6/12/09

Greetings:

 

My announcement of my candidacy for Congress delayed this newsletter, but I will try to keep them coming.

 

This is the sixteenth edition of the New Hampshire Progressive Newsletter for 2009.

 

Fairpoint people: If your email address is changing, email me at mark@markfernald.com. To unsubscribe, email me at mark@markfernald.com, or use the ‘unsubscribe’ link at the end of this message.

 

In this issue:

 

All of the talk in Concord is about the budget and gambling. For those legislators who have opposed expanded gambling, don’t let anyone tell you that because your favored revenue solution (estate tax, capital gains tax, business tax increase or whatever) is ‘dead,’ you must now accept gambling. You ALWAYS have the power to say no, and force a new round of negotiation. I say this from sad experience. During the education funding crisis of 1999, the legislature concluded that an income tax for education was the best alternative. Governor Shaheen said no, and killed the income tax with a veto threat. The legislature then reluctantly voted for a statewide property tax as the only remaining option. If we had stood our ground, and rejected the statewide property tax, it would have put us back at square one with all options on the table.

 

Item 1: Rep. Timothy Butterworth writes an excellent analysis of the capital gains tax favored by the House.

 

Item 2: What do you know? The US Government actually MADE money on some of the bailout.

 

Item 3: Sen. Kennedy unveils his universal health care proposal.

 

Item 4: A proposal for competitive bidding within Medicare.

 

Item 5: President Obama now favors a mandate that people buy health insurance.

 

Item 6: Cuba agrees to talks with the US

 

Item 7: The increased carbon dioxide in the atmosphere is making the oceans more acidic, endangering many types of sea life.

 

Mark

 

 

1.    State tax system divides investors into two camps

Capital gains levy would change that

    

 

By Rep. TIM BUTTERWORTH For the Monitor

 

June 09, 2009 - 12:00 am

 

New Hampshire prides itself on not having an income tax, but this is not exactly true. We don't have a wage tax, but we do tax interest and dividend investment income at 5 percent. Maybe it's not bad to tax investment income - but if we're going to do it, why don't we tax all investment income?

 

There is now a proposal to add capital gains to our other investment income taxes, and it provides one more chance to question tax fairness in New Hampshire. Does separating interest and dividends from capital gains - taxing one and protecting the other - create two classes of taxpayers? Are we unfairly taxing one group and giving another a pass?

 

Who makes these investments?

 

When the interest and dividends tax was passed in 1923, our Yankee grandparents kept most investments in safer investments like savings accounts. Today financial advisers recommend savings accounts, CDs, bonds and shares that pay dividends to small investors or the elderly who can't wait for several years of bad stock market performance to spend their investment. These are the people New Hampshire taxes.

 

Capital gains investment income comes from the stock market. Unlike in 1923, much more of our wealth is invested like this now. Advisers recommend growth stocks for wealthier and younger investors, who can afford a few bad years. Over the long haul, the stock market makes more money, but it's riskier and only a wise investment for people who can afford it. These are the investors New Hampshire protects.

 

The capital gains proposal says that the state would add this income to interest and dividends. Then it increases the current $2,400 individual exemption on investment income to $5,000, or $10,000 for a couple. The exemption increases for the elderly. A couple over 65 would have to earn $12,400 just from their investments - not retirement or Social Security - before they paid any tax at all, and then 5 percent on investment income above that. For most people, this would mean reduced taxes. Median family income in New Hampshire is about $65,000, and 96 percent of the new tax would be paid by people with incomes over $75,000.

 

Two views

 

We've all heard the arguments against taxing wealthier people. It's the Ronald Reagan, supply-side, trickle-down theory: If some people have lots of money they will invest it in businesses, which will employ workers. People who like this view call wealthy investors the "engine" of America's wealth. Perhaps this is why New Hampshire doesn't tax capital gains.

 

The opposing view states that working families need enough money to buy things the businesses create. This is demand-side economics, or the Henry Ford theory. He knew he had to pay his assembly-line workers enough to buy the cars he was making. People who think this way compare our current tax policy to poker game economics: When one or two players at the table get all the chips, the game is over.

 

Like most arguments, both sides have some truth, but the debate is important. Continuing to protect our biggest investments sends our state down one path, and taxing all investment income equally pushes us in another direction. Regardless of which side of the argument you prefer, is there a fair argument for favoring one group over the other, or should all investment income be taxed equally?

 

Stress on poor families

 

How does this play out in New Hampshire? Our heavy reliance on property taxes and user fees already puts stress on our poorer families because a larger percentage of their incomes goes to cover these taxes. Add to that our high health care costs and many families have nothing left to spend, no matter what the economic engine produces. While New Hampshire's tax structure attracts many wealthy older people, there is a great concern about trying to hold on to younger workers, and reports say it is one of the worst states economically for middle- and working-class retirees. Is New Hampshire becoming a tax haven for the rich, a Cayman Island with skiing?

 

This would be a good time to let the governor, senators and representatives know how you feel about it.

(Democratic Rep. Tim Butterworth lives in Chesterfield.)

 

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2. Bank Bailout Turns Out to Have Been Good Business for US Tuesday 09 June 2009

 

by: Kevin G. Hall | Visit article original @ McClatchy Newspapers http://www.mcclatchydc.com/251/story/69754.html

 

    Washington - When Congress passed the $700 billion Wall Street bailout package last fall, critics said it'd be a money loser. But when 10 banks returned $68 billion of the money on Tuesday, President Barack Obama said the government had realized a small profit.

 

    Did it really?

 

    In addition to returning the $68 billion, the 10 banks paid the government $1.8 billion in dividends on the preferred shares of stock the government owned. That translates to an annualized rate of return of about 4.64 percent on the $68 billion.

 

    In all, the government has received $4.5 billion from all bailout recipients, who've received $200 billion, for an annualized rate of return since Nov. 12, 2008, when the money was lent out, of 3.94 percent.

 

    But the government had to borrow to pay for the bailout and pay interest on those borrowings. Once the interest costs are factored in, how'd the government do?

 

    Not bad. The annualized rate of return of 4.64 percent on the $68 billion is well above the 2 percent interest the government was paying Monday to investors who were purchasing three-year bonds. The profit margin is even higher when measured against the interest the government is paying on a six-month bond - 0.31 percent.

 

    The profit gets much smaller, however, if you measure it against the interest costs on Treasury notes that mature in seven years. The interest rate on a seven-year Treasury bond stood at 3.6 percent on Monday, and 3 percent last Nov. 12. Still, whichever date you choose, the government has turned a small profit. And the money repaid ostensibly goes to knocking down the overall U.S. government debt, which also lessens the government's interest burden.

 

    The government stands to earn even more when it sells the stock warrants it holds in conjunction with its preferred shares in the 10 bank-holding companies that are paying their bailout. Treasury and the banks are negotiating a fair-market value for these warrants.

 

    Mark Zandi, chief economist of Moody's Economy.com, thinks that the warrants issued against preferred shares of stock from all bailout recipients - not just the 10 authorized Tuesday to repay the government - are worth at least $5 billion. So for a snapshot in this point in time, the Wall Street bailout has been profitable.

 

    And that's before weighing the intangible question of what the costs of doing nothing might have been and the financial system had collapsed.

 

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3. Kennedy Readies Health-Care Bill

By Ceci Connolly

Washington Post Staff Writer

Saturday, June 6, 2009

 

Sen. Edward M. Kennedy (D-Mass.) has laid down the first marker in this year's debate over how to revamp the nation's health-care system, writing a bill that would put strict new requirements on individuals and businesses to purchase insurance.

 

As expected, the ailing chairman of the Senate Health, Education, Labor and Pensions Committee and his staff have crafted comprehensive legislation that would guarantee health coverage for every American -- but would require the vast majority to contribute to the cost, according to a draft of the bill obtained last night by The Washington Post. Some small businesses and low-income workers would be eligible for subsidies.

 

While at least five congressional chairmen are working on health-care reform bills, Kennedy is the first to complete detailed legislative language. The draft provides a partial road map for how the nation might address health coverage gaps and problems such as rising costs and inferior quality.

 

The 170-page bill, dubbed the "American Health Choices Act," does not include cost estimates or specifics on how to pay for the expansion.

 

Perhaps its most controversial element is the creation of a new government-sponsored health insurance plan that would compete with private insurers. Republicans and industry groups have opposed the so-called "public option," arguing it would undermine the private marketplace and could lead to a "single-payer" system. President Obama reiterated his support for the public option earlier this week.

 

Under the approach crafted by the Kennedy staff, doctors and hospitals serving patients in the new public insurance plan would be paid 10 percent above current Medicare rates. The bill suggests the costs of the program would be covered through premiums.

 

"This is a draft of a draft," Kennedy spokesman Anthony Coley said. Committee Democrats, he said, "are still discussing legislative options among themselves and Republican colleagues."

 

He did not dispute the contents of the document, which closely tracks with summaries circulated by the Kennedy team last week.

 

Much of the bill is modeled after sweeping state health-care reform enacted three years ago in Massachusetts. In addition to the requirements on businesses and individuals, the bill would create new insurance exchanges, called "connectors," that would essentially enable individuals to shop for insurance. Kennedy would allow families earning up to 500 percent of the poverty level -- $110,000 -- to buy insurance on a sliding scale with government subsidies.

 

A markup of the bill by Kennedy's committee is tentatively set for June 16. The Senate Finance Committee hopes to release its proposal June 17 and begin markup on June 22.

 

washingtonpost.com

 

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4. June 4, 2009

OP-ED CONTRIBUTOR

Medicare, Start the Bidding

By PETER B. BACH

 

EVERY year, like half a million other doctors, I sign on to the government’s largest no-bid, no-compete contract. We agree to treat Medicare patients for a set rate, and Medicare agrees to take all of us on board, whether or not our services are needed in the city or town where we practice. As a result, doctors — in particular, specialists — flock to some parts of the country and shun others.

 

The trouble with this is that when there are too many doctors in one area, too much money gets spent on health care. But the system could take advantage of this fact to save money.

 

Researchers have observed that having one additional specialist (per 100,000 people) in a region leads to about $13 more in health care spending per Medicare patient. New York City, for instance, has 186 specialists for every 100,000 residents, which is twice as many as Albany’s 93. Accordingly, Medicare spends $12,114 a year treating each patient in New York City, but only $5,950 in Albany.

 

Patients in high spending areas are no sicker than patients anywhere else, their care is of no higher quality, and their health outcomes are no better, research has shown. Having more doctors doesn’t even offer more convenience. Patient satisfaction is no higher, and just as many patients complain about having trouble getting to see a doctor.

 

The White House budget director, Peter Orszag, has highlighted regional variations as a key source of overspending on health care. Such wasteful spending by Medicare and by private insurance could add up to as much as $700 billion a year — enough to provide insurance for everyone who doesn’t have it now.

 

To realize some of these savings, Medicare could use an approach called a reverse Dutch auction to set up competition for doctors in oversupplied regions.

 

Here is how it would work. Later this year, the agency would set a 2010 target number for each type of specialist in an oversupplied region. Then it would offer to sign up those doctors at a certain payment rate. The starting rate would be, say, $30 per doctor work unit. (Work units are a measurement that Medicare uses to set its rates; each procedure is assigned a specific number of work units.) This is lower than the $36 per work unit that Medicare pays all doctors today. If too few specialists signed up, the rate would go up, and it would keep rising until there were enough doctors for the area.

 

In areas where there are too few doctors, Medicare could pay more than $36 per work unit, attracting not only specialists but also the primary-care doctors who are so needed in these places.

 

I anticipate a few objections to this plan. People might worry, for instance, that some Medicare patients might no longer be able to consult their favorite doctors. But any doctors who did not sign up during the auction could still sign up as “nonparticipating providers.” Medicare already reimburses such doctors at a rate that is only 5 percent lower than the standard rate.

 

Then there is the question of whether both Medicare and participating doctors would be prepared to engage in bidding. The answer is yes. Medicare has already procured other goods and services — everything from wheelchairs to claims processing — through competitive bidding. And doctors have long had to haggle with commercial insurers over their rates.

 

To ensure that everyone has time to adjust, the bidding system could be phased in, starting with a few of the most overpopulated specialist groups in the most oversupplied regions.

 

Finally, there is the fact that some specialists would lose their Medicare business. But those doctors who are left out might move to places that really need them. Or they might stay where they are and compete with other doctors for privately insured patients, lowering fees for people who are not on Medicare.

Ideally, some of them would become primary-care doctors; many have already completed the training for that. Having more primary-care doctors in an area lowers health care spending and increases quality.

Of course, it would be nice if our Medicare system did not need to treat the important work doctors do as a commodity. But Medicare already regards all doctors as suppliers of equivalent services by paying them all the same fees for the same services. A competitive bidding system could hold down spending without reducing access to doctors or hurting the quality of care.

 

Peter B. Bach, a pulmonary specialist at Memorial Sloan-Kettering Cancer Center, was a senior adviser to the administrator of the Centers for Medicare and Medicaid Services from 2005 to 2006.

 

nytimes.com

 

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5. Obama Plan Would Provide Health Care for All Thursday 04 June 2009

by: Erica Werner | Visit article original @ The Associated Press

 

    Washington - President Barack Obama says he's open to requiring all Americans to buy health insurance, as long as the plan provides a "hardship waiver" to exempt poor people from having to pay.

 

    Obama opposed such an individual mandate during his campaign, but Congress increasingly is moving to embrace the idea.

 

    In providing the first real details on how he wants to reshape the nation's health care system, the president urged Congress on Wednesday toward a sweeping overhaul that would allow Americans to buy into a government insurance plan.

 

    Obama outlined his goals in a letter to Sens. Edward Kennedy, D-Mass., and Max Baucus, D-Mont., chairmen of the two committees writing health care bills. It followed a meeting he held Tuesday with members of their committees, and amounted to a road map to keep Congress aligned with his goals.

 

    "The plans you are discussing embody my core belief that Americans should have better choices for health insurance, building on the principle that if they like the coverage they have now, they can keep it, while seeing their costs lowered as our reforms take hold," Obama wrote.

 

    Obama has asked the House and Senate each to finish legislation by early August, so that t?e two chambers can combine their bills in time for him to sign a single, sweeping measure in October. In a statement Baucus welcomed the assignment.

 

    "I will stop at nothing to deliver a health reform bill that works for families and businesses to the president this year," Baucus said.

 

    Covering 50 million uninsured Americans could cost as much as $1.5 trillion over a decade, and cost is emerging as a major sticking point. Obama didn't offer new solutions to that problem in his letter Wednesday but did say he'd like to squeeze an additional $200 billion to $300 billion over 10 years from the Medicare and Medicaid government insurance programs for the elderly, disabled and poor.

 

    He said he'd do it through such measures as better managing chronic diseases and avoiding unnecessary tests and hospital readmissions. Savings from such measures are uncertain.

 

    Medicare benefits cost the federal government about $450 billion a year and Medicaid about $200 billion. Obama already has targeted the programs for some $300 billion in cuts over 10 years in the 2010 budget he released in February.

 

    He also said he's open to congressional proposals to let an independent commission identify cuts to Medicare which would take effect unless Congress rejected them all at once, similar to how military base closures are handled.

 

    The president said he supports a new health insurance exchange that Congress is crafting, a sort of marketplace that would allow Americans to shop for different plans and compare prices.

 

    All of the plans should offer a basic affordable package, and none should be allowed to deny coverage to people with pre-existing conditions, Obama said — big changes from how private insurance companies operate today.

 

    "I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans," Obama wrote, weighing in firmly on one of the most controversial issues in the debate. "This will give them a better range of choices, make the health care market more competitive and keep insurance companies honest."

 

    Republicans strongly oppose a public plan, as do private insurers, who contend it would drive them out of business.

 

    "A government-run plan would set artificially low prices that private insurers would have no way of competing with," Senate Minority Leader Mitch McConnell said Wednesday on the Senate floor.

 

    The idea of what Obama called a "hardship waiver" for individual Americans too poor to buy care splits the difference between where he was during the presidential campaign and where Congress appears to be heading.

 

    In the campaign, Obama did not support requiring everyone to buy insurance, putting him at odds with then Democratic rival Hillary Rodham Clinton. Congress is looking at doing so. The hardship waiver idea is under consideration by the Senate Finance Committee, which also is considering giving tax credits to certain individuals so they can afford health care. Kennedy and House Democrats are looking at giving subsidies to the poor to help them buy coverage.

 

    The letter didn't address the issue of taxing health care benefits. Obama opposed that during his campaign but Congress is now considering it, and Obama hasn't shut the door on it.

 

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6. In Turnaround, Cuba Agrees to Talks With US Sunday 31 May 2009

by: Mary Beth Sheridan | Visit article original @ The Washington Post http://www.washingtonpost.com/wp-dyn/content/article/2009/05/31/AR2009053101078_pf.html

 

    Cuba has agreed to open talks with the United States on issues ranging from immigration to anti-narcotics cooperation and direct mail service , a senior State Department official said today, in a sign that the island's communist government is warming to President Obama's call for a new relationship after decades of tension.

 

    The breakthrough came shortly before Secretary of State Hillary Rodham Clinton left on a trip to Latin America, where she is expected to face pressure to make further gestures to Cuba, including allowing it into the Organization of American States.

 

    A senior State Department official, briefing reporters on the condition of anonymity, called the Cuban moves "a very positive development" and added: "It's our hope this will be understood in the region in a positive way."

 

    In an initial bid to launch a new relationship with Cuba, President Obama last month scrapped restrictions on Cuban Americans traveling to the island and sending money there. But he has said the United States will not lift its economic embargo until the government of Raul Castro improves its human-rights record and makes democratic reforms.

 

    Cuba had given mixed signals about how willing it was to respond to the Obama administration's overtures. But on Saturday, the State Department official said, the head of the Cuban Interest Section in Washington, Jorge Bolaños, formally accepted a U.S. offer, made this month, to re-open talks on immigration that the Bush administration had halted in 2003. Those were the highest-level talks between the two sides.

 

    Bolaños also expressed interest in an earlier U.S. proposal to work toward resuming direct U.S. mail service to the island, the official said. It has been years since such service existed.

 

    In addition, the Cubans indicated they would like to explore the possibilities of additional dialogue on counter-narcotics, counter-terrorism and disaster response, the official said. The U.S. and Cuban governments currently work together in an informal basis to stop drug runners.

 

    No date was set yet for the talks, the official said.

 

    Clinton is making her third trip to Latin America in four months, an indication of the Obama administration's attention to an area where U.S. influence has waned in recent years.

 

    Clinton's visit, which includes high-level regional meetings and attendance at the inauguration of a new president in El Salvador, comes amid a dramatic shift. Once dominated by the United States, Latin America has diversified its trade, and the presidents of a few countries have taken a strong anti-Washington stance. Even pro-U.S. politicians in the region complain that they were ignored during much of the Bush administration as the United States concentrated on Iraq and Afghanistan. Clinton recently expressed concern about the growing role in the area played by China, Russia and Iran, and she is focusing intently on the region.

 

    "We've had a big leadership push into Latin America.... there's been a real focus on engaging, there's been a real focus on filling space," a senior State Department official said, briefing reporters on condition of anonymity before the trip.

 

    President Obama sought to repair relations with Latin America at a summit in Trinidad and Tobago last month in which he pledged to seek "an equal partnership" and not dictate to the region. But that display of goodwill is being put to the test over Cuba. Most Latin American countries would like to lift a 47-year-old ban on Cuba's membership in the Organization of American States at the group's annual assembly in Honduras on Tuesday, but Clinton has resisted.

 

   The disagreement threatens to drive a wedge between the United States and its allies in the OAS, the main forum for political cooperation in the hemisphere. Clinton has said the OAS would violate its charter on democratic rights if it accepted the return of the communist-ruled nation unconditionally.

 

    "They have to be willing to take the concrete steps necessary to meet those principles. We've been very clear about that - move toward democracy, release political prisoners, respect fundamental freedoms," Clinton told Congress recently.

 

    Obama has reversed some Bush administration decisions on Cuba, lifting restrictions on visits by Cuban Americans and offering to re-open immigration talks after a five-year hiatus. But he is moving cautiously, wary of domestic pressure.

 

    The move to re-admit Cuba to the OAS is strongly opposed by Cuban American groups and by some key U.S. senators. One of them, Robert Menendez (D-N.J.), has threatened to cut off the U.S. contribution to the OAS, about 60 percent of its budget. Last week, three former Bush administration officials who occupied senior posts dealing with Latin America - ambassadors Lino Gutierrez, Roger F. Noriega and Otto J. Reich - appealed to Clinton not to give in.

 

    "Now more than ever, any actions that confer legitimacy on the unelected regime in Havana would be a betrayal of our Cuban brothers and sisters," they wrote.

 

    Clinton's trip starts today in El Salvador with a meeting of Pathways to Prosperity, a Bush administration initiative to encourage greater commerce with its 11 free-trade partners in the region. The group was formed last fall, after Venezuelan leader Hugo Chavez started assembling a bloc opposed to free-trade pacts with the United States. It includes Nicaragua, Bolivia, Cuba and Dominica.

 

    On Monday, Clinton attends the inauguration of El Salvador's president, the first from the party formed by guerrillas who battled a U.S.-backed government in the the 1980s. The new leader, Mauricio Funes, is the latest sign of the "pink tide" that has washed over Latin America. He has said he will emulate moderate leftists like those governing Brazil and Chile, rather than populists like Chavez.

 

    Clinton's trip wraps up with the OAS meeting.

 

    Many members of the group say the ban on Cuba is outdated because it denounces the island's alignment with a "communist bloc" that disappeared after the collapse of the Soviet Union. Several countries, however, have indicated they are willing to require Cuba to fulfill some democratic requirements before it fully returns to the OAS.

 

    In the end, lifting the ban would mainly be symbolic, because Cuba has said it has no plans to rejoin a group that it sees as U.S.-dominated. But the debate indicates the emotional punch Cuba still packs across Latin America.

 

    Clinton's trip follows a March visit to Mexico and a swing last month through Haiti and the Dominican Republic on her way to the Summit of the Americas. Several top Obama administration military and political officials also have traveled to the region recently.

 

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7. Climate Change Turning Seas Acid

Sunday 31 May 2009

by: Reuters | Visit article original @ Reuters http://www.reuters.com/article/environmentNews/idUSTRE54U1ZB20090601?feedType=RSS&feedName=environmentNews

 

    Bonn, Germany - Climate change is turning the oceans more acid in a trend that could endanger everything from clams to coral and be irreversible for thousands of years, national science academies said on Monday.

 

    Seventy academies from around the world urged governments meeting in Bonn for climate talks from June 1-12 to take more account of risks to the oceans in a new U.N. treaty for fighting global warming due to be agreed in Copenhagen in December.

 

    "To avoid substantial damage to ocean ecosystems, deep and rapid reductions of carbon dioxide emissions of at least 50 percent (below 1990 levels) by 2050, and much more thereafter, are needed," the academies said in a joint statement.

 

    The academies said rising amounts of carbon dioxide, the main greenhouse gas emitted mainly by human use of fossil fuels, were being absorbed by the oceans and making it harder for creatures to build protective body parts.

 

    The shift disrupts ocean chemistry and attacks the "building blocks needed by many marine organisms, such as corals and shellfish, to produce their skeletons, shells and other hard structures," it said.

 

    On some projections, levels of acidification in 80 percent of Arctic seas would be corrosive to clams that are vital to the food web by 2060, it said.

 

    And "coral reefs may be dissolving globally," it said, if atmospheric levels of carbon dioxide were to rise to 550 parts per million (ppm) from a current 387 ppm. Corals are home to many species of fish.

 

    "These changes in ocean chemistry are irreversible for many thousands of years, and the biological consequences could last much longer," it said.

 

    The warning was issued by the Inter-Academy Panel, representing science academies of countries from Albania to Zimbabwe and including those of Australia, Britain, France, Japan and the United States.

 

    Underwater Catastrophe

 

    Martin Rees, president of the Royal Society, the British science academy, said there may be an "underwater catastrophe."

 

    "The effects will be seen worldwide, threatening food security, reducing coastal protection and damaging the local economies that may be least able to tolerate it," he said.

 

    The academies' statement said that, if current rates of carbon emissions continue until 2050, computer models indicate that "the oceans will be more acidic than they have been for tens of millions of years."

 

    It also urged actions to reduce other pressures on the oceans, such as pollution and over-fishing.