Posts Tagged ‘Bloomberg’
Christie Targets Medicaid to Close $10.5 Billion New Jersey Budget Deficit – Bloomberg
Last Updated on Sunday, 9 January 2011 08:52 Written by admin Sunday, 9 January 2011 08:52
New Jersey Governor Chris Christie
may propose cutting Medicaid spending and employee benefits to
help close a $ 10.5 billion budget deficit, even as he considers
contributing $ 512 million to the state’s underfunded pension.
The 48-year-old chief executive, who joined 28 other
Republican governors asking President Barack Obama and
congressional leaders last week for permission to reduce
Medicaid outlays below federally prescribed levels, said in a
Jan. 4 interview that “certainly” the program “is one of the
things we’re going to have to look at.”
The second-wealthiest U.S. state budgeted $ 3.1 billion for
Medicaid in the fiscal year ending June 30 and was scheduled to
receive $ 1.1 billion in federal stimulus funding, according to
the Treasury Department. Christie, who took office a year ago,
said he’ll tell lawmakers in his Jan. 11 State of the State
speech that New Jersey remains in a financial crisis and they
need to maintain fiscal controls as employment and revenue
recover slowly from the longest recession since the 1930s.
New Jersey has run consecutive annual deficits for a
decade. The governor told reporters last month that balancing
the next budget will be even tougher than with the current plan.
“First and foremost is continuing on the path of fiscal
discipline,” Christie said in his wood-paneled office at the
state Capitol in Trenton. “I’m not going to allow us to revert
back to the wild spending that we’ve had for the last decade.
It’s going to take years for us to dig out of this hole.”
Deficits Nationwide
States face deficits that may reach $ 140 billion in the
next fiscal year, according to the Center on Budget and Policy
Priorities in Washington. The 2009 economic-stimulus bill and
the health-care overhaul signed by Obama last year bar governors
from reducing eligibility for the state-administered health-care
program for the poor and uninsured below a prescribed income
level.
From New York to Washington, governors are targeting
Medicaid for cuts. New York’s new governor, Democrat Andrew Cuomo, said he wants to lower spending $ 2.1 billion, the Wall
Street Journal reported. Rick Scott, the recently elected
Republican governor of Florida, said he is looking to trim the
program by $ 1.8 billion.
Big Hole
Christie may face a deficit next year equivalent to more
than a third of his current budget, the nonpartisan Office of
Legislative Services projected in July. In the current year, he
closed a record $ 10.7 billion gap by slashing school and
municipal aid and skipping a $ 3 billion pension payment.
The governor didn’t specify how much he may take out of
Medicaid. He said he anticipates seeking to trim costs through
unspecified efficiencies, after leaving spending on the program
intact last year because of the economic slump.
New Jersey will also lose $ 900 million in federal funding
for Medicaid next year, even as it’s required to maintain
benefits, under conditions of the stimulus act, according to Michael Drewniak, Christie’s spokesman.
“That’s a big hole to have to fill,” Christie said.
“We’re going to have to look at all options. We have to figure
out how we’re going to deal with that.”
Contract Talks
Christie said in the interview he’ll also seek savings in
contract talks with state workers’ unions later this year,
especially since the Jan. 1 expiration of a no-layoff agreement
instituted by his predecessor, Democrat Jon Corzine. He declined
to provide details. Christie said he’d prefer to make moves
through negotiations with unions, not executive order.
“I think collective bargaining is an important process and
I want to participate in it fully with the workers of this state
so they feel whatever deal they end up getting is a fair deal,”
Christie said. “If I have to resort to other tactics, I will,
because I have to balance this budget.”
While he wants to cut Medicaid and worker benefits,
Christie said he may resume contributions to the state’s pension
system for the first time since 2008, when Corzine made a
partial payment of $ 1 billion. The fund had assets to cover 62
percent of its obligations as of June 30, down from 66 percent a
year earlier, according to Treasury Department data.
New Jersey’s pension deficit increased $ 8.05 billion, or 18
percent, this year to $ 53.9 billion, from $ 45.8 billion as of
June 2009. The state has failed to make actuarially recommended
contributions since 2003, according to bond documents. The
funding shortage was $ 28.3 billion in 2007.
Benefits Overhaul
Christie said the pension deficit would have grown this
year even if he made the $ 3 billion recommended payment. He said
his ability to make a $ 512 million contribution next fiscal year
will depend on the state’s financial condition.
“There’s a benefit problem,” Christie said. “We need to
get at the benefits and we need to get realistic with folks and
tell them the truth: promises were made that can’t be kept. We
need to go after the drivers of these costs.”
In September, Christie proposed undoing a 9 percent pension
increase enacted in 2001, raising the retirement age and
freezing cost-of-living raises for retirees. The governor said
he will push the Democratic-led Legislature to pass a measure
requiring require employees to contribute 8.5 percent of
salaries toward pensions, up from 5.5 percent now.
As the economic recovery took hold, the state collected 3.8
percent more revenue in the first five months of the fiscal year
than projected as income taxes ran almost 13 percent above
estimates, Treasurer Andrew Sidamon-Eristoff said on Dec. 14.
Work Remains
The increase may not herald the end of lean times for the
state, Christie and Sidamon-Eristoff said. It may be a one-time
infusion as high-income filers avoided potentially higher rates
that were averted when Congress approved an extension of the
Bush-era tax cuts.
“Imposing fiscal discipline is not a one-year fix,”
Christie said.
During his first year in office Christie enacted a 2
percent cap on the growth of New Jersey’s property taxes, which
at an average of $ 7,281 are the highest in the U.S. He also
placed a threshold on school superintendents’ pay and limited at
2 percent raises given to police and firefighters by arbitrators
when contact negotiations break down.
Getting the economy moving, as well as calls for austerity
and job creation, also will dominate the speech, Christie said.
The governor will also push a proposal to make it easier for
school districts to fire their worst teachers and base pay on
student performance.
Christie needs to get lawmakers to approve the remaining
items in his “toolkit” of measures designed to help schools
and municipalities stay within the new cap, which took effect
this year, said Brigid Harrison, a professor of law and politics
at Montclair State University. The proposals would cap contract
awards and curb payouts for unused sick-leave and vacation days.
“It’s the difference between his being able to achieve
political success and just being another politician with
promises to lower property taxes,” she said.
To contact the reporter on this story:
Terrence Dopp in Trenton, New Jersey, at
tdopp@bloomberg.net.
To contact the editor responsible for this story:
Mark Tannenbaum in New York at
mtannen@bloomberg.net.
China and Kim Jong Il Help Japan, S. Korea Forge Military Ties – Bloomberg
Last Updated on Sunday, 9 January 2011 08:49 Written by admin Sunday, 9 January 2011 08:49
China’s military buildup and failure
to condemn North Korean aggression are helping Japan and South Korea overcome their economic rivalry and a decades-long legacy
of distrust to pursue closer military ties.
Japanese Defense Minister Toshimi Kitazawa and his South
Korean counterpart Kim Kwan Jin hold talks in Seoul today, the
first in almost two years. Each country sent observers to the
other’s military drills with the U.S. for the first time last
year, following attacks by Kim Jong Il’s regime that killed 50
South Koreans.
The threat from North Korea may blunt opposition in the
south driven by animosity toward Japan for its 1910-1945
occupation of the Korean peninsula. Closer ties between Asia’s
two most developed exporters and main U.S. allies may also irk
China, which bridles at America’s presence in a region where it
wants to exert greater influence.
“China surely won’t approve of this, not to mention the
strong opposition from South Koreans who still have bad feelings
against Japan,” said Choi Jong Kun, a professor of political
science and international studies at Yonsei University in Seoul.
“The military relationship between South Korea and Japan still
has a lot of hurdles to overcome.”
Kitazawa on Jan. 5 said he wants to discuss with Kim an
agreement to share military goods and services, which Japan
already has with the U.S. and Australia. South Korea’s Ministry
of National Defense said that while no agreements will be signed,
the meeting will “provide an opportunity to strengthen military
ties to a higher level.”
Legacy of Occupation
South Korea says 176,000 of its citizens were drafted by
Japan as soldiers, labor workers and sex slaves during the
occupation. Japan’s Prime Minister Naoto Kan in August offered
“deep remorse” for the annexation, which South Korean President Lee Myung Bak called “a step forward,” while noting there were
still issues to be resolved, including victims compensation.
Japan and South Korea are also industrial rivals. While
South Korea’s gross domestic product remains about a sixth of
Japan’s, its economy has outperformed that of its neighbor in
every quarter bar one for the past 10 years. Korea’s benchmark Kospi Index quadrupled in that period. Japan’s Nikkei 225 Share
Index fell by about a quarter.
Suwon, South Korea-based Samsung Electronics Co. overtook
Sony Corp., based in Tokyo, as the world’s largest maker of
flat-panel televisions in the past decade, and is now the most-
profitable company in the two countries. Hyundai Heavy
Industries Co., based in Ulsan, helped South Korea take Japan’s
place as the world’s biggest shipbuilding nation.
U.S. Urging
The U.S. is urging South Korea and Japan to boost military
cooperation after North Korea on Nov. 23 shelled Yeonpyeong
Island, killing four people. The U.S. and Japan also backed an
international report that found a North Korean torpedo sank one
of the South’s warships in March, killing 46 sailors.
Admiral Mike Mullen, chairman of the Joint Chiefs of Staff,
said on Dec. 8 in Seoul that he hopes U.S. military exercises
with South Korea will include Japanese participation to “cement
our unified position on the threat posed by North Korea.”
China, North Korea’s biggest ally, refused to condemn
either attack and criticized the Japan-U.S. drills in December
as an obstacle to easing regional tension.
“Some are playing with knives and guns while China is
criticized for calling for dialogue, is that fair?”
Foreign Ministry spokeswoman Jiang Yu said on Dec. 2.
Credit Market Concerns
The cost of insuring Japanese and South Korea government
debt jumped after the shelling. South Korea’s five-year credit
default swaps rose 17 percent on Nov. 23, the biggest one-day
gain in two years, data compiled by Bloomberg show. Japan’s CDS
gained 27 percent in the six days following the attack.
“It’s important for the U.S., South Korea and Japan to
cooperate more closely at a time when the Korean peninsula is
increasingly unstable,” said Tsuneo Watanabe, a senior fellow
at the Tokyo Foundation think-tank. “Japan-South Korean accords
are vital for smooth operations among the three countries.”
Today’s talks coincide with U.S. Defense Secretary Robert Gates’ visit to China to mend military ties cut off a year ago
after the U.S. announced a $ 6.4 billion arms sale to Taiwan.
Gates two days ago said Chinese military development has
“the potential to put some of our capabilities at risk,” adding
that the Asian country may be developing a stealth fighter more
quickly than the U.S. had believed. It marked the second time in
a week a Pentagon official had said the U.S. may have
underestimated the speed of China’s weapons development.
Japan last month said it would shift the focus of its
national defense toward China in a report that criticized a
“lack of transparency” in Chinese military spending.
“South Korea’s rising global profile has helped it
overcome its minority complex toward Japan,” said Dong Yong
Sueng, a fellow on economic security at the Samsung Economic
Research Institute in Seoul. “The current geopolitical
situation serves as a good opportunity for them to overcome
their history.”
To contact the reporters on this story:
Bomi Lim in Seoul at
blim30@bloomberg.net;
Sachiko Sakamaki in Tokyo at
Ssakamaki1@bloomberg.net
To contact the editor responsible for this story:
Peter Hirschberg in Hong Kong at
phirschberg@bloomberg.net
China’s Reluctance to Take Yuan `Medicine’ Hampers G-20 – Bloomberg
Last Updated on Thursday, 11 November 2010 04:29 Written by admin Thursday, 11 November 2010 04:29
China’s President Hu Jintao arrives for a reception at the G20 summit in Seoul on November 11, 2010 . Photographer: Michel Euler/AFP/Getty Images
Nov. 11 (Bloomberg) — Simon Johnson, a professor at Massachusetts Institute of Technology’s Sloan School of Management and a Bloomberg News columnist, talks about the oulook for global currencies and sovereign debt in Europe.
Johnson, speaking with Tom Keene on Bloomberg Television’s “Surveillance Midday,” also discusses the outlook for U.S. financial markets. (Source: Bloomberg)
Nov. 11 (Bloomberg) — John Taylor, chairman and founder of FX Concepts, discusses the Group of 20 nations summit in Seoul and the outlook for the global currency market.
Taylor speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)
Nov. 11 (Bloomberg) — George Magnus, a senior economic adviser at UBS AG, discusses the outlook for this weekend’s meeting of leaders from the Group of 20 nations and expectations for China’s yuan.
Magnus speaks from London with Deirdre Bolton on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)
Nov. 11 (Bloomberg) — Mitul Kotecha, head of global foreign exchange strategy at Credit Agricole CIB in Hong Kong, talks about the outlook for Group of 20 discussions on global currencies.
Speaking with Maryam Nemazee on Bloomberg Television’s “Countdown,” he also discusses the outlook for the euro. (Source: Bloomberg)
Group of 20 nations’ efforts to
tackle currency and trade imbalances floundered as China
rejected policy prescriptions that fault its exchange rate
regime and directed criticism at additional monetary easing in
the U.S.
“Don’t make other people take the medicine for your
disease,” Yu Jianhua, a director general at China’s Ministry of
Commerce, told reporters in Seoul late yesterday. “Quantitative
easing will have a very big impact on developing countries
including China.”
At stake for the global economy is averting a repeat of the
currency and trade tensions that erupted in the 1930s and were
blamed for worsening the Great Depression. The pivotal roles
China and the U.S. must play to get a breakthrough at the G-20
was underscored by an 80-minute meeting between Presidents
Barack Obama and Hu Jintao dominated by exchange rates.
“The Chinese can’t help but think this is just a way of
continuing to point the finger at China,” said Neil Mackinnon,
an economist at VTB Capital Inc. in London and a former Treasury
official. “It doesn’t look as if we’re going to see anything
specific or substantive that will address global imbalances.”
China’s record $ 28 billion trade surplus with the U.S. in
August heightened criticism its government maintains an unfair
cap on yuan appreciation to the detriment of U.S. businesses.
Obama, who has pledged to double exports within five years, has
sought to broaden the currency debate by linking it to a
worldwide effort to rein in current-account excesses.
Germany’s Surplus
Germany’s current-account surplus as a percentage of gross
domestic product for 2010 is set to be 6.1 percent, the second
highest in the G-20, after Saudi Arabia, based on International
Monetary Fund projections. The U.S. is likely to see a deficit
equivalent to 3.2 percent of GDP, the third deepest, it said.
China is seeking to modify the language on trade imbalances
in the summit communique, said a German official taking part in
the talks who requested anonymity because he isn’t authorized to
speak publicly for the government. G-20 finance chiefs last
month agreed to “pursue the full range of policies conducive to
reducing excessive imbalances and maintaining current account
balances at sustainable levels.”
Obama and Hu spent “the bulk” of their talks discussing
exchange rates before attending a dinner with other leaders,
said White House press secretary Robert Gibbs. Canadian Prime
Minister Stephen Harper said he was “not so sure” an agreement
can be reached in time for the summit’s conclusion later today.
‘Underlying Causes’
“They have to deal with the underlying causes for this
instability, which are these imbalances,” said Josef Ackermann,
chief executive officer of Frankfurt-based Deutsche Bank AG.
“It’s not about assigning blame to who is in deficit and who is
in surplus — the markets will decide who is in surplus and who
in deficit — but to create a framework to find the right
balance.”
China’s yuan rose 0.16 percent to 6.6238 per dollar as of
5:30 p.m. in Shanghai yesterday, according to the China Foreign
Exchange Trading System. The yuan has risen about 3 percent
against the U.S. currency since June 19, when China said it was
allowing a resumption of appreciation that was frozen in 2008.
China permitted a faster pace of gains this week, a
strengthening of about 0.8 percent since Nov. 8, the yuan’s
biggest three-day advance since a currency peg ended in July
2005.
Geithner, China
U.S. Treasury Secretary Timothy F. Geithner has said that
the yuan remains undervalued and that China needs to show
continued commitment to allow the Chinese currency to rise
further over time. China has countered by saying that a quick
increase in the yuan’s value would cause economic and social
disruption.
The G-20 meeting of finance ministers and central bankers
last month agreed to move toward “more market-determined
exchange rate systems” and make efforts on “reducing excessive
imbalances.” The U.S. Federal Reserve a week later said it
would pump $ 600 billion into the economy to spur growth. Brazil,
Germany and China said the move would drive down the dollar and
fuel speculative capital flows that risk asset bubbles.
Commodity Prices
Copper on the London Metal Exchange rose to a record
yesterday, while gold and cotton touched all-time highs this
week as investors sought assets as a hedge against currency
debasement. The weak dollar and low interest rates are fueling
inflows of funds to higher-yielding markets, with governments in
South Korea, Brazil and Taiwan raising barriers to foreign
investors.
Former Federal Reserve Chairman Alan Greenspan, writing in
an opinion piece in the Financial Times yesterday, said that
both the U.S. and China were depressing their currencies.
“We will never seek to weaken our currency as a tool to
gain competitive advantage,” Geithner said in an interview with
CNBC television, according to a transcript released yesterday.
China, the U.S.’s second-largest trading partner, had a
trade surplus in excess of $ 170 billion with the U.S. in the 12
months through August, according to the American Department of
Commerce.
Opposing Targets
China, along with Germany, opposed a suggestion last month
by Geithner that the G-20 consider targets for reining in
current-account imbalances. To meet the targets, countries like
China would likely have to let the value of their currency rise,
making their exports more expensive.
Differences in competitiveness between nations can’t be
leveled by “politically imposed limits,” German Chancellor
Angela Merkel told global business leaders in Seoul yesterday.
Setting limits on trade gaps “is an idea that should be
discussed,” French Finance Minister Christine Lagarde said.
France takes over the presidency of the Group of 20
tomorrow after the summit chaired by South Korea’s Lee.
“Some countries, those with big deficits, need to deal
with those deficits,” U.K. Prime Minister David Cameron said in
Seoul. The big fear is “countries pursuing beggar-my-neighbor
policies — trying to do well for themselves but not caring
about the rest of the world.”
To contact the reporters on this story:
Nicholas Johnston in Seoul at
njohnston3@bloomberg.net;
Michael Forsythe in Seoul at
mforsythe@bloomberg.net
To contact the editor responsible for this story:
Bill Austin at
billaustin@bloomberg.net
Tags: Bloomberg, China's, Hampers, medicine, Reluctance, Take, yuan | Posted under World | No Comments
Eaton’s Cutler Urges More Aggressive Trade Talks to Create Export Markets – Bloomberg
Last Updated on Thursday, 11 November 2010 01:29 Written by admin Thursday, 11 November 2010 01:29
The U.S. should begin negotiating
multiple trade agreements simultaneously to meet President
Barack Obama’s goal of doubling exports in five years, Eaton
Corp. Chief Executive Officer Sandy Cutler said.
“We have had trade on the cooler for two years,” Cutler,
59, said today in an interview at Bloomberg’s world headquarters
in New York. Cutler urged more aggressive negotiations as Obama,
in Seoul, said free-trade talks with South Korea have yet to
produce an agreement.
The U.S. needs more access to India, China, Brazil, parts
of South America, the Middle East and South Africa, because
that’s where the fastest growth is taking place, said Cutler,
whose company makes circuit breakers and parts for factory
equipment.
Eaton garnered about 47 percent of its $ 11.9 billion in
sales last year outside the U.S., up from about 35 percent in
2004, according to data compiled by Bloomberg.
The Cleveland, Ohio-based company has set a goal of
increasing that figure to 60 percent, with 30 percent of sales
in emerging markets, Cutler said on a conference call Nov. 9.
The U.S. should follow the lead set by countries including
the U.K. and Germany, he said.
“They’ve recognized if their own domestic economy is not
growing quickly, you need to be establishing very active
additional trade agreements,” Cutler said in the interview.
Elections last week that gave control of the U.S. House of
Representatives to Republicans and increased their membership in
the Senate may boost the chances that Congress will pass free-
trade agreements with South Korea, Colombia and Panama that
President George W. Bush approved in 2007, lawmakers said.
‘Need to Finish’
Obama, who refrained from pushing those deals in Congress
amid high unemployment, has said the South Korean accord needs
modifications on beef and autos before Congress considers it.
“We clearly need to finish Korea,” Cutler said. “It’s
been going on for a year and a half. It’s the only one we are
working on, so it’s pretty easy to say that’s the one we should
focus on.”
Obama and South Korean president Lee Myung Bak said in
Seoul today that free-trade talks between the two countries will
continue after they were unable to meet the U.S. president’s
goal of reaching a modified agreement by the time of his visit
to the South Korean capital.
With almost $ 68 billion in two-way trade between the
nations, the deal would be the U.S.’s largest free-trade accord
since the North American Free Trade Agreement in 1994.
To contact the reporter on this story:
Will Daley in New York at
wdaley2@bloomberg.net
To contact the editor responsible for this story:
Ed Dufner at
edufner@bloomberg.net