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The US debt ceiling cash crunch: Millions will not get paid…

Coming US cash crunch...

Practical nightmares. Legal disputes. Ethical dilemmas every which way till Sunday.

That’s what the Treasury Department will face — possibly as early as mid-October — if Congress fails to raise the debt ceiling in the next couple of weeks.

Barring an increase in the nation’s borrowing limit, Treasury won’t have enough cash on hand plus revenue to pay all the country’s bills in full and on time.

Some Republicans say that in that situation Treasury should prioritize who gets paid first.

Their proposal: Pay bondholders and Social Security recipients first. Some GOP lawmakers add active-duty military to the list. If Treasury doesn’t have enough money on hand to pay any of those three things on a given day, some proposals would give Treasury limited authority to borrow just enough to make up the difference.

Treasury, by contrast, has repeatedly rejected such proposals.

“Any plan to prioritize some payments over others is simply default by another name,” Treasury Secretary Jack Lew wrote in a letter to lawmakers.

One thing is certain: Failure to raise the debt ceiling on time will cause a cash crunch — and a cascade of problems.

Related: How will a government shutdown affect you?

Automated payment systems would have to be overhauled: The Treasury pays millions of bills every day. It pays interest to bond investors from one computer system and makes all other payments from another.

So technically it may be possible to at least prioritize interest payments since they’re processed separately. But it would be much harder to prioritize everything else.

“Treasury’s systems are not designed to allow picking and choosing. Payments are automatically made as they come due,” former Congressional Budget Director Donald Marron told Congress last week.

Indeed, analysts at the Bipartisan Policy Center think a massive reprogramming of Treasury’s payment operations may be impossible.

Late payments would pile up: Even if it could reprogram its systems to allow for prioritization, Treasury still won’t have enough cash on hand.

Between Oct. 18 and Nov. 15, Treasury is likely to run about $106 billion short of what’s owed, according to a Bipartisan Policy Center analysis. Translation: It wouldn’t be able to make a third of all payments due.

Related: Never-ending charade of debt ceiling fights

So Treasury will have two main options, both awful: It could either pay some bills in full and delay others; or it could delay all payments due on a given day until it has enough money on hand to pay them all.

Senior Treasury officials indicated in an inspector general’s report that the second option would be the most likely and least harmful of the two. But it’s hardly painless.

Depending on how long the debt ceiling standoff lasts, delays could quickly grow from a day or two to several weeks.

“Either approach would damage the economy. Federal employees, contractors, program beneficiaries, businesses and state and local governments would find themselves suddenly short of expected cash, causing a ripple effect through the economy,” said Marron, who is now director of economic policy initiatives at the Urban Institute.

Deciding who gets paid and who gets stiffed is a perilous game: Who deserves to be paid more? Senior citizens, disabled veterans, families who rely on food stamps or small business owners whose federal contracts provide a large chunk of revenue?

Every bill and benefit that Treasury pays represents a legal obligation that the United States has incurred.

Favoring some over others could create a minefield of lawsuits, penalties and other assorted messes.

It would also mean Treasury would be subject to accusations of politically choosing winners over losers.

To say nothing of the fact that paying some but not all of what the federal government owes would harm the economy and likely upend markets.

“If the confidence in the reliability of [U.S.] payments were cast into doubt, then the consequences for the budget, for the U.S. economy, for the U.S. and global financial systems could be large and lasting and very damaging,” Douglas Elmendorf, the current CBO director, told Congress Thursday.

It would also do great damage to America’s reputation. It will be very hard to justify to anyone why the world’s largest economy and richest country is willfully choosing not to pay what it owes.

“As every other nation understands, if you need to borrow you can only hurt yourself by scaring your creditors,” Marron said.

Even worse, he added, “[it] contributes to the perception that the United States does not know how to govern itself.”

[from CNN Money, New York]

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NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
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New bill in US House seeks to protect religious freedom for those who affirm traditional marriage…

Rep. Raúl Labrador (R-Idaho) is sponsoring a bill in the U.S. House of Representatives that would guarantee that no person or group could lose their tax exempt status for affirming traditional marriage, or opposing the redefinition of marriage.

The Marriage and Religious Freedom Act has, at the time of this publication, 75 co-sponsors. Most of them are Republican, but at least two Democrats, Rep. Mike McIntyre (D-N.C.) and Rep. Dan Lipinski (D-Ill.), are also co-sponsoring the bill.

If enacted, no individual or institution could lose tax-exempt status for believing or advocating that marriage should only be between one man and one woman. Many religious institutions in the United States are non-profits and have a tax-exempt status under the U.S. tax code.

In explaining his reasons for the bill, Labrador cited the words of President Barack Obama, from when Obama announced he changed his position on same-sex marriage.

“Regardless of your ideology, we can all agree about the importance of religious liberty in America,” Labrador said Thursday. “Our bill will protect freedom of conscience for those who believe marriage is the union of one man and one woman. This is not a Republican or Democrat issue. As President Obama said, ‘Americans hold a wide range of views’ on marriage and ‘maintaining our nation’s commitment to religious freedom’ is ‘vital.’ We agree.”

Due to recent events, there has been growing concern among religious freedom advocates along with the redefinition of marriage to include same-sex couples in some states. Those who provide wedding services, for instance, have been denied the right to decline working at same-sex weddings, and some religious groups have been denied the right to prefer families with both a husband and a wife for adoption services.

There have also been growing concerns about the abuse of federal power within the Internal Revenue Service, the agency responsible for granting tax-exempt status. In a scandal still under investigation, the IRS reportedly targeted Tea Party, pro-life and conservative religious groups for additional scrutiny and harassment.

Rep. Steve Scalise, chairman of the Republican Study Committee, mentioned the IRS scandal as one reason for his support of the bill.

“I commend Congressman Raúl Labrador for bringing forth this bill and leading on this important issue. As we’ve seen with the IRS scandals, nonprofit organizations and those who support them may be targeted and punished for their beliefs and principles,” Scalise said. “Furthermore, the Supreme Court’s ruling on marriage may embolden those in government who want to impose their views of marriage on faith-based organizations. We need this strong legislation to protect freedom of conscience for those who believe marriage is the union of one man and one woman. Raúl’s bill does exactly that, ensuring respect and tolerance for those who affirm traditional marriage.”

The bill also has the support of the United States Conference of Catholic Bishops, the National Organization for Marriage, Heritage Action, Family Research Council, Focus on the Family, The Ethics and Religious Liberty Commission of the Southern Baptist Convention, and Concerned Women for America.

In June, the U.S. Supreme Court issued two decisions regarding same-sex marriage. In one of those, Windsor vs. United States, the Court struck down a part of the Defense of Marriage Act that defined marriage as between one man and one woman for the purposes of federal law. David Christensen, vice president of government affairs for FRC, argued that the Marriage and Religious Freedom Act is consistent with the Windsor decision.

“This bill affirms that a person’s religious belief in the importance of natural marriage should be treated with tolerance and respect by the federal government,” he said. “The Windsor Court’s ruling urges respect for federalism and the sovereignty of state decisions on marriage law, including laws that define marriage between a man and a woman. This bill merely states that the federal government cannot target or harm a person for their religious views in support of natural marriage.”

[by Napp Nazworth, writing for The Christian Post]

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Breakthrough patent filed in solar energy collection, storage…

Solar energy patent called a "breakthrough"...
In a U.S. patent application, a little-known Maryland inventor claims a stunning solar energy breakthrough
that promises to end the planet’s reliance on fossil fuels at a fraction of the current cost – a transformation that also could blunt global warming.

Inventor Ronald Ace said that his flat-panel “Solar Traps,” which can be mounted on rooftops or used in electric power plants, will shatter decades-old scientific and technological barriers that have stymied efforts to make solar energy a cheap, clean and reliable alternative.

“This is a fundamental scientific and environmental discovery,” Ace said. “This invention can meet about 92 percent of the world’s energy needs.”

His claimed discoveries, which exist only on paper so far, would represent such a leap forward that they are sure to draw deep skepticism from solar energy experts. But a recently retired congressional energy adviser, who has reviewed the invention’s still-secret design, said it’s “a no brainer” that the device would vastly outperform all other known solar technology.

Ace said he is arranging for a national energy laboratory to review his calculations and that his own crude prototypes already have demonstrated that the basic physics for the invention work.

If the trap even comes close to meeting his futuristic vision, its impact could be breathtaking: It could reorder the world’s energy landscape, end the global economic drag of soaring energy costs, and eventually curb greenhouse gas emissions that are blamed for climate change.

That all might sound rather rosy, since the previously undisclosed invention has yet to be constructed and fully tested. But John Darnell, a scientist and the former congressional aide who has monitored Ace’s dogged research for more than three years and has reviewed his complex calculations, has no doubts.

“Anybody who is skilled in the art and understands what he’s proposing is going to have this dumbfounding reaction: ‘Oh, well it’s obvious it’ll work,’” said Darnell, a biochemist with an extensive background in thermodynamics.

“Ron has turned conventional wisdom about solar on its head,” he said. “He thinks outside the box.”

[by Greg Gordon, McClatchy Washington Bureau]

NORM ‘n’ AL Note: (Full disclosure) We have known Ron Ace on both a personal and professional level for more than 25 years, and continue to maintain contact with him. We have always said that Ron Ace is the brightest guy we know, and we certainly still believe that. We invite you to learn more, lots more, on Ron’s website, H2OPE.US.

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NORM ‘n’ AL, Minneapolis
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‘Comet of the century’ may pay Earth a visit in December…

A comet looping behind the sun right now could emerge this fall as a once-in-a-lifetime spectacle that shines in the sky so brightly, it is visible with the naked eye around the world — if it survives.

Comet C/2012 S1, dubbed Comet ISON in honor of the network of observatories responsible for spotting it, is expected to pass about 40 million miles from Earth in December. As it grazes the sun, it could glow on the early morning and evening horizons from November into January if it survives that close-up encounter.

Some astrophysicists expect the sun’s heat to break the icy ball into two or more chunks, meaning less of a show for the rest of us. But for scientists in Baltimore and around the world, there will be plenty to learn from the comet no matter what — about the sun, other solar systems, and potentially Earth’s history.

“We prefer to wait before calling it the comet of the century,” said Max Mutchler, a scientist at the Space Telescope Science Institute whose research projects are based on Hubble images and data. “You don’t have to oversell this comet.”

Some have predicted the comet could shine as brightly as a full moon, but more recent data suggests that won’t be the case. Still, comets visible with the naked eye are relatively rare, with recent examples including Comet McNaught in 2007 (largely visible only in the Southern Hemisphere), Comet West in 1976 and Comet Ikeya-Seki in 1965.

norm-al-130916
No one knows how Comet ISON will compare because it has been hidden behind the sun for the past few months.

It had been on a journey likely tens of trillions of miles long when scientists from Belarus and Russia spotted its faint impression last September on images captured by a telescope near Kislovodsk, Russia. The telescope is part of a scientific collaboration across 10 countries called the International Scientific Optical Network.

Since then, telescopes and other instruments around the world and in space have tracked it as it hurtled from its origins in the Oort Cloud, a cluster of billions of comets that surrounds our solar system.

They include the Hubble, managed at the institute on the Johns Hopkins University’s Homewood campus; a robotic spacecraft called Swift that is managed at the NASA Goddard Space Flight Center in Greenbelt; and EPOXI, a mission led by the University of Maryland, College Park. It also includes the Mars Reconnaissance Orbiter and solar observation satellites, as well as NASA’s land-based telescopes and those of amateur astronomers.

What they have seen is a comet that, so far, is not quite as bright as some other so-called comets of the century. Beyond that, scientists haven’t confirmed many details.

The comet, like others, is a “dirty snowball” made of ice and other particles. But it’s not known just how those materials are structured. Too much ice at its core, and it’s more likely to break up, for example. Scientists also haven’t agreed on just how large the comet’s nucleus is, with estimates ranging from three to four miles, or on what sorts of rocks, minerals or other compounds it contains.

Once they figure out all those details, it could shed new light on the formation of planets and other heavenly bodies.

“It’s what gets kicked out when a solar system forms,” said Dean Hines, a scientist at the space telescope institute whose projects focus on the evolution of stars and planetary systems.

Relative to frequently observed comets in our solar system, Comet ISON is pristine. Others with periodic orbits like Halley’s Comet, which passes Earth once every 76 years, get repeatedly heated and cooled as they pass by the sun and back into outer space, making them appear black and scorched on the outside.

But scientists say Comet ISON hasn’t made such a trip before, coming into our solar system in what is likely the same form in which it has spent billions of years circling the Oort Cloud. All the way out there, the comets are closer to our sun than any other star.

“One of the things we like to try to find out is, what was the composition of the original solar nebula? What were comets made of 4.5 billion years ago when the sun formed?” said Frank Summers, an astrophysicist with Space Telescope institute located at Johns Hopkins University. “ISON will tell us more about that than a comet like Halley.”

The comet’s makeup and density also could provide clues into the characteristics of other solar systems and the creation of planets like Earth. One theory suggests that ice-loaded comets helped fill Earth’s oceans, but other comets in our solar system typically carry water with different types of molecules than those in our oceans, Hines said. Scientists will be eager to see if the ice on Comet ISON is more of a match, he said.

“It’s like a fossil,” Mutchler said of the comet.

And for any chance this comet will hit Earth, he offered “an emphatic no” — it will be 40 million miles away at its closest, on Dec. 26. Some time around Jan. 12, the planet will pass through Comet Ison’s trail of dust and debris, but the particles are likely to be too small for a meteor shower, according to NASA.

The comet will serve as a “test particle” for solar physicists studying the sun’s corona. At its Nov. 28 perihelion, when it is closest to the sun, the comet will be a mere 700,000 miles above the sun’s surface. That means it will graze the layer of plasma that surrounds the sun, known as the corona, which is hundreds of times hotter than the sun’s surface.

Observing how the comet reacts to the plasma could tell scientists more about the structure of the corona, assuming the comet stays in one piece, Summers said.

Answers to all of the questions should become clear in the coming months. Comet ISON became visible to some telescopes in late August, but won’t be within Hubble’s field of view until October.

Indications are so far that the comet isn’t shining as brightly as it could have been based on earlier forecasts, which would make predictions that it will appear as bright as a full moon in our sky unlikely, Hines said. But it still could be as bright as the brightest stars in the sky, and with its wispy trail of gas and dust.

“There’s a clamoring sense of excitement,” said Summers, who’s been invited on a cruise to the Canary Islands late this fall to talk about the comet. “We don’t want to get too excited too early, but it’s very intriguing to see whether it will develop.”

[by Scott Dance of The Baltimore Sun]

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
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Children worldwide still dying by the millions every year…

Hope you'll REALLY enjoy that next meal...Childhood death rates around the world have been halved since 1990, but an estimated 6.6 million children under the age of 5 still died last year, according to the UN children’s agency.

Nearly half of all children who die are in five countries: Nigeria, Congo, India, Pakistan, and China, the agency said.

“Progress can and must be made,” said Anthony Lake, UNICEF’s executive director. “When concerted action, sound strategies, adequate resources, and strong political will are harnessed in support of child and maternal survival, dramatic reductions in child mortality are not just feasible, they are morally imperative.”

The top killers are malaria, pneumonia, and diarrhea, the report said, taking the lives of about 6,000 children under the age of 5 every day. A lack of nutrition contributes to almost half of those deaths, according to UNICEF.

NORM ‘n’ AL Note: Please read this short post about four or five times to be sure it sinks in. We have managed to cut child mortality in half in the last couple of decades, BUT 6.6 MILLION CHILDREN ARE STILL DYING EVERY YEAR FROM PREVENTABLE CAUSES. Can YOU do something to help?

As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
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Financial planning the ‘Washington Way’… or, ‘Do as we say, not as we do’…

Do you believe in irony?

The government provides debt counseling before you take out a federal student loan, to ensure that poor college students are educated on debt management and don’t end up drowning in student loans for the rest of their lives.

Washington could learn a lot...

However, Washington seems to live by the motto, “do as I say, not as I do” when it comes to its own spending habits. Take the below quiz to see if you can match Washington’s debt counseling advice with its own actions.

“Managing your spending is key to minimizing debt.” Has Washington managed its spending recently?

Yes: In the last year, Washington has tightened its belt and is running a budget surplus for the first time in 5 years.

No: The United States has run a budget deficit for seven out of the last ten months, and currently has an overall budget deficit of $608 billion.

“The first step to managing spending is to borrow less.” Has Washington followed this advice?

Yes: Washington has drastically reduced its spending since the recession began in December 2007, helping to lower the national debt and balance the budget.

No: In 2013 alone, the federal government borrowed one-fifth of every dollar spent.

When applying for a federal student loan, you’re asked “whether your budget is realistic.” Is Washington’s budget realistic?

Yes: Washington essentially lives within its means, only spending what it takes in.

No: Washington spent much of the last four years without a budget, and in 2013 alone, the Government Accountability Office identified billions in wasteful and duplicative government spending.

You can “only borrow up to the school’s cost of attendance.” Washington has a debt limit as well, but does it adhere to this limit on borrowing?

Yes: Washington has a debt ceiling, and stops borrowing before it hits that number.

No: Washington has a debt ceiling, but in the last 10 years, it’s raised the debt ceiling 12 times in order to continue borrowing and spending.
(The correct answer to each question above is NO.  However, if you missed any of these questions and answered with a YES, you are obviously qualified immediately for a well-paying government job. )
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NORM ‘n’ AL, Minneapolis
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Health insurance costs now up to $16,000 a year for the average family…

The average family’s health insurance now costs about $16,000, and workers pay more than a quarter of that, according to a new survey.

But health insurance premiums for job-based family coverage rose a relatively modest 4 percent, reflecting slowed health spending, according to a survey of about 2,000 employers released Tuesday by the Kaiser Family Foundation and the Health Research & Educational Trust. (KHN is an editorially independent program of the foundation.)

Nonetheless, workers are likely to feel an increased pinch from health care costs: More than a third have annual deductibles of at least $1,000 this year before their insurance kicks in, while wages continue to grow far more slowly than health insurance costs.

Premiums for the average family plan topped $16,000 for the first time, with workers paying on average $4,565 toward that cost, not counting copays and deductibles, the survey found.

The average cost of a single employee’s insurance premiums rose 5 percent, to $5,884, with workers paying an average of $999, the survey found. Workers’ wages increased 1.8 percent on average, while general inflation rose 1.1 percent. The survey was done between January and May of this year.

“The premium increase this year is very moderate, but the pain factor for health insurance cost has not disappeared,” said Drew Altman, president and CEO of the foundation. “Over time, what people pay for health care has dramatically eclipsed both their wages and inflation.”

The increases documented in the report, moderate by historic standards, come amid ongoing debate over the federal health care law’s ability to rein in health care costs.

In July, the Obama administration granted a one-year delay, until 2015, in the requirement that employers with 50 or more workers offer coverage or risk a fine, prompting Republicans to call for a similar delay in the rule requiring most individuals to carry coverage. Critics and opponents have also sparred over whether the health law will slow premium growth.

All sides may find fodder in the report.

“You will have the administration and the Democrats saying, ‘Look how the health law is helping moderate health cost increases,’ and Republicans and those against the law will say, ‘It hasn’t done anything because costs are still four times inflation,’ ” said Paul Fronstin, director of the Health Research and Education Program at the Employee Benefit Research Institute, a nonpartisan Washington think tank.

The employer survey found that 93 percent of firms with more than 50 workers offer coverage, down from 95 percent in the 2012 survey. Overall, 57 percent of all employers offer health insurance to their workers, down from 66 percent decade ago.

The rate of coverage by employers with 200 or more workers remained steady, with about 99 percent offering insurance. Coverage drops off with firm size, with only 45 percent of the smallest companies offering insurance to workers, down from 55 percent in 2003.

Other findings include:

  • Workers pay 18 percent of the premium costs for single coverage on average, and 29 percent of the premium cost for family plans, rates that have changed little in a decade.
  • Health insurance premiums nearly quadrupled, up 196 percent since 1999, with worker contributions growing 182 percent. Meanwhile, wages have grown an average of 50 percent since 1999.
  • Thirty-eight percent of all workers with single health insurance had at least a $1,000 annual deductible, the amount they pay before most insurance coverage kicks in. At small firms, 58 percent of those covered workers had at least a $1,000 deductible, while nearly 31 percent had deductibles of at least $2,000, up from 12 percent in 2008.

“One of the changes in this report is the growth in deductibles,” said economist Paul Ginsburg of the Center for Studying Health System Change, a nonpartisan research group in Washington. The deductibles were likely “a factor behind the premium increase being as low as it was.”

Workers in small firms with 3 to 199 employees have an average annual deductible of $1,715, compared with $884 for those in larger firms.

Small businesses generally see more volatile insurance premium rates than larger firms. Scott Hauge, who runs an insurance brokerage firm in California, says his clients have seen increases averaging around 10 percent a year for the past seven years. He doesn’t dispute the findings of the survey, but added that “small businesses are not seeing those minor increases.”

Analysts say premium increases are cyclical, with periods of rapid increases, such as the double-digit hikes that marked the late 1980s and the early 2000s, followed by periods of slower growth. Since about the mid-2000s, rate increases paid by employers fell below 10 percent each year, with the smallest annual growth tracked at 3 percent in the 2009-2010 employer survey. In what surprised many analysts, rates jumped by 9 percent from 2010 to 2011 before moderating the past two years to around 4 percent.

Some employers say changes associated with the health law, such as a provision allowing adult children to stay on their parents’ plans until age 26, are adding costs.

“We’re all seeing it,” said Forrest Cook, vice president of human resources at NCP Solutions, a 350-employee company in Birmingham, Ala. “We have around a 5 percent to 6 percent increase this year. Before that, our costs held steady for about three or four years.”

Cook was also concerned with the uncertainty surrounding the health law, such as the year delay in the requirement that large employers provide health coverage or pay a penalty.

His firm does not require workers to pay a large sum before their insurance kicks in because “when you have a high deductible plan, it’s going to discourage people from using it,” Cook said.

But the firm is enthusiastic about wellness programs, as are 35 percent of employers in the survey, who consider them an effective strategy for controlling costs. Such programs range widely, from providing small gifts to employees for filling out a health risk questionnaire, to offering large reductions in premiums for workers who get screened and meet certain goals for weight, blood pressure, cholesterol or blood sugar.

The federal health law allows employers to increase those financial incentives from 20 percent of the cost of the health coverage to 30 percent.

NCP offers workers financial incentives to participate in wellness programs, including getting flu shots and checking blood pressure. Those who sign up for a stop-smoking class get credit for paid time off, Cook said. And the firm discusses health costs with workers.

“We’re very honest about the cost of our plan,” said Cook, whose firm is self-insured. “We tell people if you control the cost of the health plan, if you’re lively and well, it will cost us less.”

[by Julie Appleby of Kaiser Health News, as reported by NBC News]

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NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
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