KPCC: Economy News

Obama's budget salvo opens next political fight

Sun, 12 Feb 2012 20:54:30 -0800

Copies of of President Obama's fiscal 2013 federal budget are readied for shipment Thursday at the Government Printing Office in Washington. Credit: Manuel Balce Ceneta/AP

When President Obama unveils his budget Monday, it will project a $1.3 trillion deficit this year, and just under $1 trillion in 2013. It would increase spending on education, research and development, and transportation. It would also increase taxes on the wealthy and cut spending, including on defense.

Presidential budgets are almost always aspirational documents. They lay out a vision, not what the president actually thinks will happen.

"You know, every president's budget is part political statement, part policy document," says Stan Collender, a senior partner at Qorvis Communications, and a longtime federal budget guru.

"This is an election [year]; the president is facing a hostile Congress — if not very hostile Congress — in a hyper-partisan environment," Collender says. "Just like the State of the Union, that makes this year's president's budget a campaign document more than a serious proposal."

If the pre-buttals are any indication, the hostility toward this budget plan is quite fierce.

"The president likes to call his new plan, 'America Built to Last.' I would call it, 'America Drowning in Debt,'" said Wisconsin Republican Paul Ryan, the House Budget Committee chairman, at a Capitol Hill press conference last week. "It seems as if the president's doing little more than class envy and the status quo."

Ryan called it the greatest threat to the nation's health, retirement, national and economic security. He says House Republicans will outline their own budget soon, but the House GOP budget has about as good a chance of becoming reality as the president's budget — which is to say, none.

"We do not need to bring a budget to the floor this year. We already did that," said Senate Majority Leader Harry Reid. "That's what that big, long, drawn-out obstruction resulted in."

That "big, long, drawn-out" thing Reid is talking about was last summer's debt ceiling fight, which led to passage of the Budget Control Act, which lays out spending caps every year for years to come.

"For heaven's sake. We have a law, not some idea. Not some wish," Reid said. "We have a law that guides how we do our spending this year."

There's one more thing that puts next year's budget closer to fantasy than reality, says Scott Lilly at the Center for American Progress. There's another $1.2 trillion in automatic spending cuts set to start Jan. 1 as part of the Budget Control Act, unless Congress moves to change it.

"This is the starting point for a very big fight over priorities and very substantial reductions in spending," Lilly says.

It's a fight many say will not be resolved before November's election.

United Way offers free tax filing for low income families

Sat, 11 Feb 2012 08:22:59 -0800

Mayor Villaraigosa joins United Way of Greater Los Angeles President & CEO Elise Buik to launch the 2011 Earned Income Tax Credit (EITC) Program. Credit: David Starkopf/Flickr

Tax time is coming and you may be able to get your returns done for free, thanks to the United Way.

They’ve set up volunteer centers across the country for low and middle income people who need help with their forms.

They also want to get the word out about the Earned Income Tax Credit, something many people overlook that could nevertheless save them thousands of dollars.

"We estimate that last year, we left about $300 million on the table," said Elise Buik, head of United Way of Greater Los Angeles. "We want to bring that money from D.C. to Los Angeles. It helps our economy, and more importantly, it helps families at a time when they’re struggling."

State controller: California revenues $700 million behind expectations, 'disappointing on almost every front'

Fri, 10 Feb 2012 18:00:38 -0800

California state controller John Chiang (D) looks on as California governor-elect Jerry Brown speaks during a briefing on California's state budget Credit: Justin Sullivan/Getty Images

In a written release, Controller John Chiang called January’s revenues "disappointing on almost every front." Personal income and corporate tax each lagged by a combined $700 million, and only the state sales tax managed to exceeded the mark, coming in $42 million higher than expected.

H.D. Palmer, deputy director for external affairs at the California Department of Finance, said that it was unclear why personal income’s lagging but that its "something we're watching."

It could be that self-employed taxpayers underestimated what they owed the state in January and will pay more in April. Californians also may have delayed stock sales because of market conditions — or the governor’s team may have over-estimated capital gains income.

If the trend continues, state lawmakers will be forced to close a larger deficit next year.

California lawmakers won’t know why January revenues were low until the end of April, after they’ve counted all the tax returns. A spokesman for the legislative analyst says that given the uncertainty, lawmakers are likely to wait until May before making any major budget decisions.

California attorney general extracts something extra from the big banks

Fri, 10 Feb 2012 09:53:36 -0800

California Attorney General Kamala Harris. Credit: Jesse Grant/Getty Images for Obsolete

Forty-nine states signed on to a $25 billion settlement between the Obama administration and the largest mortgage servicers involved in the foreclosure crisis. California was one of the last holdouts because State Attorney General Kamala Harris wanted a better deal. She may have gotten one: Harris calls it “The California Commitment.”

She pulled out of the multi-state settlement negotiations last year because at that point, there was only $4 billion in it for California. According to Harris, the banks, including Wells Fargo, JP Morgan Chase and Citigroup, now have committed $18 billion to the Golden State alone.

"This issue has never been about anything other than allowing homeowners, hardworking people, to stay in their homes," Harris said on Thursday at a news conference in downtown L.A. "And we were very determined to make sure that California — the hardest hit in the country — would receive its fair share."

Californians who owe more than their homes are worth will get $12 billion, so they can write down their mortgage principals or set up a short sale. And, Harris continued, the banks won’t get credit for simply promising relief.

"There’s a simple principle in law – and in particular contract law – which is the deal ain’t done when it’s based on a promise," she said. "It’s based on a promise and acceptance and then performance."

California’s settlement also requires the banks to start the relief in the areas most soaked by underwater mortgages.

"We wanted to make sure that places like Boyle Heights received priority, so we built into this a California commitment that requires the banks, through an incentive and a penalty, to focus on our hardest-hit communities," Harris said.

Harris went on to say that under the California settlement, if the banks drag their feet, she can drag them into state court.

"It’s so scary to have the hope and to have it crushed again," said Sharne Matson about the settlement.

Matson lives in a six-bedroom house in Acton with her parents, husband and four children. They paid $900,000 for the house. Now it’s worth less than half that much. When a car accident forced her to retire from the Air Force a few years ago, she says she contacted Wells Fargo about modifying the family mortgage. It’s been a confusing runaround ever since.

"I don’t want to have hope because there were so many times for those two years where someone would tell me it was OK, and they were gonna do this and do that. We had several different companies trying to help us."

But none of them did, Matson said. Her parents emptied their life savings just to stay in the home. She’s not sure if the new settlement means she’ll be able to line up a loan modification from her bank.

"I will do what they tell me to do," Matson said. "I just hope that they have their ducks in a row, because they certainly did not before when they were doing – or attempting to do – modifications because they weren’t doing that."

California farm leader to Congress: Give undocumented farmworkers permanent legal status

Thu, 09 Feb 2012 16:43:32 -0800

File: Mexican migrant workers load boxes of organic cilantro during the fall harvest at Grant Family Farms on October 11, 2011 in Wellington, Colorado. Credit: John Moore/Getty Images

In an election year, Congress has shied away from any immigration legislation. But this morning, a House committee examined several bills that address one immigration issue: the need for farm labor. Political realities help explain the debate.

Republican Congressman Dan Lungren of Folsom is pushing his guest worker bill, which would grant 10-month visas to foreign farm laborers.

Paul Wenger, head of California’s Farm Bureau Federation, told the House Judiciary Committee that farms today employ about a million skilled undocumented workers.

"Any solution must deal in a practical and humane way with current workers," Wenger said. Those experienced farm workers need a more permanent legal status, Wenger added.

After the hearing, Wenger admitted none of the bills likely to pass the GOP-led House would grant permanent residency. But there are two bodies of Congress.

"Should something get out of the House, you know, there could be some other things in the Senate," Wenger said. He's talking to Democratic U.S. Senator Dianne Feinstein, Wenger said, about a guest worker program that would address the needs of undocumented farm workers already in this country.

High school science whiz kids from Southern California visit White House

Tue, 07 Feb 2012 19:14:19 -0800

Hayley Hoverter, inventor of soluble sugar packets Credit: Kitty Felde/KPCC

President Barack Obama shot marshmallows across the White House dining room today — all in the name of science, of course. The marshmallow launcher was part of an exhibit of prize-winning science projects from high school kids across the country.

A pair of Southern California teenagers were there.

President Obama welcomed the teenagers to the White House science fair. This is the second year the First Family has turned the downstairs of the White House into a display hall for the latest innovations in science.

The exhibit gave the president a chance to announce a $22 million project by corporations and non-profits to train 100,000 new math and science teachers. But it also let him celebrate a group of high school science students with remarkably clever ideas.

He called on Hayley Hoverter who invented a new type of sugar packet that dissolves in hot water. "It’s flavorless, it’s colorless and potentially could save up to two million pounds of trash each year. And that’s just at Starbuck’s!"

Hoverter, 16, from the Academy of Finance at L.A.'s Downtown Magnet High School says her class assignment was to write a business plan for a cause she cared about. She says her mom used to work in a cafe when she was younger, "so I used to see firsthand all the trash that was being consumed and it really bothered me."

She came up with the idea of the world’s first soluble sugar packet. "It’s sugar encased in starch paper so you can just drop the entire packet in, other than throwing it out, ripping it open." Hoverter says she got the idea partially from rice paper candy that she used to eat "when I was little, and the whole entire thing kind of just melted in your mouth. So that kind of stuck."

Hoverter won the National Youth Entrepreneurship Challenge which comes with $10,000 to develop the idea. She’s now conducting feasibility studies to see whether other condiments or instant hot chocolate might work well with soluble packets.

Football inspired an invention by 15-year-old freshman fullback Braeden Benedict from Palos Verdes Peninsula High School. Two years ago, he says he had a teammate who suffered a concussion in a game. "And they didn’t know about it for one or two weeks afterwards. Just because he couldn’t focus at all in classes. And so after that, he missed weeks of school, he was really out of it, and it he can’t play football anymore just because it’s too dangerous."

So Benedict, the son of two engineers, invented a liquid sensor that turns a white patch on the front of the football helmet bright red when a player gets hit really hard. "What I was doing first of all is I was trying to develop a low-cost sensor that could be used for youth in high school sports that would tell you that you’ve received a hit that could have caused a concussion. So that way at least they’ll be able to check you out, the medical staff there, so at least they’ll have some knowledge of it. 'Cause lots of times, they can’t even see the hits."

Braeden Benedict’s helmet sensor invention won the Discovery Education 3M Young Scientist Challenge. That came with a $25,000 prize — a down payment on a billion dollar idea from a high school science whiz.

Parents, school officials rally to protect funding for California transitional kindergarten

Tue, 07 Feb 2012 06:00:05 -0800

A statewide group of public school superintendents, parents and early education advocates are set to rally in Long Beach Tuesday at 10 a.m. in support of an early kindergarten program that was supposed to start in the fall.

The state’s gradually changing the kindergarten cutoff age. Transitional kindergarten classes were set to open in the fall for kids caught in between — about 40,000 statewide, by one count.

Gov. Jerry Brown is proposing zeroing out $223 million set aside for these classes.

As they prepared for the change, many school districts have run pilot kindergarten classes designed for the younger kids.

Mike Conan’s son enrolled in one two years ago in Long Beach.

"All the kids were younger," Conan said, "and especially for the boys, the maturity level was so similar, and by the time he got to kindergarten, then he was doing great. In fact, I don’t know if he set the record, but he brought home more books than any of the other kids, as far as his reading pace went that year."

The group Preschool California emphasized these benefits as it calls on the state to restore the money. The governor’s office now says it’ll allow districts to run transitional kindergarten classes, but it hasn’t backed down from its proposed cuts to the program.

McDonald's chewed out for ad pushing McBites as 'less risky' than petting a pit bull

Mon, 06 Feb 2012 17:45:33 -0800

Pitbull dogs play with a rope during the Pitbull show on June 19, 2010 in Prague. Credit: Michael Cizek/AFP/Getty Images

McDonald's came under attack Monday when an ad saying that eating a Chicken McBite was "less risky than petting a stray pit bull" triggered an uproar from pit bull owners and defenders.

"I guess McDonald’s was trying to combat the perception that their Chicken McNuggets contained unsafe ingredients, but did the geniuses in their advertising department have to vilify pit bulls to do it?" said Robert Pregulman, writing for the website Seattle Dog Spot. "Why not explain what actually goes in their product?"

Rachele Lizarraga of Sacramento says she found it reckless, so she started a Facebook site and an online petition.

McDonald's has since apologized and withdrawn the ad, saying that "the ad was insensitive in its mention of pit bulls."

The Kansas City-area radio ad for Chicken McBites ran just a few days before it was pulled Friday, McDonald's spokeswoman Ashlee Yingling said Monday.

Some critics said McDonald's should also donate to pit bull causes or use a pit bull in an ad, but there's been no word from McDonald's on those ideas.

Pit bulls have long been the targets of “Breed-specific” legislation (BSL), a blanket term for laws that either regulate or ban certain breeds completely in the hopes of reducing dog attacks. The cities of Ontario, Miami and Denver have all instituted pit bull bans.

Berkeley considers closing their account with Wells Fargo, putting their $350 million elsewhere

Mon, 06 Feb 2012 17:02:37 -0800

A town hall meeting in Berkeley, CA. Credit: James Buck/Flickr.com

The city of Berkeley has voted to consider removing its $350 million from Wells Fargo, blaming the bank, at least in part, for the nation's financial crisis.

"Wells Fargo Bank [...] was a key part of the subprime lending crisis which led to our overall economic collapse," reads the item before the Council, written by members Darryl Moore and Jesse Arreguin and reported by the San Jose Mercury News.

The council voted last week to study other options, including entrusting the money to "responsible financial institutions" such as a community bank or credit union.

Berkeley's contract with San Francisco-based Wells Fargo expires at the end of this year. Following last Tuesday's vote, the city manager will present a report in May on the feasibility of ending their contract with the bank.

Mayor Tom Bates cautioned during the meeting that Wells Fargo loans a lot of money to Berkeley nonprofits and gives to local charities.

Council member Susan Wengraf said that she hoped the action would make a statement, reports the Mercury News.

"We pass a lot of things here that are just symbolic," Wengraf said. "But this may be the single most significant thing we do as a city. It will send a real message."

Wells Fargo spokesman Ruben Pulido noted that while the bank did accept a $25 billion federal bailout in 2008, it repaid it with interest by the next year.

California back in negotiations with big banks over settlement for mass foreclosures

Mon, 06 Feb 2012 15:42:43 -0800

Attorney General Kamala Harris calls the current settlement inadequate. Credit: klutzykristie/Flickr.com

California has returned to settlement talks between several states, the Obama Administration and the largest mortgage servicers involved in the foreclosure crisis, the Los Angeles Times and the New York Times report.

Banks like Wells Fargo, Bank of America, and JP Morgan Chase want to settle allegations of robo-signing that led to fast foreclosures en masse.

The deadline for states to accept or reject the settlement was supposed to be Monday — but deadlines change when a crucial state like California decides it wants to be involved.

The banks' settlement would require them to offer billions of dollars in aid to homeowners who’ve lost homes to foreclosure, or who still face that danger. Just how many billions depends on the number and size of the states that sign on.

California Attorney General Kamala Harris pulled out of the settlement negotiations last year, saying that "the discussion in terms of what was offered was insufficient to really bring a fair deal to California."

Two weeks ago, Harris said the potential $25 billion settlement was inadequate.

In a statement, the attorney general says the talks are closer to a resolution than they’ve been, but they’re not there yet.

California's stevia growers bet on fast track to sweetener success

Mon, 06 Feb 2012 12:32:29 -0800

The S&W Seed Co., in Five Points, Calif., will grow these seedlings of zero-calorie stevia in the fields of California's Central Valley. Credit: Dan Charles

It's stevia time!

At least that's what food industry newsletters are saying. Regulatory barriers that once blocked many uses of this all-natural sweetener have fallen. The European Union approved the use of stevia in food late last year. In the U.S., the U.S. Food and Drug Administration gave stevia a green light in 2008. Sales are soaring.

Stevia's charm? It's the only zero-calorie sugar substitute with a fresh, clean, green image. It comes from the leaves of the bushy stevia plant, a native of Paraguay. (It still grows wild there.) The other nonsugar sweeteners — saccharin, sucralose, and aspartame — all were born in a laboratory somewhere.

Lots of companies are part of the new stevia gold rush, but S&W Seed Co., in Five Points, Calif., may be the most interesting and entertaining.

"Our feeling is, we can use our advantages in soil, and climate, and weather, to make a natural, clean, good product that people really want right now," says Grover Wickersham, S&W's chairman.

I met Wickersham in The Village Pub in the town of Woodside. It's a Silicon Valley kind of place; a venture capital hangout.

Wickersham has one foot in this big-money part of California. He's a deal-making securities lawyer. But the other foot is firmly planted in the farmland of California's Central Valley. He's the son of a rancher. The main business of the S&W Seed Co. is growing and selling alfalfa seed.

When Wickersham heard about stevia a few years ago, the Silicon Valley side of him recognized its attraction to consumers. "It could be the biggest nonsugar sweetener. That's really big!" he says.

And his Central Valley side was pretty sure that California farmers could grow stevia better, and more profitably, than anyone else.

"California's famous for being able to grow pretty much anything as well or better than any other place in the world," he says, before taking a big bite of burger. "We may not be able to compete with all the things that they make in China, but one area where California does compete, really effectively, is agriculture."

Today, Wickersham's company has thousands of little stevia seedlings growing in a cavernous rented greenhouse south of Salinas.

"This is just the beginning of our spring planting. We're making more and more plants," says Koren Sihota, gesturing toward a carpet of green vegetation. Sihota is in charge of S&W's stevia project.

"How many plants?" I ask.

"Millions!"

Someone else is visiting the greenhouse today, a bearded man in a floppy hat who has a longer history with stevia than almost anyone else in the United States.

His name is Clint Shock. He's a researcher Oregon State University. But when he first saw stevia, more than 40 years ago, he was working with the Methodist Church among poor farmers who lived along the border between Brazil and Paraguay.

Some of the farmers were growing stevia in their gardens. "They gave me some plants. They also explained where it grew in nature," says Shock.

A few years later, Shock went to those places where stevia grew wild, and picked up a whole truckload of plants. He started a plantation of them. But the business flopped. Shock blames marketing problems.

Now, decades later, he has another chance, working as a consultant for S&W Seeds.

The company is trying to turn this semiwild plant into an industrial crop at Silicon Valley speed. Sihota and his team are figuring out how to plant and harvest it mechanically. They're trying to breed new varieties of stevia, turning the plant into a better biological sweetness factory.

"Ideally, what we would want is very little leaf, with 10 times the sweetness," says Sihota. "One big plant that's got a lot of sweetness and we harvest it once."

That harvest — dried leaves that look like hay — goes to a big stevia processor named Pure Circle.

It's up to Pure Circle to extract the sweet compounds from these leaves and make something that tastes just like sugar.

As it happens, this is quite a challenge.

Paul Breslin, a psychologist of taste at Rutgers University and the Monell Chemical Senses Center, in Philadelphia, says people don't really think about how sugar tastes — how quickly they sense its sweetness, and how quickly it fades.

"But if you give them something that differs from [sugar], like something that just lingers way too long, they'll notice that immediately, and they'll say, 'That really lingers in my mouth!' "

Breslin proposes a little taste test with stevia.

We rip open two little green packets of it and mix the sweet powder into cups of hot water. Then we take five sips, one right after the other, to see if each sip tastes the same.

The first sip tastes sweet. But by the fifth sip, something funny happens. The sweetness somehow disappears.

It's a phenomenon called adaptation, Breslin says. It doesn't happen much with sugar, but it does with all of the zero-calorie sweeteners, including stevia.

Pure Circle, the big stevia processor, says it's working on ways to deal with this problem. Sidd Purkayastha, the company's vice president for global technical development, says stevia leaves actually contain a whole family of different sweet molecules, called steviol glycosides. So you can create mixtures of different molecules, tweaking the taste.

"We found that, as we bring together different steviol glycoside molecules, they start performing better, in many cases, and more like sugar," he says.

Maybe the perfect combination, he adds, is a mixture of stevia and regular sugar.

You'd have some calories, but a lot fewer than if you used only sugar. You'd have the sweetness that people crave. And you could still put these valuable words on the label: "All-natural."

LA County giving $2.5 million to replace trees following SoCal windstorms

Mon, 06 Feb 2012 07:00:04 -0800

Credit: David McNew/Getty Images

Windstorms earlier this winter felled thousands of mature trees across L.A. County. A new fund aims to replace them.

L.A. County Supervisor Mike Antonovich has announced a $2.5 million grant program. Cities, public agencies and nonprofits can compete for up to $100,000 each to spend on trees.

The goal is to plant new trees on public land, in parks and open spaces and along parkways in residential neighborhoods. Urban arborists across the San Gabriel Valley region have been busy in the two months since heavy winds knocked trees down.

Environmentalists argue that trees are the lungs of the urban area, breathing in carbon dioxide and particulate smog, and breathing out oxygen. Social scientists say that trees add value to the urban economy.

The county program will accept applications through the end of May, with the goal of distributing money and getting new trees rooted next fall and winter.

Stopping the 'brain drain' of the U.S. economy

Mon, 06 Feb 2012 06:00:04 -0800

Recent surveys show that a large percentage of graduates from the nation's top schools are taking jobs in consulting or financial sector. Credit: Mary Altaffer/AP

Yale University student Marina Keegan received an email last May from Bridgewater Associates, one of the world's largest hedge funds, offering her $100 if she said why she didn't apply for a summer internship.

Keegan, an English major, decided to take Bridgewater up on its offer.

"It was only sort of once I was inside the room when I realized ... maybe I'm helping them perfect their recruiting machine, which is exactly what we were doing," Keegan tells weekends on All Things Considered host Guy Raz.

Bridgewater confirmed that it does hold these focus groups. It's a small but telling window into the way big banks and consulting companies recruit at top-tier schools.

Ever since she got to Yale, Keegan was bombarded with emails from banks, consulting firms and hedge funds, begging her to consider working for them; same with her friends.

At some Ivy League schools last year, up to half of the graduates went into finance or consulting, a move that could have a profound effect on the economy in the years to come.

Shortly after Keegan went to the Bridgewater focus group, she wrote about it in a Yale student magazine. She found out that a quarter of her classmates were heading into banking and consulting. She was surprised and even a little angry.

A Campus Backlash

Craig LeMoult of member station WSHU reports that Keegan was not alone in her anger, and that the sentiment has fulminated into protests on some of the most elite campuses in the country.

Student protesters recently got into a Goldman Sachs recruitment session at Princeton University to tell student attendees they were listening to a "carefully crafted recruitment pitch" and that they could "do better for society."

Similar protests have been held at Harvard University, and at Stanford University, where Teryn Norris was a student. Norris and a classmate wrote an op-ed in the student paper.

"When we, sort of saw the Occupy Wall Street movement rise this fall ... we felt like it was a really important time to step out and say this is how we think this is impacting universities across the country and why it's relevant to students today," Norris tells NPR's Raz.

After he wrote the op-ed, Norris teamed up with a politically focused network for young people called Our Time to expand on that idea. They started the Stop the Brain Drain campaign to call attention to the issue and encourage public service and entrepreneurship as an alternative to the financial world.

So far, more than 1,400 people have signed a petition on their website supporting that goal. Norris stresses, however, that they're not against all financial institutions.

"The problem is that when you've got 20 to 30 percent of some of the top talent in this country going into a sector that is not necessarily contributing to economic and social productivity," he says. "That's a problem for the country at large and it's something that we should all be concerned about."

According to university surveys of the class of 2010, more than half of respondents from the University of Pennsylvania are working either in finance or consulting. At Harvard it was 49 percent, and more than a third of respondents at Cornell University started out their careers in the field. Norris says so many idealistic young people start college wanting to change the world.

"Then four years later, they go to work for Goldman Sachs and JP Morgan," he says. "What is going on there? I think that's what we're trying to figure out and trying to address."

Goldman Sachs declined to be interviewed for this story, but Morgan Stanley sent a written statement saying:

"Because a healthy banking and capital markets system is vital to economic growth, joining the industry at this time is a unique chance to shape how we contribute to a healthy economic environment."

The Stop the Brain Drain campaign is only partly about the demand for new finance employees. It is also targeting the supply, and that focuses its attention on the career-development centers at the top universities. The campaign says the schools are too focused on funneling graduates into these jobs.

Rebuilding Entrepreneurship

Economist Paul Kedrosky with the Kauffman Foundation says elite schools sending a bigger share of their graduates into finance and consulting is not new; they've been doing it for at least two decades.

Kedrosky tells NPR's Raz that what's different now is that those students have essentially used their talents to grow the financial sector in ways that are unhealthy for the overall economy.

"It's grown as a proportion of the economy in a way that we haven't seen since the years leading up to the Great Depression," Kedrosky says.

The other thing that is happening, Kedrosky says, is that the financial sector is drawing in scientists, engineers and mathematicians and moving them to a use that no one really ever imagined. He says it is one of the reasons why the rate at which new companies are created in the U.S. has flatlined.

"These entrepreneurs ... [are] getting yanked off into the financial sector never to be seen again," he says.

There's good news, however, as Kedrosky points out that last week's jobs numbers showed a sharp decline in employment in the financial sector and an increase in areas like manufacturing.

"We finally saw the beginnings of a contraction, not to do with the crisis, but to do with the restructuring and a change in the role of financial services," he says. "It points to a much happier future for the U.S. economy."

Recliners score big with Super Bowl watchers

Sun, 05 Feb 2012 15:00:04 -0800

Republican presidential candidate Rick Santorum walks among recliners during a campaign stop at a furniture store in Iowa in December. Recliner sales have been rising fast leading up to the Super Bowl. Credit: Charlie Neibergall/AP

And now the final preparations for Super Bowl Sunday. Chips and salsa? Check. Buffalo wings and beer? Got 'em. Recliner? Wait, what?

Sales of reclining chairs and sofas are as hot as New York Giants receiver Victor Cruz's touchdown dance. Or, for you New England Patriots fans, as popular as star tight end Rob Gronkowski's sprained ankle.

It might seem an odd connection, but retailers say the Super Bowl, America's most watched sporting event, sends football fans bursting into showrooms like a bruising running back.

In the past two weeks before the big game, as the hype of the Eli Manning vs. Tom Brady quarterback duel has built, furniture stores have experienced a run on recliners.

"So far, we're looking at what we would hope will be double-digit increases in sales over these two weeks," says Nancy Christiansen, senior buyer for recliners at Art Van, the Michigan-based furniture retailer.

Christiansen, known among her colleagues as the Queen of Motion (recliners are formally categorized as "motion" furniture), says the fall and winter months are the busiest period for recliner sales, especially in the Midwest and Northeast. As the temperatures drop, people spend more time indoors and tune into the football.

In the otherwise laggard furniture business, recliners are driving revenues. Sales of reclining chairs and sofas totaled roughly $3.5 billion in 2011, according to the trade magazine Furniture Today. The publication projects recliner sales will grow by nearly 21 percent over the next five years.

Since La-Z-Boy introduced the first chair in 1928, Americans have enjoyed a love affair with these heavily cushioned thrones that flip out and back into a daybed with a pull of a lever. And they go well with America's latest obsession — home theaters with flat-screen TVs, which also have been selling at a faster clip ahead of the Super Bowl.

But today's hot models aren't your dad's Barcalounger. Remember that big wooden handle on the side that took some muscle to work and expanded the chair with a jarring clunkety clunk?

Now, for the latest technological advancement in lounging: smooth-action reclining at the touch of an electric button. Power recliners have hit the market like a Tim Tebow-esque sensation.

"Power is very, very important. You can stop and start it wherever you want. It's a little bit more money, but over half of what's on our floor right now is power. It's a category that's really exploded for us," says Eric Easter, president and CEO of Kittle's Furniture in Indianapolis.

Indianapolis also is the site of Sunday's Super Bowl, and the excitement swelling locally has been a windfall for Kittle's, which operates its flagship store downtown, not far from Lucas Oil Stadium where the game will be played. Easter says his power recliner sales are up at least 15 percent over last year.

"I hadn't really expected the immediacy of it. People are coming in, like, 'We're having guests over, and we need it now,' " Easter says. "More than beds, anything ... This has never happened before in our history. People are filling their room with this power, just lapping it up. They love it."

Christiansen says the power button gives an ease of use that is attracting women customers: "We're seeing more his-and-hers purchases. You can imagine how busy that makes a Saturday afternoon in the showroom."

The recliners don't come cheap. And the names of some models are as extravagant as their cushioning.

Like the Catnapper Deluxe Soother Power Lift Lounger, offering heat, massage and effortless motion, all by remote control. This bad boy retails for $999.99. Or the sleek, leather styling of La-Z-Boy's Spectra Contemporary Power Recliner, featuring a "plump, channel-tufted back" and other luxuries for about the same price.

If you're a football fan reading this and hoping to find a last-minute deal, you're in luck: Current sales of recliners are running up to $250 below list prices.

Hurry, so that by kickoff on Sunday, you can grab a cold one, take a load off, reach for that power button and, as ESPN's Chris Berman would say, lean back-back-back-back-back-back.

The improving job market could help Obama's election stock

Sat, 04 Feb 2012 13:00:04 -0800

President Obama speaks about the economy Friday in Arlington, Va. Obama says he wants to "send a clear message to Congress: Do not slow down the recovery that we're on." Credit: Ron Sachs-Pool/Getty Images

It turns out January was a surprisingly good month in the job market. U.S. employers added 243,000 jobs in January, and the unemployment rate fell to 8.3 percent.

That better-than-expected news from the Labor Department triggered a rally in the stock market Friday, with the Dow climbing more than 150 points. The news could also help the stock of President Obama.

All kinds of companies were hiring last month: 21,000 new construction jobs, 50,000 factory jobs and 30,000 new jobs for temporary workers. Tom Maher owns the Manpower temporary firm in Dayton, Ohio. He supplies a lot of workers to the auto industry.

"Our business has been steadily improving. I've seen an increase in billable hours week over week, which is a wonderful indicator," Maher says. "So we're seeing, at least as the year begins, pretty positive activity."

'One Day At A Time'

Even as he writes those extra paychecks, though, Maher is cautious. He was enjoying a similar boost in business this time last year, only to see it fizzle out after the Japanese tsunami wreaked havoc on U.S. supply chains, and the Arab Spring triggered a spike in oil prices.

"It's very important to take things really one day at a time. While I'm optimistic, I'm not exuberantly optimistic. But things are improving," Maher says. "I read an article locally that our restaurants are much busier than they were before. They're hiring staff. If people are spending more money on their dining entertainment, then obviously they're feeling more optimistic than they have been."

Nationwide, bars and restaurants added 33,000 workers in January. Overall, the hiring spree was the strongest in nine months — a pleasant surprise for forecasters like Nariman Behravesh of IHS Global Insight.

"It's certainly too early to break out the champagne in the sense that this has been a very uneven recovery," he says, "but these are really good numbers — have been quite good for a couple of months. So at least we're getting going a little bit in terms of the hiring process."

Between Now And Election Day

That could be a break for Obama. The jobless rate is still high, higher than any president has been re-elected with since Franklin Roosevelt. But political forecaster Charlie Cook says at least now Obama has a fighting chance in November.

"The folks in the White House have had a lot of bad news for a really long time. They're just starting to get a spat of some good news, and it points to a real close race," he says.

Of course, a lot could happen between now and Election Day. Cook says many voters will be making their judgments about the president's economic stewardship based on what happens over the next six to eight months.

"Public attitudes — they start off as a liquid, and then they turn into a gel, and then they harden at the end," he says.

'Don't Muck It Up'

Obama acknowledged Friday that far too many Americans are still looking for work, and he warned the numbers could go up and down in the months to come. The jobless rate has tumbled nearly a full percentage point since August. It's now the lowest it's been since the president's first full month in office.

"The unemployment rate came down because more people found work, and altogether we've added 3.7 million new jobs over the last 23 months," he said.

Obama urged lawmakers not to jeopardize the recovery by allowing a payroll tax cut to expire this month. After all the economy's been through, he said, it doesn't need any self-inflicted wounds.

"So I want to send a clear message to Congress: Do not slow down the recovery that we're on. Don't muck it up. Keep it moving in the right direction," he said.

Republicans argue the country could be enjoying a stronger recovery, were it not for business uncertainty over taxes and regulation. But that in itself marks a shift in the debate. For years, it was the president, saddled with bad economic news, who was forced to argue that "things could be worse."

Now, Obama can point to encouraging numbers, leaving the GOP with the challenge of making the case, "things could be better."

Obama housing chief Edward DeMarco under fire from California Democrats

Fri, 03 Feb 2012 18:32:18 -0800

Federal Housing Finance Agency Acting Director Edward DeMarco testifies before the House Financial Services Committee's Oversight and Investigations Subcommittee Dec. 1, 2011 in Washington, D.C. Credit: Chip Somodevilla/Getty Images

NPR has been reporting on the quasi-government mortgage giants Fannie Mae and Freddie Mac working at cross purposes, placing billions in investments that did better if the homeowners whose mortgages it held were unable to refinance to lower rates.

Today, NPR Morning Edition host Steve Inskeep questioned Edward DeMarco, the federal regulator who monitors Fannie Mae and Freddie Mac.

Inskeep asked whether "everything that happened here was right, was correct, was morally right, entirely aside from legality." DeMarco said, "Absolutely. I’m completely puzzled by the notion that there was something immoral that went on here."

DeMarco has few friends among Californians on Capitol Hill.

More than a dozen California Democrats wrote to President Barack Obama, asking him to replace DeMarco with a permanent recess appointment.

Congressman Dennis Cardoza of Modesto says the mortgage agencies’ acting director “simply doesn’t get it.” Cardoza says that in meetings with DeMarco, lawmakers asked whether he’d ever even met a borrower who’d been foreclosed on. He hadn’t.

"You’d think that someone in his position would at least try to understand the human side of it," Cardoza said, "rather than just the green eyeshade side of it."

House Democrat Zoe Lofgren of San Jose says that, in a fall meeting with DeMarco, lawmakers offered their proposal to help mortgage borrowers whose homes are worth less than they owe. She says DeMarco asked for 10 days to review the idea.

"At the end of January, instead of October, we got an answer," Lofgren said, "and it’s clear from the answer he hadn’t even looked at it. So he took several months to not do his job." She says it's nothing personal, but DeMarco is a "career civil servant who is not apparently capable of taking the bold action that is necessary to rescue the economy."

Cardoza says that if the president can’t muster enough Senate votes to approve a permanent head of the agency, he needs to replace DeMarco and “put somebody with a pulse” in that position.

Companies behind gastric bypass bands refuse to sell to SoCal surgery centers

Fri, 03 Feb 2012 18:22:14 -0800

A Google Maps screenshot of a Lap-Band billboard on W 11th Street, Los Angeles, Calif. The billboards are under fire after the FDA criticized their misleading displays. Credit: Google Maps

The second of the two companies that manufacture the only adjustable gastric bands approved in the U.S. for weight loss surgery says it will not sell its device to the eight surgery centers marketed by 1-800-GET-THIN.

A spokesman for Johnson & Johnson, which owns the company that manufactures the device marketed as the Realize Band, says it has never sold its device to the centers and has no plans to do so.

That news follows an announcement this week by Irvine-based Allergan Inc., maker of the competing Lap-Band, that it will stop selling its device to the surgery centers, effectively cutting off their supply.

The decision by both companies comes in the midst of investigations and wrongful death lawsuits against the eight surgery centers associated with the 1-800-GET-THIN marketing campaign.

The centers have found themselves targeted by the FDA, the Department of Insurance and various members of Congress.

Five southern California residents have died after undergoing surgery at the centers, which are also under investigation by the California Department of Insurance for alleged fraud.

Attorneys who represent the surgery centers did not respond to a request for comment.

California Gov. Jerry Brown signs bill to stave off cash crunch

Fri, 03 Feb 2012 17:09:56 -0800

California Gov. Jerry Brown gives a speech at Los Angeles City Hall on January 18, 2012 in Los Angeles. Credit: Kevork Djansezian/Getty Images

Gov. Jerry Brown signed a bill Friday that increases how much the state can borrow from special funds to cover a cash shortfall. That shortfall resulted from lower revenues and higher state spending.

The bill allows the state to borrow an extra $800 million from a special fund for transportation to cover cash expenses. It was introduced, passed and signed within days of a warning from the controller that California would run out of cash by the end of the month—unless lawmakers took action.

"People often budget, but we know, at the end of the day, cash is king," Controller John Chiang said.

Chiang says the state spent $2.6 billion more than it budgeted for — and took in $2.6 billion less in revenues than it projected for the six months ending Dec. 31. Chiang says the state would have fallen $750 million into the red early next month.

"Fortunately this is a seven-week cash shortfall," Chiang said. "We’re managing it with one of the strong actions being the governor signing the Legislature’s bill to provide for additional borrowable money."

"We’re going to be able to manage this short-term period without having to resort to IOUs, as was the case in 2009," said H.D. Palmer with the state Department of Finance.

In addition to borrowing from special funds, Palmer said, the Administration plans to delay reimbursement to large medical providers who see patients on state health programs. State universities also agreed to loan the government about a half-billion dollars.

"Now this problem will cease to exist by April," Palmer said, "because as the state begins to get personal income tax returns sent in, then obviously the state’s cash position will improve as well."

Palmer says California’s short on cash in part because courts have blocked some of the cuts to health and human services that lawmakers enacted last year.

State Republicans criticized the Democrats for enacting an unrealistic budget without their input.

Obama housing plan gets lukewarm reaction from Democrats and Republicans

Fri, 03 Feb 2012 16:37:12 -0800

U.S. President Barack Obama speaks about government reform in the East Room of the White House January 13, 2012 in Washington, DC. Credit: Brendan Smialowski/Getty Images

President Barack Obama’s proposal to help homeowners refinance at lower interest rates is getting a lukewarm reception from California lawmakers from both parties.

The president proposed a simpler mortgage form, a Homeowners’ Bill of Rights and expansion of an existing federal program to allow homeowners with underwater mortgages to refinance.

Democratic Congresswoman Zoe Lofgren of San Jose says some ideas are “quite good.” But, says Lofgren, "unfortunately, a large portion of it would require legislation, and we have seen that the Republicans here that control the House are unwilling to pass legislation."

Republican Congressman John Campbell of Irvine is no fan of the Obama plan. He says a lot of people on Capitol Hill "suspect, like many things that are happening right now, particularly from the president, that this is a campaign-oriented proposal and not something that is intended to actually ever become law."

Neither lawmaker expects any housing legislation to be voted on by the House before the November election.

House votes to freeze federal salaries, including their own

Fri, 03 Feb 2012 15:05:34 -0800

File: This Oct. 26, 2011 photo shows the U.S. flag flying at the Capitol building in Washington, DC. Credit: Karen Bleier/AFP/Getty Images

If you’re a federal worker, you may not get a pay raise next year.

House members have voted to freeze their own salaries, along with those of other federal employees. Republican Congressman Dan Lungren of Folsom defended the action.

"While I am a limited government conservative, I believe that the government we have ought to be efficient and effective," Lungren said. "Meaning that you have to have good people doing their job. And that means we have to attract good people."

He says you have to have some salary base at which that attraction is possible. "And I do think we have that."

A Congressional Budget Office report says the top earners in the federal government are underpaid by more than 20 percent, compared to the private sector; the lowest paid federal workers — food service and janitorial employees — are overpaid by 20 percent with more generous benefits.

President Barack Obama froze federal salaries two years ago. The new pay freeze still needs Senate approval.