U.S. Economic/Financial News
How To Save Social Security Without Privatization
Edith Fierst, a member of Clinton's Social Security Advisory Panel (1994-96), has proposed four easy changes that could erase most, if not all, of the projected Social Security deficit, without eliminating the current Federal program: Raise the maximum income subject to the Social Security payroll tax; dedicate the tax on estates worth $3.5 million and more to Social Security, and retain it; broaden mandatory coverage to include all newly hired public employees, who are currently exempt; and, adjust cost-of-living increases. The "solution" of delaying the retirement age, could impoverish the many workers who retire early.
Privatization, Fierst warned in a Washington Post op-ed Nov. 18, would threaten the security of retirees because: individual accounts are "inevitably insecure"; retirees may outlive benefits; administrative costs would increase; spouses, survivors and other dependents could lose their benefits.
She insists, "Privatization unnecessarily risks the security of Americans during retirement or disability. Guaranteed benefits under Social Security can and must be saved."
Baltimore's Historic GM Broening Plant To Close
The long-expected announcement of the closing of the historical General Motors Broening Highway plant in Baltimore in 2005 officially came on Nov. 17, marking another notch in the nearly complete de-industrialization of the city over the last 35 years. The history of the Broening plant takes us from the beginning of the Franklin Roosevelt New Deal to lift the U.S. economy out of the Depression, to the beginning of the current, more devastating economic depression. The plant was constructed in 1934, opening on April 9, 1935, with the 1937 hourly wage of 95 cents, that rose to $27 an hour today. In the 1970s, plant employment peaked at 7,000, and with next year's closing, 1,000 hourly workers and 100 salary workers will be laid off. Bethlehem Steel's giant Sparrows Point complex was the other industrial center of employment in the late 1960s to early 1970s, at one point employing 30,000 workers. Today, a mere shell of its former self, it employs less than 3,000 workers.
Baltimore-area manufacturing has decreased in the last 11 years from 108,700 manufacturing jobs in 1993 to 78,400 today. Over a longer stretch of time, the state has gone from 33% of its workforce employed in manufacturing, to 6%, half the national average of 12%.
Catholic Charities Report Sharp Increase in Need for Aid
According to a new survey by Catholic Charities USA, during 2004, a whopping 73% of 86 local Catholic Charities agencies reported an increase in requests for assistance for paying rent/mortgage and utility bills, and 70% saw an increase in the need for emergency food. Overall, the survey found that 77% of local agencies are being hit by an increase in the number of families seeking help, with 63% seeing more seniors requesting aid. Even as need is increasing, government funding has been cut to 48% of Catholic Charities agencies. Here are a few horror stories:
* Galveston-Houston: For the first time ever, the food pantry was shut downtwicebecause it ran out of food.
* Chattanooga: a staggering 50% increase in number of people seeking assistance for food, rent, and other basic necessities.
* Indianapolis: a 35% increase in requests for shelter due to homelessness.
Tests To Determine If Second BSE Cow Found in U.S.
On the morning of Nov. 18, the U.S. Department of Agriculture held a media conference call on six minutes' notice, to report the limited facts that its National Veterinary Science Laboratory at Ames, Iowa, is performing detailed immunohistochemistry tests on cow parts from an animal which has tested positive twice for BSE, on the Bio-Rad brand surveillance tests. Under stated USDA policy, if two field tests turn up positive, then the cow remains are to be shipped to Ames for definitive tests. A conclusive report is expected on the current suspect specimen within four to seven days. In June, two such specimens were subsequently found to be negative. The USDA will not divulge the location of the animal, only that it comes from a "high-risk" group of some 270,000 identified this summer, defined by criteria based on age and signs of illness. They say no remains have entered the food chain.
The USDA reports on its website that 113,264 tests have been conducted since June 1 this year. In July, the USDA's own Inspector General faulted the surveillance design of the agency, saying that too few animals were being tested, and also, it's a false premise to focus only on apparently sick animals, not on apparently healthy ones too.
In May 2003, an Alberta, Canada cow was found with BSE; the border has been closed for live cattle imports into the U.S. from Canada. Subsequently, in Washington State in December 2003, a BSE cow was found which had originally come from Canada in 2001.
One of the particular reasons it had long been expected that Agriculture Secretary Ann Veneman would resign (which she did Nov. 15), was that she did not want to be around for the flack over the malfeasance of the USDA and FDA over BSE. The FDA has dragged its heels over implementing a ban on recycling abattoir parts back into the livestock feed chain.
BSE Spread Reflects Over-Reliance on Single Strains
The spread of BSE in North America reflects the principle of danger of over-reliance on single-strains in livestock and crops. These items from a discussion with a U.S. agriculture expert on the dangers of monoculture:
* Only four families of Holsteins: Discussing the significance of finding a Canadian-origin in the BSE incident in Washington State last year. Why is the U.S. even importing milk cows from Canada, even in border states? The U.S. super-reliance on the Holstein breed, from really only four families of Holsteins, to the point of over 90% of all milking herds in USA now utilizing the few bloodlines of this stock, has resulted in problems. In particular, the breed is showing reproduction problems, and some cows are calving only twice. So there is a need for acquiring more milkers. Canada still has some localized, diversified family-sized herds, selling good milk cows. Hence purchases from Canada.
* Thanksgiving turkey? Better eat it up now, in case it's gone. Essentially all commercial turkeys in USA come from three breeding flocksone in California, one in Ontario, and one in Europe. An Ohio State University turkey DNA testing program a few years ago, showed that the DNA is as close as can be.
* Crops: Soy is very limited to only a few strains. About three decades ago, there was a disaster when cornvery few strainswas hit by the Southern Corn Blight. The five seedstock agrochemical companies dominating seeds today are: Monsanto, DuPont (Pioneer Hy Bred), Dow, Syngenta, and Bayer.
Cargill itself is on the way to controlling 50-60% of all key fertilizers.
Florida Health Officials Warn of Mosquito-Borne Disease Threat
In Leon County, Florida, where Tallahassee is located, county health-department officials asked residents to avoid the outdoors when mosquitoes are more apt to bite, because in the last week, 10 sentinel chickens tested positive for eastern equine encephalitis; the previous week, there were three others, the Tallahassee Democrat reported Nov. 16. The chickens were located across the county, not in just one location. Eastern equine encephalitis (EEE) is a mosquito-borne disease more deadly than West Nile Virus. While EEE is rareonly 200 confirmed human cases have been reported since 1964its fatality rate is 35%! In 2001, two childhood cases were reported; one resulted in death. The disease is spread by mosquitoes which feed on the infected birds. The mosquito season has extended past its usual end by late October, due to mild weather in Florida.
Fannie Mae Misses Deadline for SEC Filing
Fannie Mae, the bankrupt housing-finance giant at the center of the mortgage-backed securities bubble, on Nov. 15, notified the Securities and Exchange Commission that its outside auditor, KPMG, had refused to sign off on Fannie's third-quarter earnings report, causing it not to be able to file the report with the SEC on time. Fannie, which is facing a criminal probe by the Justice Department, also said that if the SEC finds it has improperly accounted for derivatives, it would post an estimated net loss of $9 billion just during July-September. In addition, Fannie admitted that its methodology of accounting for some transactions "was not consistent" with generally accepted accounting principles. If the SEC orders Fannie to recognize the $9 billion loss, the lender would fall about $13 billion short of its minimum capital requirements mandated by its regulator, the Office of Federal Housing Enterprise Oversight.
PBGC Loss Grows by $12 Billion in Fiscal 2004
The Pension Benefit Guaranty Corporation (PBGC) report for fiscal 2004 released Nov. 15 showed a net loss of $12.1 billion from completed and probable pension plan terminations, bringing the PBGC's deficit to $23.1 billion as of Sept. 30, the end of fiscal 2004. The annual report also calculates "reasonably possible" exposure, based on underfunded pension plans of potentially insolvent corporations, at $96 billion.
The PBGC is a Federal corporation created under the Employee Retirement and Security Act of 1974 (ERISA), which currently guarantees payment of basic pension benefits up to $44,386 per year for more than 44 million American workers and retirees participating in more than 31,000 private sector "defined benefit" pension plans. The PBGC receives no funds from general tax revenues; it is financed by insurance premiums paid by corporations with "defined benefit" pension plans and by the PBGC's investment returns.
While the PBGC has $39 billion in assets, with which it can pay pension obligations for a number of years, CEO Brad Belt said its liabilities are currently greater than $62 billion.
Belt told Congress on Oct. 7 that the administration wants changes in pension plans the PBGC insures; among them:
1) Increasing funding requirements; tighter enforcement of them, including changing the law that allows employers to stop making contributions when they say plans are 90% funded; and measuring funding not on a current liability (payout) basis, but what the liability would be if the plan terminated. For example, U.S. Airways said its pilots' pension plan was 94% funded on a current liability basis, but the plan was only 33% funded on a termination basis, which left the pilots with a $2.5 billion shortfall;
2) Setting the insurance premium based on risk of the corporation defaulting on its obligations. Unless premiums are tied to risk, Belt warns that the healthy corporations will opt out of the system;
3) Shortening the time corporations have to file an annual pension plan report to ERISAnow typically 2 1/2 years. The PBGC is also pushing for legislation to allow it to get liens forcing corporations to pay their pension obligations in bankruptcy, just as the PBGC would do outside bankruptcy; i.e., remove bankruptcy as a way for corporations to dump their pension obligations.
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