The World Food Bank recently released a report saying food prices world-wide are now at “dangerous levels,” having gone up 29 percent in the past year alone. This clearly could contribute to political instability and push millions of people into poverty.

In actuality, it already has. It is no accident that the revolution now sweeping the Arab world primarily is centered in countries that import much of their food.

Food inflation should come as no surprise to those who shop at supermarkets in the United States, where checkout-counter shock is endemic. Grocers and wholesalers say it is not their fault. Farmers say they should not be blamed, for their costs have skyrocketed, too. Well, then, who or what is responsible?

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The president is right ”” if America is to be competitive in this new knowledge-based global economy, we must invest in education, infrastructure and high-value-added research in a fiscally responsible manner.

But House Republicans are also right ”” spending is out of control, and there is no way possible to address our burgeoning debt without real spending cuts. That means finding ways to make government perform more efficiently, while scaling back or even eliminating certain government functions altogether.

Yet by focusing primarily on domestic discretionary spending, neither plan goes at all far enough to deal with our medium- or long-term fiscal challenges.

With the Fiscal Commission, we spent 10 months closely studying the cold, hard facts. Together, we came to the unavoidable conclusions that the problem is real, the solution will be painful, there is no easy way out and everything must be on the table.

Read it all (emphasis mine).

Libyan unrest is fueling a sharp boost in U.S. pump prices. But beyond that immediate cause for concern lies a far more extended — and ominous — trend: Oil costs appear likely to keep rising over the coming decades as demand outpaces supply across the planet.

Consider this recent alarming statistic from Exxon’s annual report: For every 100 barrels of oil it pumps above ground, it can now only find 95 to replenish the supply below ground.

Exxon’s not the only “Big Oil” enterprise sounding the alarm about this big problem. As The Wall Street Journal reported last week: “It’s a conundrum shared by most of the other large Western oil-producing companies, which are finding most accessible oil fields were tapped long ago, while promising new regions are proving technologically and politically challenging.”

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John Boyd writes:

The leaders of both political parties have come to embrace the philosophy of the common box turtle. They believe the key to success is to refuse to “go first” and never “lead with your chin.” They are convinced the loser will be the one who is forced to propose solutions to the problems they were elected to solve. This behavior is not acceptable.

We expect our leaders to analyze the pressing issues of the day based on the best information available and then to reach a consensus concerning the best course of action.

Read the rest of his letter and the others also.

Get ready for more undernourished infants, dangerously cold homes and disease-stricken communities in developing countries if proposed federal budget cuts become law.

That’s the message coming from left-leaning religious advocacy groups, who’ve been rallying supporters and blanketing Capitol Hill since budget debates kicked into high gear last week (Feb. 14-18). Declaring budgets to be “moral documents,” they’re prodding lawmakers to honor their respective faith traditions by sparing poverty-related programs from the cost-cutting axe.

But efforts to save funding are meeting resistance””not only from number crunchers, but also from others with different views of what constitutes moral budgeting.

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One of Senator Edward M. Kennedy’s legacies in the new health care law, intended to allow the chronically ill and people with disabilities to continue living in their homes, is too costly to survive without major changes, Obama administration officials now say.

Republican lawmakers, who have vowed to repeal the health care law, cite the administration’s acknowledgment as yet another reason to do so. But the health and human services secretary, Kathleen Sebelius, says the law gives her plenty of authority to make the necessary changes to the program without Congressional action.

To make the program viable, Ms. Sebelius said, she is considering changes in the eligibility criteria, including employment and earnings requirements, to ensure that only active workers may enroll. She also said she favored adjusting premiums to rise with inflation.

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President Obama’s budget director, Jacob Lew, said as much last week during his briefing on the president’s budget. Obama wants to find ways to “work together to find a solution to the long-term issues in Social Security,” Lew told reporters, but the program “does not contribute to the deficit in the short term.”

That would be nice if it were true. It’s not.

Social Security is a cash-in/cash-out program. It went into the red last year, when payroll tax revenue came up about $37 billion short of the benefits paid to retirees. Initially, that shortfall seemed a temporary consequence of the recession. But new projections from the Congressional Budget Office show that factors such as the payroll tax cut Obama and congressional Republicans agreed to last year mean that Social Security will instead come up short every year from now on ”” at least $45 billion this year, and a staggering half a trillion dollars over the next decade.

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Many economists warn that the government’s huge national debt is a looming threat to long-term prosperity. But is it also immoral?
According to a growing number of conservative Christians, the answer is a resounding “Yes.”

As Washington debates President Obama’s proposed 2012 budget, the morality of the deficit has become the hot topic on right-leaning Christian blogs, radio programs and political mailings.

The concern is not only that the estimated $14.13 trillion debt could cripple the economy, some conservative Christian leaders say, but also that borrowing so much money violates important biblical tenets.

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Let’s indulge Mr Obama in his fantasy economics: imagine that he does reduce the deficit to 3.1%. Supposedly, that would stabilise government debt: but it would do so at a dangerously high level of around 80% of GDP, and as interest rates rise the target will become much harder to hit. And that is before you consider the biggest problem of all: as more and more baby-boomers retire (the first started to do so this year), their demands for pensions and government-provided health care will start to push the deficit sharply up again after that.

Indeed, the real problem with both Mr Obama’s budget and the Republicans’ proposals is not so much the half-truths and fibs within them, as all the things they both left out. America needs to simplify its tax system and (slightly) increase its overall tax take. It needs to rein in its defence spending, which is currently equivalent to that of the next 20 countries combined. And it needs to tackle the gathering surge in entitlement costs. All these recommendations were made by the deficit-reduction commission that Mr Obama himself set up, but his budget conspicuously fails to take up any of them. Other debt-burdened Western countries have embarked on a stringent diet. America continues to gorge.

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The 401(k) generation is beginning to retire, and it isn’t a pretty sight.

The retirement savings plans that many baby boomers thought would see them through old age are falling short in many cases.

The median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement, according to data compiled by the Federal Reserve and analyzed by the Center for Retirement Research at Boston College for The Wall Street Journal. Even counting Social Security and any pensions or other savings, most 401(k) participants appear to have insufficient savings. Data from other sources also show big gaps between savings and what people need, and the financial crisis has made things worse.

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A first-of-its-kind federal survey of online access found that Americans in lower-income and rural areas often have slower Internet connections than users in wealthier communities.

he data, released Thursday by the Commerce Department, also found that 5 to 10 percent of the nation does not have access to connections that are fast enough to download Web pages, photos and videos.

Compiled in an online map that is searchable by consumers – assuming they have a fast enough broadband connection – the survey seems to confirm that there is a digital divide, something experts had suspected but lacked the data to prove.

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Fannie and Freddie are failed experiments in social policy. Their government charters allowed them to borrow for less than other companies, which gave them easy money and easy profits. And their odd status as government-chartered entities that were also publicly traded corporations set them up to profit by putting taxpayers at risk.

The Treasury Department presented three options. The first would simply wind down Fannie and Freddie as the housing market recovers, leaving nothing in their place. The second would create a government agency that would lend during crises when private credit died up. The third would put government in the reinsurance business, selling policies that would guarantee mortgages in case a primary guarantor from the private sector foundered.

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When Congress takes up President Obama’s fiscal 2012 budget, the debate will center on just a fraction of the overall $3.7 trillion budget: his proposals on spending and how to pay for them.

Not counting what the government spends on national security and social safety-net programs such as Medicare and Social Security, spending on other domestic programs accounts for just 12% of the overall budget.

Read it all.

I wonder if Mr. Obama is at all embarrassed by the 2012 budget. Like his previous two budgets, this one breaks all those “Morning in America” campaign promises of a “new” Washington.

The 2012 budget also is a repudiation of the findings of his very own bipartisan deficit commission.

The Bowles-Simpson commission had plenty of sensible recommendations, like cutting funds for the Corporation of Public Broadcasting, eliminating the Office of Safe and Drug-Free Schools and raising the qualifying age for Social Security.

But you’ll find precious little of this in the 2012 budget. At the White House, political sense apparently matters a lot more than common sense.

Read it all.

A small Catholic college in Riverdale, N.Y., last month got some news that sent shivers across religious higher education: part-time faculty have a right to form a union on campus.

But that wasn’t the worst of it. The National Labor Relations Board also isn’t convinced that the Catholic school is actually Catholic.

According to Elbert Tellem, the NLRB’s acting regional director, Manhattan College can’t prohibit adjunct faculty from unionizing because the school’s core purpose isn’t religious enough to trigger a labor law exemption.

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The architect of the Obama administration’s new consumer protection bureau met with faith-based groups Tuesday (Feb. 8) in a bid to shape the agency’s work as a moral crusade.

“The most recent financial crisis caused many to question the moral underpinnings of our financial dealings with each other,” Elizabeth Warren, a former Harvard University law professor who was appointed last year to start the new Consumer Financial Protection Bureau.

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States that have borrowed billions of dollars from the federal government to cover the soaring cost of unemployment benefits would get immediate relief from the Obama administration under a plan to suspend interest payments for the next two years.

The proposal, which will be included in the budget request President Obama will send to Congress next week, would allow states to avoid raising taxes on employers to cover the payments – which are projected to total $3.6 billion through 2012, according to independent estimates.

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The problems with the FCIC’s report, released at the end of January, stem from the Commission’s very inception: it was focused on the wrong topic. The FCIC investigated risky investments, lax regulation, excessive leverage. And it downplayed the more mundane, but vastly more important, collapse of the housing bubble.

The FCIC was set up to investigate a sidebar rather than the real story. Given the definition of its mission, the Commission did a reasonably good job. However, its 662-page report is a distraction from the real reasons why 25 million Americans are unemployed, underemployed, or have given up looking for work altogether. The real story doesn’t require 662 pages; it can easily be summed up in a few paragraphs.

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Put it together. QE2 is due to run out this summer. Unless you think we’re creating so many jobs in a few months, that it’s obvious that we’re on the right track to full employment, then more QE seems in the cards.

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US Treasury Secretary Timothy Geithner has told Davos delegates rapid, drastic spending cuts are “not the responsible way” to cut national budget deficits.

He also said the US was more confident now there was a sustainable expansion, but said it was not a boom.

Mr Geithner said “education, innovation, and investment” were the way forward for the US economy.

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Social Security’s finances are getting worse as the economy struggles to recover and millions of baby boomers stand at the brink of retirement.

New congressional projections show Social Security running deficits every year until its trust funds are eventually drained in about 2037.

This year alone, Social Security is projected to collect $45 billion less in payroll taxes than it pays out in retirement, disability and survivor benefits, the nonpartisan Congressional Budget Office said Wednesday….

Read it all.

Government “investments”””Mr. Obama’s favorite word last night””are by definition made for political purposes, rather than for their highest potential return. They are allocated by politics rather than by prices. In our view, that 4% of GDP a year could have contributed far more to economic recovery had it stayed in private hands.

But even if you believe that such spending prevented a depression, it makes no economic sense to keep those resources under political sway now that the recovery is underway. Would you rather have Congress allocating that 4% of GDP, or millions of individuals deciding among Apple, Gilead Sciences, or the next great idea?

The path back to faster growth, more jobs and a more competitive U.S. economy does not travel through more political mediation. Nor does it lie in endlessly easy Fed policy in a misguided attempt to refloat the housing bubble or revive the financial boom. A better economy requires policies that reward work and innovation, while letting capital flow to the companies and individuals with the best ideas. They might even be GE’s.

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Now that bipartisan commission has reported, but Mr. Obama didn’t fully endorse any of its recommendations. To the contrary, he promised more jobs for teachers and construction workers. He warned against “slashing” Social Security benefits. Corporate tax reform is fine, but if it’s revenue-neutral, it only postpones – and makes more politically difficult – the task of narrowing the nation’s deficit.

So what happens now? Maybe some members of Congress will display the courage the president has lacked. Maybe Mr. Obama, in the budget he proposes next month, will grapple more realistically with the hard choices than he did Tuesday night. But even if he does, how can he expect public support if he hasn’t made the case? From the man who promised to change Washington, it seemed all too drearily familiar.

Read it all.

We must never forget that the things we’ve struggled for, and fought for, live in the hearts of people everywhere. And we must always remember that the Americans who have borne the greatest burden in this struggle are the men and women who serve our country. (Applause.)

Tonight, let us speak with one voice in reaffirming that our nation is united in support of our troops and their families. Let us serve them as well as they’ve served us — by giving them the equipment they need, by providing them with the care and benefits that they have earned, and by enlisting our veterans in the great task of building our own nation.

Our troops come from every corner of this country — they’re black, white, Latino, Asian, Native American. They are Christian and Hindu, Jewish and Muslim. And, yes, we know that some of them are gay. Starting this year, no American will be forbidden from serving the country they love because of who they love. (Applause.) And with that change, I call on all our college campuses to open their doors to our military recruiters and ROTC. It is time to leave behind the divisive battles of the past. It is time to move forward as one nation. (Applause.)

We should have no illusions about the work ahead of us. Reforming our schools, changing the way we use energy, reducing our deficit — none of this will be easy. All of it will take time. And it will be harder because we will argue about everything….

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Richard S. Carnell, an associate professor at Fordham University Law School who was an assistant secretary of the Treasury for financial institutions during the 1990s, questions why Mr. Raines, Mr. Howard and others, given their conduct detailed in the Housing Enterprise Oversight report, are being held harmless by the government and receiving payment of legal bills as a result.

“Their duty of loyalty required them to put shareholders’ interests ahead of their own personal interests,” Mr. Carnell said. “Had they cared about the shareholders, they would not have staked Fannie’s reputation on dubious accounting. They defied their duty of loyalty and served themselves. At a moral level, they don’t deserve indemnification, much less payment of such princely sums.”

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Parents of the profoundly disabled are profoundly troubled.

Beginning April 1, Medicaid will cover a total of 75 occupational, physical and speech therapy sessions annually. The health insurance program for the poor and disabled now covers a combined 225 of those therapies a year.

The reductions will be retroactive to July 2010, meaning some families already will have reached their yearly maximum before the cuts officially take effect.

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Could the yuan become a rival? China’s economy will probably surpass America’s in outright size within 20 years. It is already a bigger exporter. It is prodding firms to settle trade and even acquire foreign companies in its own currency. That is adding to a pool of “redbacks” outside its borders. These offshore yuan are, in turn, being tapped by borrowers, issuing “dim sum” bonds in Hong Kong.

But as the dollar’s history shows, economic clout is not enough without financial sophistication (see article). If foreigners are to store their wealth in yuan, they will need financial instruments that are safe, stable and easily sold. Dim sum makes for a tasty appetiser. But the main feast of China’s financial assets is onshore and off-limits, thanks to its strict capital controls. The government remains deeply reluctant to let foreigners hold, buy and sell these assets, except under tight limits. Indeed, it is barely ready to give its own people financial freedom: interest on bank deposits is capped; shares are largely owned by state entities; and bonds are chiefly held by the banks””which are, in turn, mostly owned by the state.

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Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.

But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.

Read it all.

We have come to believe a story about the deficit that is largely not true.

It’s a comforting story, to be sure. It holds the promise of a painless solution, because it suggests that the country’s huge looming deficits are not really our fault. Instead, they seem to stem from weak-willed politicians, wasteful government programs that do not benefit us and tax avoidance by people we have never met.

In truth, the coming deficits are a result, above all, of the fact that most Americans are scheduled to receive far more in Medicare benefits than they have paid in Medicare taxes. Conservative and liberal economists agree on this point. After Medicare on the list of big, growing budget items come Social Security and the military.

Read it all.

From here:

Major food producers like Sara Lee Corp., Kraft Foods, General Mills and ConAgra Foods are dropping discounts and upping food prices by 6% to 10% at the stores.