot digitally access information about federal wages, Fogg said.

“Maybe a lot of people think that some decision will be made and perhaps they may not have to” apply for unemployment benefits, said Fogg. If the shutdown continues, she said, the agency expects to see more claims arrive next week.

The House and Senate this week proposed legislation to retroactively pay the 800,000federal employees who are furloughed. On Monday, President Obama signed a bill ensuring that members of the military and some civilian workers who support them will be paid during the shutdown.

If the federal workers receive back pay for the time not worked, they will need to repay any unemployment benefits received for that time.

Federal workers must file their unemployment claims where they work, not where they live. In the District and Virginia, people must be out of work for at least a week before they are eligible to receive benefits.

In the District, the phone lines at the city’s employment agency remained busy this week, with callers waiting up to 20 minutes, Haywood said. She said job centers across the city are also open to help.

Non-emergency call centers and the social media accounts of local governments across the region have also been bombarded with inquiries from residents wanting to know whether their local services are affected and from furloughed workers with questions about the shutdown.

In Prince George’s County, home to 72,000 federal workers, the county’s 311 line received more than 600 calls since Tuesday, said Jennifer Hawkins, the call center’s manager. Many of the calls have been from furloughed workers wanting to apply for unemployment benefits, she said.

“It will probably grow if the shutdown continues because folks are going to start worrying about it,” Hawkins said.

 Thousands of unemployment claims filed in Washington area since government shutdown – The Washington Post.

 

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Short-term funds show stress as default looms – Houston Chronicle


Short-term funds show stress as default looms

By KEN SWEET, AP Markets Writer | October 9, 2013 

Photo By Charles Krupa/AP

FILE – In this Thursday, Dec. 4, 2008 file photo, a man walks past a Fidelity Investments office in the Financial District of downtown Boston. On Wednesday, Oct. 9, 2013, the nation’s largest manager of money market mutual funds said that it no longer holds any U.S. government debt that comes due around the time the nation could hit its borrowing limit. Money market portfolio managers at Fidelity Investments have been selling off their government debt holdings over the last couple of weeks, said Nancy Prior, president of Fidelity’s Money Market Group. While Fidelity expects the debt ceiling issue to be resolved, the Boston-based asset manager said it is taking steps to protect investors.

NEW YORK (AP) — Fidelity Investments, the nation’s largest money market mutual fund manager, has sold all of its short-term U.S. government debt — the latest sign that investors are increasingly nervous about the possibility of a government default.

Money market portfolio managers at Fidelity Investments started selling off short-term U.S. government debt a couple of weeks ago, Nancy Prior, president of Fidelity’s Money Market Group, said Wednesday. While Fidelity expects the debt ceiling issue to be resolved, the Boston-based asset manager said it has taken steps to protect investors.

“We expect Congress will take the steps necessary to avoid default, but in our position as money market managers we have to take precautionary measures,” Prior said.

Fidelity, which manages $430 billion in money market mutual funds, has taken similar actions in the past. The most recent instance was in the summer of 2011, when the U.S. government came close to a default and Standard & Poor’s downgraded the nation’s credit rating, Prior said.

Prior said that Fidelity no longer holds any U.S. debt that comes due in late October or early November, the window considered by many investors to be the most exposed if the government runs out of money to pay its debts.

Money market funds are a significant part of the U.S. financial system. Individuals and institutional investors have roughly $2.685 trillion invested in the funds, according to data from the Investment Company Institute.

Money market funds are typically ultra-safe places to park money. They invest primarily in short-term debt that can be easily bought and sold, such as U.S. Treasurys or commercial paper, debt issued by large companies to fund their day-to-day expenses. In a money market fund, investors expect to get back every dollar they invest.

The U.S. Treasury has warned it will run out of money if Congress does not agree to raise a $16.7 trillion cap on borrowing by Oct. 17 and allow it to issue more debt.

The worry has other parts of the market showing signs of stress. Like Fidelity, other investors have tried to limit their exposure to U.S. government debt that comes due this month, with the heaviest selling occurring in one-month Treasury bills. The yield on the one-month T-bill jumped to 0.27 percent Wednesday, its highest level since the 2008 financial crisis. The yield was nearly zero at the beginning of the month.

Money market mutual fund managers don’t want to be caught holding U.S. government debt that comes due around the time the government hits the debt ceiling. They fear that the government may not be able to pay back bond holders, said Gabriel Mann at the Royal Bank of Scotland Group.

“Investors are buying protection,” Mann said, referring to growing demand for insurance against the U.S. defaulting on its debt __ a security known on Wall Street as a credit default swap.

Overnight interest rates in the repo market, used by banks to fund day-to-day lending, shot up to 0.12 percent Wednesday from 0.04 percent at the beginning of the month.

The increase is partly because some banks have stopped accepting some U.S. Treasurys as collateral, or are requiring more collateral, to borrow.

Not all investors are worried though.

“We’re doing just the opposite … probably buying what Fidelity is selling,” Bill Gross, co-founder of PIMCO, the world’s largest bond fund manager, said Wednesday in an interview with CNBC.

Gross said the odds are a million to one that the U.S. will not default on its debt.

 Short-term funds show stress as default looms – Houston Chronicle.

 

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How the GOP food-stamp bill adds to state bureacracy


How the GOP food-stamp bill adds to state bureacracy

By Niraj Chokshi, Published: September 23

Amanda Aubin and Cody Allison carry $70 of groceries, paid for with food stamps, to their apartment in Rhode Island. (Credit: Michael S. Williamson/The Washington Post.)

(Credit: Michael S. Williamson/The Washington Post.)

The bill the House passed late last week to slash $39 billion in food aid was all about reducing the scope of the federal government, but it could do the opposite for states.

The Republican bill eliminates a shortcut states have long used to determine eligibility for food aid provided under the Supplemental Nutrition Assistance Program. Rather than check whether each a household qualifies for SNAP benefits directly, states have for years been making that determination based on whether they already receive other low-income assistance.

The thinking for the practice, known as “categorical eligibility,” was this: if you’ve already passed the test for welfare, you probably pass it for food stamps. Instead of running separate eligibility tests for all low-income assistance programs, states have been allowed to streamline the process.

“Categorical eligibility was seen as advancing the goals of simplifying administration, easing entry to the program for eligible households, emphasizing coordination among low-income assistance programs, and reducing the potential for errors in establishing eligibility for benefits,” Congress’s research arm, the Congressional Research Service,wrote in a report about the practice last week. Forty states—red ones and blue ones—have embraced the broadest form of categorical eligibility, it found.

Under the Republican House bill, however, that shortcut would be restricted yielding $11 billion in savings over a decade as households are discouraged or deemed ineligible for the benefits. An estimated 2.1 million people will lose benefits next year alone, according to the nonpartisan Congressional Budget Office. But while the federal government’s payouts will shrink, cash-strapped states will have to start conducting more determination tests.

“This limitation in categorical eligibility would increase state administrative costs in SNAP and significantly curtail state flexibility,” the nonpartisan National Conference of State Legislatures wrote in a May letter responding to a similar provision.

Earlier this month, the American Public Human Services Association, a group whose membership includes SNAP administrators, echoed the sentiment. States have become more efficient in determining eligibility under the current SNAP rules, APHSA wrote in a letter to House and Senate leadership.

“APHSA strongly supports SNAP’s current administrative options, which have allowed states to reduce administrative costs and errors; eliminate duplicative steps in the eligibility process; and make more effective use of scarce caseworker and information system resources,” APHSA Executive Director Trace Wareing wrote. “These options include the current one for categorical eligibility and those for SNAP’s other administrative options.”

And, in 2007, the Government Accountability Office found that eliminating categorical eligibility altogether could decrease participation by as much as 25 percent in North Carolina or Arizona, or as little as 0.1 percent in Kansas or 0.2 percent in South Carolina. State officials also told GAO that eliminating categorical eligibility would increase costs, workload and error rates.

Conservatives argue that restricting the practice prevents those who don’t qualify for food aid from receiving it. And it is true that some are determined eligible when they are not. In many states, the practice eliminates the asset test (SNAP recipients must have less than $2,000 in liquid assets). And CRS found that some households were found to be eligible even though they earned more than the rules allow.

In fiscal year 2011, for example, a monthly average of 3.5 percent of households without an elderly or disabled member received SNAP benefits and had incomes above the cutoff of 130 percent of the poverty line, according to CRS. (That 3.5 percent likely make only a little more than the threshold, though, as they’ve already qualified for some other form of low-income assistance, albeit one with a higher threshold.)

But advocates argue that by adding another eligibility test, those who deserve and need SNAP benefits may be turned away.

While it may not be likely to make its way through the Senate, the House bill, if passed, would succeed in both limiting the federal government while also likely forcing an expansion in state bureaucracy.

 How the GOP food-stamp bill adds to state bureacracy.

 

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Wonkbook: Brace yourselves. This fiscal fight could be worse than 2011′s.


Wonkbook: Brace yourselves. This fiscal fight could be worse than 2011′s

By Ezra Klein and Evan Soltas, Published: September 24

 

(Photo by Karen Bleier/AFP/Getty Images)

(Photo by Karen Bleier/AFP/Getty Images)

Much of Washington — not to mention the financial markets — is taking comfort in the fact that think they’ve seen this movie before.

In 2011, House Republicans threatened to shut down the government and breach the debt ceiling unless the Obama administration made substantial concessions. Though the negotiations were tense, the two sides ultimately came to an agreement. There was no shutdown. There was no default. The lesson most everyone took away was that Washington always figures it out in the end.

But this isn’t 2011. It’s potentially much worse.

What’s lost in the comforting analogy is how much the two sides agreed on in 2011:

1) Republicans had just won a massive victory in the midterm elections, so both sides broadly agreed that Republicans had a mandate to cut spending.

2) Both sides agreed that there should be negotiations over the debt ceiling. Indeed, by the time the debt ceiling hit, negotiations had been ongoing for months.

3) Both sides agreed that the aim of those negotiations was reducing the budget deficit.

As deep as the disagreements over policy were, these broadly shared premises led to negotiations that led to an agreement that cut the budget deficit by cutting a trillion dollars in discretionary spending and another trillion dollars through sequestration’s spending cuts.

The ultimate deal, in other words, precisely tracked the issues on which the two parties agreed.

In 2013, however, the parties don’t agree on anything:

1) Republicans believe Obamacare’s unpopularity gives them a mandate to defund or delay the law. Democrats believe that their victory in the last election gives them a mandate to implement their agenda.

2) Republicans believe there should be negotiations around raising the debt ceiling. Democrats emphatically don’t. Currently, there are no ongoing negotiations, nor any plan for them.

3) Republicans believe the aim of these negotiations should be defunding or delaying Obamacare. Democrats say they will not, under any circumstances, delay or defund Obamacare.

There is, quite literally, no shared ground for a deal. Democrats and Republicans disagree on everything from the principle of negotiations to the potential objective of those negotiations. And “disagree” is almost too light a word. They hold mutually exclusive positions that neither can abandon without sparking an overwhelming backlash from their base and seriously harming their credibility in negotiations going forward.

The GOP is operating by analogy to 2011, assuming that the Obama administration — or at least Senate Democrats — will eventually crack and offer concessions. The Democrats are also mindful of 2011, but for them, it’s an object lesson in why they can’t negotiate: Otherwise, the GOP will keep taking the debt ceiling hostage, putting the U.S. at a permanently higher risk of default.

Making matters even worse, it’s not even clear who represents the Republican Party in 2013. Speaker John Boehner already had to pull his favored CR from the floor and replace it with a bill that met Sen. Ted Cruz’s demands. Senate Minority Leader Mitch McConnell is facing a tea party challenge in Kentucky. It’s not clear whether either leader has the flexibility or authority to credibly negotiate on behalf of the GOP, if negotiations were even taking place.

Most in Washington and on Wall Street hold to a serene faith that the two parties will figure something out. And that’s probably right. But in interviews with both Democratic and Republican staff from the House and Senate leadership, as well as the White House, I have yet to hear a plausible story for how they figure something out. The tales range from the unlikely — Republicans expect Senate Democrats to force the White House to delay the individual mandate, while Democrats expect Boehner to simply fold and absorb the backlash from his party — to the nonexistent.

“I don’t know the end of this movie,” says Rep. Chris Van Hollen, ranking member on the House Budget Committee. “I don’t think anybody knows how it ends. And that’s a very dangerous place to be in.”

 Wonkbook: Brace yourselves. This fiscal fight could be worse than 2011′s..

 

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Shutdown: Here Is What Will Happen If Congress Doesn’t Get Its Act Together By Monday | ThinkProgress


Shutdown: Here Is What Will Happen If Congress Doesn’t Get Its Act Together By Monday

BY IGOR VOLSKY ON SEPTEMBER 24, 2013

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If Congress fails to pass a continuing resolution in six days, the federal government will come to a standstill, shuttering “non-essential” services and operations that are deemed unnecessary for the safety of human life and national security. So while air traffic controllers will keep the planes in the sky, seniors will receive their Medicare and Social Security checks and the unemployed will continue to see benefits, other services will begin to dry up the longer the shutdown continues. Services that are not subject to yearly appropriations — so-called mandatory spending — will continue functioning and self-funding agencies like the Postal Services could still deliver mail.

But close to a million federal workers performing tasks that are deemed non-essential could be furloughed, leading to delays and shutdowns in the following services:

FINANCIAL SERVICES. The Small Business Administration will stop making loans, federal home loan guarantees will likely go on hold, and students applying for financial aid could also see delays and backlogs in applications.

ARMED FORCES. U.S. troops serving at home and abroad could stop receiving paychecks if the shutdown continues for an extended period and changes of station would also be delayed and facility and weapons maintenance would be suspended. Families back home would also be impacted.

HEALTH CARE. The National Institutes of Health will stop accepting new patients and delay or stop clinical trials. Medicare and the Veterans administration will continue paying out benefits, but new filers could face delays and doctors and hospitals may also have to wait for reimbursements.

PUBLIC SAFETY. The Environmental Protection Agency would stop reviewing environmental impact statements and food inspectors would stop conducting workplace inspections unless there is an imminent danger. The Bureau of Alcohol, Tobacco, and Firearms could stop processing applications for permits.

SECURITY AND TRAVEL. The Department of Homeland Security would suspend the E-Verify program, which helps businesses determine the eligibility of employees, creating hiring delays. The State Department will also likely halt new passport and visa applications.

PARKS AND RECREATION. The National Park Service sites and the Smithsonian Institution will be shutdown. During the 1990s, 368 sites closed down and approximately 7 million visitors denied entry.

All this will come at a price. The last two shutdowns during the Clinton era — one lasted six days in 1995 and another stretched 21 days at the end of 1995 and beginning of 1996 — cost the country 0.5 percentage points of gross domestic product (GDP) growth and more than $2 billion (in today’s dollars) in unnecessary expenses — as government employees abandoned their jobs to prepare for the shutdown. Economists estimate that were a short-term shutdown to occur next month, it “would do significant economic damage, reducing real GDP by 1.4 percentage points.” A two-month shutdown could “precipitate another recession.”

 Shutdown: Here Is What Will Happen If Congress Doesn’t Get Its Act Together By Monday | ThinkProgress.

 

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