In the USA...
Originally published Thursday, November 29, 2012 at 5:40 AM
US economy grew at 2.7 percent rate in summer
By MARTIN CRUTSINGER
AP Economics Writer
The U.S. economy grew at a 2.7 percent annual rate from July through September, much faster than first thought. The strength may fade in the final months of the year if Congress and the Obama administration fail to reach a budget deal.
The Commerce Department said Thursday that growth in the third quarter was significantly better than the 2 percent rate estimated a month ago. And it was more than twice the 1.3 percent rate reported for the April-June quarter.
The two biggest factors in the upward revision were larger gains in business stockpiles and a boost in export sales. That offset weaker consumer spending.
Still, most economists say growth has slowed since then to below 2 percent in the October-December quarter. That's generally considered too weak to rapidly lower the unemployment rate.
Economists cite two reasons for the anticipated weakness.
Superstorm Sandy halted business activity along the East Coast in late October and November. And many businesses and consumers could end up scaling back on spending in the final weeks of the year, if lawmakers and Obama fail to avert the "fiscal cliff." That's the name for sharp tax increases and spending cuts that would occur in January without a deal.
So far, many reports suggest economic activity picked up early in the fourth quarter. And if Congress and the White House reach agreement and avoid the fiscal cliff, economic growth could accelerate next year, many economists say.
A Federal Reserve survey released Tuesday showed improved consumer spending and steady home sales helped lift growth from October through early November in most parts of the United States. The one exception was the Northeast, where the storm led to widespread disruptions.
The Labor Department said employers added 171,000 jobs last month and hiring in September and August was stronger than previously thought.
Rising home values, more hiring and lower gas prices pushed consumer confidence in November to the highest level in nearly five years, according to the Conference Board.
A better mood among consumers appears to have encouraged businesses to invest more in October after pulling back over the summer.
There are already signs that consumer optimism is leading to more spending. A record number of Americans visited stores and shopping websites over the four-day Thanksgiving weekend, according to a survey by the National Retail Federation.
Originally published November 29, 2012 at 5:32 AM | Page modified November 29, 2012 at 5:58 AM
White House, Congress talk as 'fiscal cliff' nears
By ANDREW TAYLOR
Amid increasing anxiety that the White House and top Republicans are wasting time as the government slides toward an economy-rattling "fiscal cliff," administration officials are heading to Capitol Hill for talks with congressional leaders.
Treasury Secretary Tim Geithner and senior White House aide Rob Nabors were to visit separately Thursday with the four leaders of the House and Senate to discuss how to avert a series of tax increases and spending cuts due to begin in January. Republicans complain that the White House is slow-walking the talks and has yet to provide specifics on how President Barack Obama would curb the rapid growth of benefit programs like Medicare and Medicaid.
Obama and House Speaker John Boehner of Ohio, the lead GOP negotiator, spoke on the phone Wednesday, their first conversation in five days. But there's been little evident progress in negotiations between the two sides.
Boehner's lieutenants say the White House has been slow to engage.
"We have not seen any good-faith effort on the part of this administration to talk about the real problem that we're trying to fix," said House Majority Leader Eric Cantor, R-Va.
Obama is mounting a public campaign to build support and leverage in the negotiations, appearing at the White House with middle-class taxpayers and launching a campaign on Twitter to bolster his position.
"Right now, as we speak, Congress can pass a law that would prevent a tax hike on the first $250,000 of everybody's income," Obama said. "And that means that 98 percent of Americans and 97 percent of small businesses wouldn't see their income taxes go up by a single dime."
Obama is insisting that tax rates go up on family income exceeding $250,000; Boehner is adamant that any new tax revenues come from overhauling the tax code, clearing out tax breaks and lowering rates for all.
Republicans are also demanding significant cuts to so-called entitlement programs like Medicare, such as an increase in the eligibility age for the program from 65 to perhaps 67.
"It's time for the president and Democrats to get serious about the spending problem that our country has," Boehner said at a news conference Wednesday in the Capitol. Boehner, like Obama, expressed optimism that a deal could be reached.
At issue are steep, across-the-board cuts to the Pentagon and domestic programs set to strike the economy in January as well as the expiration of Bush-era tax cuts on income, investments, married couples and families with children. That combination of tax increases and spending cuts would wring more than half a trillion dollars from the economy in the first nine months of next year, according to the Congressional Budget Office.
No one anticipates a stalemate lasting that long, but many experts worry that even allowing the spending cuts and tax increases for a relatively brief period could rattle financial markets.
From their public statements, Obama and Boehner appear at an impasse over raising the two top tax rates from 33 percent and 35 percent to 36 percent and 39.6 percent. Democrats seem confident that Boehner ultimately will have to crumble, but Obama has a lot at stake as well, including a clear agenda for priorities like an overhaul of the nation's immigration laws.
Obama wants fiscal cliff deal before Christmas
By Agence France-Presse
Wednesday, November 28, 2012 17:05 EST
WASHINGTON — US President Barack Obama on Wednesday called for a deal with Republicans before Christmas on averting a tax and deficit crunch that it is feared could pitch the economy into recession.
Obama gathered middle class families at the White House to up his campaign for Republicans to join Democrats in Congress to pass an extension to tax cuts for most Americans, while bowing to his pressure to raise rates on top earners.
“I want to make sure everybody understands this debate is not just about numbers. It’s a set of major decisions that are going to affect millions of families all across this country in very significant ways,” Obama said.
“Our ultimate goal is an agreement that gets our long-term deficit under control in a way that is fair and balanced.
“I believe that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas.”
If there is no agreement before the end of the year, taxes on all Americans will rise, raising the prospect of a sudden draining of consumer spending and fears that the still fragile economy could be thrown back into recession.
Obama also called on Americans to mobilize to support his position, just weeks after his re-election triumph, by posting on Facebook and sending tweets marked with the hashtag #My2K.
“Tell members of Congress what a $2,000 tax hike would mean to you,” he said.
Obama was later to huddle with top CEOs at the White House, including Lloyd Blankfein, CEO of investment giant Goldman Sachs, and Yahoo! chief executive Marissa Mayer, as part of his campaign for a debt and deficit deal.
On Friday, he will crank up pressure on Republicans even more by making a campaign-style trip to a manufacturing business in Pennsylvania.
The year-end deadline is the result of legislation passed when Republicans and Democrats failed to reach a previous long-term deficit and budget deal, and was meant to concentrate minds of lawmakers and spur compromise.
Obama campaigned on a platform of raising taxes on individuals who make more than $200,000 per year and families that rake in more than $250,000, as a way of raising extra revenue to tame the deficit.
Republicans insist that raising taxes on the wealthy would be counter-productive, would hurt small business owners, and would slow economic growth and dampen job creation.
The parties are also feuding about where to cut expenditures, with some Republicans opposed to any trimming of the military budget and Democrats guarding social safety net entitlement programs.
November 28, 2012
Obama Tilts Tax Debate Away From Spending Cuts
By PETER BAKER
WASHINGTON — President Obama surrounded himself with taxpayers on Wednesday to pitch his plan to preserve current rates for the middle class and raise them for the wealthy. A day before, he met with small-business owners for the same purpose. On Friday, he plans to fly to Pennsylvania to tour a factory to make the same point.
As the president and Congress hurtle toward a reckoning on the highest federal budget deficit in generations, Mr. Obama says he wants a “balanced” approach to restoring the nation’s fiscal order. But the high-profile public campaign he has been waging in recent days has focused almost entirely on the tax side of the equation, with scant talk about his priorities when it comes to curbing spending.
Mr. Obama has embraced specific cuts to the federal budget in the past and has committed to an agreement with Congress that will include deep reductions in spending. But it would be easy for those who listen to his public pronouncements lately to miss it. In public statements since his re-election, he has barely discussed how he would pare back federal spending, focusing instead on the aspect of his plan that plays to his liberal base and involves all gain and no pain for 98 percent of taxpayers.
Republicans and even some Democrats have expressed frustration that Mr. Obama has avoided a serious public discussion on spending with barely a month until deep automatic budget cuts and tax increases are scheduled to take effect. While the president’s aides said it was important to engage the public on taxes, others say he has not prepared the country for the sacrifice that would come with lower spending.
“The problem is real,” said Erskine B. Bowles, who was co-chairman of Mr. Obama’s deficit reduction commission. “The solutions are painful, and there’s not going to be an easy way out of this.”
After meeting with White House officials this week, Mr. Bowles said he believed “they were serious about reducing spending” but added that “we need to talk more about the spending side of the equation.”
Republican leaders were more scathing, saying the president was more interested in campaigning than sitting down to resolve difficult issues. They said they were willing to raise tax revenue by closing loopholes and limiting deductions, but Mr. Obama has not reciprocated with more restraint of entitlement programs.
“We have not seen any good-faith effort on the part of this administration to talk about the real problem that we’re trying to fix,” said Representative Eric Cantor of Virginia, the House majority leader. “This has to be a part of this agreement or else we just continue to dig the hole deeper, asking folks to allow us to kick the can down the road further. And that we don’t want to do.”
Although Mr. Obama has not scheduled a new meeting with Congressional leaders, he will dispatch top advisers to Capitol Hill for talks on Thursday. Treasury Secretary Timothy F. Geithner and Rob Nabors, the White House legislative director, will pay separate visits to Senators Harry Reid of Nevada and Mitch McConnell of Kentucky, the Democratic and Republican leaders, and Representatives John A. Boehner of Ohio and Nancy Pelosi of California, the Republican speaker and Democratic minority leader.
Mr. Obama met privately on Wednesday with the chief executives of 14 major corporations like Goldman Sachs, Home Depot, Marriott, Coca-Cola, Pfizer and Yahoo to discuss the fiscal situation.
“He seemed flexible, but he said taxes should go up on the top 2 percent,” said one executive who did not want to be named. Most of the executives said they were not opposed to tax increases as part of a deal but stressed that a quick resolution could help the economy.
White House officials rejected Republican suggestions that Mr. Obama has not been serious enough about tackling the growth of entitlement spending. “He is committed, every time he talks about this, to a balanced approach that includes both, you know, revenues, spending cuts and savings through entitlement reforms,” said Jay Carney, the White House press secretary.
White House officials pointed to $340 billion in health care entitlement program savings and $272 billion in reductions to other mandatory programs over 10 years in a previous presidential budget proposal. “Even though that budget proposal’s been out there for a long time, a lot of people aren’t aware of that,” Mr. Carney said. “ He called it “another piece of evidence that the president has been willing to make tough choices.”
One reason a lot of people may not be aware of the cuts Mr. Obama has proposed is that he does not talk about them often. In his first postelection news conference, he focused on tax increases on the wealthy and used the term “spending cuts” just once without elaborating.
By focusing on taxes, Mr. Obama has put Republicans on the defensive. At Wednesday’s event, he challenged them to extend Bush-era tax cuts for family income under $250,000 since both sides agree those should continue. Doing so would effectively mean tax cuts on income over $250,000 would expire at the end of the year since Mr. Obama would not sign a separate bill extending them.
The president’s public lobbying seemed to crack through the solid Republican opposition this week when a prominent conservative, Representative Tom Cole of Oklahoma, urged his party to seek such a quick deal with Mr. Obama extending middle-class tax cuts. Mr. Boehner pushed back against Mr. Cole on Wednesday, saying that would hurt small businesses and the economy.
At the same time, Mr. Obama evidently sees no percentage in talking in detail about spending cuts, acutely aware that his liberal base is unenthusiastic about paring back entitlement programs. Senator Richard J. Durbin, a longtime Illinois ally and the No. 2 Senate Democrat, said this week that Medicare, Medicaid and Social Security should not be part of current budget talks.
As the two sides continued to shadowbox, Mr. Bowles was skeptical, putting the chances of a deal by the end of the year at one in three. “I believe the probability is that we are going over the cliff,” he said, “and I think that will be horrible.”
Jonathan Weisman contributed reporting from Washington, and Nelson Schwartz from New York.
Bernie Sanders Blows the Lid Off the ‘Bipartisan’ Plan To Cut Taxes for Corporations and the Wealthy
By: Jason Easley November 28th, 2012
In a letter to his Senate colleagues today, Bernie Sanders exposed the bipartisan Simpson/Bowles plan for what it really is. A scheme to lower taxes on the wealthy and corporations while passing the burden to the rest of us.
Sanders laid out the 5 areas of Simpson-Bowles that he believes Democrats should strongly oppose. Simpson-Bowles would cut Social Security benefits for current retirees, cut veterans’ benefits, raise the retirement age to 69, and cut Social Security benefits for middle class workers. Simpson-Bowles would also cut taxes for corporations and the wealthy. The Simpson-Bowles plan would reduce taxes to an even lower level than the Bush tax cuts. Taxes on corporations and the wealthy would be reduced to 23%-29%. Simpson-Bowles also would increase the gas tax by 15 cents, increase Medicare premiums, establish a territorial taxation system that would allow corporations to avoid US taxes by establishing subsidiaries overseas. Simpson-Bowles would also increase taxes on low income workers by 14.5% starting in 2021, and it would make fewer people eligible for SSI, CHIP, Medicaid, LIHEAP, WIC, Head Start, the Earned Income Tax Credit, and the Refundable Child Credit.
Sanders urged his Democratic colleagues to reject Simpson-Bowles because it would, “cause major economic pain to nearly every America while lowering tax rates for millionaires, billionaires, and large corporations even more than President Bush.”
There is a reason why Mitt Romney and the Republican campaigned so hard for Simpson-Bowles. It is exactly what the Republican Party wants. It slashes entitlements and passes the pain on to the middle and lower classes, while lowering taxes for corporations and the so called “job creators.” The rich feel no pain and get all of the gain from Simpson-Bowles.
The reason why this plan never went anywhere with Obama is because it violates several of the elements that he believes any deal on deficit reduction should contain. If congressional Democrats adopted Simpson-Bowles as their negotiating framework, they would lose before they even sat down at the table. Simpson-Bowles contains everything that the right could ever hope for. This is why it being championed by corporate America and the Republican Party.
Starting negotiations from the Simpson-Bowles framework would be like negotiating at all. Earlier today, President Obama asked Americans to make their voices heard on this issue. Call or write to your local representatives and senators. Let them know, that you won’t stand for any deficit deal that contains the Simpson-Bowles framework.
If you don’t stand up now, the wealthy’s gain will be your pain.
U.S. firms rush special payouts to beat tax hike
By Agence France-Presse
Thursday, November 29, 2012 7:00 EST
US companies are rushing to make huge payouts to shareholders before year-end to beat a tax increase on dividends expected to emerge from deficit talks under way in Washington.
Big-box discounter Costco became the latest firm Wednesday to set a dividend before December 31, promising a special cash payout of $3 billion, or $7 a share, on December 18.
On Tuesday Brown-Forman Corp., which makes Jack Daniels whiskey, declared a special cash dividend of $4 a share, to be paid on December 27; department store owner Dillard’s set a $5 a share bonus dividend, and casino operator Las Vegas Sands said its board approved a special payment of $2.75 a share on December 18.
Other companies, including Walmart, the world’s largest retailer, have moved forward their regular quarterly dividends from early 2013 to December in order to beat the expected year-end deadline for a tax change.
Verizon Wireless said earlier this month it would pay an $8.5 billion dividend to parents Verizon and Vodafone with a December 31 deadline — just in time to beat the possible tax hike.
The tax rates on dividends and capital gains are widely expected to increase as a result of negotiations between Democrats and Republicans aimed at cutting the deficit over the long term.
Cut to 15 percent in 2003 from a top rate of 39.6 percent, the dividend tax has become a symbol of a tax system and economy that critics say favors the wealthy.
It was a key issue in the presidential election, during which President Barack Obama skewered his wealthy opponent Mitt Romney for paying taxes at one of the lowest rates. This was because much of Romney’s tens of millions of dollars in income came from dividends.
Most expect the rate to be pushed back up to the same levels of income taxes — as much as 35 percent, or more if the highest income tax rate is raised again.
That has encouraged a number of companies — especially those like Dillard’s, Walmart and Las Vegas Sands which are closely controlled by families — to return cash to shareholders at a likely lower tax rate.
“We believe this special dividend is the best utilization of the company’s strong balance sheet at this time… The company chose to make this payment in calendar 2012 because of the uncertainty surrounding future dividend tax rates,” said Brown-Forman Chief Executive Paul Varga.
According to market research group Markit, special dividends are soaring this quarter, and it expects the normal average of 31 to surge to 120 or more.
It is not the first time, according to Markit: payouts jumped in December 2010 when it appeared that the dividend tax would rise at the beginning of 2011.
Markit pointed out that the payouts are more frequent when those deciding the payout control a bigger chunk of the company, as in Walmart.
“Markit believes that insider holdings are the key variable in projecting special dividends in this unique tax environment.
“Concentrated ownership at the executive and board level can more expeditiously push for one-time special dividends at the current favorable tax levels. Disparate groups of shareholders may not have the same influence.”
Jon Ogg of 24/7WallSt said some tech companies loaded up with cash could also make the move for an advanced payout, including Apple, Yahoo!, Juniper Networks and Oracle.
“Larry Ellison and friends have a cash arsenal of more than $31 billion,” Ogg said of Oracle’s chief executive and key shareholder.
“By sending back half of that cash, Oracle could have a 10 percent special cash dividend and still have more than $15 billion on its books.”
November 28, 2012
Big Issues Are Lost in Focus on Libya Talking Points
By SCOTT SHANE
WASHINGTON — Three days after the lethal attack on the American Mission in Benghazi, Libya, Representative C. A. Dutch Ruppersberger of Maryland, the top Democrat on the House Intelligence Committee, asked intelligence agencies to write up some unclassified talking points on the episode. Reporters were besieging him and other legislators for comment, and he did not want to misstate facts or disclose classified information.
More than 10 weeks later, the four pallid sentences that intelligence analysts cautiously delivered are the unlikely center of a quintessential Washington drama, in which a genuine tragedy has been fed into the meat grinder of election-year politics.
In the process, the most important questions about Benghazi, where Ambassador J. Christopher Stevens and three other Americans were killed on Sept. 11, have largely gotten lost: Were requests for greater security for diplomats in Libya ignored? Even if Al Qaeda’s core in Pakistan has been decimated, what threat is posed by its affiliates and imitators in other countries where they have taken refuge? How can crucial diplomacy be conducted amid the dangerous chaos that has followed the toppling of dictators across the Arab world?
Instead, it is the parsing of the talking points — who wrote them, altered them, recited them on television or tried to explain them — that could decide the fate of a leading candidate for secretary of state, Susan E. Rice, currently the United Nations ambassador. On Wednesday, for the second time in two weeks, Ms. Rice received a hearty endorsement from President Obama in the face of a continuing battering on Capitol Hill.
“Susan Rice is extraordinary,” he said in response to a reporter’s question as he met at the White House with his cabinet for the first time since the election. “Couldn’t be prouder of the job that she’s done.”
Now the talking points could also affect the chances of a top candidate for C.I.A. director, Michael Morell, the agency’s acting director, who on Tuesday accompanied Ms. Rice to a briefing for some of her most vocal Senate critics and misspoke about changes in the original draft of the talking points.
Intelligence officials said Wednesday that Mr. Morell’s flub, which prompted a sharply worded statement from three Republican senators, was an insignificant mix-up: He said the F.B.I. had taken out a specific reference to Al Qaeda, when in fact that change was made by the C.I.A. The F.B.I. had added another phrase to the same sentence.
“This was an honest mistake, and it was corrected as soon as it was realized,” one official said. “There is nothing more to this.”
But such earnest attempts to lower the political temperature have so far failed. As so often in Washington, the clashes over Benghazi have a semi-hidden personal element that adds to the emotion. Senator John McCain, the Arizona Republican who led the initial lambasting of Ms. Rice, had been subjected to withering criticism by her in 2008 when he was running for president. And senators considering Ms. Rice’s future are quite aware that her main rival for the job of secretary of state is their colleague Senator John Kerry, Democrat of Massachusetts.
For now, the focus of Congress and the news media is mostly on language. For weeks after the Benghazi attack, Republicans accused Mr. Obama and his aides of avoiding labeling it “terrorism” for fear of tarnishing his national security record in the weeks before the Nov. 6 election. Since his re-election, that issue has faded, and the debate has shifted to the talking points.
The facts about the talking points, like those about the Benghazi attack itself, have dribbled out slowly and awkwardly from intelligence officials who generally do not relish airing their internal deliberations. But there is now a fairly clear account.
The C.I.A. and other intelligence agencies rarely prepare unclassified talking points; more often, policy makers submit proposed public comments, and intelligence analysts check them for classified information or errors of fact. But in the storm of news media coverage after the killings in Benghazi, C.I.A. officials responded quickly to Mr. Ruppersberger’s request on Sept. 14.
C.I.A. analysts drafted four sentences describing “demonstrations” in Benghazi that were “spontaneously inspired” by protests in Cairo against a crude video lampooning the Prophet Muhammad. (Later assessments concluded there were no demonstrations.) The initial version of the talking points identified the suspected attackers — a local militant group called Ansar al-Shariah, with possible links to Al Qaeda in the Islamic Maghreb, an offshoot of the terrorist network in North Africa.
But during a subsequent review by several intelligence agencies, C.I.A. officials were concerned that such specific language might tip off the malefactors, skew intelligence collection in Libya and interfere with the criminal investigation. So they replaced the names with the blanket term “extremists.”
Ms. Rice has been skewered by Republican senators for her comments on Sunday television news programs on Sept. 16, which they have suggested were part of an administration cover-up of the terrorist nature of the attack and links to Al Qaeda. The criticism has barely been affected by the revelation that she accurately recited the talking points the intelligence agencies prepared.
On Wednesday, as she and Mr. Morell continued their meetings on Capitol Hill, an evident preamble to her possible nomination as secretary of state, Republican senators were not mollified.
“I continue to be troubled by the fact that the United Nations ambassador decided to play what was essentially a political role at the height of a contentious presidential election campaign,” Senator Susan Collins of Maine told a throng of reporters waiting for her after her hourlong meeting with Ms. Rice and Mr. Morell.
Ms. Collins said she “would need to have additional information” before she could support Ms. Rice for secretary of state.
Ms. Rice and Mr. Morell also met at length with Senator Bob Corker of Tennessee, who said that he too was deeply troubled by what he has learned. “The whole issue of Benghazi has been, to me, a tawdry affair,” he said. Though he did not mention Ms. Rice by name, he seemed to question whether she would be an appropriate choice for a position as vital as secretary of state.
Mr. Morell — thrust into the acting directorship of the C.I.A. on Nov. 9 when David H. Petraeus stepped down in a sex scandal — might himself soon be asking for the senators’ support. He is among a handful of top candidates to lead the agency, and it is uncertain whether the flap over his misstatement about the Benghazi talking points will be held against him.
Thomas Fingar, a former intelligence official and veteran of highly politicized disputes over Iraq’s weapons of mass destruction and Iran’s nuclear program, said that such Congressional scrutiny could be disconcerting for an analyst unaccustomed to the political fray.
“Michael is a very, very capable guy,” said Mr. Fingar, now at Stanford University. “But until you’ve sat at the table to undergo the grilling in this kind of atmosphere, it’s hard to imagine what it’s like. I might forget my own birthday.”
Jeremy W. Peters and Eric Schmitt contributed reporting.
November 28, 2012
Ex-Official Is Charged After Deaths at Coal Mine
By JESS BIDGOOD
Federal prosecutors in West Virginia charged the highest-ranking executive to date on Wednesday in a broad investigation stemming from the 2010 explosion at the Upper Big Branch mine that killed 29 miners, a move that suggests more senior executives at Massey Energy, the mine’s operator, are likely to be prosecuted.
The official, David C. Hughart, the former president of the Green Valley Coal Company, a division of Massey, will plead guilty and is cooperating with the investigation, said R. Booth Goodwin II, the United States attorney. “He was obviously a highly placed individual, and he gives us a fairly unique perspective,” Mr. Goodwin said.
Mr. Hughart was charged with one felony count of conspiracy to defraud the United States and a second misdemeanor conspiracy count. Prosecutors say that he and others knowingly conspired to violate safety laws at Massey’s mines and worked to hide those violations by giving advance warnings of surprise inspections by the Mine Safety and Health Administration.
The charges do not relate directly to the Upper Big Branch mine, indicating that prosecutors have widened their investigation to include a broader culture of suspected violations that is believed to have played a role in the 2010 explosion. Investigators say the blast was caused by explosive gases and coal dust that had built up in the mine.
“The conspiracy charge permits us to look more deeply at the conduct and all of the players involved in perpetuating this conduct in the corporate entity,” Mr. Goodwin said.
The use of conspiracy charges is unusual in the history of investigations of mining accidents, which typically have been prosecuted under the federal Coal Mine Health and Safety Act of 1969. That legislation can punish the actions of lower-level mining operators, like shift foremen, but has a limited scope for prosecuting high-level company officials, said Tony Oppegard, a Kentucky lawyer who represents miners and a former prosecutor of mine-safety violations for the state.
“It’s an unusual approach, and that’s why I think it signals some restless nights for other officials at Massey,” Mr. Oppegard said of the continuing inquiry. “I think it’s an indication that they’re aiming higher in the chain of command.”
Prosecutors also used conspiracy charges against Gary May, a superintendent of the Upper Big Branch mine who pleaded guilty this year to a fraud charge that accused him of manipulating a ventilation system to fool inspectors and disabling a methane monitor, among other violations.
Last year, Hughie Elbert Stover, a former security chief at Massey, was convicted of impeding the investigation into the blast by lying to federal investigators.
In June 2011 Massey Energy was acquired by Alpha Natural Resources, which late last year agreed to pay $209 million in restitution and civil and criminal penalties over the explosion, the worst American mining disaster in nearly 40 years. Samantha Davison, a company spokeswoman, said that Massey had fired Mr. Hughart in 2010, before that acquisition, but said the company was “committed to working fully” with the agencies investigating the disaster.
November 28, 2012
Losing in Court, and to Laptop Thieves, in a Battle With NASA Over Private Data
By NATASHA SINGER
In 2007, Robert M. Nelson, an astronomer, and 27 other scientists at the Jet Propulsion Laboratory sued NASA arguing that the space agency’s background checks of employees of government contractors were unnecessarily invasive and violated their privacy rights.
Privacy advocates chimed in as well, contending that the space agency would not be able to protect the confidential details it was collecting.
The scientists took their case all the way to the Supreme Court only to lose last year.
This month, Dr. Nelson opened a letter from NASA telling him of a significant data breach that could potentially expose him to identity theft.
The very thing he and advocates warned about had occurred. A laptop used by an employee at NASA’s headquarters in Washington had been stolen from a car parked on the street on Halloween, the space agency said.
Although the laptop itself was password protected, unencrypted files on the laptop contained personal information on about 10,000 NASA employees — including details like their names, birth dates, Social Security numbers and in some cases, details related to background checks into employees’ personal lives.
Millions of Americans have received similar data breach notices from employers, government agencies, medical centers, banks and retailers. NASA in particular has been subject to “numerous cyberattacks” and computer thefts in recent years, according to a report from the Government Accountability Office, an agency that conducts research for Congress.
Even so, Dr. Nelson, who recently retired from the Jet Propulsion Laboratory, a research facility operated by the California Institute of Technology under a contract with NASA, stands out as a glaring example of security lapses involving personal data, privacy advocates say.
“To the extent that Robert Nelson looks like millions of other people working for firms employed by the federal government, this would seem to be a real problem,” said Marc Rotenberg, the executive director of the Electronic Privacy Information Center, an advocacy group which filed a friend-of-the-court brief for Dr. Nelson in the Supreme Court case.
In a 2009 report titled “NASA Needs to Remedy Vulnerabilities in Key Networks,” the Government Accountability Office noted that the agency had reported 1,120 security incidents in fiscal 2007 and 2008 alone.
It also singled out an incident in 2009 in which a NASA center reported the theft of a laptop containing about 3,000 unencrypted files about arms traffic regulations and wind tunnel tests for a supersonic jet.
“NASA had not installed full-disk encryption on its laptops at all three centers,” the report said. “As a result, sensitive data transmitted through the unclassified network or stored on laptop computers were at an increased risk of being compromised.” Other federal agencies have had similar problems. In 2006, for example, the Department of Veteran’s Affairs reported the theft of an employee laptop and hard drive that contained personal details on about 26.5 million veterans. Last year, the G.A.O. cited the Internal Revenue Service for weaknesses in data control that could “jeopardize the confidentiality, integrity, and availability of financial and sensitive taxpayer information.”
Also last year, the Securities and Exchange Commission warned its employees that their confidential financial information, like brokerage transactions, might have been compromised because an agency contractor had granted data access to a subcontractor without the S.E.C.’s authorization.
On Wednesday, Dr. Nelson, the astronomer, and several other scientists in the NASA case held a news conference in which they asked members of Congress to investigate NASA’s data collection practices and the recent data breach.
Robert Jacobs, a NASA spokesman, said the agency’s data security policy already adequately protected employees and contractors because it required computers to be encrypted before employees took them off agency premises. “We are talking about a computer that should not have left the building in the first place,” Mr. Jacobs said. “The data would have been secure had the employee followed policy.”
The government argued in the case Dr. Nelson filed that a law called the Privacy Act, which governs data collection by federal agencies, provided the scientists with sufficient protection. The case reached the Supreme Court, which upheld government background checks for employees of contractors. The roots of Dr. Nelson’s case against NASA date to 2004 when the Department of Homeland Security, under a directive signed by President George W. Bush, required federal agencies to adopt uniform identification credentials for all civil servants and contract employees. As part of the ID card standardization process, the department recommended agencies institute background checks.
Several years later, when NASA announced it intended to start doing background checks at the Jet Propulsion Laboratory, Dr. Nelson and other scientists there objected.
Those security checks could have included inquiries into medical treatment, counseling for drug use, or any “adverse” information about employees such as sexual activity or participation in protests, said Dan Stormer, a lawyer representing Dr. Nelson.
But Dr. Nelson and other long-term employees of the lab challenged the legality of those checks, arguing that they violated their privacy rights. NASA, they said, had not established a legitimate need for such extensive investigations about low-risk employees like themselves who did not have security clearances or handle confidential information. Dr. Nelson, for example, specializes in solar system science — concerning, for example, Io, a moon of Jupiter, and Titan, a moon of Saturn — and publishes his work in scientific journals
“It was an invitation to an open-ended fishing expedition,” Dr. Nelson said of the background checks.
In friend of the court briefs for Dr. Nelson, privacy groups cited many data security problems at federal agencies, arguing that there was a risk that NASA was not equipped to protect the confidential details it was collecting about employees and contractors.
In 2008, the United States Court of Appeals for the Ninth Circuit in San Francisco temporarily halted the background checks, saying that the case had raised important questions about privacy rights. But last year, the Supreme Court upheld the background investigations of employees of government contractors.
Dr. Nelson said he retired from the Jet Propulsion Laboratory last June rather than submit to a background check. He now works as a senior scientist at the Planetary Science Institute of Tucson.
NASA has contracted with ID Experts, a data breach company, to help protect employees whose data was contained on the stolen laptop against identity theft. Mr. Jacobs, the NASA spokesman, said the agency has encrypted almost 80 percent of its laptops and plans to encrypt the rest by Dec. 21. He added that he too received a letter from NASA warning that his personal information might have been compromised by the laptop theft.
November 28, 2012
BP Is Barred From Taking Government Contracts
By JOHN M. BRODER and STANLEY REED
WASHINGTON — The United States government has temporarily banned the British oil company BP from new federal contracts, citing the company’s “lack of business integrity.”
The decision comes after BP agreed to plead guilty this month to criminal charges over the 2010 Deepwater Horizon blowout and oil spill that killed 11 workers and polluted hundreds of miles of Gulf of Mexico shoreline. As part of its settlement, the company agreed to pay penalties of $4.5 billion, including $1.26 billion in criminal fines.
The Environmental Protection Agency said Wednesday that BP’s suspension from new contracts would remain in effect “until the company can provide sufficient evidence to E.P.A. demonstrating that it meets federal business standards.”
Although the suspension does not affect the company’s existing federal contracts, the action is nonetheless a blow to BP. It is one of the government’s largest contractors, with $1.47 billion in federal business in 2011, according to a ranking compiled by the General Services Administration. Much of that revenue comes from the Defense Department, to which it provides more than $1 billion a year in fuel.
“It is not great news for BP, as they want to do business in the U.S.,” said Iain Pyle, an analyst at Bernstein Research in London.
The company’s shares closed down 0.4 percent in London trading, although they rose slightly later in New York trading. Its depositary receipts on the New York Stock Exchange rose 13 cents to $41.48.
An E.P.A. official said that BP would have to satisfy the terms of its plea agreement, made with the Justice Department, before the agency would consider lifting the ban.
In addition to paying the fines and penalties, the company must hire a safety monitor to oversee its deepwater operations, retain an ethics monitor to ensure that company employees do not again skirt federal laws and regulations, conduct safety and environmental audits for each drilling rig, and ensure that all equipment and workers meet federal safety and training standards.
Government officials would not speculate on how long it would take the company to meet those conditions.
The E.P.A.’s decision appeared to take BP by surprise. During a conference call with analysts on Nov. 15, the day the company and the government announced the plea deal, BP’s general counsel, Rupert Bondy, said, “We have not been advised of the intention of any agency to suspend or debar us in connection” with the settlement. The deal, however, stated that the government reserved the authority to restrict BP’s ability to receive government contracts or other benefits.
A BP spokesman, David Nicholas, said Wednesday that despite the E.P.A.’s action, the company remained “engaged” with the agency. “We are working through a process demonstrating present responsibility,” he said, referring to the legal standard that BP needs to meet before the suspension is lifted.
BP’s finances could suffer if the suspension is not lifted quickly because the United States accounts for such a large part of its business, representing 19 percent of its global oil and gas production in the third quarter and about one-fourth of the profit in its important exploration and production unit.
The heart of its American business is the Gulf of Mexico, where BP helped lead the way into deepwater drilling in the late 1980s. Its operations in the gulf, previously the source of some of its most profitable oil, are still a long way from returning to prespill levels. According to a company spokesman, production from fields it operates there now averages about 150,000 barrels a day of oil or its natural gas equivalent, which is only about one-third of output before the spill.
The slump is largely a result of BP’s being unable to conduct routine maintenance drilling because of the moratorium the government imposed on all gulf drilling after the blowout. That moratorium was lifted in October 2010, but new permits were not issued until early 2011. Although many oil companies were affected by the moratorium, BP was hit hardest because it was the region’s biggest deepwater oil and gas leaseholder.
Even before the E.P.A. announced its decision, BP had voluntarily decided not to participate in a gulf lease sale that the Interior Department held on Wednesday, according to a company spokeswoman.
Representative Edward J. Markey, Democrat of Massachusetts, had earlier called for a contracting ban on BP for its actions after the spill and for misleading Congress about the rate of oil flow from the damaged well.
“After pleading guilty to such reckless behavior that killed men and constituted a crime against the environment, suspending BP’s access to contracts with our government is the right thing to do,” Mr. Markey said Wednesday. “The wreckage of BP’s recklessness is still sitting at the bottom of the ocean, and this kind of time out is an appropriate element of the suite of criminal, civil and economic punishments that BP should pay for their disaster.”
BP says it has invested $52 billion in the United States over the last five years, more than in any other country, and it employs 23,000 Americans.
In another sign of the spill’s continuing fallout, BP is still selling assets elsewhere to help pay for the disaster’s costs, which total about $42 billion so far.
On Wednesday, BP announced the sale of North Sea oil fields representing about 25 percent of its British oil and gas production to Taqa, an energy company that belongs to the Abu Dhabi government, for about $1.1 billion.
Although BP has agreed to a settlement of criminal charges in the Deepwater Horizon case, it still faces billions of dollars in pollution fines under federal environmental laws.
Prosecutors are also continuing to investigate and bring charges against individuals involved in the case.
In New Orleans on Wednesday, two former BP rig supervisors were arraigned on manslaughter charges arising from the disaster. One of the supervisors, Robert Kaluza, told reporters before entering a plea of not guilty that he had not caused the accident, according to The Associated Press. He and Donald Vidrine, another site leader, were indicted on a charge of failing to heed abnormal well pressure tests.
Mr. Kaluza’s lawyer, Shaun Clarke, said his client was a scapegoat. “Bob and Don did their jobs,” he said, according to the A.P. report. “They did them correctly and they did them in accordance with their training.”
A former BP vice president, David Rainey, also pleaded not guilty to misleading Congress about the spill’s flow rate.
John M. Broder reported from Washington, and Stanley Reed from London.
November 28, 2012
Drive to Unionize Fast-Food Workers Begins
By STEVEN GREENHOUSE
Fast-food workers at several restaurants in New York walked off the job on Thursday, firing the first salvo in what workplace experts say is the biggest effort to unionize fast-food workers ever undertaken in the United States. The effort — backed by community and civil rights groups, religious leaders and a labor union — has engaged 40 full-time organizers in recent months to enlist workers at McDonald’s, Wendy’s, Domino’s, Taco Bell and other fast-food restaurants across the city.
Leaders of the effort said that workers were walking off the job to protest what they said were low wages and retaliation against several workers who have backed the unionization campaign. They said it would be the first multi-restaurant strike by fast-food workers in American history, although it was unclear how many workers would walk off the job.
The first walkout took place at 6:30 a.m. at a McDonald’s at Madison Avenue and 40th Street, where several dozen striking workers and supporters chanted: “Hey, hey, what do you say? We demand fair pay.” An organizer of the unionizing campaign said that 14 of the 17 employees scheduled to work the morning shift had gone on strike.
Raymond Lopez, 21, an aspiring actor who has worked at the for more than two years, showed up on his day off to protest. “In this job having a union would really be a dream come true,” said Mr. Lopez, who added that he makes $8.75 an hour. He said that he, and fellow fast-food workers, are under-compensated. “We don’t get paid for what we do,” he said. “It really is living in poverty.”
Over the decades there have been occasional efforts to unionize a fast-food restaurant here or there, but labor experts say there has never before been an effort to unionize dozens of such restaurants. The new campaign aims in part to raise low-end wages and reduce income inequality, and is also an uphill battle to win union recognition.
Ruth Milkman, a sociology professor at the City University of New York, said there had been so few efforts to unionize fast-food workers because it was such a daunting challenge.
“These jobs have extremely high turnover, so by the time you get around to organizing folks, they’re not on the job anymore,” she said. Nonetheless, she said the new effort might gain traction because it is taking place in New York, a city with deep union roots where many workers are sympathetic to unions.
Jonathan Westin, organizing director at New York Communities for Change, a community group that is playing a central role in the effort, said hundreds of workers had already voiced support for the campaign, called Fast Food Forward.
“The fast-food industry employs tens of thousands of workers in New York and pays them poverty wages,” Mr. Westin said. “A lot of them can’t afford to get by. A lot have to rely on public assistance, and taxpayers are often footing the bill because these companies are not paying a living wage.”
Mr. Westin said the campaign was using techniques that differed from those in most unionization drives, and was still developing overall strategy. He declined to say whether it would pursue unionization through elections or by getting workers to sign a majority of cards backing a union.
McDonald’s issued a statement about the incipient unionization push. “McDonald’s values our employees and has consistently remained committed to them, so in turn they can provide quality service to our customers,” the company said.
It added that the company had an “an open dialogue with our employees” and always encouraged them to express any concerns “so we can continue to be an even better employer.” McDonald’s noted that most of its restaurants were owned and operated by franchisees “who offer pay and benefits competitive within the” industry.
But workers demonstrating outside the Mcdonald’s on Madison Avenue said their employer pays them wages that makes it difficult to pay for basics.
“We can’t pay rent, pay bills,’' said Hector Henningham, 40, a manager, who said he was worked for McDonald’s for eight years and makes $8 an hour. “We need change.’'
One customer drinking coffee inside the McDonald’s said she supported the organizing effort. “If anybody deserves to unionize, it’s fast food workers,’' said the customer, Jocelyn Horner, 35, a graduate student.
Even with a union, it might be hard to obtain wages of $15 an hour, and many employers say they would most likely employ fewer workers if they had to pay that much.
Mr. Westin’s group, New York Communities for Change, has played a major role in the recent uptick in unionizing low-wage workers in New York, many of whom are immigrants. In the past year, his group, working closely with the retail, wholesale and department store union and other organizations, has helped win unionization votes at four carwashes and six supermarkets in New York.
The sponsors of the fast-food campaign also include
UnitedNY.org, the Black Institute and the Service Employees International Union, a powerful union that is playing a quiet but important role behind the scenes.
Several religious leaders are backing the effort. “I’ve become involved because it is primarily a matter of justice,” said the Rev. Michael Walrond of the First Corinthian Baptist Church in Harlem. “We seek to protect those who are the most vulnerable in our culture, and some of the most vulnerable people in the city are fast-food workers who work for poverty wages.”
According to the State Labor Department, median pay for fast-food workers in the city is around $9 an hour — or about $18,500 a year for a full-time worker.
After three years of working at a McDonald’s restaurant on 51st Street and Broadway, Alterique Hall earns $8 an hour — and is yearning for something better.
So when he heard about the unionization campaign, Mr. Hall, 23, was quick to sign on.
“It’s time for a change,” he said, “It’s time to put on the gloves.”
Linda Archer, a cashier at the McDonald’s on 42nd Street just west of Times Square, said she wished she earned that much. She earns $8 an hour after three years there and averages 24 hours a week, she said, meaning her pay totals about $10,000 a year.
“I feel I deserve $15 an hour,” said Ms. Archer, 59. “I work very hard.” She said she hoped a union would deliver affordable health insurance and paid sick days.
“My hope is we can all come together in a union without being intimidated,” she said.
TCB Management, the franchisee that operates Mr. Hall’s McDonald’s, and Lewis Foods, which runs Ms. Archer’s, did not respond to inquiries.
Tim McIntyre, a Domino’s Pizza spokesman, said the few efforts to unionize its stores and drivers had fallen flat.
“It’s a fairly high-turnover position, so there’s never been a successful union effort,” he said. “People who are doing this part time, seasonally or as they work their way through college don’t find much interest in membership.”
Richard W. Hurd, a labor relations professor at Cornell, said the organizations backing the fast-food campaign seemed intent on finding pressure points to push the restaurants to improve wages and benefits.
“But it’s going to be a lot harder for them to win union recognition,” he said. “It will be harder to unionize them than carwash workers because the parent companies will fight hard against it, because they worry if you unionize fast-food outlets in New York, that’s going to have a lot of ramifications elsewhere.”
Nate Schweber contributed reporting.
November 28, 2012
Rail Plan Stirs Distrust Among Black Angelenos
By IAN LOVETT
LOS ANGELES — The story of major transit projects in the 20th century here was the story of black neighborhoods carved into pieces. One freeway after another forced families from their homes in South Los Angeles, the core of the region’s black community. Walls of concrete were erected through their neighborhoods, which they said cut them off from wealthier parts of the city.
The Crenshaw rail line was supposed to be different. The line, a crucial link in a planned rail network that will span Los Angeles County, promised to right that historical wrong by connecting South Los Angeles to the city’s business hubs: downtown, the airport and Hollywood.
Instead, the Crenshaw line threatens to become yet another insult to South Los Angeles and a burden for businesses, some residents and community activists have said.
The Leimert Park neighborhood, the heart of black culture here, may be left without a stop on the rail line, a victim of limited money. And the train will run at street level through part of the area, which business owners fear will cut them off from their customers during years of construction.
The prospect that the train will bypass the neighborhood has stoked distrust among South Los Angeles residents who feel that they are being shortchanged as power brokers try to save money for other projects in wealthier parts of the city.
Tonya Anthony’s family has owned and operated a hair salon on Crenshaw Boulevard since 1959. She was initially excited about the Crenshaw line. But once she learned that there would be no stop in Leimert Park, a few blocks from her shop, and that construction would take away half of the parking her customers used, she worried that the train might drive the salon out of business.
“Leimert Park is one of the major cultural areas in the city,” Ms. Anthony, 44, said. “For traffic to be diverted past it, I think, would be very detrimental to this area and the businesses here.”
Tom Bradley, this city’s first and only black mayor, was also the mayor who brought modern subways to Los Angeles. Mayor from 1973 to 1993, Mr. Bradley lived in Leimert Park before moving to the mayoral residence. And, for some, the Crenshaw line, which will cover 8.5 miles through South Los Angeles to the airport, has become part of an effort to extend his legacy.
Mark Ridley-Thomas, a Los Angeles County supervisor who represents South Los Angeles, put forward a plan last year to allocate money for a Leimert Park stop and to keep the line underground along Crenshaw Boulevard. The city’s black political establishment — religious and business leaders and elected officials who have often clashed on other issues — lined up behind the effort.
“It was a salute to Tom Bradley, who said this was his vision for his city,” Mr. Ridley-Thomas said. He added that the Crenshaw line and a Leimert Park stop had become “emblematic of a struggle for progress.”
Mayor Antonio Villaraigosa, the city’s first Latino mayor, has also positioned himself as a successor to Mr. Bradley’s transit legacy: the rail lines that will span Los Angeles County in the coming decades will be a major piece of his own legacy after he leaves office next year because of term limits.
Yet Mr. Villaraigosa and his allies blocked Mr. Ridley-Thomas’s plan. Instead, a Leimert Park stop will be included only if contractors can squeeze it within the existing budget, and the Crenshaw line will run at street level for part of its trip through the area.
Mr. Villaraigosa agrees, as does just about everyone else, that Leimert Park, home to cultural festivals, jazz clubs and a host of black-owned businesses, deserves its own stop. Contractors will submit their proposals for the project within a few weeks, and the mayor said he was “fairly confident” that a Leimert Park stop could be done within the $1.8 billion budget.
But Mr. Villaraigosa also emphasized the benefits that the rail network — including a recently constructed light-rail line that carries passengers through the northern parts of South Los Angeles — would offer the area even if a Leimert Park stop was not built. He also noted his efforts to expand the Crenshaw line, which was originally designed as a bus line with a fraction of the money it now has.
“All of that happened because I drove it,” he said. “This was a busway before I made it into a light rail.”
Still, some Leimert Park residents remain convinced that the rail line has been nickel-and-dimed to save money for other projects in wealthier parts of the city, like the “Subway to the Sea,” which will extend the subway line from downtown through affluent communities in West Los Angeles. The budget for that project stretches to an estimated $6.3 billion, and the entire line will run underground, sparing businesses from surface-level construction that could drive away customers.
“In this community, we don’t have money,” said Theodore Thomas, the president of the Community Council in the Park Mesa Heights neighborhood, where the Crenshaw line will run at street level. “The majority of people think we’re a pass-through on the way downtown.”
Lisa Schweitzer, a professor at the Sol Price School of Public Policy at the University of Southern California who studies social justice and transport, said that the congested corridor on the West Side was the best place in Los Angeles for a subway line, while Crenshaw Boulevard was better suited for an aboveground light-rail line, which is less expensive to build but carries fewer people.
Crenshaw Boulevard was the site of a streetcar line before that rail system was ripped out more than half a century ago.
But Dr. Schweitzer said she understood the frustration that residents and small-business owners along Crenshaw Boulevard had expressed. “It comes out of this history in which the answer is always no,” she said. “When it comes to requests from South L.A., the answer is always no, we can’t afford it. And, conversely, when it comes to the West Side, the answer is always yes, because they’re so politically empowered and so wealthy.”
Tavis Smiley, the television and radio broadcaster, has lived and worked in Leimert Park since the 1980s, when he started as an intern for Mr. Bradley.
“This is an old story,” he said. “I detest when government gives short shrift to people of color. If they don’t figure out a way to make sure this stop is included, there’s going to be outrage in this community.”