U.S. Economic/Financial News

Bush, Reid Square Off on Economy

A hallucinating President Bush declared, in his Saturday radio address Jan. 21—billed as a preview of the State of the Union address—that the U.S. economy is "strong" because of his tax cuts, but the tax cuts that are set to expire in the next few years need to be extended, and such boondoggles as health savings accounts, medical liability reform, and more free-trade agreements are needed to "keep the economy moving forward and extend prosperity and hope in our country."

The Democratic response was delivered by Senate Minority Leader Harry Reid (Nev), who attacked the GOP's "culture of corruption," the effects of which can be seen in the present state of the union. "Special interests and the well-connected have been rewarded by Republicans ... while everyone else has been left behind." Reid noted that we have a national security policy "that protects Halliburton's bottom line with no-bid contracts, but does not protect our troops with body armor," and an energy policy "that helped Big Oil make $100 billion in profit in 2005, but this same policy has families feeling the financial pinch every time they fill their gas tanks or heat their homes." Even worse, "The state of the union today is that we have low-income Americans begging for their prescription drugs, and seniors going without any coverage." After touting Democratic measures to address the Medicare drug crisis and lobbying reform, he said, "We can be energy independent, have affordable health care and a strong economy. All it takes is a commitment in Washington to put progress, not politics first."

Senator Lott To Revive Amtrak Bill

Senator Trent Lott (R-Miss) said he will resume efforts to pass his Amtrak reauthorization bill, according to Congressional Quarterly Jan. 20. Late last year, the Senate voted 93 to 6 to add Lott's bill, co-sponsored by Sen. Frank Lautenberg (D-NJ), to the budget reconciliation bill, but it was taken out in conference. The bill would authorize $12 billion for Amtrak through 2011. The annual budget battle over Amtrak is expected to continue this year, although Congressional aides and lobbyists don't expect Bush's fiscal 2007 budget proposal, to be released on Feb. 6, to zero out Amtrak's budget the way the 2006 budget did. However, said one Senate Appropriations Committee aide, "I hear it's a number and that it's not a number that would cause Amtrak to avoid bankruptcy."

GOP 'Drafting Error' Could Cost Disabled, Seniors Dearly

The Center for Budget and Policy Priorities is demanding that Congressional Republicans fix a drafting error in the budget reconciliation bill that would allow states to charge poor, disabled parents and senior citizens unlimited co-payments for Medicaid services. A House GOP budget aide told Congressional Quarterly Jan. 20 that it could be fixed with a correcting measure, and anyway, no state would actually force the poor to pay, even without a correction. Senate GOP budget aides claim that existing caps on co-pays remain in effect and no correction is needed.

The reality is, that re-opening the conference report on the bill would necessitate votes in both chambers all over again, which is the last thing the Republicans want. Last year, Senate Democrats stalled final passage of the bill, which would cut $40 billion out of programs like Medicaid, student loans, and others, when they made a point of order that certain provisions in it violated the budget rules, requiring another vote in the House when it returns on Jan. 31.

Textile Manufacturer Slashes Workforce To Please Wal-Mart

Textile manufacturer Russell Corp., based in Alexander City, Ala., will cut 2,300 jobs and freeze its pension plan, USA Today reported Jan. 23. The cuts comprise 15% of its worldwide workforce, and, Russell said, are required so that it can continue to sell to Wal-Mart, which is demanding lower prices. Some 1,700 of the job cuts will be in the U.S.—1,250 in Alabama.

GE Head: Graduate More Engineers

Jeffrey Immelt, Chairman and CEO of General Electric Company, told the Economic Club of Washington D.C. on Jan. 19: "If you want good manufacturing jobs, one thing you could do is graduate more engineers.... We had more sports exercise majors graduate than electrical engineering grads last year.... If you want to be the massage capital of the world, you're well on your way."

Home Heating Aid Drops to Five-Year Low

Home heating aid for low-income families has dropped to a five-year low, due to Federal budget cuts, even as heating costs have jumped 25% this winter, USA Today reported Jan. 24. The National Energy Assistance Directors' Association estimates that the average dollar amount received under the federally funded and state-run Low-Income Home Energy Assistance Program (LIHEAP), will fall 11%, as more families are receiving assistance.

Sales of Existing Homes Sink for Third Straight Month

The National Association of Realtors said nationwide sales of existing homes fell 5.7% the Wall Street Journal reported Jan. 26. The NAR said that the market has slowed but there will be no housing crash.

GM Announces Huge Losses; Bush Is Against Bailout

General Motors announced a loss of $8.6 billion for 2005, the first annual loss in 13 years. Meanwhile, in an interview with the Jan. 26 Wall Street Journal, President George W. Bush "hinted" that he is against a government bailout of GM and Ford, saying they should develop "a product that's relevant" (e.g., using alternative fuels), and stressing the importance of market forces. Labor Secretary Elaine Chao did her part in a speech at the Davos, Switzerland World Economic Forum, saying that the Ford layoffs are not a sign that the U.S. job market is softening.