Signs of the Times (3/4/13)

Obama Signs Order to Begin Sequester Cuts

The White House made public an order at about 8:30 p.m. ET signed by President Obama making the budget cuts known as sequestration official and giving the federal government the authority to begin implementing mandatory $85 billion in across-the-board decreases. The cuts would run through Sept. 30, the end of the federal fiscal year. the sequestration calls for a 7.8% cut in non-exempt defense discretionary funds and 5% cut in non-exempt non-defense discretionary funding. It also calls for 2% cuts to Medicare, 5.1% to other non-exempt non-defense mandatory programs and 7.9% to non-exempt defense mandatory programs. The federal government has said the cuts will soon translate into furlough notices to government workers. For the most part, the ramifications would kick in over months, not several days or weeks,

The order comes after both Republican and Democratic alternatives to imposing across-the-board spending cuts failed to pass in the U.S. Senate. The Democratic plan would have imposed a tax of 30% or more on millionaires, and cuts to defense and farm programs. The Republican plan would have forced responsibility on the president to determine how to implement the cuts as opposed to imposing an across-the-board decrease.

Tax Bills for Rich Approach 30-Year High

With Washington gridlocked again over whether to raise the taxes on the rich, it turns out wealthy families already are paying some of their biggest federal tax bills in decades even as the rest of the population continues to pay at historically low rates. President Obama and Democratic leaders in Congress say the wealthy must pay their fair share if the federal government is ever going to fix its finances and reduce the budget deficit to a manageable level. A new analysis, however, shows that average tax bills for high-income families rarely have been higher since the Congressional Budget Office began tracking the data in 1979. It’s middle- and low-income families who aren’t paying as much as they used to.

For 2013, families with incomes in the top 20% of the nation will pay an average of 27.2% of their income in federal taxes, according to projections by the Tax Policy Center, a research organization based in Washington. The top 1% of households, those with incomes averaging $1.4 million, will pay an average of 35.5%.The average family in the bottom 20% of households won’t pay any federal taxes. Instead, many families in this group will get payments from the federal government by claiming more in credits than they owe in taxes, including payroll taxes. That gives them a negative tax rate. The middle 20% of U.S. households — those making an average of $46,600 — will pay an average of 13.8% of their income in federal taxes for this year, according to the Tax Policy Center.

Medicare Doctor’s Pay Cut

The nation’s Medicare doctors, already facing higher costs and sluggish revenue, now face a pay cut because of the automatic spending cuts that were triggered Friday. Under the so-called sequester, Medicare payments to health care providers, health care plans and drug plans will be reduced by 2% starting April 1st. Reimbursement for low-income beneficiaries is exempt. Overall, the cut will mean $11 billion less for doctors, hospitals and other providers in 2013.

Recovery in U.S. Is Lifting Profits, but Not Adding Jobs

With the Dow Jones industrial average flirting with a record high, the split between American workers and the companies that employ them is widening and could worsen in the next few months as federal budget cuts take hold. Stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high. With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers. The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.

Rights Group Sues Over Internet Kill Switch

A privacy rights group has brought a lawsuit to gain more detailed information on the federal government’s ability to shut off the internet in the event of a national crisis. The Electronic Privacy Information Center (EPIC) has filed Freedom of Information Act lawsuit against the Department of Homeland Security, in response to a failure by the agency to release any documents pertaining to the “Emergency Wireless Protocols,” (Standard Operating Procedure 303 or “SOP 303″). SOP 303 outlines exactly how the DHS would carry out a complete communications shutdown in the event of what it deemed an emergency situation. EPIC explains in its complaint that the DHS has publicly stated that under SOP 303 an agency component “will function as the focal point for coordinating any actions leading up to and following the termination of private wireless network connections, both within a localized area and within an entire metropolitan area.”

DHS Censors Information About Firearms Purchase

Amidst continuing controversy over the Department of Homeland Security’s purchase of large quantities of guns and ammunition, the federal agency is getting more secretive about its activity by censoring information about a no-bid contract with Remington for firearms parts. Despite the fact that documents pertaining to government activity are only supposed to be redacted for national security reasons or if authorized by Congress, a new entry posted on the FedBizOpps website pertaining to the DHS’ plans for a $1.5 million contract with firearms manufacturer Remington contains numerous blacked-out sections. The document is an explanation of why the DHS has entered into a contract on a basis “other than full and open competition,” in other words a no bid contract. The contract with Remington Arms Company for firearms replacement parts is set to run for five years. The first censored portion of the document blacks out the precise year by year amount in dollars that the DHS plans to purchase from Remington. The second censored section blacks out the number of Remington firearms that have been serviced and maintained by the ICE National Firearms and Tactical Training Unit (NFTTU).

Flu No Longer Widespread in U.S.

The flu isn’t totally gone, but we’re on the downward slope, according to the latest report from the Centers for Disease Control and Prevention. Right now the states with the most flu are in the Northeast and the West. Oregon and Nevada are bearing the brunt on the West Coast while in the Northeast, New York, New Jersey, Massachusetts, Pennsylvania, Michigan and Ohio all have lots of flu. Nationally, 8.4 percent of deaths reported in CDC’s 122 Cities Mortality Reporting System were due to pneumonia and influenza as of Feb. 23. The previous week it was 8.6 percent. That’s still above the epidemic threshold of 7.2 percent.

Doctors Report First Cure of HIV in a Child

For the first time, doctors are reporting that they have cured a child of HIV, the virus that causes AIDS. The landmark finding will help scientists better understand the nature of HIV, doctors say, and could potentially help countless HIV-positive babies in developing countries. Experts note that the girl’s story is also unique — involving a string of unusual events — and won’t immediately lead to a cure for the 34 million people living with HIV worldwide. The baby contracted HIV at birth. Because doctors suspected the baby would be infected, they began administering anti-AIDS therapy the day after birth.

Keystone Pipeline Considered Best Option

The State Department on Friday raised no major objections to the Keystone XL oil pipeline and said other options to get the oil from Canada to U.S. Gulf Coast refineries are worse for climate change. But the latest environmental review stops short of recommending whether the project should be approved. State Department approval of the 1,700-mile (2,735-kilometer)pipeline is needed because it crosses a U.S. border. The lengthy report says Canadian tar sands are likely to be developed, regardless of whether the U.S. approves Keystone XL, which would carry oil from western Canada to refineries in Texas. The pipeline would also travel through Montana, South Dakota, Kansas, Nebraska and Oklahoma. The report acknowledges that development of tar sands in Alberta would create greenhouse gases but makes clear that other methods to transport the oil — including rail, trucks and barges — also pose a risk to the environment.

Economic News

Spending on U.S. construction projects fell in January by the largest amount in 18 months as home construction stalled and spending on government projects fell to the lowest level in more than six years. Construction spending fell 2.1% in January compared with December, when spending had risen 1.1%.Residential construction, which has been leading the rebound in building, stalled in January with no gain in activity following a 1.7% rise in December. Non-residential building dropped 5.1% while public construction was down 1%.

Personal income growth plunged 3.6% in January, the biggest one-month drop in 20 years, the Commerce Department said Friday. And consumer spending rose just 0.2% with most of it going toward higher heating bills and filling up the gas tank. The income drop was offset by Americans’ savings a hefty 2.6% rise in December. But most of that gain, analysts said, reflected a rush by companies to pay dividends and bonuses before income taxes increased on top earners at the start of 2013.

There were spending declines in January for big-ticket items that last three years or more, like cars and appliances, and non-durable goods, like clothing and food. Some economists said the declines could be blamed on a 2% federal payroll tax cut expired Dec. 31. Income taxes on the wealthiest Americans rose starting Jan. 1.

Michigan Gov. Rick Snyder announced Friday that the state will take over the operations of Detroit’s city government due to its long-standing financial problems. The takeover is short of a formal bankruptcy, but it will include appointing an emergency manager who would have many of the same powers as a bankruptcy judge. It could mean throwing out contracts with public employee unions and vendors that the city can’t afford, and could lead to further cutbacks in already depleted city services.

Eurozone

Many thousands of demonstrators held marches in more than 20 cities in Portugal on Saturday to protest against government-imposed austerity measures aimed at lifting the ailing country out of recession. Tens of thousands of people filled a Lisbon boulevard leading to the Finance Ministry. Portugal is expected to endure a third straight year of recession in 2013, with a 2 percent contraction. The overall jobless rate has grown to a record 17.6 percent. The marches were powered mostly by young people. Unemployment among people under 25 is close to 40 percent.

Persecution

Persecution of Christians in North Korea shows no sign of abating under the country’s new leader, Kim Jong-Un, according to a report by the worldwide ministry Open Doors. “North Korea is in a league of its own when it comes to persecution of Christians,” the report says. Of an estimated 200,000 prisoners in North Korea, 70,000 of them are Christians, Open Doors reported. For the 11th consecutive year, North Korea tops Open Doors’ list of the worst countries for its brutal treatment of believers. Christianity is viewed as a Western-instigated threat to the autocratic regime.

Liberty Counsel says a Florida public school principal acted unconstitutionally when he halted the invited speaker at an after-school club meeting and rudely escorted him off campus because the school disagreed with the guest’s conservative views. Controversial Christian radio talk-show host Bradlee Dean, an outspoken opponent of same-sex “marriage,” was invited to address the American Club, a student organization at Spanish River Community High School in Boca Raton. Though the February 13 event had been arranged with school officials long beforehand, Dean was nonetheless stopped during his presentation. According to Liberty Counsel, as Dean was led off campus, one school official stated to the student group: “I warn you children – everything that [Bradlee Dean] is going to tell you is complete misinformation.” The legal group argues that that “parting shot,” which was captured on video, clearly illustrates the denial was based on Dean’s viewpoint.

  • Tolerance is for everything except Christians and Conservatives

Egypt

Calling it a “good-faith effort” to help the Egyptian people, U.S. Secretary of State John Kerry released $250 million in economic aid Sunday, with a pledge of more if President Mohamed Morsy implements economic and political reforms. “In light of Egypt’s extreme needs” and assurances by Morsy that he will take the steps necessary to obtain a major loan package from the International Monetary Fund, Kerry said the United States would provide the first $190 million of $450 million in already-promised support funds to the Egyptian government budget. In addition, Kerry said, the United States will provide $60 million in direct support for an Egyptian-American Enterprise Fund geared toward Egypt’s entrepreneurs and fund a higher-education initiative to help students, especially women, earn undergraduate degrees in science, technology, engineering and business. Kerry said he was banking on Morsy’s assurances that he would implement “homegrown” reforms to help secure agreement with the IMF and “put Egypt on the path to establishing a firm economic foundation and allow it to chart its own course.”

  • Of more concern than economic stability is the increase in internal Islamic oppression and external threats against Israel’s sovereignty.

Syria

The civil war in Syria has already begun to seep into neighboring countries in the form of massive refugee flows and in the case of Lebanon, active combat between opposing camps. Lebanese Interior Minister Marwan Charbel declared on Thursday that Syrian refugees in his country have become a security threat because many of them have deep sympathies for the Sunni rebel factions battling the regime of president Bashar Assad, which is being actively supported by the Shi’ite terror militia Hezbollah, Lebanon’s strongest armed force with representatives in the national parliament. Charbel added that Sunni rebel factions have already set up camps to arm and train rebels going to Syria.

Pakistan

The death toll from a massive car bombing in the southern port city of Karachi jumped from 37 to 45 as more victims died overnight from the Sunday evening blast. Another 146 people were also wounded, with 32 of them in serious condition. The blast targeted members of the minority Shiite Muslim sect who were leaving a mosque when the bomb went off. Sunni militant groups who do not consider Shiites to be true Muslims have carried out such attacks in the past.

China

China defended its booming military spending on Monday, saying vast investments in the armed forces have contributed to global peace and stability, despite concerns among the U.S. and Beijing’s Asian neighbors over sharpening territorial disputes. Chinese defense spending has grown substantially each year for more than two decades, and last year rose 11.2 percent to $106.4 billion an increase of about 67 billion. Only the United States spends more on defense. This year’s legislative session comes amid a continuing standoff with Japan over disputed islands in the East China Sea. Ships and planes from both sides have repeatedly confronted each other in the area. China’s feuds with Vietnam and the Philippines over territory in the South China Sea have also flared periodically in recent months.

Kenya

Multiple attacks against security forces in Kenya on Monday killed at least 12 people as Kenyans waited in long lines to cast ballots five years after more than 1,000 people died in election-related violence. A group of 200 secessionists armed with guns, machetes and bows and arrows set a trap for police in the pre-dawn hours, killing five officers. A second attack by the Mombasa Republican Council secessionists in nearby Kilifi killed one police officer and five attackers. The country’s top two presidential candidates condemned the attacks. The U.N. restricted the movement of its staff on the coast because of the violence. Long lines around the country left voters frustrated in the election’s early hours. Anti-fraud fingerprint voter ID technology being used for the first time appeared to be greatly slowing the process. The technology broke down in many locations.

Uganda

Uganda is one of the poorest countries on earth with an economy based on agriculture but there is one industry that’s booming — international child adoptions. Extreme poverty combined with one of the world’s highest birth rates is creating a pressure cooker where many children are abandoned or put up for adoption. And there are also fears that as the adoption numbers grow more needs to be done to prevent children being exploited. Children — sometimes orphans, sometimes just with parents unable to care for them — find themselves taken into Uganda’s child welfare system. For some this can mean foster care or a temporary home. For others it is the first step on a road that will lead to adoption and a new life. While traditional adoption hotspots are becoming less attractive — Russia has banned Americans from adopting children, and it can take years to navigate China’s adoption bureaucracy — Uganda is seen as a quick and easy alternative for prospective parents.

Earthquakes

A moderate earthquake in southwest China has caused hundreds of homes to collapse and injured more than 30 people. Three of the injuries were serious. The official Xinhua News Agency says the quake damaged 2,500 houses and that 700 others collapsed. The U.S. Geological Survey says the magnitude-5.5 quake struck 32 miles from Dali city at a depth of 20 miles.

Weather

Heavy snow that fell in northern Japan over the weekend killed eight people on Hokkaido island, including a family whose died of of carbon-monoxide poisoning when their car became buried by the snow. Separately, 23 year-old woman froze to death after leaving her car, stuck in the snow. A 53-year-old man died Sunday after getting buried in the snow, although his 9-year-old daughter found with him was recovering. The storm caused six-and-a-half-feet drifts and was blamed for derailing a bullet train in Akita prefecture, south of Hokkaido, on Saturday afternoon.

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