State Government Revenues Fall 16 Percent

/PRNewswire/ -- State governments took in nearly $1.7 trillion in total revenues in fiscal year 2008, a 15.8 percent decrease from 2007, according to new data on state government finances released by the U.S. Census Bureau. The largest share of those revenues came from taxes ($780.7 billion), which made up 46.5 percent. The decline was primarily because of a decrease in insurance trust revenue, which fell by $377.7 billion (72.7 percent).

Insurance trust systems are comprised of public employee retirement systems, the unemployment compensation system, state government workers' compensation programs and other state social insurance trusts.

Total state government expenditures increased 6.2 percent from fiscal year 2007,
totaling slightly more than $1.7 trillion in 2008. Education ($546.8 billion), public welfare
($412.1 billion) and highways ($107.2 billion) represented the top three outlays, accounting for nearly two-thirds of all state government total expenditures.

The findings come from the 2008 Annual Survey of State Government Finances, which includes data on revenues, expenditures, debt, and cash and security holdings for each state, as well as a national level summary. The major source of these finance statistics is the governments' own accounting systems, either directly from a government's own records or through intermediate reporting systems.

Eleven states spent more than 25 percent of total expenditures on public welfare, with Tennessee (32.8 percent), Maine (30.5 percent) and Rhode Island (29.8 percent) spending the highest percentage of their total expenditures.

Public welfare spending is used to support people based on need and includes such items as old-age assistance, temporary assistance for needy families, and commodities and services provided under welfare programs, including medical care or burial services.

Hawaii (11.5 percent), Alabama (10.1 percent) and South Carolina (9.9 percent) led in spending on public health and hospitals as a percentage of total expenditures.

In addition to state taxes, state lotteries were another way many state governments (including Washington, D.C.) raised revenue in 2008. Total state lottery ticket sales reached $77.3 billion in 2008, an increase of 1.8 percent from 2007. Lottery prize payouts represented $56.7 billion in expenditures, a 1.4 percent increase over the previous year. And lottery proceeds represented $18.2 billion in state government revenue, an increase of 2.9 percent. New York ($2.7 billion), Florida ($1.4 billion) and California ($1.2 billion) led the nation in lottery proceeds.

The data used in the tabulations came from state government records. As such, they are not subject to sampling error. Although quality assurance methods were applied to all phases of data collection and processing, the data are subject to nonsampling error, including errors of response and miscoding. For information, visit the Census Bureau's Web site at: http://www.census.gov/govs/www/index.html.

For information on Georgia expenditures, visit http://www.census.gov/govs/state/0811gast.html

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House Democrat's Health Care Reform Bill Is a 1,018-Page Nightmare

/PRNewswire/ -- The Democrats' health care reform bill currently on the floor of the House of Representatives creates a new government-run health plan that will undercut the private market and force as many as 119 million people to lose their private health insurance and be forced into a Medicare-like plan, according to National Center for Policy Analysis President John C. Goodman.

"Americans who desperately need health care relief won't get it in this bill," said Goodman. "This legislation is going to create a financial and medical nightmare for Americans."

"Of course, members of Congress will be able to hold on to their Cadillac health care plans because this reform won't apply to them," he added.

The bill requires employers to pay the government for health reform - either by purchasing government-approved insurance for their employees, or (more likely) by paying a tax and sending their employees over to the government-run Medicare-like plan.

"This bill has ALL the bad ideas from previous versions, plus a cost of one trillion dollars, and NO long-term solutions that will control costs or improve quality," added Goodman. "This bill contains 1,018 pages of new regulations that will REQUIRE you to buy as much health insurance as the government mandates, even before you buy groceries, gas, or pay your rent. If you don't buy government-approved insurance, you will be taxed."

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NIA Says Health Care Will Cause U.S. Dollar Collapse

/PRNewswire/ -- The National Inflation Association today released the following statement to its http://inflation.us/ members:

"It is becoming increasingly likely that health care will be the straw that causes the U.S. Dollar to collapse. There is no doubt about it that health care costs are out-of-control in America. Unfortunately, most Americans are calling for the government to do something about astronomical health care costs, when the government is actually the cause of the crisis and will only make it much worse.

Medicare costs have increased from $3 billion in 1966 to an estimated $408 billion in 2009. This equals a compound annual growth rate of 12% and proves that inflation gravitates towards parts of the economy where government is involved in the most. Health care now accounts for 17% of the U.S. GDP, and by 2017 it is estimated that one out of every $5 spent in this country will be on health care.

Isn't it amazing that the one area of medical care that is going down in price is plastic surgery and other cosmetic procedures, because it is the area where the government is involved in the least? Free market forces dictate plastic surgery prices, because health insurance typically does not cover it.

Today we have a system where tax free health benefits from employers force Americans into expensive health insurance plans that encourage individuals to claim every small doctor's visit. This creates abuse of the system with Americans going to the emergency room for unnecessary reasons, knowing they will only have to pay a $10 co-pay.

If Americans were able to take home the cost of their health insurance plans, in the form of higher wages, they would then be able to purchase cheaper health insurance plans on their own that cover only bad accidents and major emergencies. If they wanted to see the doctor for something minor, they could pay for it out of pocket. With less people abusing the system, waits would be shorter and doctors would be encouraged to charge the least. Today, with doctors getting paid by a handful of third-party corporations, they are encouraged to charge the most.

Government intervention into health care has ruined the industry for doctors too. The government has made the industry less efficient by creating too many licenses and regulations. Doctors now spend half of their time filling out excessive paperwork while worrying about malpractice lawsuits. If somebody has a small bruise on their arm, instead of telling the patient to use ice, doctors now run multiple tests and fill out dozens of forms to comply with regulations and prevent themselves from being sued.

Obama's plan of socialized health care will wipe out the private sector and create less competition. No private health insurance companies will be able to compete with the government, which will be able to operate at a loss continuously. With any remaining efficiencies of the free market eliminated, costs will go up for all Americans in the form of much higher inflation, and the quality of health care will go down.

If we want the U.S. to remain the country where millions of people travel to for top quality medical care, we need to allow the free market to work for itself. Free market principles are the only way to drive costs down while improving the quality of health care."

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"Safety-Net" Hospitals Need Support to Survive

Health care reform may make life easier for low-income Americans in the future, but for now, it’s “safety-net” hospitals that need rescuing in order to serve the needs of millions of uninsured patients and meet the disaster response needs of communities, say experts in the June 18, 2009 New England Journal of Medicine (NEJM).

Safety-net hospitals are typically found in areas in which the uninsured are concentrated – inner-city neighborhoods and economically depressed rural communities. Private hospitals with a large base of paying patients can shift their relatively modest costs of uncompensated care onto other patients’ bills, safety-net hospitals have little capacity for shifting costs.

Nearly 30 years ago, the federal government developed a plan to partner with states to provide supplemental Medicaid payments to facilities that provided a disproportionate share of care to the uninsured and Medicaid beneficiaries. These facilities came to be called “disproportionate share hospitals (DSHs)” and the supplements were called DSH payments.

But in the years that followed, many state governments figured out how to exploit loopholes in the program to secure large federal DSH payments and direct the money to other purposes. After several cycles of reform, most of these abuses have been eliminated, but wide disparities in DSH payments persist.

“Over the years, the program has had its flaws, but the DSH funds that finally reach safety-net hospitals are vital to their survival,” says Arthur L. Kellermann, MD, MPH, professor of emergency medicine and associate dean, Emory University School of Medicine. In addition to providing ‘safety net’ care, these institutions play several vital roles in their communities.”

Kellermann and co-author Michael Spivey, JD, a principal with Spivey/Harris Health Policy Group, say in the NEJM Perspective article that four changes to the federal law would allow the DSH program to achieve its original purpose.

“First, we believe that DSH funding should be restricted to truly disproportionate providers,” the authors say. “The legislative clause that deems certain hospitals to be DSH facilities should be revised so that DSH payments can be made only to these facilities.” Currently, state governments can direct DSH payments to hospitals that provide little or no charity care if they choose to do so.

Second, say Kellermann and Spivey, the flexibility given to states to designate special classes of DSH providers should be eliminated. They believe that states should not be allowed to favor certain hospitals over those that provide a greater proportion of uncompensated care. DSH payments should be based on a single, uniform method.

Third, because trauma and emergency care are vital to public safety, a hospital should be required to operate an emergency department and participate in its state’s trauma system to receive DSH funds.

Fourth, large DSH hospitals that anchor their region’s disaster plan should receive supplemental funds, provided that they meet strict performance and readiness criteria. A portion of current federal DSH money - perhaps 10 percent - should be held back and awarded for this purpose through competitive grants.

“By allocating federal funds to hospitals that need them most, the reforms we propose would go a long way toward correcting the program’s deficiencies,” say Kellermann and Spivey.

The authors acknowledge that they could have gone farther with their recommendations.

“Our proposals do not correct historical inequities in the allocation of DSH funds among the states,” they concede. “Attempts to do so would probably trigger a legislative battle that would doom any chance for reform.

“Until fundamental health care reform is achieved, millions of low-income Americans will remain dependent on safety-net facilities for care,” say the authors. “Everyone - insured and uninsured alike - benefits from the specialized services, medical education, and trauma and disaster care that many safety-net hospitals provide. Today, DSH is needed more than ever. The program is broken, but we believe it can and should be fixed.”

From Woodruff Health Sciences Center News

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What's Ahead for the Global Auto Industry?

Over the course of just a few months, the profile of the U.S. automobile industry has changed in profound ways as GM and Chrysler, two of the Big Three American carmakers, have filed for bankruptcy. The most immediate, visible effects are likely to involve direct and indirect job losses as manufacturing plants are shut down and car-parts suppliers and other vendors go out of business.

Under a “best case” scenario--a relatively smooth and easy bankruptcy and emergence for the two industrial titans--the U.S. auto industry is likely to lose 60,000 jobs by the end of this year, growing to about 179,000 in 2010, according to a Center for Automotive Research study. The bankruptcies and their ripple effects also will shrink the U.S. economy by $3.4 billion in 2009, and by another $9.9 billion in 2010, according to the CAR study.

But the industry also will undergo other significant strategic and tactical changes, says Jagdish Sheth, chaired professor of marketing at Emory University’s Goizueta Business School and auto industry consultant whose works include The Rule of Three: Surviving and Thriving in Competitive Markets and The Self-Destructive Habits of Good Companies...And How to Break Them. In a recent interview with Knowledge@Emory, Sheth discusses the latest developments within the industry and the likely outcomes.

Knowledge@Emory: Your “Rule of Three” observes that in almost every mature industry, the natural competitive forces through shakeouts and mergers end up in three large companies as full line suppliers surrounded by many small niche companies. Until recently, the U.S. auto industry was dominated by GM, Ford Motor and Chrysler. With two of them filing for Chapter 11 bankruptcy, what happens to the Rule of Three?

Sheth: Nothing. The Rule of Three is still valid because the automotive industry, like many others, is no longer a domestic industry, but a global one. We have already seen this in the tire industry. At one time, the U.S. was dominated by Goodyear, Firestone, and B.F. Goodrich. In Europe, the big three were Michelin, Dunlop, and Pirelli. But today’s global tire market is dominated by Bridgestone (Japan), Michelin (Europe) and Goodyear (US). Something similar will happen in the auto market, and we will see three companies from different markets dominating the global auto industry, while others will operate in niche segments.

Knowledge@Emory: Which American companies will likely become global players?

Sheth: First, let us consider what is happening now. Chrysler is not just bankrupt, but is being sold to Fiat. It will get consolidated into a global play. So in the U.S., we are really talking about Ford and GM.

Knowledge@Emory: Which of these two American automakers is likely to dominate the global stage?

Sheth: Ford may be one of them, but only if it makes some strategic international mergers or acquisitions. Ford needs more of a global reach, and may have to merge with a European company; although now that the Nissan-Renault alliance is under strain, there might be a merger of Renault or Peugot with Ford.

If Ford cannot follow through with a significant merger or acquisition, then I think a European carmaker, perhaps Volkswagen, is likely to emerge as a global player; but only after it completes additional mergers such as the one with the owner of the Audi brand [in the 1960s].

Knowledge@Emory: Which carmaker will be the third major player?

Sheth: As things stand, Toyota will be the best candidate. It is already the dominant brand in Japan, which is a big market, and it is active in other Asian markets, such as China and India. Toyota is also entrenched in the United States and in Europe.

Knowledge@Emory: With two of the Big Three U.S. automakers effectively sidelined, will there be any competitive pressure on foreign automakers to maintain or expand their U.S. manufacturing operations?

Sheth: Importing a fully built vehicle is usually not very cost efficient. It means that millions of dollars sit idle as inventory is shipped to a destination, and then further delayed in warehousing and distribution. Instead, as car companies become increasingly globalized, they will find it more efficient to source components globally, while setting up localized assembly facilities. This is similar to the industrial model that PC makers already utilize. But to make this global model work, automakers must improve their supply chain management capabilities. Right now there are still too many delays and other inefficiencies.

Knowledge@Emory: Let’s go back to GM. If it emerges from bankruptcy as a much smaller company, does it still have any competitive advantage?

Sheth: Yes, but not as a carmaker. Instead, GM’s key assets are its capabilities. One of them is OnStar. Right now OnStar is known primarily for its roadside assistance communications, but it can be a key player as automobiles evolve through vehicle telematics, or the integration of sending, receiving and storing multimedia information (voice, data, video) through Internet connectivity. Eventually, vehicles will trade information with each other to reduce traffic accidents and congestion, and will serve as communication centers linking individuals to everything from their home security system to their kitchen appliances.

Knowledge@Emory: These are all innovative ideas, but the U.S. government effectively owns GM right now. Do you think the company can be nimble and responsive when it’s owned by politicians?

Sheth: First, I do not think the federal government wants to be involved in day-to-day management. Instead, I believe the government will act as an institutional investor, setting financial goals and governance targets that will encourage the company to get itself back on track. There is some evidence to suggest that is what happened in the banking bailout. The government initially provided huge sums of money to banks when it loaned money at high interest rates through the Troubled Asset Relief Program (TARP). But the governance requirements and interest rates were so onerous—intentionally so—that banks were incentivized to quickly take steps on their own to raise capital and pay back the TARP funds. Similarly, I think the federal government will quickly move to sell off its stake in GM, or orchestrate a merger or acquisition with a foreign or a private equity company.

Knowledge@Emory: What will increasing globalization mean to the dealership model?

Sheth: I have said before that there are too many dealers and that the traditional model—where state laws often protect dealers’ franchises—is not tenable. But this excess is now being rationalized by GM and Chrysler, which are using their respective bankruptcies to circumvent the state franchise protection laws.

I anticipate more superdealers to emerge, similar to American Nalley of Brunswick and Hennessey Auto Cos. in Georgia [and Reedman-Toll in Pennsylvania]. I also expect we’ll see more regional and national dealers like CarMax and AutoNation.

The automobile industry is changing significantly, and while the developments may cause some initial dislocation, the changes are necessary and will result in greater efficiencies in the long term.

From Knowledge@Emory

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Health Care Reform May Force U.S. Pharmaceutical Companies to Overhaul Sales Strategies, Says New Report From ZS Associates and eyeforpharma

/PRNewswire/ -- While President Obama's push for a larger government role in health care and the prospect of a European-style health care model developing in the United States may worry some pharmaceutical companies, all should share a more immediate concern: the growing influence of payers over physician prescription decisions in the United States.

According to a new report by global management consulting firm ZS Associates and eyeforpharma, a leading provider of pharmaceutical business intelligence, this changing payer landscape will force companies in the United States to change their sales models much like pharmaceutical companies in Europe who must adapt today to serve the needs of the various decision-makers and influencers driving their local health economies. Still, this change won't happen in the U.S. as quickly as in Europe.

"Though U.S. health care has plenty of problems of its own, the lack of central decision-makers, as are common in much of Europe, allows the traditional practice of pharmaceutical representatives calling on physicians to remain effective and largely intact -- for now," said Chris Wright, principal and leader of the pharmaceutical practice at ZS Associates and co-author of the "Drivers of Change to Pharmaceutical Commercial Models" report. "Over the next several years, however, U.S. pharmaceutical companies should trim another 15-20 percent of their sales forces and prepare to do what many in Europe are doing today. They must modify their direct-selling strategies and prepare to sell to an increasingly diverse group of health insurance companies, government payers like Medicare and Medicaid and other opinion leaders who will increasingly influence prescription decisions."

Payer Restrictions in the U.S. versus EU

The fragmented nature of managed care organizations and government-led health care initiatives limits their influence over physician prescription decisions in the United States. So even if a pharmaceutical company fails to obtain a favored spot -- and the concomitant smaller co-pay -- for its drug on a payer's formulary in the United States, physicians and patients still can opt for the drug.

This contrasts with Europe, where government-funded payers such as the Primary Care Trusts (PCTs) in the United Kingdom administer most health care budgets. During the last five years, many of these payers have increased their influence over physician behavior by penalizing those who prescribe drugs that fall outside of increasingly restrictive formularies. They often use a combination of financial rewards and penalties to control prescribing.

"Unlike in the United States, pharmaceutical executives in Europe must immediately change the way they market and sell to increasingly powerful public health care payers who strive to provide their constituents the best drugs at the lowest possible cost," said Rohan Fernando, managing principal for ZS Associates Europe and co-author of the report. "Pharmaceutical companies in the United States should watch carefully the changes taking place in Europe to prepare for a future when they face similar challenges."

Lessons from Europe

Several companies in Europe, primarily in the United Kingdom, the Netherlands, Italy, Spain and Germany, have begun to make meaningful changes to their selling strategies to meet the needs of public payers. While there is no blueprint for strategies that will work for every European country, the "Drivers of Change to Pharmaceutical Commercial Models" report identifies some common features of effective changes to the sales model -- changes that could be relevant for companies in the United States in the near future:

1. Acquire the skills to manage "new" stakeholders effectively, and
integrate sales strategies that previously functioned separately. This
includes blending account management with regional health care payers,
stakeholder management with key opinion leaders and continuing
traditional promotion with physicians.
2. Design flexible, regional strategies that address the differences
between local health economies. This can be a complex undertaking since
many pharmaceutical companies are set up to implement national-level
strategies. Many companies that seek this flexibility will make a move
towards contract sales forces.
3. Create stronger, mutually beneficial relationships with regional health
care payers. Focus not just on product features and benefits, but also
on product value by explicitly tying outcomes to costs.


The Pharmaceutical Sales Rep is Safe -- for Now

Despite frequent news stories about the imminent demise of pharmaceutical sales people, the report suggests that while the rep function will not disappear in the near future, sales representatives will need to adapt.

The report also addresses select, long-term trends that are likely to have a dramatic influence on the future of the sales representative position. Among them: the development of personalized medicine, which would lead to multiple "versions" of a branded product and allow doctors to prescribe drugs that best align with a given patient's genetic makeup. Such a fundamental shift in the branding and marketing of pharmaceutical products could render the pharmaceutical sales representative irrelevant in the future. The report stresses, however, that the impact of personalized medicine won't likely be felt in the next decade.

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H1N1 Flu Update with HHS Secretary Kathleen Sebelius

Video tape of Flu Update
11 am





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AIG Directors Sued to Force Immediate Return of Total Bonuses

/PRNewswire/ -- Today, Freedom Watch announced the filing of a class action lawsuit by shareholders of AIG to force the directors of the company to themselves pay back the millions in illicit bonuses, dividends and other perks they paid out to themselves and other officials who destroyed the company's financial standing.

The lawsuit, filed in the federal court in Los Angeles, is wide reaching and will accomplish what Congress cannot, given the patent illegality of its taxing scheme, which violates the U.S. Constitution as it would tax ex post facto and discriminately.

Larry Klayman, the Chairman and General Counsel of Freedom Watch, who represents the shareholders in their class action suit, issued this statement:

"Today, the American people, not the compromised ruling elite in Washington, D.C., have begun a second American Revolution to take the country back from the con men on Wall Street, and on Pennsylvania Avenue - who under successive administrations played a central role in the meltdown of the U.S. financial system and economy. Freedom Watch will not rest until justice is done and it won't come from the Obama administration, bent on deceiving the U.S. taxpayer that it intends to clean up this corruption, all the while lining the pockets of its friends at AIG with government bailout money, who gave handsomely to have the President elected."

The lawsuit also seeks to recover, from the directors, the losses of the shareholders of the last many months and years, as well as to make AIG whole under new leadership, without the use of government money.

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Symposium to Examine Human Rights in Times of Threat March 27

“Human Rights in an Age of Insecurity” symposium
9 a.m. to 4 p.m. March 27
Speakers Auditorium, Georgia State Student Center, 44 Courtland St., Atlanta

In times of military or economic threat, public fear can breed indifference when it comes to human rights issues, says Michael Galchinsky, professor of English at Georgia State University, who is coordinating a symposium to address what happens to human rights in democracies that are under threat.

In times of national security threats, democracies have typically blocked the public’s right to information, expanded government surveillance and launched attacks on freedom of speech and the rights of due process and habeas corpus. International human rights issues are often ignored as well, Galchinsky said.

“People’s fear sometimes makes them consider human rights to be luxuries rather than entitlements,” he said. “We can see this in real concrete ways: Human rights watchdog groups get less money from the public at this time, they are able to place their information in fewer newspapers, and they have the ear of fewer government officials.”

What makes this especially difficult, Galchinsky said, is that at times of increased insecurity, human rights groups are most needed. With recent economic woes taking center stage, advocacy groups are now also needed to keep an eye on the financial welfare of those in the United States and abroad.

“In our country, we’ve often talked about civil and political rights, but not so much economic, social and cultural rights, which are a big deal in other parts of the world, especially the underdeveloped countries,” he said. “With the global economy tanking, it’s a good time to begin thinking about economic rights and social welfare.”

The symposium aims to address economic and other human rights issues from both a theoretical and a practical standpoint, inviting speakers who have extensive legal knowledge as well as those who have been involved as activists. Keynote speaker Elisa Massimino is CEO and executive director of Human Rights First and has been an advocate for international human rights for nearly 20 years.

In conjunction with the daylong symposium, a photographic exhibit titled “In Black and White: Political Violence in Argentina (1969-1985)” will be on display in the Gallery Lounge, Room 346 of the Student Center, March 22 through 27.

The time is ripe for examining human rights issues in Atlanta. The city is in the midst of finalizing plans to build the Center for Civil and Human Rights, and Georgia State is creating its own Center for Human Rights and Democracy.

“It makes a lot of sense that this conversation is happening here in Atlanta with its strong history of civil rights, and it was Dr. King who sought very much to link civil rights at home to human rights everywhere,” Galchinsky said. “We feel like this is the time to be having this conversation, and it needs to be in Atlanta.”

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New Demographics Program Helps Government Leaders Plan for the Future

Georgia leaders at all levels of government will now be able to make more informed decisions related to tough public issues through the Applied Demography Program, a new service of the University of Georgia's Carl Vinson Institute of Government.

The program, a partnership with the state's Office of Planning and Budget, will provide a regularly updated, consistent and objective set of population and employment data useful for state and local government budget planning, said Warren Brown, director of the Applied Demography Program.

"By combining local trends with forecasts of national, state and regional changes, the Applied Demography Program will fill the gap for information between what the U.S. Census Bureau does for the nation and what Georgia cities and counties can do on their own and deliver it in an expedient manner," he explained.

The Vinson Institute will release the first population and employment projections to the public by the end of March, along with guidelines on how they can be used by government entities for strategic planning. Updates will be released every two years.

"The University of Georgia and the Vinson Institute have always been committed to providing leaders with systematic, data-driven research to address public issues. We look forward to enhancing officials' ability to anticipate future scenarios and plan accordingly in today's increasingly complex government environment," said Steve Wrigley, Vinson Institute director.

For example, the Environmental Protection Division of the Georgia Department of Natural Resources plans to incorporate the Applied Demography Program's population and employment projections into their process for developing regional water plans throughout the state.

Before joining the Vinson Institute, Brown directed Cornell University's Program on Applied Demographics, producing population estimates and projections for New York State. He has worked closely with the U.S. Census Bureau; he is a past chair of the bureau's Federal State Cooperative for Population Estimates.

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Consumer Reports Survey: 56 Percent of Americans Think U.S. Needs to Help Citizens More in Tough Economy

/PRNewswire-USNewswire/ -- Consumer Reports' latest national survey finds that more than half (56%) of respondents think that government hasn't done enough for them in these tough economic times.

Only 17 percent of those polled said the government needs to do more for banks and financial institutions. In the poll, 29 percent said the government went too far in bailing out the financial industry. Thirty-nine percent were unsure.

The Consumer Reports National Research center calculated results based on a nationally representative telephone survey of 2000 adults, conducted in late October 2008. The full report is available in the January issue of Consumer Reports on sale December 2 or at www.ConsumerReports.org.

"The results show that people largely think the bailout won't help average citizens," said Noreen Perrotta, Consumer Reports money editor. "We took a look at the responses and came up with dos and don'ts for consumers dealing with financial distress."

When asked which reforms could help Main Street the most, respondents to CR's poll cited these top actions:

-- Ensuring the financial health of the Social Security system. (88 %)
-- Reducing the national debt. (87%)
-- Protecting pensions and other retirement accounts when companies or
financial institutions go under. (85%)
-- Increase spending on energy exploration, energy efficiency, and
alternative energy sources. (84%)
-- Ensure affordable health care for all Americans. (82%)
-- Increase regulation of financial institutions to ensure responsible
practices. (78%)
-- Extend federal insurance to all deposits in savings and money market
accounts. (78%)
-- Cut taxes for working Americans. (77%)


The rescue plan enacted in October gave broad authority to the Secretary of the Treasury to use as much as $700 billion to shore up the ailing financial industry. Economists say that it will ultimately help millions of people of who are falling victim to the souring economy.

But back on Main Street, the rescue plan may seem like a bitter pill because the money is going to the financial institutions that many see as the cause of the problem. The people CR polled blamed several factors for the economic crisis, including poor lending practices by banks and mortgage companies (27 percent), lack of government oversight (26 percent), Wall Street greed (19 percent), and excessive borrowing by consumers (15 percent).

Lost jobs, lost health care

The top worry of poll respondents was the health of Social Security; 88 percent called the issue important or very important. It most likely looms large because of the increasing fragility of other sources of retirement income. Only about half of working Americans are enrolled in a pension or 401(k) plan. Americans have lost as much as $2 trillion in retirement savings over the past year and a half.

While retirees cope with diminished nest eggs, younger workers worry about unemployment increasing. It could reach 8 percent nationally, according to some estimates. With the loss of jobs comes the loss of health-care coverage. Twenty percent of respondents in CR's survey said they're unable to afford medical bills or drugs; 15 percent said they lost coverage or their benefits were reduced because of the downturn.

Seventy percent of poll respondents would like to see government regulation of mortgage lenders. Only 4 percent said they've missed a mortgage payment, but families stuck with subprime loans are at risk of falling behind.

Some economists fear that the credit-card defaults could be the next shoe to drop in the economy, as overextended borrowers can't meet their payments. Defaults are expected to reach record highs as unemployment increases. Fifty-seven percent of poll respondents said they've reduced their credit-card spending; Eighteen percent said they have had their interest rates increased, been hit with penalty fees, or had their credit lines reduced.

CR's Dos and Don'ts of Dealing with Financial Distress

DO contact your lender immediately if you can't pay your mortgage. You might be able to restructure your loan or get your lender to agree to a lesser amount to pay it off.

DON'T borrow against your 401(k). You'll probably need to repay the loan within five years or it will count as a withdrawal. If you leave your job before then, you'll owe federal and state income taxes on the outstanding loan, plus a ten percent penalty if you're younger than 59 1/2.

DO take advantage of your employer contribution to your 401(k). Put away at least as much as you need to get the maximum matching amount.

DON'T take a refund anticipation loan. They are short-term loans that you pay back with your tax refund. Interest rates can run into the triple digits on an annualized basis. Filing your taxes online and having the refund direct-deposited can get cash to you almost as fast.

DO consider raising your insurance deductibles. That will reduce your premiums. Home-insurance policies, for instance, typically carry a $250 deductible. If you're willing to bear more risk, you can save upward of 15 percent per year in premiums with a $500 deductible.

DON'T take cash advances. Credit-card advances can come with up-front charges of 2 to 4 percent and have a higher interest rate than regular card purchases. Payday loans, which are cash advances on your wages, can cost you $15 to $30 for every $100 you borrow.

DO cut what you can from your budget. You can save a lot on groceries by taking advantage of sales and buying less-expensive store brands. Look at your other monthly expenses to see what you can trim, including premium cable service or pricey coffee drinks.

The Consumer Reports National Research Center calculated results based on a telephone survey of a nationally representative probability of 2,000 adults, 18 years or older in the month of October 2008. The margin of error is +/- 2.2% among a 95% confidence level.

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CAGW Questions Healthcare Plan Options Presented to the Dougherty County Commission

PRNewswire-USNewswire/ -- On behalf of its 24,965 members and supporters in Georgia, Citizens Against Government Waste (CAGW) today called for the public release of the details related to how insurance broker Kirk Rouse made recommendations to the Dougherty County Commission on changes to the health care plan for county employees. CAGW President Tom Schatz sent a letter to the county commissioners expressing concerns and asking questions about the process.

Schatz wrote, "The Commission ... has an obligation to select a plan through an open, fair and competitive bid process that provides the best possible quality health care at the lowest possible cost. ... Mr. Rouse owes the Commissioners and the taxpaying public a full accounting of how he arrived at his recommendations. He should reveal all options that were available to him. Simply comparing various forms of exclusive deals for Phoebe Putney Memorial Hospital is not the kind of rigorous exercise that the county employees and the public deserve."

The letter questioned whether or not a formal request for proposal was issued, whether competitive bids were considered that did not require exclusive bids for Phoebe Putney or Palmyra Medical Center, what kind of criteria Mr. Rouse used, and how he reached his recommendation for the commission.

Mr. Schatz's letter added, "Basic free market principles dictate that identifying an alternative health care plan that offers a choice should provide better savings than an exclusive arrangement with either hospital. Dougherty County taxpayers deserve the benefit of any additional savings that can be achieved by identifying a plan that offers in-network choice. Mr. Rouse has not done his job until he has explored this option for the county employees and taxpayers."

The Dougherty County Commission is scheduled to meet Monday, November 17, 2008, at 10:00 a.m. at the Central Square Government Center, 222 Pine Avenue, Albany, Georgia to make a final decision on the proposed changes to the County employee health care plan.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.

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Land Banking Key Solution For Vacant, Abandoned Properties, Says Emory Professor

The federal government needs to play a critical role in the use of land banking programs to alleviate one of the consequences of the nation's mortgage foreclosure crisis – vacant and abandoned properties, says Emory Law professor Frank S. Alexander, one the nation's leading experts on local government land banks.

In a paper released Oct. 29 by the Brookings Institution's Metropolitan Policy Program, Alexander says that more and more communities are "stressed by the catastrophic mortgage foreclosure crisis and the long-run decline of older, industrial regions," and are struggling to deal with vacant and abandoned properties. Read the paper at: http://www.brookings.edu/papers/2008/1028_mortgage_crisis_alexander.aspx .

"To alleviate this drag on national prosperity, the federal government should advance policies that support regional and local land banking for the 21st century," writes Alexander, who directs the Project on Affordable Housing and Community Development at Emory's Center for the Study of Law and Religion (CSLR). Alexander, CSLR's founding director, is the author of the leading text in the country on land banking, "Land Bank Authorities: A Guide for the Creation and Operation of Local Land Banks."

Land banking enables local governments to acquire vacant and abandoned properties and convert them to productive use or hold them for long-term strategic public purposes. Common re-uses of such property are affordable housing, mixed-use developments, or mixed-income housing, all provided by not-for-profit entities.

The Emergency Assistance Act in the Home and Economic Recovery Act of 2008, passed in July, recognized land banking as a federal concern and funded it with $3.92 billion, but Alexander says neither the bill's clarity for implementation nor the amount of funding it provides are enough.

"It does not come close to meeting the costs associated with the two million foreclosures projected by the end of 2008 and the local revenues lost from vacant and abandoned properties," he writes, adding that earlier drafts of the bill called for $15 billion in loans and grants.

"The role of land banking is not to replace or supplant the open market; it steps in when there is a failure of market conditions," says Alexander.

Alexander reports that during the mortgage crisis of the past two years, foreclosures doubled nationwide -- in August 2008 alone, one of every 416 households received a foreclosure notice. And, almost 600,000 vacant, for-sale homes were added to weak real estate markets. This decline has compounded the long-term problem of vacancies and abandonments in older, industrial regions.

"When left unaddressed, these problem properties impose severe costs on neighborhoods, including reduced property values and tax revenues; increased arson and crime; and greater demands for police surveillance and response," explains Alexander.

In addition to capitalizing local and regional land banking, Alexander recommends that federal policy provide incentives for reforming local code enforcement and state tax foreclosure procedures, and incentives for communities to develop inter-jurisdictional entities that will allow them to address property issues across city and county boundary lines.

"Forty years ago, land banking was encouraged to be a part of federal housing and urban development policy. It is time for it to be implemented. The need is greater than ever; the time is now; and the opportunity is here," he concludes.

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Arts Across Georgia

More Than Five Billion Dollars Released Under LIHEAP

GFP Note: Georgia will receive over $80,000,000 under this program.

HHS Secretary Mike Leavitt today announced the release of $5.1 billion
from the federal government's Low Income Home Energy Assistance Program
(LIHEAP) under the Fiscal Year 2009 Continuing Resolution. The funds
will assist states, territories, tribal areas and the District of
Columbia with addressing their energy needs, particularly for the
upcoming winter season.

"The release of these funds will help low-income families stay warm this
winter," Secretary Leavitt said. "These funds will also help reduce the
risk of health and safety problems exacerbated by exposure to extreme
temperatures."

LIHEAP funding is provided to states through the Office of Community
Services in the Administration for Children and Families (ACF) at HHS.
The funds will assist eligible low-income households in meeting their
heating and other energy needs.

"The funds released by the Bush Administration will help our most
vulnerable citizens, including the disabled, elderly and children," said
Josephine Robinson, director, Office of Community Services at ACF.

Under the language of the Continuing Resolution, $4.5 billion in block
grant funds and $590 million contingency funds must be released by Oct.
30, 2008. Block grant funds will be allocated to states under a formula
specified in the Continuing Resolution. Of the $590 million in
contingency funds, $100 million will assist states where large numbers
of eligible households use heating oil for heat: Alaska, Connecticut,
Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. The
remaining $490 million will help individuals in all 50 states.

For a complete list of state allocations of the funds released today go
to:
http://www.acf.hhs.gov/news/press/2008/liheap_allocations_fy2009.htm.

Individuals interested in applying for energy assistance should contact
their local/state/LIHEAP agency. For more information, go to
http://www.acf.hhs.gov/programs/liheap or
http://www.acf.hhs.gov/programs/liheap/brochure.html.

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News to Use in Fayetteville, Atlanta, Athens, Peachtree City and all of Georgia

Although $700 Billion Bail-Out is Only 'First Step' on Long Road to Repair Financial Markets, CornerCap Sees Opportunities for Smart Investors

PRNewswire/ -- Although the $700 billion bail-out legislation signed into law earlier this afternoon by President Bush should help set an orderly process for disposing mortgage assets, it is at best a first step to allow for stability and recovery of the nation's financial markets says Atlanta-based CornerCap Investment Counsel's chief investment officer, J. Cannon Carr, Jr.

Writing for the firm's quarterly newsletter, Carr says that even with the government's plan, credit markets are likely to remain tight until home prices and debt levels fall to rational levels.

"That will take time," Carr says. "Only the market can stabilize home prices." Moreover, with extreme risk aversion among lenders, Carr still anticipates a difficult year ahead for the economy.

"Despite the uncertain market, this is not a time for broad selling," Carr notes. "In fact, there are real opportunities available for the patient and disciplined investor."

The full text of Carr's commentary is available online and may be downloaded at no cost from www.cornercap.com/library/Newsletters/n2008fall.pdf .

Carr points out that the nation has experienced 10 recessions since 1945. In all but the most recent recession (2001) stocks slid as the economy slowed, but began their assent before the recession ended.

"Recognizing that it is impossible to call a market bottom, we believe the probabilities are in our favor and now is the time to take advantage of some increasingly attractive opportunities to make selective buys," Carr said.

His firm began increasing its exposure to consumer stocks earlier in the year, and now sees opportunities in Industrials and Basic Materials stocks, which are among the hardest hit on recession fears.

"While there are still potential land mines out there, a healthy balance sheet and flexible cost structure are keys to helping determine which stocks can weather the storm," Carr said.

According to Carr the nation's financial system cracked due to two issues: too much debt and falling housing prices. "Once the housing process stabilizes, the financial system can more accurately price transactions, and more importantly, evaluate asset risk and debt obligations," Carr said.

What started as "apparently" isolated problems in subprime mortgages over a year ago has mounted to a crescendo of scary news about the health of the U.S. financial system and the global economy Carr writes.

Even if the government successfully plugs the holes in the nation's financial dam, the pressure causing the fissures must still drop before the dam can truly hold, Carr says.

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Duke: Treasury Action Should Work, But at High Cost to Taxpayers, Professor Says

The Treasury’s proposed action to use government money to purchase mortgage-backed securities held by financial institutions should work, but at an unnecessary cost to taxpayers, says Steven Schwarcz, the Stanley A. Star Professor of Law & Business at Duke University.

Schwarcz has studied systemic risk for more than a year and has suggested, in congressional testimony last October, that the government should consider acting as a market liquidity provider of last resort, but to do so at the outset of a financial market panic. His article, “Systemic Risk,” will be published next month in the Georgetown Law Journal.

“The focus from the outset should have been on treating loss of confidence in the financial markets, which is the underlying cause of problems in the financial system,” Schwarcz says. “While it may have been necessary under the circumstances for the Fed to act to prop up AIG and Bear Stearns, among others, preventing financial institution failure amounts to treating symptoms of the disease, not its underlying cause. By delaying, the government missed a vital opportunity to nip the problem in the bud at a much lower cost to the American taxpayer.”

The Treasury’s proposed bailout plan is a semi-strong version of Schwarcz’s proposal, which he said would work most effectively if used at the outset of a market panic. The current panic has become so entrenched, however, that financial institutions now distrust the creditworthiness of other financial institutions; they do not know how much in mortgage-backed securities those institutions hold or the value of those securities.

The Treasury, therefore, needs to address both this counterparty risk perception and the market collapse. It is proposing that government money be used to purchase, at a deep discount, mortgage-backed securities held by financial institutions, which would stabilize market prices and reduce counterparty risk.

'This should work," says Schwarcz, "but it will be much more expensive than if the government had stabilized the market at an earlier point."

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