Stimulus Dollars Only Trickling Out

Less than one-half of 1% of the money set aside for highway repair and construction has been distributed since President Obama signed the $787 billion stimulus package in February, Transportation Department figures show. The top Republican on the House Transportation Committee, John Mica of Florida, says stimulus funding is trickling to states too slowly because of excessive federal regulations. “It’s not a pretty picture,” he says. “There should be no reason why, with the economy in dire straits, that we can’t get the money out there. It’s tied up in red tape.” States have received only about $132 million of the stimulus package’s $27.5 billion in road construction funding, department figures show. As of May 31, the 13 states with double-digit unemployment rates received only about $22 million of that highway money.

Federal spending meant to jump-start the economy slowed last week, two weeks after President Obama vowed to “ramp up” the pace of that aid. Last week, federal agencies allocated about $5.2billion in new stimulus aid for projects across the country, according to disclosure reports the agencies released Thursday. “If my boss came to me and told me to ramp something up, I’d do it,” said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, R-Ky. “If the president says it, you’d definitely expect something to happen, so I don’t know why it isn’t happening.”

  • Why do people keep believing that more government can solve our problems?

Production of Heroin, Cocaine Decline

Markets for cocaine and opiates such as heroin are leveling off or declining, but stimulants are growing popular in the Middle East and Brazil, the United Nations reports. After several years of record growth in Afghanistan’s opium crop, the U.N. Office on Drugs and Crime reported Wednesday that the number of acres devoted to opium there dropped 19% in 2008. Cultivation of opium poppies declined in parts of the country with more government security, the report said. Afghanistan produces more than 90% of the world’s opium supply. The opium crop in Laos and Burma — the other major producers of the drug — held steady. The U.N. also reported an 18% decline in Colombia’s coca crop, the plant used to produce cocaine. The Colombian government has a robust program to destroy the coca plants and dismantle processing labs. Colombia grows most of the world’s coca. Crops in Peru and Bolivia, the other significant coca producers, increased slightly from 2007.

Swine H1N1 Flu

Health officials estimate that as many as 1 million Americans now have the new swine flu. Lyn Finelli, a flu surveillance official with the Centers for Disease Control and Prevention, voiced the estimate at a vaccine advisory meeting Thursday in Atlanta. The estimate is based on mathematical modeling. Nearly 28,000 U.S. cases have been reported to the CDC, accounting for roughly half the world’s cases. The U.S. count includes 3,065 hospitalizations and 127 deaths. The percentage of cases hospitalized has been growing, but that may be due to closer scrutiny of very sick patients.  An estimated 15 million to 60 million Americans catch seasonal flu each year. The average age of swine flu patients is 12, the average age for hospitalized patients is 20, and for people who died, it was 37.

Health Suffers in Recession

As the recession continues and unemployment climbs, surveys suggest many Americans are cutting costs by delaying or forgoing preventive health care. A survey of family doctors released last month by the American Academy of Family Physicians reports that six out of 10 respondents said they were seeing more health problems as a result of skipped preventive care, such as screenings, or unfilled prescriptions. One survey respondent wrote about a 46-year-old patient who cut back on his pills for type 2 diabetes, Epperly says. The man’s blood sugar got out of control, and he ended up having a fatal heart attack. Another respondent wrote of a patient with bipolar disorder who tried to save money by not filling his prescription for an antipsychotic medication. Within a week to 10 days, he spun out of control and lost his job, his family and his house.

Companies Rethink 401(k) Plan Contributions

About a quarter of companies have either suspended their 401(k) plan match or are considering doing so because of the economic downturn, according to a recent survey by CFO Research Services and Charles Schwab. The list of companies that have suspended matches includes Hewlett-Packard, Sears Holdings, Starbucks and Eastman Kodak. The average company match is 50 cents on the dollar, up to 6% of pay. But a quarter of companies that plan to reinstate their company match said the amount of the new contribution will vary, depending on profits, according to the Watson Wyatt survey. Companies believe this option will give them more flexibility to respond to lean times, says Robyn Credico, national director for Watson Wyatt.

California to Issue I.O.U.s

Signaling that California is slipping deeper into financial crisis, the state’s controller said Wednesday that his office would soon be forced to issue i.o.u.’s to scores of the state’s creditors, as lawmakers failed at their first attempt as a body to close the state’s multibillion-dollar shortfall. “Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression,” the controller, John Chiang, said in a written statement. He added, “Unfortunately, the state’s inability to balance its checkbook will now mean short-changing taxpayers, local governments and small businesses.” The issuing of the i.o.u.’s would reflect the state’s lack of cash flow and its Legislature’s inability to agree on a way to close the roughly $24 billion budget gap, as tax revenues have continued to fall.

Economic News

The Labor Department said the number of workers filing new claims for jobless benefits unexpectedly rose last week by 15,000 to a seasonally adjusted 627,000 — a measure of the strain still faced by hard-pressed consumers. Several states reported more claims than expected from teachers, cafeteria workers and other school employees, a department analyst said. The number of people continuing to receive unemployment insurance rose by 29,000 to 6.74 million. Claims remain far above levels associated with a healthy economy. A year ago they were 392,000.

General Motors won approval Thursday to use up to $33.3 billion to pay for its bankruptcy, after making a few changes to settle technical objections. The step marks another major milestone in GM’s dash through bankruptcy court, which it and President Obama’s auto industry task force hope to complete with the creation of a new, government-owned GM by the end of the month.

The epicenter of the U.S. financial crisis remains the contracting value of real estate across the board. The latest S&P/Case-Shiller U.S. National Home Index indicates the rate of housing value decline is getting worse – the first quarter of 2009 showed the biggest quarterly decline in the index’s 21-year history.

Households pushed their savings rate to the highest level in more than 15 years in May as a big boost in incomes from the government’s stimulus program was devoted more to bolstering nest eggs than increased spending. The Commerce Department said Friday that consumer spending rose 0.3% in May, in line with expectations. But incomes jumped 1.4%, the biggest gain in a year and easily outpacing the 0.3% increase that economists expected. The savings rate, which was hovering near zero in early 2008, surged to 6.9%, the highest since December 1993. Last month’s savings rate was far above recent annual rates, which dipped below 1% from 2005 through 2007 as a booming economy and soaring home prices pushed Americans to spend most of what they earned. Investors are nervous about the savings rate outpacing spending, sending the stock market down.

  • It used to be that Americans were chastised for not saving enough. Now we’re undermining the economy by not doing our patriotic duty to spend, spend, spend. Such is life under the god of materialism and greed, which is the real culprit in the economic crisis.

Iraq Violence Escalates

A massive bomb exploded Wednesday in a busy market in the heart of the capital’s Shiite slums, killing at least 69 people and wounding more than 100. On Thursday, a booby-trapped motorcycle loaded with nails and ball-bearings exploded in a crowded bazaar Friday in Baghdad, killing at least 15 people. Also on Thursday, a bombing at a bus station in a Shiite neighborhood in southwest Baghdad killed at least seven people, less than a week before U.S. combat troops are scheduled to withdraw from Iraq’s cities. A series of bombings since Saturday have killed around 200 people. President Jalal Talabani said the bombing would not be a setback for the change-over.

Iran Election Protests Continue

Protesters and riot police clashed in the streets around Iran’s parliament Wednesday as hundreds of people converged on a Tehran square in defiance of government orders to halt demonstrations demanding a new presidential election, witnesses said. Police beat the protesters gathered on Baharestan Square with batons and fired tear gas canisters and rounds of ammunition into the air, the witnesses told the Associated Press. They said some demonstrators fought back while others fled to another Tehran plaza, Sepah Square, about a mile to the north.

The Obama administration is moving forward with plans to fund groups that support Iranian dissidents, records and interviews show, continuing a program that became controversial when it was expanded by President Bush. The U.S. Agency for International Development (USAID), which reports to the secretary of state, has for the last year been soliciting applications for $20 million in grants to “promote democracy, human rights, and the rule of law in Iran,” according to documents on the agency’s website. The final deadline for grant applications is June 30. U.S. efforts to support Iranian opposition groups have been criticized in recent years as veiled attempts to promote “regime change.”

Weather

Cities in Wisconsin and Michigan and all the way down to Texas and Florida have been smashing heat records this week. Concrete roads buckled, one person was found dead and seven show dogs died. A wide swath of the country is experiencing temperatures ranging 10 to 15 degrees above average. Some record-setting temperatures set on Wednesday: 96 degrees in Grand Rapids, Mich.; 95 in Traverse City, Mich.; 105 in Austin; 104 in Houston; and 106 in Waco.

Storms spawned two tornadoes in southwest North Dakota Thursday, and as many as five in southeast South Dakota. Hail hit both states, strong winds downed power lines in South Dakota and a twister in North Dakota’s Stark County destroyed several farm buildings.

A tropical storm whipped up tornadoes, triggered landslides and overturned boats as it cut across the central Philippines, leaving at least eight dead and eight more missing amid widespread flooding, officials said Thursday. Nearly 10,000 people were stranded aboard hundreds of ferries and motorboats, which were ordered to stay docked for safety Wednesday.

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