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Slumping Revenue May Trigger More State Cuts, LayoffsBy Matt Viser
The Boston Globe | October 2, 2009
Governor Deval Patrick announced this morning that September revenues came in $243 million below expectations, a shortfall that may trigger more state cutbacks and layoffs. The slumping revenue came after several tax hikes and will force state officials over the next two weeks to downgrade revenue estimates for the remainder of the fiscal year. That process will likely cause deeper cuts, forcing the state to further reduce the local aid it sends to cities and towns.
"It's certainly on the table," Patrick said at a press conference this morning after meeting with his Cabinet at the State House. "Because it's unavoidable."
But Fed officials also cautioned that the recovery would be slow and repeated their vow to keep the benchmark overnight interest rate at virtually zero for "an extended period." That almost certainly means until at least sometime next year.
At the same time, Patrick pointed to positive signs in the private sector, noting that Massachusetts was doing well compared to other states. As the private economy bounces back, tax revenues often lag behind, he said.
Overall revenues for the first quarter of the current fiscal year came in $212 million below expectations. The governor, working with legislative leaders, has until Oct. 15 to revise the revenue estimates for the next nine months. A lower revenue estimate would probably trigger cuts to the budget, to keep it balanced.
The lagging revenues, despite increased taxes this year and signs of life in the state economy, could hurt Patrick politically as he heads into a reelection campaign next year. His opponents, running on themes of fiscal responsibility, argue that they would be better than Patrick at guiding the state out of its economic doldrums.
Fed officials did not even hint at a timetable for selling the central bank's huge mortgage portfolio. But to prevent disruptions when it simply stops buying, the Fed said it would gradually phase out its purchases over the next six months.
Patrick made today's announcement as news came from Washington that the national unemployment rate rose to 9.8 percent in September, the highest since June 1983, as employers cut far more jobs than expected. The report from the Labor Department underscores that the worst recession since the 1930s is still inflicting widespread pain.
Source: www.boston.com.
Fed to Lower Safety Net, but Gingerly
By Edmund L. Andrews
The New York Times |
September 23, 2009
WASHINGTON- The Federal Reserve, acknowledging that an economic recovery has begun, took a cautious step on Wednesday toward weaning the housing market off its trillion-dollar support program. But even as policy makers expressed new optimism about growth, they also conveyed the difficulties that lie ahead in removing the vast safety net that they have erected over the last year.
"Economic activity has picked up following its severe downturn," the central bank said in a statement after a two-day policy meeting. It said financial markets had improved further, that activity in the housing market had increased and that household spending seemed to be stabilizing.
But Fed officials also cautioned that the recovery would be slow and repeated their vow to keep the benchmark overnight interest rate at virtually zero for "an extended period." That almost certainly means until at least sometime next year.
Policy makers also announced that they would slow down the Fed�s program to buy almost $1.5 trillion worth of mortgage-related securities and stretch it out through the end of March.
That program is aimed at keeping mortgage rates low and propping up the housing market. But the Fed now dominates the mortgage market so much that many analysts predict it will be difficult for the central bank to extract itself.
"I don't think there are enough private buyers to replace the central bank," said Sung Won Sohn, professor of economics at California State University. "If there is even an inkling that the Fed is going to start selling by 2010, we would see mortgage rates go up right away."
Fed officials did not even hint at a timetable for selling the central bank's huge mortgage portfolio. But to prevent disruptions when it simply stops buying, the Fed said it would gradually phase out its purchases over the next six months.
Even that could cause heartburn for prospective home buyers. Analysts estimate that the Fed is buying more than 80 percent of new mortgage-backed securities.
Private investors have retreated to the sidelines, and no one is sure how rapidly they will return if the Fed retreats.
Ian Shepherdson, a forecaster at High Frequency Economics, said private credit markets were still so weak that an important measure of the money supply, known as M-2, had actually edged down in recent months. That is the opposite of what is supposed to happen under the Fed's policy of "quantitative easing," under which it creates large volumes of money out of thin air to buy Treasury bonds and mortgage-backed securities.
"That tells you that the volume of private credit is falling," Mr. Shepherdson said. If the Fed stops its purchases, he added, the money supply might fall sharply and make credit even harder to obtain. "I just wonder whether they have the stomach for that kind of contraction," he said.
The Fed's statement on Wednesday suggested that policy makers had become slightly more optimistic since their meeting in August. At the same time, policy makers left themselves ample room to keep rates low, contending that that high unemployment and unused factory capacity would keep inflation subdued for the foreseeable future.
The unemployment rate was 9.7 percent in September, its highest level since the early 1980s, and many analysts say they believe it will ultimately climb above 10 percent and remain well above its normal levels for several years.
In a sign that officials were worried about how jittery markets might become, the Federal Reserve Bank of New York issued an unusual follow-up statement on Wednesday to explain how it planned to scale back the purchase of mortgage securities.
It said the process would start this week, with its purchases of mortgage-backed securities gradually declining in volume. It also said it would gradually reduce both the frequency and the volume of its purchases of debt issued by Fannie Mae, Freddie Mac and other federal agencies that guarantee mortgages. The Fed has already phased out some of the emergency lending programs it created during the financial crisis last fall. It is also wrapping up its program to buy $300 billion worth of Treasury bonds, stretching out its final purchases through the end of October.
Even so, the Fed's balance sheet has more than doubled over the last year, to about $2 trillion. And the mortgage-security program is both bigger than any of its other efforts and more central to the economy's core weakness � the housing market.
Several of the Fed's more hawkish board members have pushed to end the mortgage program early, contending that it has displaced private investors and feeds inflationary pressures.
But the Fed's chairman, Ben S. Bernanke, has warned that ending the stimulus programs too quickly could tip the United States back into a recession � the same mistake policy makers made in the 1930s. On Wednesday, the Fed's policy makers voted unanimously to finish buying all the securities they had originally planned but to end the purchases by the end of March.
Fed officials say they are under no pressure to raise interest rates quickly. With unemployment approaching 10 percent, and underemployment pushing the true jobless rate above 16 percent, Fed officials expect wage pressures to remain scant.
Largely because of the fall in oil prices this year, the government's Consumer Price Index has actually edged down 1.5 percent over the last 12 months. The Fed's preferred measure of inflation, which excludes the volatile prices of food and energy, has declined to an annual rate of 1.8 percent. Fed officials expect that rate to decline more over the next year, possibly below 1 percent.
Source: www.nytimes.com.
Paul Kirk Jr., Michael Dukakis top Senate List
By Hillary Chabot
The Boston Herald |
September 23, 2009
Family and friends of the late U.S. Sen. Edward M. Kennedy lobbied yesterday to secure the interim Senate seat for former staffer Paul Kirk Jr. as Beacon Hill lawmakers took final steps to hand appointment power to Gov. Deval Patrick. Patrick, who remained mum on his pick, is said to be considering former Gov. Michael Dukakis as well as Kirk, who was close friends with Kennedy. It�s also possible some other candidate may come to the fore. "We need a vote and we need someone to do what the senator would have done. This is the most surefire way," said one former Kennedy aide. "(Kirk) would turn to Kennedy's health-care staffers and say, 'What do you want to do?' "
Kirk, 71, a former Kennedy aide and campaign manager, knows his way around the Capitol as former chairman of the Democratic National Committee and would likely keep Kennedy's staff, while toeing the Democratic party line on President Obama's health-care reform, said sources close to the Kennedy family.
Dukakis backers said he brings national stature and credibility as a former presidential candidate and two-time governor - though critics have said baggage from both roles could reflect poorly on Patrick as he goes into his own re-election year.
Senators voted 24-16 yesterday to approve a bill allowing Patrick to pick a temporary U.S. senator until the Jan. 19 special election; the House passed the measure last week. Both the House and Senate will make a final endorsement of the bill tomorrow. The law doesn't go into effect for 90 days, but Patrick can skirt that by claiming an emergency, allowing him to select a temporary senator as soon as tomorrow.
Either of the top picks likely would bolster GOP complaints that the interim senator is simply a puppet for the Obama administration.
"What's really going on is the national Democratic Party wants a rubber stamp in Washington," said Sen. Scott Brown (R-Wrentham), who voted against the bill and is running for the U.S. Senate seat in the January special election. "They need someone in the U.S. Senate to vote the way they want them to vote on these issues, and not necessarily in the interest of the people of Massachusetts."
Presidents since Theodore Roosevelt have been advocating universal health care without success, and Mr. Obama vowed to fare better. "I am not the first president to take up this cause," he said, "but I am determined to be the last."
Patrick admitted Friday that President Obama personally pushed the issue and that White House aides have called frequently to check on the legislation's progress.
Source: www.bostonherald.com.
Obama, Armed with Details, Says Health Plan is Necessary
By Sheryl Gay Stolberg and Jeff Zeleny
The New York Times |
September 9, 2009
WASHINGTON - President Obama confronted a critical Congress and a skeptical nation on Wednesday, decrying the "scare tactics" of his opponents and presenting his most forceful case yet for a sweeping health care overhaul that has eluded Washington for generations. In blunt language before a rare joint session of Congress, Mr. Obama vowed that he would "not waste time" with those who have made a political calculation to oppose him, but left the door open to working with Republicans to cut health costs and expand coverage to millions of Americans. "The time for bickering is over," the president declared. "The time for games has passed. Now is the season for action."
The president was greeted by booming applause from Democrats and polite handshakes from Republicans. But the political challenge at hand soon became clear as several Republican lawmakers heckled Mr. Obama when he dismissed the notion that so-called death panels would deny care to the elderly.
"It is a lie, plain and simple," Mr. Obama declared.
"You lie!" Representative Joe Wilson of South Carolina yelled back after Mr. Obama said it was not true that the Democrats were proposing to provide health coverage to illegal immigrants.
The 47-minute speech was an effort by Mr. Obama to regain his political footing on health care, his highest legislative priority. He insisted throughout that he had not closed the door on reaching a bipartisan compromise. He gave a nod to Senator John McCain, Republican of Arizona, and embraced his proposal to create a high-risk pool to help cover people with pre-existing conditions against catastrophic expenses.
And, with the widow of Senator Edward M. Kennedy sitting in the House gallery, the president appealed to the nation"s conscience, reading a letter Mr. Kennedy had written in May with instructions that it be delivered to the president upon his death. In it, Mr. Kennedy wrote that health care was "above all a moral issue; at stake are not just the details of policy, but fundamental principles of social justice and the character of our country."
Presidents since Theodore Roosevelt have been advocating universal health care without success, and Mr. Obama vowed to fare better. "I am not the first president to take up this cause," he said, "but I am determined to be the last."
The speech came after a rocky August for the White House, in which many lawmakers held public meetings that deteriorated into shouting matches over health care.
After months of insisting he would leave the specifics to lawmakers, Mr. Obama used the speech to present his most detailed outline yet of a plan he said would provide "security and stability" to those who have insurance and cover those who do not, all without adding to the federal deficit.
The president placed a price tag on the plan of about $900 billion over 10 years, which he said was "less than we have spent on the Iraq and Afghanistan wars." But he devoted much of his address to making the case for why such a plan is necessary, and sought to reassure the elderly and the Americans who already have insurance that they would not be worse off.
As expected, Mr. Obama repeated his support for a government insurance plan to compete with the private sector, though he said he would consider alternatives to the "public option."
He sketched out a vision for a plan in which it would be illegal for insurers to drop sick people or deny them coverage for pre-existing conditions, and in which every American would be required to carry health coverage, just as drivers must carry auto insurance.
Mr. Obama did embrace some fresh proposals. He announced a new initiative to create pilot projects intended to curb medical malpractice lawsuits, a cause important to physicians and Republicans.
He endorsed a plan, contained in a draft proposal being circulated by Senator Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee, to help pay for expanding coverage by taxing insurance companies that offer expensive, so-called gold-plated insurance plans.
And, seeking to reassure those who worry he will run up the federal deficit, Mr. Obama promised to include a provision that "requires us to come forward with more spending cuts" if the savings he envisions do not materialize.
In embracing Mr. McCain and the malpractice projects, the White House appeared to be seeking to lay the groundwork for an argument that the final bill would be bipartisan not because it garners Republican votes but because it contains Republican ideas. That is the same argument Mr. Obama used when the economic recovery package passed with just three Republican votes.
Republicans seemed primed for a fight; many, like Senator Charles E. Grassley, the Iowa Republican who has been deeply involved in health negotiations, released statements about the speech even before it began. Mr. Grassley called on Mr. Obama to "start building the kind of legislation that could win the support of 70 to 80 senators," a goal Mr. Grassley said could not be achieved if the bill contained a new government plan.
In the Republican response, Representative Charles Boustany Jr. of Louisiana, a heart surgeon, agreed that the health care system needed an overhaul. But he urged the president to start anew, focusing on a "common-sense, bipartisan plan."
The speech was the president's second address before a joint session of Congress. But the political backdrop on Wednesday was far different from his appearance in the House chamber on the 36th day of his term, when an optimistic wave of momentum was at his back and his Republican rivals were dispirited and in disarray.
"What we have also seen in these last months is the same partisan spectacle that only hardens the disdain many Americans have toward their own government. Instead of honest debate, we have seen scare tactics," Mr. Obama said. "Some have dug into unyielding ideological camps that offer no hope of compromise. Too many have used this as an opportunity to score short-term political points, even if it robs the country of our opportunity to solve a long-term challenge."
He added, "And out of this blizzard of charges and countercharges, confusion has reigned."
While Mr. Obama was addressing lawmakers inside the ornate House chamber, the much more important audience was outside Washington: the 180 million Americans who already have health insurance and who remain skeptical that Mr. Obama"s plan will change things for the better. Inside the chamber, the president drew laughter when he said, "there remain some significant details to be ironed out."
For Mr. Obama, the speech was a go-for-broke moment; there is no more dramatic venue for a president than an address to a joint session to Congress. For many Democrats, the speech evoked memories of a similar health care address by President Bill Clinton, 16 years ago this month. Mr. Clinton called for "security, simplicity, savings, choice, quality and responsibility" - the same broad themes Mr. Obama evoked Wednesday night.
The architect of the Clinton plan, of course, was Mr. Clinton"s wife, Hillary Rodham Clinton.
On Wednesday night, Mr. Obama's wife, Michelle, sat quietly in the House gallery, holding the hand of Victoria Reggie Kennedy, Mr. Kennedy"s widow. Mrs. Clinton, now Mr. Obama's secretary of state, sat in the front row, smiling and shaking hands.
Source: www.nytimes.com.
Fulfilling a nation's promise
Edward M. Kennedy
1932-2009
By Susan Milligan
The Boston Globe |
August 26, 2009
WASHINGTON - Edward M. Kennedy's legacy in the Senate reads like a response to the inscription on the Statue of Liberty: "Give us your tired, your poor, your huddled masses yearning to breathe free."
Kennedy spent most of five decades on Capitol Hill trying to fulfill the promises inherent in that invitation, seeing it as government's responsibility to give aid to the disadvantaged.
From his work on human rights in Chile, to his exhaustive efforts to expand health care, revise immigration laws, help people pay for college, and create equal opportunity regardless of race, gender, disability, or genetic background, Kennedy's record of sustained accomplishments embodies a large portion of modern America's social policy agenda.
As author of more than 2,500 pieces of legislation, Kennedy solidified his international reputation as the liberal stalwart of the Senate. And, not least because his deft ability to compromise helped make several hundred of those bills law, he was frequently cited by senators of both parties as their most effective colleague. Nearly every piece of major health legislation since the 1960s has Kennedy's fingerprints on it. His passion for education showed up in programs ranging from Head Start for poor children, to expanding loans for the college-bound, to job training for those not headed to higher education. In his long fight for women's rights, he sponsored the doomed Equal Rights Amendment in the 1970s. But he scored a victory as co-sponsor of the sweeping Americans With Disabilities Act, which in 1990 protected the disabled from discrimination at work and at business establishments.
One of the wealthiest members of the Senate, Kennedy also fought tirelessly for increases in the minimum wage. He pleaded with Representative George Miller, Democrat of California, to introduce another wage increase bill even as the two lawmakers were celebrating the House passage of a minimum wage hike in 2006 - an effort that had taken 10 years to complete.
Kennedy touched millions of lives in other ways that are not always remembered because they do not fit into his reputation as the liberal lion. For instance, he championed private industry over the government in 1978 when he won approval of a law deregulating the airlines. The change had the dramatic effect of expanding air travel to a broader range of fliers but made travel more expensive to rural areas, aggravating Kennedy fans such as former South Dakota Senator George McGovern.
He was a key sponsor in 1970 of the bill giving 18-year-olds the right to vote, insisting at the height of the Vietnam War that "if young people are old enough to fight, they are old enough to vote." That measure continued to affect presidential campaigns through the election of a man Kennedy endorsed, President Obama, whose support among young voters helped propel him to victory.
In the realm of government reform, he introduced the first bipartisan campaign finance overhaul act in 1973, a year later winning passage of a law imposing the first-ever limits on campaign contributions while providing public financing provisions for presidential elections. And in 1976, Kennedy authored the Foreign Intelligence Surveillance Act, creating special courts to monitor US intelligence agency surveillance. During the Bush administration, Kennedy became a vocal critic of what he dubbed abuses of the law. Some of Kennedy's biggest initiatives did not turn out as he planned. Known for his ability to work with political foes, Kennedy teamed up with former President George W. Bush to write the No Child Left Behind Act, a law that ushered in unprecedented federal involvement in elementary and secondary education. The law sets standards for schools and mandates testing to assess whether schools are making progress.
But Kennedy was disheartened to find that Bush failed to fully fund the act, a move the senator saw as a personal betrayal because the president, according to Kennedy, had looked him squarely in the eye and pledged to give the law the cash it needed.
Health care was a driving force in Kennedy's legislative agenda throughout his many decades in the Senate. In 1966, the young senator won expansion of the Economic Opportunity Act, which created a national health center system. In 1971, Kennedy filed his first effort toward universal coverage - a straight-up national health care system - but failed to get the measure passed.
Unable to persuade Congress and the White House to create a sweeping national plan, Kennedy painstakingly went about expanding health care on a piecemeal basis. He teamed up with conservative Utah Republican Senator Orrin Hatch to create the State Children's Health Insurance Program, cementing a relationship with Hatch that would turn into a genuine friendship and a powerful political alliance.
Another key part of his health care legacy was his work crafting the Medicare prescription drug benefit, known as Medicare Part D. Many Democrats initially balked at the measure, arguing that its "doughnut hole" in drug coverage - a cost range in which seniors would not receive benefits - would make the program inadequate and would anger older voters critical to the Democratic base.
But Kennedy argued that it was best to get the prescription benefit plan in place while supporters had the chance, with the Republican Bush in support in 2003, and then fix the details in subsequent years. Republicans, however, so extensively rewrote the bill, adding incentives for seniors to move away from Medicare and toward private plans, that Kennedy in the end led the unsuccessful fight against passage.
Although Kennedy was unable to win passage of the Equal Rights Amendment in his role as co-sponsor, he continued to push for women's rights. Last year, he celebrated the signing of the Lilly Ledbetter Fair Pay Restoration Act - a bill he sponsored and ushered through the Senate that expanded the rights of workers to sue for past pay discrimination.
He battled over decades for immigration reform, winning passage of an historic measure in 1965 to change the standards for allowing immigrants into the country. While newcomers had been limited by quotas - ceilings that tended to benefit Western Europeans - Kennedy's bill changed the law to focus on family connections and job skills. He continued to fight for a sweeping immigration law in his later years - a law that would have increased "guest workers" and provided a path to legal status for the country's 12 million undocumented workers.
Although Kennedy was known more for domestic than foreign policy, he took a strong position on human rights around the world, engaging in a decades-long effort to encourage the peace process in Northern Ireland and winning approval of laws punishing Chile in 1974 for its military coup and South Africa in 1986 for its apartheid policy.
Securing rights for the disabled was an ongoing goal for Kennedy, whose sister Rosemary had a mental disability and whose son, Teddy, lost his leg to cancer. The Massachusetts senator won approval of laws guaranteeing access for the disabled at polling stations, ensuring equal education for children with disabilities, and protecting the handicapped from discrimination in housing.
Kennedy was a major figure pushing the Women, Infants and Children program to provide nutritional aid to needy pregnant women and mothers. He won passage of laws setting standards for pharmaceuticals and mammograms, and - with his odd-couple colleague Hatch - passed the Ryan White CARE Act providing emergency aid to cities hit by the AIDS epidemic.
Kennedy never realized his dream of achieving a universal health care system - a measure he continued to fight for even as he was battling his own illness. But even in his last year, a time marred by seizures and the exhaustion of chemotherapy, he managed to score legislative victories. Former president Bush signed a law Kennedy had fought for 13 years to get: a ban on discrimination on the basis of the results of genetic testing.
"President shifts focus to renting, not owning" WASHINGTON - The Obama administration, in a major shift on housing policy, is abandoning George W. Bush's vision of creating an "ownership society" and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities. The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates. Analysts say the approach takes a wrecking ball to Bush's heavy emphasis on encouraging homeownership as a way to create national wealth and provide upward mobility for low- and working-class families, especially minorities. Housing and Urban Development Secretary Shaun Donovan's recalibration of federal housing policy, they said, shows that the Obama White House has acknowledged that not everyone can or should own a home. In addition to an ideological shift, the move is a practical response to skyrocketing foreclosure rates, tight credit, and the economic crisis. "I've always said the American dream should be a home - not homeownership," said Representative Barney Frank, chairman of the House Financial Services Committee and one of the earliest critics of the Bush administration's push to put mortgages in the hands of low- and moderate-income people. Conservatives, however, believe that President Obama and HUD shouldn't head too far in the other direction; in some cases, rent can be more expensive than a mortgage payment. Done properly, they say, homeownership can bolster the tax base and bring stability to neighborhoods and families, reducing crime and helping people achieve financial independence. The $4.25 billion set aside for the creation of rental housing will come from $14 billion that HUD has received from the federal economic stimulus package. Another $4 billion of the money will be used to fix up the nation's existing public housing stock of 1.2 million units. The funds for new units will be available under competitive grants, and officials in Massachusetts said they will be among the states aggressively competing for the money. In Boston, more than 20,000 households are on a waiting list for affordable rental housing, said Lydia Agro, a spokeswoman for the Boston Housing Authority. "There's definitely a need out there," she said. City, state, and federal officials said they could not yet estimate how many new rental units will be created with stimulus money, but HUD said the "tens of thousands" of apartments and town houses it will produce nationwide will ease an increase in homelessness that has resulted from the foreclosure crisis. Carol Galante, HUD's assistant secretary for multifamily housing, said HUD will still be in the business of helping people buy homes using existing lending subsidies. The difference from the Bush administration, she said, is "we're trying to have a balanced policy. We're not trying to say homeownership isn't important, because it is. But we have to be sure we're helping people get into homes that are sustainable for them." RealtyTrac, a private company that follows homeownership trends, reported Thursday that the number of foreclosure notices issued to homeowners nationwide increased 9 percent during the first half of 2009. At the same time, the US Census Bureau reported that the vacancy rates for homeowner housing nationwide crept up for the second consecutive quarter, further signs of the ongoing mortgage crisis. The foreclosures are displacing large numbers of families, who will need new housing. "People who were owners are going to be renting for a while," said Margery Turner, vice president for research for The Urban Institute, a Washington think tank that studies social and economic policy. "There is a housing stock that is sitting vacant. There is a real opportunity here" to use those homes as rental property and solve both problems, she said. In addition to the stimulus money, Obama's budget also seeks $1.8 billion for the construction of rental housing, the same amount that Congress approved in the last year. David John, a senior analyst at The Heritage Foundation, a conservative policy center, said it remains to be seen whether the Obama administration's decision to step away from the Republican administration's "ownership society" will have a positive effect on minorities and the working class. John said the benefits of homeownership are greater than just building equity in a house. For example, he said, children of parents who own homes do better in school. "There's more stability in the family and overall an improvement in society," he said. "Usually, homeownership brings with it a sense of building towards the future, rather than living day to day." Still, he said, renting is better than putting a family in a house that it cannot afford. "It's a mixed bag," he said. In the past few weeks, Donovan, the former housing commissioner in New York City, has embarked on a series of cross-country trips to cities like Seattle and Anchorage to highlight the federal stimulus money being used to build low- and moderate-income rental housing units. Donovan was unavailable for an interview. Bush made homeownership a signature issue of his tenure. In remarks before a panel discussion on promoting minority homeownership in 2002, Bush said America is "a nation of owners. Owning something is freedom, as far as I'm concerned." But that vision disappeared over the last two years as the housing market plunged, leaving homeowners struggling under mortgages they could no longer afford for a home that was no longer worth what they paid. As mortgage defaults piled up, banks that made the risky loans imploded, helping trigger the global financial crisis. "This notion that a home was your source of wealth was a recent one," Frank said. "People thought that prices would go up, and up, and up, and up." Frank said he never bought the idea that Americans could keep borrowing to support higher and higher home prices. "My answer was, I wish I could eat more and not gain weight," he said.
Using $4.25b to build affordable housing
By Joseph Williams
The Boston Globe,
August 16, 2009
"Gov. Patrick planning economic summit in Mass."
By Glen Johnson, AP Political Writer
August 10, 2009
BOSTON --Gov. Deval Patrick wants to help push the economic recovery in Massachusetts rather than waiting for it to happen, so he's organizing an economic summit this fall.
The Democrat said Saturday he wants to bring together key business, financial and state officials from important job sectors and different regions in the state.
With everyone in one place, he said, he wants specifics about what businesses need to resume hiring, how bankers and others can help and what the state can do to facilitate the process.
"If somebody says, `I'm just waiting for X,' say, capital, then let's turn to the capital people and say, `What can you do about this?'" Patrick said in a telephone interview.
In June, Massachusetts had an 8.7 percent unemployment rate, a full percentage point below the national rate of 9.7 percent.
Nonetheless, the state has seen slowing tax collections, prompting billions of dollars in budget cuts and a recent 25 percent increase in the sales tax, from 5 percent to 6.25 percent. Patrick is considering even further budget cuts, and the state's rainy day fund is at a recent low.
The governor noted Massachusetts is "faring better" than many other states, thanks to strength in its financial, health care, life sciences, alternative energy and educational sectors.
He added: "This time we went in (recession) later, not as deep as the rest of the country, and using that platform, we want to come out faster."
The meeting is being organized by Housing and Economic Development Secretary Greg Bialecki and Cathy Minehan, the former Boston Federal Reserve president who now serves as chairwoman of Patrick's Council of Economic Advisors.
It will last a day or two and take place in late September or early October. The location still must be determined.
When the logistics are settled, the governor said the question he wants to ask everyone attending is, "Instead of just waiting for the economy to come around, how do we shape our future?"
"Bid for US aid envisions wide N.E. rail system"
Alan Wirzbicki , The Boston Globe
August 4, 2009
WASHINGTON - Transportation officials from six states sketched their vision for an advanced New England rail network yesterday, seeking federal help for projects that range from repairing a rusted bridge in Haverhill to building a bullet train that would whisk travelers from Boston to Montreal.
Described as the first regionwide passenger rail agenda, the New England system would speed up trains, increase service, and open new commuter lines throughout the region - as well as provide high-speed routes linking New England to Quebec with 110 mile-per-hour trains.
The officials acknowledged they face long odds, with stiff competition from projects proposed by states in the West and Midwest. But they said New England needs an economic boost and a better transportation system, and the best way to jump-start the effort is by using some of the $8 billion set aside for rail projects in the economic stimulus package approved by Congress in February.
"This plan will not only improve mobility and the environment, but also economic growth and development in New England," said James A. Aloisi Jr., Massachusetts transportation secretary, who attended a meeting of the six states in Burlington, Vt., where the plan was unveiled.
Officials said just getting the plan down on paper has significant political value and will lay the foundation for future rail construction.
The projected price tag of the Northeast projects totals $35 billion - far more than is available nationwide. Other states also are aiming high. Overall, the government has been deluged with $102 billion in applications, according to the US Department of Transportation.
"It promises to be a very difficult fight, because this is a discretionary program, and there are a lot of regions that are vying for this money," said Joseph F. Marie, commissioner of Connecticut's Department of Transportation. "While $8 billion sounds like a lot of money, the need exceeds it tenfold. It's really important to manage expectations."
Forty states and the District of Columbia have filed 278 applications for the money, which are due later this month and will be awarded in the fall. Transportation Secretary Ray LaHood and other Obama administration officials have hinted that California, Florida, and the Midwest, whose high-speed rail plans are closer to being "shovel ready," are front-runners to receive much of the funding - Washington's largest-ever commitment to high-speed rail.
LaHood told the Wall Street Journal in May that California, which has been developing plans for a $40 billion bullet train between San Francisco and Los Angeles for more than a decade, was "way, way, way, ahead" of other applicants. California requested $22.3 billion in high-speed rail projects under the stimulus program.
Still, New England officials said they were optimistic that the federal government was keeping an open mind and that at least some of the projects in the regional rail blueprint will make the cut.
"I think at the end of the day New England will get its fair share," said Aloisi, who said he had a cordial meeting with LaHood last month to push for the region's rail plans.
David Cole, commissioner of the Maine Department of Transportation, said that the state had shovel-ready projects that fit the federal guidelines, including a proposal to extend the Downeaster, which runs from Boston to Portland, north to Brunswick.
"The Brunswick project is ready to go. We're not complacent. It's not a slam dunk, but we should have a decent shot at funding," he said.
The New England plan identifies dozens of other projects, but singles out six as top priorities: raising speeds and running more trains between Springfield and New Haven, where the state of Connecticut hopes to introduce commuter rail; raising speeds and expanding the number of trains on the Downeaster; inaugurating passenger rail between Boston and Concord, N.H.; increasing capacity on the Northeast Corridor in Rhode Island; and improving service to the east and west sides of Vermont. The Vermont plan would return passenger trains to Northampton, Mass., after an absence of several decades.
Several of the proposals are intended to establish connections between train lines and airports in Providence, Hartford, and Manchester, which the federal guidelines say is a plus in deciding grant awards.
New England officials said that even if they don't win funding this time, the legwork they are doing now could pay dividends later.
The Obama administration has promised that the $8 billion in the stimulus is just a "down payment" on a national high-speed rail network.
Congress is considering $4 billion more for high-speed rail in next year's budget - four times as much as the administration requested - and a draft of long-term federal transportation legislation under consideration on Capitol Hill includes $50 billion more for high-speed rail.
Michael Lewis, the director of the Rhode Island Department of Transportation, said he was confident that more high-speed rail money would be provided.
"I don't think this is the end," he said. "Our investment in intercity rail is going to be a long-term commitment. The intercity highway system was built over 40 years."
"It's going to be heavy competition," Cole said. "But what we don't get this round, we'll continue to pursue."
"Vision for New England High Speed and Intercity Rail Network"
"State asks localities to take US aid for housing"
Andrea Estes, The Boston Globe
July 27, 2009
The state, looking to reduce the amount of money it pays for public housing, is urging communities to take advantage of a little-known provision in the federal stimulus law that allows them to shift the ownership of certain units to the federal government.
In an e-mail last week to housing authorities across the state, the state Department of Housing and Community Development encouraged communities "to aggressively pursue this opportunity," which the department says will bring stability to public housing during the current economic crisis."
State officials argue that tenants, taxpayers, and cities and towns will all benefit from moving some of the 50,000 state-subsidized apartments to federal rolls. Federally subsidized public housing receives far more money for operations and capital improvements than state units, which operate under a more limited budget, they said.
"A lot of this stuff was built after World War II," said Tina Brooks, the state's undersecretary of Housing and Community Development. "If the feds are willing to help us keep it whole, intact, and healthy for people, we�re happy to take them up on the offer."
But officials in Boston, the city with the most public housing tenants in Massachusetts, are refusing to take part, accusing the state of reneging on a longstanding commitment to finance housing for low-income residents.
"I view this as nothing short of the Commonwealth abandoning its moral and legal responsibilities for the thousands of poor, elderly, and disabled folks living in state public housing," said BHA administrator William McGonagle.
Only Massachusetts and Connecticut offer substantial public housing subsidies, state officials said. Other states rely almost exclusively on federal housing assistance for their low-income residents.
Patrick administration officials said that 68 out of 242 housing authorities across the state have units that could qualify for the shift to federal control. Only cities and towns that already have federally subsidized public housing projects are eligible. In addition, the units must be in good shape and not require major repairs.
It is up to each local housing authority to decide whether to participate. The state and the US Department of Housing and Urban Development then have to sign off. HUD officials could not be reached for comment.
State officials credited Steve Finn, the head of the Malden Housing Authority, with discovering the obscure provision in the American Recovery and Reinvestment Act of 2009 that allows the transfer of properties from the state to the federal government.
"I found a needle in a haystack," said Finn, adding that funding from the federal government is often more steady than funding from the state, especially during difficult budget years.
Finn said that tenants in any of Malden's units that shift to federal control would, like tenants who currently live in federally run housing units, also be eligible for extras such as paid utilities and membership in the city's new YMCA.
Raymond Mariano, executive director of the Worcester Housing Authority, said his city is in the process of determining which of its housing developments could qualify for federalization.
"There's a huge incentive for housing authorities to do this," he said. "We need at least to consider it, especially for large authorities like Worcester's. Our buildings are old. One was built in 1949. We need money to put in new kitchens and to do other things. We can't move forward unless we get federal money - there is no state money to do it."
McGonagle, Boston's housing chief, said he does not think any of the city's 3,200 state-subsidized units would qualify, because they are too run-down and in need of major renovations and repairs.
"The administrator of the Boston Housing Authority would like to know what the state's plan is for the other, distressed units," McGonagle said, adding that the plan to shift units to federal control "does absolutely nothing" to fix state-financed projects in disrepair such as the Orient Heights Housing Development in East Boston.
Sandy Ortiz, the head of the tenants' group at the Orient Heights development, said the state should make good on its commitment to rehab the project, which she said is beset with problems, including flaking paint, condensation on the walls, and bathrooms that have been ripped out and never replaced.
"This isn't a good idea," she said, referring to the transfer of state public housing to the federal government. "They should start cleaning up the mess they've already started and get this place back again. Orient Heights is a nice development if they could put it back together. Instead of going this way, why don't they do what they are supposed to do?"
With the federal government picking up the tab for potentially thousands of apartments, the state will be able to spend more on the units left behind, Brooks said.
"You're essentially using a federal program to preserve housing you desperately need," she said.
Conference Board's Leading Economic Index Increases by 0.7 in June,
a 3rd Consecutive Month of Increase
Released July 20th, 2009
Excerpts from the release:
- The Conference Board LEI for the U.S. increased for the third consecutive month in June. Most of the components contributed positively to the index this month except real money supply* and manufacturers' new orders for nondefense capital goods*. The six-month change in the index has risen to 2.0 percent (a 4.1 percent annual rate) in the period through June, up substantially from - 3.1 percent (a -6.2 percent annual rate) for the previous six months, and the strengths among the leading indicators have remained balanced with the weaknesses in recent months.
- The Conference Board LEI for the U.S. has risen for three consecutive months now, after having fallen steadily since reaching a peak in July 2007. With these large and widespread gains, its six month growth has picked up to the highest rate since the first quarter of 2006. Meanwhile, The Conference Board CEI for the U.S., measuring current economic activity, remains on a downtrend, but the pace of its decline has moderated somewhat in recent months. All in all, the behavior of the composite indexes suggest that the recession will continue to ease and that the economy may begin to recover in the near term.
LEADING INDICATORS. Seven of the ten indicators that make up The Conference Board LEI for the U.S. increased in June. The positive contributors -- beginning with the largest positive contributor -- were interest rate spread, building permits, stock prices, weekly initial claims (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance), and manufacturers' new orders for consumer goods and materials*. The negative contributors -- beginning with the largest negative contributor -- were real money supply*, manufacturers' new orders for nondefense capital goods*, and index of consumer expectations.
The Conference Board LEI for the U.S. now stands at 100.9 (2004=100). Based on revised data, this index increased 1.3 percent in May and increased 1.0 percent in April. During the six-month span through June, the leading economic index increased 2.0 percent, with five out of ten components advancing (diffusion index, six-month span equals 50 percent).
COINCIDENT INDICATORS. Two of the four indicators that make up The Conference Board CEI for the U.S. increased in June. The positive contributors to the index -- beginning with the largest positive contributor -- were personal income less transfer payments* and manufacturing and trade sales*. The negative contributors -- beginning with the largest negative contributor -- were employees on nonagricultural payrolls and industrial production.
The Conference Board CEI for the U.S. now stands at 100.3 (2004=100). This index decreased 0.3 percent in May and decreased 0.3 percent in April. During the six-month period through June, the coincident economic index decreased 3.0 percent, with none of the four components advancing (diffusion index, six-month span equals 0.0 percent).
Mayors say cities need direct economic help
June 15th, 2009
Camille Dummond, The Washington Post
Without more direct aid to U.S. local governments, Washington may make matters worse for cities facing falling tax revenues and increased spending needs, the nation's mayors said at their annual meeting this weekend
Price tag makes state colleges more appealing
June 15th, 2009
Charlie Breitrose, MetroWest Daily News
Gaining admission to UMass and other state colleges has become more challenging, in part because of rising standards, but also because the nation's economic crisis has students looking for affordable four-year colleges.
Guidance counselors at area high schools have noticed that UMass has become a top choice for many, and students aren't just looking at state colleges as fall-back schools.
______________________________________________________________________Health Plan May Mean Payment Cuts
June 13th, 2009
Sheryl Gay Stolberg and Robert Pear, The New York Times
The White House said Saturday that President Obama intended to pay for his health care overhaul partly by cutting more than $200 billion in expected reimbursements to hospitals over the next decade — a proposal that is likely to provoke a backlash from struggling medical institutions around the country.
______________________________________________________________________Property tax hikes winning support
June 12th, 2009
Lisa Kocian, The Boston Globe
In a baffling trend playing out against an abysmal economy, voters have approved property tax increases in at least 11 communities around Boston in recent weeks, reaching into their own pockets to preserve libraries, schools, and public safety services.
____________________________________________________________________________________Health-Care Bills Begin to Crystallize
June 10th, 2009
Naftali Bendavid and Janet Adamy, The Wall Street Journal
House leaders outlined a health-care overhaul plan that would create a national health-insurance "exchange" for consumers and include a government-run plan as one option, while Sen. Edward Kennedy introduced a similar bill in the Senate.
_____________________________________________________________________________________Local aid delays leave cities, towns in a budget limbo
June 7th, 2009
Matt Carroll, The Boston Globe
While leaders on Beacon Hill wrangle over how much - or how little - local aid to give to cities and towns in the annual state budget, officials in many area communities find themselves preparing for worst-case scenarios as they firm up spending plans for next fiscal year.
________________________________________________________________________T warns fares may rise by up to 20%
June 5th, 2009
Noah Bierman, The Boston Globe
The MBTA expects to increase fares by at least 15 percent to 20 percent beginning this fall, Patrick administration officials announced yesterday, raising the specter that transit riders will have to pay both higher taxes and more for their CharlieCards by year's end as part of the state's efforts to fix its transportation systems.
__________________________________________________________________________________HUD revises rules for stimulus money
June 3rd, 2009
Kevin Freking, Associated Press (courtesy of the Boston Globe)
Federal officials have lowered the threshold that the nation's public housing agencies must meet to get some of the stimulus money set aside for new roofing, plumbing and other renovations.
___________________________________________________________________________US personal incomes show surprise rise
June 1st, 2009
Alan Rappaport, The Financial Times
US consumers curbed their spending for the second month running in April, in spite of the first rise in income this year, as they continue to cope with the recession and fears of more job cuts.