September 23, 2021

U.S. Shutdown Nears as House Votes to Delay Health Law

The votes, just past midnight, followed an often-angry debate, with members shouting one another down on the House floor. Democrats insisted that Republicans refused to accept their losses in 2012, were putting contempt for the president over the good of the country and would bear responsibility for a shutdown. Republicans said they had the public on their side and were acting to protect Americans from a harmful and unpopular law that had already proved a failure.

The House first voted 248-174 to repeal a tax on medical devices, then voted 231-192 to delay the law’s implementation by a year — just days before the uninsured begin enrolling in the law’s insurance exchanges. The delay included a provision favored by social conservatives that would allow employers and health care providers to opt out of mandatory contraception coverage.

But before the House had even voted, Senator Harry Reid of Nevada, the majority leader, declared the House bill dead. Senate Democrats are planning to table the Republican measures when they convene on Monday, leaving the House just hours to pass a stand-alone spending bill free of any measures that undermine the health care law.

The House’s votes early Sunday all but assured that large parts of the government would be shuttered as of 12:01 a.m. on Tuesday. More than 800,000 federal workers deemed nonessential faced furloughs; millions more could be working without paychecks.

“The American people don’t want a government shutdown, and they don’t want Obamacare,” House Republican leaders said in a statement. “We will do our job and send this bill over, and then it’s up to the Senate to pass it and stop a government shutdown.”

A separate House Republican bill passed unanimously Sunday morning to ensure that military personnel continued to be paid in the event of a government shutdown, an acknowledgment that a shutdown is likely. En route to South Korea, Defense Secretary Chuck Hagel was unimpressed, excoriating his former Republican colleagues in Congress.

“This is an astoundingly irresponsible way to govern,” Mr. Hagel said, adding that a fully functioning military went beyond its uniformed forces to its civilian personnel. “If this continues, we will have a country that is ungovernable.”

Representative Darrell Issa, a powerful Republican committee chairman who is close to the leadership but has sided with those who want to gut the health care law, flashed anger when asked what would happen when the Senate rejected the House’s offer.

“How dare you presume a failure?” he snapped. “We continue to believe there’s an opportunity for sensible compromise, and I will not accept from anybody the assumption of failure.”

But Mr. Reid made it clear that failure was inevitable. “After weeks of futile political games from Republicans, we are still at Square 1,” he said. “We continue to be willing to debate these issues in a calm and rational atmosphere. But the American people will not be extorted by Tea Party anarchists.”

The White House was just as blunt. “Any member of the Republican Party who votes for this bill is voting for a shutdown,” the press secretary, Jay Carney, said in a written statement. The White House also said that the president would veto the House bill if approved by the Senate.

In fact, many House Republicans acknowledged that they expected the Senate to reject the House’s provisions, making a shutdown all but assured. House Republicans were warned repeatedly that Senate Democrats would not accept any changes to the health care law.

Jennifer Steinhauer contributed reporting.

Article source:

$300 Million in Detroit Aid, but No Bailout

This first major infusion from the federal government, which administration officials say will not be the last, would be used to help clear and redevelop blighted properties, improve transportation systems, bolster the police — especially around schools — and overhaul city management systems wrecked by years of poor administration and inadequate resources.

The package follows weeks of meetings in Detroit and at the White House between the administration team and local business, labor and philanthropic leaders on how best to pool existing resources. Final details are to be worked out in a two-hour meeting of the federal and local officials at Wayne State University, participants said.

While Mr. Obama remains in Washington as fights over the budget and health care threaten a government shutdown at the start of a fiscal year on Tuesday, he is sending a delegation led by his chief White House economic adviser, Gene B. Sperling, which includes three cabinet members: Attorney General Eric H. Holder Jr.; Shaun Donovan, secretary of housing and urban development; and Anthony R. Foxx, secretary of transportation and a former mayor of Charlotte, N.C.

Administration officials acknowledged that the initial aid would hardly solve problems in Detroit that have been decades in the making. But, Mr. Sperling said, “It’s the largest city bankruptcy in the history of our country, on our watch, and we’ve got to do something.”

Yet the idea of the federal government’s responsibility toward Detroit is hardly a settled issue in Washington. Instead, divisions over the question reflect the fundamental divide between the two parties over the size and role of government.

Congress, preoccupied with reducing federal deficits, has been all but silent about helping the birthplace of the auto industry and, some say, of the American middle class. The Republican-controlled House is hostile to any spending initiatives from Mr. Obama. In the Senate, two Southern Republicans separately and unsuccessfully proposed legislation intended to ban bailouts — Detroit leaders have not sought one — briefly churning the racial currents at play over a city where four out of five residents are black.

So with the chances that Congress would pass any legislation for Detroit “somewhere between zero and zero,” as an administration official put it, Mr. Obama has fallen back on what he can do through executive actions, with available money and tax credits, or through partnerships with local businesses and foundations.

The effort is similar to the way he has worked around Congress to create advanced manufacturing centers nationwide with federal and local support, provide broadband in every classroom, speed up infrastructure projects and try to reduce gun violence.

Even before Friday’s event, administration officials worked with Michigan’s governor, Rick Snyder, a Republican, to redirect $52 million in federal money to be used to demolish abandoned properties that are blighting communities and discouraging investment.

Most of the roughly $300 million to come is federal money, with the state and foundations chipping in, according to the White House. About $140 million would go toward transit improvements, including $24 million to repair buses. An additional $100 million would go to blight efforts, including $25 million for commercial demolitions from combined federal, state and foundation money. With the planned $25 million in federal Homeland Security money, up to 150 firefighters could be hired.

“Our message right from the beginning was: There is nothing we can do to help on the bankruptcy; there is no bailout,” said Mr. Sperling, a native of Ann Arbor, Mich. “However, we want to look at what could we do to help Detroit through existing resources and mobilization” of public and private partners.

“What we knew, too, was that this was a place where signaling was important,” he added. “You want to signal that people are staying with Detroit, that this is still a place to invest, to go.”

Article source:

Many Steps to Be Taken When ‘Sequester’ Is Law

At that moment, somewhere in the bowels of the Treasury Department, officials will take offline the computers that process payments for school construction and clean energy bonds to reprogram them for reduced rates. Payments will be delayed while they are made manually for the next six weeks.

Hours later, employees at the Environmental Protection Agency will open e-mails notifying them of the bad news: a forced furlough of up to 13 days in the weeks ahead.

And over at the Department of Housing and Urban Development, officials will spend the weekend mailing out letters to governors in all 50 states showing how much their grants will be reduced in the coming days and weeks.

Created by desperate politicians in Washington to force themselves to find a smarter way to cut government, the “sequester” will instead become the law of the land as a result of a failure of Mr. Obama and congressional Republicans to compromise.

But the law does not create an immediate spending crisis or government shutdown like the ones that have loomed over so many of the previous budget fights in Washington. On Friday, the immediate impact on most Americans will be exactly nothing.

Federally funded day care programs will continue to operate. National parks will stay open. Government employees will continue to report to work. Border patrol agents will do their best to prevent illegal crossings. Experts do not expect the stock market to flinch.

It will be, Mr. Obama said Wednesday night, more of a “tumble downward” than a quick descent into budgetary nightmare. “It’s conceivable that in the first week, the first two weeks, the first three weeks, the first month, a lot of people may not notice the full impact of the sequester,” Mr. Obama told a group of business officials.

That might not be entirely true, as Mr. Obama noted, for some pockets of American society: companies who do business directly with the Defense Department, families who live near military installations and parents who rely on federally funded child care will be affected. Federal workers may soon face effective cuts of 10 percent or more in their salaries this year.

But even there, officials conceded this week, the specific impacts are more fuzzy than the aggregate ones. Ask officials about which contracts will be cut or which services will be trimmed back, and there are long pauses and blank looks.

“The impacts of sequester are real,” Jay Carney, the White House press secretary, said again and again to reporters on Thursday. “These are about real issues. These are about the concrete effects of policies on people’s lives.”

But who? Which agencies? What contracts?

Under the barrage of questions, Mr. Carney managed to come up with reduced funding for school children in Ohio.

But which children? Those who live in Columbus or Cincinnati? Officials at the White House, the Office of Management and Budget and the Education Department cannot answer with that kind of specificity.

White House officials become indignant with suggestions that Mr. Obama and his top lieutenants might have hyped the devastation wrought by the automatic cuts. At his briefing, Mr. Carney insisted that the administration had been transparent.

“You know, we’ve been very clear,” he said. “What the president said last night is that — you know, and I think what other people have said — is that this will be a rolling impact, an effect that will build and build and build.”

Strategists in the West Wing are betting that the growing impact of the budget cuts — including what they expect will be a hit to the nation’s already slow economic growth rate — will eventually bring Republicans to the table for a deal.

It may take some time. Even the most direct impact on federal workers — the forced furloughs — will not happen in most cases for 30 or 60 days, after government managers have concluded negotiations with the unions that represent workers.

A letter sent to employees at the Justice Department, for example, is filled with legalese. “This memorandum notifies you that the Department of Justice (DOJ) proposes to furlough you no earlier than 30 days from receipt of this notice,” it said.

More letters like that are coming once Mr. Obama signs the letter making sequestration official.

And when, exactly, will that happen?

“It has to be done by 11:59 p.m. tomorrow,” Mr. Carney told reporters, joking that it would be at “11:59 and 59 seconds, because he’s ever hopeful.”

Article source:

House Votes to Temporarily End Debt Ceiling

The 285-144 vote staved off an impasse that could have put the full faith and credit of the United States government into doubt and potentially set off an economic disaster. Instead, the next Republican showdown with the president will come in March, when the subject will be across-the-board spending cuts first and a possible government shutdown by the end of the month.

“We know with certainty that a debt crisis is coming to America. It’s not a question of if. It’s a question of when,” Representative Paul D. Ryan of Wisconsin, the Republicans’ vice-presidential nominee last year and current Budget Committee chairman, said as he vowed to press ahead with deep spending cuts.

To give House Republicans a rationale for giving in on the debt ceiling after dropping demands for offsetting cuts, the House legislation included a provision that would withhold the pay of lawmakers in a chamber of Congress that fails to pass a budget blueprint by April 15.

That allowed House Republicans to turn a spotlight on Senate Democrats, who have not passed a detailed budget blueprint since 2009.

“It took one week in which their paychecks were on the line, and now the Senate is going to step up and do the right thing,” Representative Eric Cantor of Virginia, the House majority leader, said after the vote.

Senate Democratic leaders shrugged off the dictate as an insignificant gimmick and claimed victory.

“The president stared down the Republicans. They blinked,” said Senator Charles E. Schumer, Democrat of New York.

Senator Harry Reid of Nevada, the majority leader, thanked Speaker John A. Boehner for reversing course and said he would take up and pass the House bill without changes as soon as next week, possibly by unanimous consent. He said he would then move quickly on a budget plan for the first time since 2009.

“Democrats are eager to contrast our pro-growth, pro-middle-class budget priorities with the House Republicans’ Ryan budget that would end Medicare as we know it, gut investments in jobs and programs middle-class families depend on, and cut taxes for the wealthiest Americans and biggest corporations,” said Senator Patty Murray of Washington, the chairwoman of the Senate Budget Committee.

House Republicans appeared eager for that fight. For two years, the House has passed detailed but nonbinding budget plans that would cut domestic programs to levels not seen since World War II, enact changes to Medicare that would offer older people fixed subsidies to buy private health insurance, and mandate a much-simplified tax code. Democrats have criticized those plans, declined to produce an alternative, and instead demanded what they called a “balanced approach” to deficit reduction.

Now, Republicans said, the debate will be over numbers.

“We have a budget that’s described as draconian, that decimates this program or that. They have a phrase, ‘balanced approach,’ ” said Representative Trey Gowdy, Republican of South Carolina. “I’m tired of debating against a phrase.”

The debt ceiling legislation — devised with awareness of the constitutional hurdles imposed by the 27th Amendment on Congressional pay — would impound lawmaker salaries until a budget is passed or the 113th Congress ends, whichever comes first. And it would not require the House and the Senate to come to a compromise on the two spending and tax blueprints, which are likely to be very different. That will be the really difficult task.

House Democratic leaders tried to persuade their members to vote against the deal, so as to force as many Republicans as possible to vote to do something most said they would never do: lift the debt ceiling. But 86 Democrats voted yes, more than enough to let 33 Republicans vote no without bringing the bill down and handing Republican leaders an embarrassing defeat.

House Republicans say punting the debt ceiling to May 18 is not so much a retreat as a “re-sequencing” of the coming budget showdowns. House Republicans now take for granted that the first deadline, March 1, will come and go, and $110 billion in across-the-board spending cuts to military and domestic programs — known as a sequester — will go into force.

“The sequester is going to go into effect on March 1 unless there are cuts and reforms that get us on a plan to balance the budget over the next 10 years. It’s as simple as that,” Mr. Boehner said.

The next real showdown will come by March 27, when the stopgap measure financing the government expires. Republicans have made clear that they are willing to let the government shut down at that time to force deep spending cuts or changes to Medicare and Social Security that would bring down deficits in the long run.

Such continuing brinkmanship brought a rebuke from Ms. Murray, who said Republicans were trying to have it both ways, forcing Senate Democrats to move forward in an orderly way with a budget plan by mid-April, but threatening the next budget crisis weeks before that.

The pay provision brought its own protests. Representative Jerrold Nadler, Democrat of New York, called it “institutionalized bribery,” since it effectively says, do what Republicans want or do not get paid. That was why the nation passed the 27th Amendment, which says Congressional pay cannot be varied within a single Congress.

Article source:

House Republicans Push Stopgap Spending Bill

But Republicans acknowledged Thursday that they would miss the deadline they had promised to meet. They began to rush a stopgap spending bill through the House because, they said, Congress could not finish work on any of the 12 regular appropriations bills before the new fiscal year starts in two weeks, on Oct. 1.

The stopgap measure maintains spending for the first 49 days of the fiscal year, through Nov. 18, with a 1.5 percent across-the-board cut from current levels, averting at least for now the threat of a government shutdown. Congressional leaders hope the additional time allows them to finish many of the overdue spending measures.

In addition, the stopgap bill includes $3.65 billion in assistance for people affected by Hurricane Irene, wildfires, floods, tornadoes and other natural disasters. Of this amount, $1 billion would be offset by cutting a loan guarantee program for production of more fuel-efficient cars. Republicans’ insistence on the offset infuriated Democrats, who said no such offset had been required for the wars in Afghanistan and Iraq.

By a vote of 62 to 37, the Senate on Thursday approved a $7 billion disaster relief measure after rejecting Republican efforts to offset the costs. How differences with the House will be resolved is unclear.

Representative Harold Rogers, Republican of Kentucky and chairman of the House Appropriations Committee, said he would have preferred to complete all the bills before Sept. 30. “Unfortunately,” he said, “the Senate is slightly behind schedule.”

Republicans offered several reasons for missing the deadline. They spent the first few months of the year cleaning up after Democrats who had failed to pass any spending bills for 2011. They spent much of July wrangling with President Obama over an increase in the federal debt limit. When the House took up spending bills for 2012, Republicans allowed wide-open debate and hundreds of amendments, including many offered by Republicans who wanted deeper cuts or more restrictions on use of the money by Mr. Obama.

In the past, lawmakers sought seats on the Appropriations Committees so they could secure more money for programs and projects they liked. But the dynamic is entirely different this year, as pet projects have been drastically curtailed and the committees must cut spending for many programs because of constraints imposed by the new debt limit law.

The chairman of the Senate Appropriations Committee, Daniel K. Inouye, Democrat of Hawaii, said that even military spending had come under the knife “in this austere fiscal climate.”

Senator John McCain of Arizona, the senior Republican on the Armed Services Committee, said, “Real defense cuts are coming.” And they “will require a change in culture at the Defense Department,” which in the past “has just reached for more money as the solution to most problems,” Mr. McCain said.

The House has passed 6 of the 12 regular spending bills for 2012, and a seventh, providing money for the Environmental Protection Agency and the Interior Department, was on the floor for four days with no final resolution. The House Appropriations Committee has approved three other bills that have not gone to the House floor. The committee has not even released the text of the most contentious bill, which provides money for the Labor Department and the Department of Health and Human Services.

The Senate has passed just one 2012 spending bill, which would provide $144 billion for military construction projects and veterans’ programs. The House has passed a similar bill, but has not responded to the Senate’s request to hash out a compromise in a conference committee.

On Thursday, the Senate Appropriations Committee approved four 2012 bills, including one that would freeze spending for the normal activities of the Defense Department at $513 billion, which is $26 billion less than Mr. Obama requested and $17 billion less than the House approved in July. The bill would cut $695 million from the F-35 Joint Strike Fighter, the Pentagon’s largest weapons program.

In addition, the bill would provide $117.6 billion, as requested by Mr. Obama, for “overseas contingency operations” related mainly to the wars in Afghanistan and Iraq.

Republicans see the spending bills as a way to clip the wings of federal regulators.

In January, Mr. Obama signed a food safety law that provides broad new authority to the Food and Drug Administration. But one of the 2012 spending bills passed by the House would cut the agency’s budget.

Mr. Obama proposed an increase of more than 50 percent for the Commodity Futures Trading Commission so it could step up regulation of the financial industry and begin policing the over-the-counter derivatives market under the Dodd-Frank Act. The House-passed bill would cut the agency’s current budget by 15 percent, to $172 million.

Representative Marcy Kaptur, Democrat of Ohio, said the bill “takes cops off the beat at the commission, which provides a critical bulwark against the type of speculation and fraud that led our country into the worst recession since the Depression.”

But Representative Jack Kingston, Republican of Georgia and chief author of the bill, said that Democrats “love more regulations,” and that the Dodd-Frank law was “an overreach, more government telling people how to conduct their business.”

Representative James P. Moran, Democrat of Virginia, said the House version of the E.P.A. spending bill carried “a wish list for special interests — oil companies, cattle grazers, industrial agribusiness, miners and those who wish to pollute our air and water.”

Mr. Rogers said that in its zeal for regulation, the agency had lost touch with “economic reality.”

The House bill would also prevent the National Park Service from carrying out boat inspections on waterways in the Yukon-Charley Rivers National Preserve in Alaska.

“The Park Service in Alaska has become, very frankly, like an occupying army of a free territory,” said Representative Don Young, Republican of Alaska, and he pointed to a case in which he said federal agents had manhandled a 70-year-old on a Yukon River cruise.

Article source:

Bucks: Just Ignore the Crisis du Jour

Carl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog and on his personal Web site,

Unless you were under a rock on Friday, you had to endure endless chatter about the impact of the looming government shutdown on our lives. By the time you woke up Saturday morning, it was over, after a suspense-filled, last-minute deal averted what had begun to seem like sure disaster thanks to all of the minute-by-minute updates.

At its height, the chatter verged on comical. Venture Beat warned that initial public offerings would be delayed. But the bright spot for the day was that the Cherry Blossom Parade would go on even if there was a shutdown.

I know that the impact to federal employees would have been no joke, so here’s my point:

1. The shutdown didn’t happen.

2. There was almost nothing any of us could have done on Friday afternoon to change the outcome.

3. There will be something new to worry about today. Or tomorrow for sure.

It’s amazing how often we fall into this trap of worrying about things that are simply not problems yet. Most of the problems we face are not even really problems at the time we’re tying ourselves up in knots. Often these “problems” serve only to call up regret about how we responded to a real problem in the past or worry about something that has a small chance of happening in the future. But none of these things are within our control. So why waste the time?

Because emotion plays such a huge role in our financial behavior, it’s critical that we not act on irrational fears about the crisis du jour. History has shown us that the best way to meet financial goals is to have a plan, get to work and avoid reacting to each and every one of the latest crises.

Article source:

Japan Cargo Is Screened at U.S. Ports

Three Customs and Border Protection officers used the equipment to screen Japanese cargo plucked by cranes as high as 24-story buildings from the NYK Aquarius, a massive cargo ship. Semi trucks hauling the containers passed slowly between two government trucks mounted with radiation detectors that resembled white cabinets.

If the lights flashed, it would mean the equipment detected unusual levels of radioactivity in the cargo. A white light means gamma radiation was detected; a red light indicates neutron radiation.

But on this day, like every day thus far, no dangerous cargo was found.

Although the government agency, part of the Department of Homeland Security, checks every cargo container coming from Japan since radiation began escaping from a damaged nuclear power plant in Fukushima, its officers have found no radioactively contaminated seafood, auto parts or electronics. The officers waved the Aquarius’s cargo through.

“To date, we have not held one container for contamination,” said Richard F. Vigna, a director of field operations for Customs and Border Protection. “There hasn’t been anything.”

The federal government operates a vast web of radiation screening at the nation’s seaports, airports and border crossings. Originally installed after the Sept. 11 attacks, the system is now also being used to make sure no contaminated Japanese imports reach store shelves.

The agency expects to keep working at the nation’s ports despite a government shutdown, if one occurs.

The heightened scrutiny increased for Japanese products immediately after the Fukushima nuclear plant’s troubles started. Typically, ship cargo goes through at least one round of radiation screening before being cleared to leave the port. But as a precaution, containers from Japan now get multiple checks.

The radiation screening program, which cost billions of dollars to put into effect, is operated by Customs and Border Protection. Radiation is just one concern for the agency, which also seizes drugs, detains illegal immigrants and eradicates invasive insects that stow away on incoming ships and airplanes.

But these days, attention is focused on the lights of the radiation detector. Should any contaminated products slip through, they could pose a health hazard, and would more than likely set off a panic among consumers, some of whom are already skittish about eating Japanese sushi. Only dairy products and produce from near the Fukushima plant have been banned outright by the Food and Drug Administration.

Scanning imports is a huge undertaking because of the volume of goods involved. Japan alone ships $120 billion in cars, electronics and other products to the United States annually.

Customs and Border Protection also has to balance the potential impact on commerce. Delays could mean lost money for shippers and the businesses that depend on supplies from Japan.

Michael Zampa, spokesman for APL, a container shipping company, said there were some initial backlogs in Los Angeles because of the expanded inspections, but they seemed to have eased.

“There was some delay, but it’s what you would expect with any new process,” he said.

The biggest excitement at the Port of Oakland came one day last week when a trucker ran over a traffic cone that then became stuck between his vehicle’s tires. The officers had to stop him to pull it out. Another driver balked at driving through the detectors because she feared that she would be subjected to radioactivity, as if she were going through an X-ray machine. The machines, in fact, do not emit radiation; they only measure it. Another driver took her place.

The offloaded containers get a second inspection when they leave the port. All trucks, no matter the origin of their cargo, must drive through radiation detectors resembling yellow gates at each terminal’s exit.

Earlier that day, in a nearby booth where officers monitor the port’s gate, an automated voice barked “gamma alert, gamma alert.” The equipment detected abnormal radiation on a passing truck. Although ominous sounding, such alerts are actually routine.

Article source:

Oil Prices Surge Again on Fighting in Libya

Oil prices surged again Friday amid reports that the fighting in Libya damaged the country’s oil fields and on a weaker dollar that has made commodities cheaper for investors with other currencies. Equity markets on Wall Street moved with a narrow range on Friday as investors watched for news from Washington about a possible government shutdown.

The price of benchmark crude for May delivery was up $1.02 at $111.32 a barrel, the highest since September 2008, in early trading in New York. The contract rose $1.47 on Thursday to settle at $110.30.

In London, Brent crude for May delivery was up $2.05 to $124.72 a barrel.

The large spread between the two prices has been attributed to the belief that Europe has a higher exposure to the scarcity of Libyan oil exports, and the big American stockpiles of crude and gasoline.

Crude output in Libya slowed to a trickle this week as forces loyal to Col. Muammar el-Qaddafi attacked the country’s largest oil field in the rebel-controlled east, rebels said. Most of Libya’s 1.6 million barrels a day of crude production had already been shut down by nearly two months of fighting.

“The biggest driver of the further increase in oil prices is a growing perception in the market that the conflict in Libya might not end anytime soon,” a report from KBC Energy Economics in Britain said.

Oil prices were also lifted by a weakening dollar, which makes dollar-based commodities like crude oil cheaper for traders with other currencies. The euro rose to $1.4433 on Friday from $1.4306 late Thursday.

Analysts, meanwhile, noted demand could drop as oil prices climb above what many consumers can afford.

Wall Street indexes struggled Friday with investors looking to watching Washington, where Republicans and Democrats are in the final day of talks to reach a budget agreement that would prevent a government shutdown. A shutdown will close non-essential government services, including the publication of most economic reports.

In early trading, the Dow Jones industrial average were down 5.29 points. The Standard and Poor’s 500-stock index was flat, while the Nasdaq 100 lost 3.65, or 0.13 percent.

In economic news, the Commerce Department reported that wholesale businesses increased inventories in February for the 14th consecutive month but sold fewer cars, pieces of furniture and petroleum products.

Sales at the wholesale level slipped 0.8 percent in February, the agency said, the first setback since June 2009. Inventories rose 1 percent and have been rising for more than a year. The string of inventory gains pushed them to $438 billion, up 13.4 percent from the low reached in September 2009.

Equity markets in Europe and Asia were higher, led by Nikkei 225 index in Japan, which rose up 1.9 percent at 9,768.08 — its highest closing since the quake. More than 900,000 households in Japan remained without electricity on Friday after the strongest aftershock since the March 11 earthquake and tsunami rocked a wide section of the country’s northeast. But there no reports of fresh damage at the stricken Fukushima Daiichi nuclear power complex.

“After a weak close on Thursday, following another earthquake in Japan, stocks have bounced back strongly as it became clear this was not as bad as first feared,” the head of research at IG Index, Anthony Grech, said of European markets.

The FTSE 100 in London was up 0.97 percent while the DAX in Frankfurt rose 0.61 percent. The CAC 40 in Paris added 0.95 percent.

But Todd Salamone, director of research at Schaeffer’s Investment Research, said that stocks tend to rise along with oil prices over the long term. “The recent breakdown in the pattern has largely been due to fears of supply shocks,” he said. “But the oil rally could also be attributed to a stronger world economy.”

Still, investor sentiment remains fairly buoyant even though this week has seen interest rate increases from the European Central Bank and the People’s Bank of China, and confirmation that Portugal is looking to tap a European bailout fund.

The euro remained supported in the markets by the European bank’s decision on Thursday to raise its main interest rate by a quarter percentage point to 1.25 percent and expectations it will increase again, despite worries over Portugal.

The 17-nation currency posted a fresh 15-month high of $1.4433 on Friday.

With scheduled economic news sparse, investors will be keeping a close watch on developments in Hungary, where finance ministers from Europe are gathering. Portugal’s bailout request is set to be the main topic of discussion, and one European official said that preliminary estimates showed Lisbon would need about 80 billion euros or $114 billion.

The monetary affairs commissioner, Olli Rehn, said that he hoped a final deal will be in place by mid-May, but that it was essential for opposing parties in Portugal to reach a “cross-party” agreement.

Earlier in Asia, Hong Kong’s Hang Seng added 0.5 percent to 24,396.07, and South Korea’s Kospi was up 0.3 percent at 2,127.97.

Mainland Chinese shares edged higher with the benchmark Shanghai Composite Index closing up 0.7 percent to 3,030.02, and the Shenzhen Composite Index of China’s smaller, second exchange rising 1.15 percent to 1,285.99.

Article source:

News Analysis: Job Growth Alters Playbook for Obama and His Critics

PRESIDENT OBAMA has not had a lot of good news in a term defined by assorted crises. But on Friday he reported the “good news” about job growth in March to an appreciative audience at a United Parcel Service shipping facility here — and did so with a bit more of a celebratory air, and less caution, than in the past.

After 12 months of up-and-down job creation, the significant increase in March suggested that maybe, just maybe, the economy was gaining enough strength to grow and bring unemployment down substantially this year.

And as the unemployment rate ticked down, the hopes of Mr. Obama and his party ticked up: perhaps by the approaching election year they could claim vindication for the stimulus policies Democrats have enacted, or at least dodge the sort of blame that Republicans so effectively stuck them with last November in the midterm elections.

At the same time it has given Democrats new ammunition to argue that Republican efforts to cut spending could hurt the recovery just as it is gaining traction, and that forcing a government shutdown could put more people out of work.

“You should know that keeping the economy going and making sure jobs are available is the first thing I think about when I wake up in the morning,” Mr. Obama said. “It’s the last thing I think about when I go to bed each night.”

No doubt. Few metrics are as critical to re-election as the employment rate. Even at 8.8 percent in March, the lowest level in two years, the jobless rate is still high in political as well as economic terms, and it is not expected to fall significantly before November 2012.

The administration does not project the rate dropping below 8 percent until 2013. It was 7.8 percent when Mr. Obama took office after the recession began, and rose to a peak of 10.1 percent in October 2009 as the economy shed about 700,000 jobs a month.

The White House and the Democratic Party are banking on voters focusing not on the unemployment rate, but on a trend of job growth. That assumes, of course, the trend continues.

“While today’s jobs numbers are headed in the right direction, most Americans believe the economy is still pretty seriously off-track, making the jobs issue still a challenging one for the president,” said Neil Newhouse, a Republican pollster. “Looming on the nation’s economic horizon is the after-effects of the Japanese tsunami and the Middle East unrest, hardly the kind of stable economic environment needed for significant U.S. job growth.”

The United States Chamber of Commerce, in its statement noting the improved employment picture, emphasized caution given the global crises.

“The outlook for the international economy has worsened recently,” the chamber said. “If these problems were to spill over to the U.S. economy, causing growth to slow below its potential rate of growth of between 2.5-2.75 percent, they could upset the modest job gains we’ve seen thus far.”

A year ago, the effects of a European debt crisis set back the administration’s hopes that a full, self-sustaining recovery was under way. Last fall, Republicans won elections on the argument that Keynesian-style economic stimulus measures had failed, and that it was time to try an austerity policy of big cuts in government spending.

On Friday, Republican leaders in Congress pressed that policy argument even as they welcomed the new jobs report.

“Washington needs to do more to end the uncertainty plaguing job creators,” John A. Boehner, Republican of Ohio and the speaker of the House, said. “That means getting control of government spending, ending the threat of tax hikes, removing regulatory obstacles to job growth and approving stalled trade agreements that would open new markets for American exports.”

Since Republicans took control of the House in January, they have forced Democrats to agree to $10 billion in cuts from current spending and are seeking roughly $50 billion more. They will soon unveil plans for deeper cuts in 2012 and beyond.

Yet the potential for such deep cuts in domestics spending recently has caused a number of analysts at major corporations and economic forecasting firms to shave their projections of economic growth.

“This sign of jobs growth shows the president’s economic plan is starting to work,” said Senator Charles E. Schumer, Democrat of New York. “We should stick with it, and quickly reach a budget deal to avert a government shutdown that would risk these fragile gains.”

Many voters are not persuaded that the president’s policies are working; in nonpartisan national polls, slight majorities have disapproved of his handling of the economy. Future monthly unemployment rates will be central to whether those numbers improve as he seeks another term.

“If the economy continues to improve over the next year, the fact is it will strengthen President Obama’s political position,” said Geoff Garin, a Democratic pollster. “And,” he added, “if the economy slows down in the next year, the Republicans put themselves in a position to take a good share of the blame for that, because now a good case could be made that the president had the jobs numbers moving in the right direction until the Republicans pushed through their own fiscal policies.”

Michael D. Shear contributed reporting.

Article source: