Should lawmakers not reach agreement prior to the end of the year, the US budget deficit for 2013 would be cut almost in half, to $560 billion.

Which doesn’t sound like a bad thing. After all, the US is staggering under a monumental pile of debt and could potentially begin to face the kinds of difficulties that have plunged several euro-zone countries into crisis. It is a viewpoint shared by the ratings agencies — a year ago, Standard & Poor’s withdrew America’s top rating, justifying the measure by pointing to the unending battle over the debt ceiling. The agency noted that “the political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed.”

From afar, it is difficult to argue; the ongoing battle between Democrats and Republicans in the face of a horrendously imbalanced budget looks catastrophically absurd. As their country heads toward the edge of the abyss, lawmakers preferred to debate whether or not French fries and pizza should be considered vegetables.

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Heavenly Father we ask that you will have mercy on America today and bless us in spite of ourselves. We ask that you will give wisdom to all who go to the polls to cast their votes. Help us as we make difficult decisions on a variety of issues and as we seek to elect men and women who will hunger for righteousness and seek the common good to positions of authority in our towns and cities, in our states and in our nation. We pray against any voter fraud or any corruption of proper voter access and ask that justice be done in each and every election, whatever the locale. We also pray for peace and grace with one another as the results are received and digested, through Jesus Christ our Lord, who with you and the Holy Spirit lives and reigns in glory everlasting, Amen–KSH.

Finance chiefs of the world’s 20 leading economies are ringing alarm bells over the U.S. fiscal cliff and Europe’s debt woes at a meeting in Mexico this weekend as they look to push back deficit reduction targets to help boost growth.

Unless a fractious U.S. Congress can reach a deal, about $600 billion in government spending cuts and higher taxes are set to kick in on January 1, threatening to push the American economy back into recession and hit world growth.

“The Americans themselves acknowledge that this is a problem,” a G20 official said on condition of anonymity. “The U.S. administration says it doesn’t want to fall off the fiscal cliff, but right now it can’t tell us how exactly it will address it because that issue is on ice ahead of the election.”

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On the third day after Hurricane Sandy soaked Hoboken in several feet of water, leaving the city one of the most crippled in the region, those with the least found themselves suspended in the storm’s cold, dark aftermath. Late this week, Hoboken started to hum with generators and a taco truck.

The projects where [Grace] Rodriguez and her daughter, Jayleen Avalos, lived were still at the bottom of the world. The 25 or so buildings operated by the Hoboken Housing Authority were clustered together on 17 acres at the city’s southern edge. They were hemmed in by gentrification on one side ”” $600,000 lofts with same-day shirt service dry cleaners ”” and a steel fence in the back. Two feet of floodwater created a moat around the buildings. The National Guard brought water and MREs. The Red Cross brought bologna-and-cheese sandwiches.

But the one commodity residents were starved for was information, and the absence of it deepened their sense of isolation. The city government used social media to update citizens. Grace Rodriguez would have appreciated a bullhorn.

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The middle class has been caught in an economic vise, trying to pay 2012 prices with paychecks that haven’t grown since the good times went bust ”” or even earlier.

Across the nation, family income was down 8 percent last year from what it was in 2000. And in South Carolina, the median income last year was just over $40,000.

That’s the lowest wages have been in the Palmetto State since 1985, according inflation-adjusted figures from the U.S. census.

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Deficit-reduction principles backed by more than 80 U.S. chief executive officers are so broad that anti-tax advocate Grover Norquist and an ally of President Barack Obama both claim their plans could satisfy the standards.

The Campaign to Fix the Debt, with more than $30 million in backing, announced an expanded list of supporters yesterday, including the leaders of Verizon Communications Inc. (VZ), Cisco Systems Inc. (CSCO) and Microsoft Corp. (MSFT) On the most vexing issue — whether tax increases should be part of a deal — the principles refer to lower tax rates and higher revenue, not higher taxes.

Read it all. You can also find the CEO Debt Concerns Press Release here.

“What we’re trying to do right now is to have a set of standards, a set of criteria, and have a decision-making process that will govern our counterterrorism actions ”” we’re talking about direct action, lethal action ”” so that irrespective of the venue where they’re taking place, we have a high confidence that they’re being done for the right reasons in the right way,” [John] Brennan said in a lengthy interview at the end of August.

A burly 25-year CIA veteran with a stern public demeanor, Brennan is the principal architect of a policy that has transformed counterterrorism from a conventional fight centered in Afghanistan to a high-tech global effort to track down and eliminate perceived enemies one by one.

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The federal government has filed another mortgage-fraud lawsuit against Bank of America, contending that defective loans generated by the bank’s Countrywide Financial Corp. subsidiary caused mortgage finance giants Fannie Mae and Freddie Mac to lose more than $1 billion.

A statement Wednesday from the office of U.S. Atty. Preet Bharara in New York said that after the subprime mortgage market collapsed in 2007, Calabasas-based Countrywide devised a loan-processing system called “Hustle” to “process loans at high speed and without quality checkpoints.”

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Americans in their late 30s are now the group most likely to doubt they will be financially secure after retirement, a major shift from three years ago when baby boomers nearing retirement age expressed the greatest worry.

The survey findings by the Pew Research Center, released Monday, reflect the impact of a weak economic recovery beginning in 2009 that has shown stock market gains while housing values remain decimated….

“My biggest fear is not being able to retire,” [37 year old Nicole] Gilliard said as she came out of the courthouse on Meeting Street after work Monday. “I have a 5-year-old, and my biggest fear is that I’m going to have to keep working to put her through school.”

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The CIA is urging the White House to approve a significant expansion of the agency’s fleet of armed drones, a move that would extend the spy service’s decade-long transformation into a paramilitary force, U.S. officials said.

The proposal by CIA Director David H. Petraeus would bolster the agency’s ability to sustain its campaigns of lethal strikes in Pakistan and Yemen and enable it, if directed, to shift aircraft to emerging al-Qaeda threats in North Africa or other trouble spots, officials said.

If approved, the CIA could add as many as 10 drones, the officials said, to an inventory that has ranged between 30 and 35 over the past few years.

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Indeed, the impact of this latest round of unconventional monetary policy is already fading. Analysts at Morgan Stanley this week decided that returns in the high-yield market were no longer attractive in the face of deteriorating fundamentals. The stock market is struggling to make further headway, while yields on mortgage-backed securities have started to turn up after an initial drop. A drop in third-quarter capital expenditure suggests the Fed policy hasn’t been a catalyst for corporate investment at all.

One major reason for the lack of effectiveness of this latest round of quantitative easing may well be a growing concern with the “fiscal cliff”, automatic US tax rises and spending cuts due to kick in on January 1. Uncertainty over “cliff risk” ”“ and the prospects of a deal in Congress on deficit reduction ”“ seems to be offsetting any positive impact of Fed policies.

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The FBI on Wednesday arrested a Bangladeshi man in a sting operation on charges he attempted to blow up the New York Federal Reserve Bank with what he believed was a 1,000-pound (450-kg) bomb, federal authorities said.

Quazi Mohammad Rezwanul Ahsan Nafis, 21, faces charges of attempting to use a weapon of mass destruction and attempting to provide material support to al Qaeda, the U.S. Department of Justice said in a statement. If convicted, he faces life in prison.

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An Episcopal priest who, with her husband, brings in about $65,000 a year tells Marketplace that they are lower middle class. A woman posting at dcurbanmom.com identifies her family as middle class, and their income is $100,000 a year. CNN talks to a man struggling to save for his son’s education who defines “middle class” as families with too much to qualify for federal Pell Grants””which is at most about $48,000 for a family of three. I was eligible for Pell Grants, and before that for subsidized school lunches, but I’ve always understood my family of origin to be middle class.

A majority of Americans consider themselves middle class, a recent Pew survey found, despite a wide variance in their earnings. So what does “middle class” mean if it applies to most of the country? And if we are all middle class now, what are the political and cultural implications?

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From an interview with the authors of the Simpson-Bowles reform plan and Goldman Sachs CEO Lloyd Blankfein:

“…We just met with — a dozen of the largest high-tech company CEOs in the country. Not only are they hoarding cash. All their customers, all their suppliers are. They’re scared to death we’re going to go over this cliff and it could be a catastrophe….”

You can find a summary article to read there, it has briefer video links, but the best use of your time is to watch the full interview over here or read the transcript (about 42 1/2 minutes). Also, David Brook’s piece on the debt indulgence is worth a careful revisit.

No matter who gets elected president next month, the United States economy in 2013 will have only tepid growth.

Does that sound like this year all over again? Yes, indeed.

At least that’s the view of 44 professional economic forecasters, members of the National Association of Business Economics, who on Monday released their outlook for the coming year.

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The United States Postal Service chose Washington National Cathedral’s Bethlehem Chapel to issue its Holy Family Forever stamp on Oct. 10. The stamp depicts the Holy Family’s flight into Egypt after Christ’s birth. The family appears in silhouette against a deep orange sky with the brightly shining Christmas star ahead of them. Joseph leads a donkey on which Mary and the infant Jesus ride.

The contemporary artwork on the stamp, now available nationwide, is a departure from some of previous Christmas stamps featuring traditional artwork of Mary and Jesus. Indeed, the 1980 USPS Christmas stamp showed the Madonna and Child in Bethlehem Chapel’s Epiphany stained-glass window.

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When Facebook Inc. (FB) filed its proposal Feb. 1 to go public, it touted the effectiveness of ads linked to customers’ friends, citing research from Nielsen, the audience-counting company.

arbara Jacobs, an assistant director for corporation finance at the U.S. Securities and Exchange Commission, was skeptical, as she and her staff vetted the filing to ensure Facebook had disclosed all material information to investors. The claim appeared to be drawn from marketing materials, not a Nielsen study, she wrote to Chief Financial Officer David Ebersman, 42.

She gave him an ultimatum: Produce the study and provide Nielsen’s consent for use of the data — or don’t use it, she wrote to Ebersman on Feb. 28. Facebook dropped the reference after initial resistance.

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The Pentagon says cyberspace is an operational domain on par with land, sea, air and outer space, and there is little doubt that a global cyberarms race is getting underway. The United States is already well engaged in this race, as evidenced by reports of the computer worm Stuxnet, used to attack Iran’s nuclear enrichment equipment. But so far these efforts have largely been kept secret and conducted as intelligence operations.

DARPA’s workshop points again to the need for more transparency. The United States still has no open, overarching doctrine to govern a cyberweapons program. A good place to start would be a declaratory policy that would lay out when and under what circumstances offensive weapons such as Stuxnet might be used. After that, an open discussion is needed about rules of engagement for this complex new field, along with additional study of such issues as how and whether the military should protect non-military assets in government and the private sector.

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The greatest risk to US financial markets stems from other countries’ willingness (or lack thereof) to continue to hold dollar reserves as the value depreciates. If those nations suspect that the US cannot maintain the strength of our currency, they will begin to drain assets from American banks ”“ seeking safer havens for their wealth. That could entail trading US treasury bonds for perceived “safer” currencies such as those of New Zealand or Canada or even switching to an entirely different asset class such as gold or silver.

While there may not be any significant signs of capital flight yet, just look east. The Chinese are the largest, external holder of US debt. And they’re already heading down this path ”“ dropping the share of their portfolio comprised of US dollar assets from 74 to 54 percent in the last five years. It may very well be a harbinger of what’s to come.

Attempting to counter fears fanned by trends like this, Bernanke talks of a “soft landing…”

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The reality is that more than three years into this weakest of economic recoveries, 12.1 million Americans are still out of work””nearly 23 million by the broader definition that includes those who have stopped looking or can’t find full time work””and the labor participation rate is still down to 1981 levels at 63.6%. Hooray!

Of the 114,000 new jobs, 104,000 were in the private economy, and all of the 86,000 in upward revisions for July and August came in government jobs. Job growth for 2012 has averaged 146,000 a month, which is down from 153,000 in 2011.

Manufacturing employment fell again (down 38,000 in the last two months) further dampening one of the few bright spots in this recovery. A still abysmal 40.1% of the unemployed in America have been jobless for six months or more. Such a job market is anemic by any historic measure for this stage in an expansion and reflects continuing slow GDP growth in the 1%-2% range.

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A federal strike force has charged 91 people, including a hospital president, doctors and nurses, with Medicare fraud schemes in seven cities involving $429 million in false billings.

At a news conference Thursday, Attorney General Eric Holder said the case reveals an alarming trend in criminal efforts to steal billions of taxpayer dollars for personal gain. Holder called the action one of the largest such law enforcement efforts of its kind.

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Federal Reserve officials debated the risks of beginning an ambitious new stimulus policy before ultimately giving it a green light, according to minutes of the central bank’s September meeting released Thursday.

The minutes show officials concerned during their two-day meeting that without further action, the unemployment rate could remain stubbornly high. Officials were also troubled by signs of slowing growth abroad, including in China, and the possibility of a so-called fiscal cliff at home.

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And to draw, dear reader, what I think are critical relative comparisons, look at who’s in that ring of fire alongside the U.S. There’s Japan, Greece, the U.K., Spain and France, sort of a rogues’ gallery of debtors. Look as well at which countries have their budgets and fiscal gaps under relative control ”“ Canada, Italy, Brazil, Mexico, China and a host of other developing (many not shown) as opposed to developed countries. As a rule of thumb, developing countries have less debt and more underdeveloped financial systems. The U.S. and its fellow serial abusers have been inhaling debt’s methamphetamine crystals for some time now, and kicking the habit looks incredibly difficult.

As one of the “Ring” leaders, America’s abusive tendencies can be described in more ways than an 11% fiscal gap and a $1.6 trillion current dollar hole which needs to be filled. It’s well publicized that the U.S. has $16 trillion of outstanding debt, but its future liabilities in terms of Social Security, Medicare, and Medicaid are less tangible and therefore more difficult to comprehend. Suppose, though, that when paying payroll or income taxes for any of the above benefits, American citizens were issued a bond that they could cash in when required to pay those future bills. The bond would be worth more than the taxes paid because the benefits are increasing faster than inflation. The fact is that those bonds today would total nearly $60 trillion, a disparity that is four times our publicized number of outstanding debt. We owe, in other words, not only $16 trillion in outstanding, Treasury bonds and bills, but $60 trillion more. In my example, it just so happens that the $60 trillion comes not in the form of promises to pay bonds or bills at maturity, but the present value of future Social Security benefits, Medicaid expenses and expected costs for Medicare. Altogether, that’s a whopping total of 500% of GDP, dear reader, and I’m not making it up. Kindly consult the IMF and the CBO for verification. Kindly wonder, as well, how we’re going to get out of this mess.

Please take the time to read it all and examine the chart closely. The only difference on this between Mr. Gross and myself is that I believe he understates the problem with the 60 trillion dollar figure. As has been discussed on the blog in the past, the correct figure may be as much as three plus times that amount–KSH.

According to the non-partisan Tax Policy Center, the U.S. is on the threshold of one of the largest tax increases in history, a tax hike that could average $3,500 for every American household.

Without actions from Congress, the report says taxes will go up next year by 20 percent, or $536 billion overall. It will hit Americans at every income level including those living below the poverty line. For a middle income family making $40,000 per year, the tax increase is $2,000.

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Americans have poured record amounts of money into savings accounts even though interest rates are at historic lows, new federal data show, a sign that average people may be missing out on a booming stock market and recovering real estate sector.

The total amount in those accounts climbed nearly 5 percent to $6.9 trillion in the spring, the highest level recorded since the Federal Reserve launched its regular reports on the flow of money in the economy in 1945. At the same time, other data show that Americans are fleeing the stock market and avoiding the purchase of new homes.

The pattern suggests that Americans, wounded by the financial crisis and scared by an uncertain job market, do not want to take any risks with their money ”” even as the government is encouraging risk-taking.

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Estimates of the number of businesses eligible to take the tax credit have ranged from 1.4 million to 4 million companies, but in May, the Government Accountability Office reported that only 170,300 firms actually claimed the credit in 2010. Of these, only a small fraction, 17 percent, were able to claim the whole credit….

So why has the credit fallen short of expectations? The G.A.O. concluded that the credit was too small to sway business owners. Moreover, it said, claiming the credit is a task so complicated as to discourage many companies from trying.

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When Jeanne Majors, 63, took an early retirement in December 2005, she assumed that she would pick up a part-time job and be in good financial shape. She didn’t know that her future would quickly fall apart.

Majors, who is single and lives in Brooklyn, N.Y., learned the hard way about the retirement obstacles that most women face today. When the economy slid into the recession, she lost her part-time job and could not find another.

“They wanted somebody young,” Majors says. “Or if I was a man, somebody would have hired me at my age. I’m not sorry that I retired, but things didn’t turn out the way I wanted it to. Everything went bust.”

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Premium increases in certain Medicare drug plans may be more volatile next year with some popular plan rates jumping by double-digit percentages, a new study shows.

A report by Avalere Health, a Washington-based advisory firm and consultant to the health care industry said seven of the 10 most popular prescription drug plans chosen by seniors have double-digit percentage increases in their monthly premiums. Here’s a link to the Avalere report that analyzes the so-called Medicare Part D drug plans that contract with the Centers for Medicare and Medicaid Services to offer seniors prescription drug coverage.

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Columbia leaders are trying to prepare the Midlands for an economy based on a leaner federal government and more white-collar jobs in the private sector.

“Everyone is rather bullish on the economy here in the Midlands, but I think nationally we’re seeing people come out of this Great Recession and focus on getting people back to work,” Mayor Steve Benjamin said. “We are aggressively seeking to attract more corporate headquarters, more white-collar jobs and make sure people are prepared for these jobs in the new economy.”

Columbia is projected to lose 16 percent of its federal jobs over the next 10 years as the overextended federal government trims down, according to a new report from IHS Global Insight, prepared for the U.S. Conference of Mayors, which is holding a meeting on workforce skills this week in Dallas.

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Saying there are “troubling signs” of abuse in the way hospitals use electronic records to bill for Medicare and Medicaid reimbursement, the Obama administration warned in a letter to hospital associations Monday that it would not tolerate what it called “gaming the system” and vowed to vigorously prosecute doctors and hospitals implicated in fraud.

The strongly worded letter, signed by Attorney General Eric H. Holder Jr. and Kathleen Sebelius, the secretary of health and human services, said that “electronic health records have the potential to save money and save lives.” But the letter continued: “There are troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled. False documentation of care is not just bad patient care; it’s illegal.”

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