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Leaders in Europe Agree to Deal on Long-Term Budget

February 8, 2013 by Leave a Comment

The expected deal met the demands of northern European countries such as Britain and the Netherlands that wanted belt-tightening, while maintaining spending on farm subsidies and infrastructure to satisfy the likes of France and Poland.

It is the first net reduction to the EU’s long-term budget in the bloc’s history, representing a decrease of around 3 percent on the last budget and shaving spending in areas such as infrastructure, bureaucracy and scientific research.

Last-minute haggling over precisely how to divide up the 960 billion euros (822.4 billion pounds) to be spent between 2014 and 2020 dragged out the process, before Herman Van Rompuy, the president of the European Council and chairman of the summit, announced that a definitive deal had been struck among the leaders.

“Deal done!” he said in a message posted on Twitter.

At a news conference shortly afterwards, battling to stay alert after nearly 36 hours awake, Van Rompuy said the agreement was a budget of moderation that reflected straightened times.

“We simply could not ignore the extremely difficult economic realities across Europe, so it had to be a leaner budget,” he said. “For the first time ever, there is a real cut compared to the last multiannual financial framework.”

The deal must now be approved by the European Parliament, where leading legislators have already expressed opposition. Securing parliamentary approval is likely to take several months and is far from guaranteed.

After negotiating through the night, leaders broke for a brief rest, allowing German Chancellor Angela Merkel to swap her green jacket for a lilac one, and returned to address a list of questions, including how to satisfy smaller countries such as Romania and Bulgaria among the 28 states covered by the budget.

Mindful of their restive voters, Northern European countries were adamant that as they shrink spending at home and grapple with the aftermath of the global financial crisis, the European Union had to do the same by cutting headline spending.

Around 12 billion euros was cut from the last budget proposal, made at a summit in November, bringing the total reduction from the European Commission’s original blueprint to 85 billion euros. European Commission President Jose Manuel Barroso said he was disappointed, but understood the logic.

While vast as a headline figure, in annual terms the budget amounts to just 1 percent of total EU economic output.

The cuts agreed fell mainly on spending for cross-border transport, energy and telecoms projects, which were reduced by more than 11 billion euros. Pay and perks for EU officials – a top target for Britain – were lowered by around 1 billion euros.

Spending on agriculture was spared further cuts, and there was an increase of about 1.5 billion euros on rural development over the seven years, satisfying France, Italy and Spain.

NARROW GAP

Even with a deal, around 40 percent of the spending will still be dedicated to farming, something that frustrates many northern European states, which want a more dynamic budget.

At the same time, officials said money had been set aside for measures to stimulate economic growth, for research and for structural funds to flow to countries worst hit by the economic crisis, including Greece, Ireland, Portugal and Spain.

There were also stipulations for green investment and 6 billion euros for a fund to combat youth unemployment via apprenticeships in hard-hit countries.

The deal still faces further hurdles, not least at the bloc’s parliament. “The European Parliament will not accept this deficit budget if it is adopted in this way. That is certain,” the parliament’s president Martin Schulz said.

Van Rompuy urged the parliament to be responsible and to reflect carefully before deciding to reject the spending plan.

In recent weeks, Van Rompuy has been in touch with every EU leader to assess where the contours of an agreement may lie.

But reaching a deal was never going to be a simple since it also involves delicate negotiations over rebates – amounts countries get reimbursed after they have made contributions.

Denmark won a refund of around 130 million euros a year, but other rebates were trimmed or modified. The Czech Republic was among a small group of countries that fought for final extra distributions, mostly for funds to build infrastructure.

The EU calculates two budget numbers: a headline ‘commitments’ figure that sets a ceiling on how much can be paid out, and a lower ‘payments’ figure that indicates what will actually be spent.

The baseline payments figure in the framework agreed on Friday was 908 billion euros, a figure low enough to convince Britain, which focuses on payments rather than commitments, that it was getting a satisfactory deal.

(Additional reporting by John O’Donnell, Illona Wissenbach, Andreas Rinke, Robin Emmott, Luke Baker, Mark John, Peter Griffiths and Emmanuel Jarry; writing by Luke Baker and Robin Emmott; Editing by Toby Chopra, Will Waterman and Giles Elgood)

Article source: http://www.nytimes.com/reuters/2013/02/08/business/08reuters-eu-budget.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Letters: Letters: Governments Need a Culture Change

January 15, 2012 by Leave a Comment

To the Editor:

Re “The Art of Bargaining, So Lost Upon Washington” (Economic View, Jan. 8), in which Richard M. Thaler suggested ways to deal with a malfunctioning Congress:

The column recommended that our legislators read Thomas Schelling’s 1956 essay, “An Essay on Bargaining,” whose theme is that the key to success in a negotiation is the ability to commit to a future course of action. Although that may be educational, it would address only one-time bargaining situations, not the overall malaise in Congress and, by extension, in many state and local government bodies.

Members of Congress have been elected to perform a function, which they are far from fulfilling. The much more important question is how to return Congress to a working mode, in which the needs of the country are being regularly and routinely addressed. In my view, that might require a culture change — both inside and outside Congress.

This challenge may well require a culture that rewards cooperation and compromise, which are sorely absent today. It’s a tall order, but one that is worth thinking about.

Michael Dishon, Ph.D.

Century City, Calif., Jan. 9

The User Is the Judge

To the Editor:

Re “Defining Words, Without the Arbiters” (Novelties, Jan. 1), which looked at the online dictionary Wordnik, and how it presents all information it finds about words:

There may indeed be a public perception that a dictionary is the authority on language. But the linguistic point of view is that users of the language, not self-appointed arbiters, are its ultimate authorities. There is no single “correct” way when it comes to an ever-evolving semantic system. Wordnik has it right. Susan Behrens

Brooklyn, Jan. 1

The writer is a professor of communication sciences and disorders at Marymount Manhattan College.

Letters for Sunday Business may be sent to sunbiz@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=93976a49bdfe89f40f1b6c3389b6f4e5

Filed Under: Business News Tagged With: , ,

You’re the Boss Blog: The S.B.A. Says Its Culture Has Changed

November 14, 2011 by Leave a Comment

The Agenda

How small-business issues are shaping politics and policy.

In a recent post about the incidence of fraud in federal contracting programs for small businesses, the Small Business Administration came in for some criticism from the agency’s inspector general, Peggy E. Gustafson. Ms. Gustafson, whose office is independent from the rest of the agency, testified before Congress recently that the agency needed to “change its culture” and become more aggressive in punishing contractors who misrepresent themselves as small companies in order to win government work.

Joe Jordan, the agency’s associate administrator for government contracting and business development, sees it differently. He thinks the criticisms are out of date. “That may have been true two or three years ago,” he said, “but there is absolutely a culture throughout S.B.A. of ridding our programs of fraud, waste and abuse.” Government officials often try to disassociate themselves from the work of their predecessors, but Mr. Jordan does have some numbers on his side.

He began by discussing suspension and debarment, a process for banning businesses from receiving government contracts, often permanently, in cases of fraud or other misconduct. This was in fact what the inspector general was referring to when she called for a culture change — agency employees, she told legislators, were reluctant to pull this trigger. Mr. Jordan argued that the shift had already occurred.

In the three years beginning in 2009, Mr. Jordan said, the S.B.A. had pursued suspension and debarments for contracting fraud in 51 cases — compared with not more than seven instances over all of the previous decade. “We’re really focused on being more proactive and effective than ever before in terms of protecting our programs and the legitimate small businesses that benefit from them,” he said.

Mr. Jordan said the agency was trying to weed out fraud well before the banishment stage. He cited, for example, efforts to clean up the pool of businesses taking advantage of a preferential contracting program known as HubZones. HubZones are designated disadvantaged neighborhoods; the government sets aside contracts for businesses that have their principal office in a HubZone and employ HubZone residents. The program has been notorious as an opportunity for fraud by companies that falsely claim a HubZone headquarters.

One straightforward way to detect this sort of fraud is to visit a HubZone company’s stated headquarters. “In the first six months of fiscal year 2009,” which began two-and-a-half months before President Obama was sworn in, “S.B.A. had conducted seven HubZone site visits total,” Mr. Jordan said. “In the next six months of ’09, we conducted 700. In 2010, we conducted over a thousand.” One such investigation began when the S.B.A. noticed “multiple firms in the HubZone program that were located at the same address,” Mr. Jordan continued. “We sent a member of our team to do a site visit. She identified the address as a virtual office, so nobody was working there.”

The inspector general’s office began looking into those companies, which included a subcontractor to Eyak Technology, a small-business contractor now involved in an alleged $20 million bribery scheme. (An EyakTek official was one of four people indicted in the case last month, but the company itself was not accused of wrongdoing.) The subcontractor residing at the virtual office was not part of the bribery case, Mr. Jordan said, but that initial inquiry led to further investigations, which uncovered the alleged conspiracy.

Ms. Gustafson has acknowledged the agency’s progress cleaning up the HubZone program. “When S.B.A. started doing a very thorough review and seeing if everybody belonged in the program, people dropped out in droves,” she said at the Congressional hearing. But she made clear that the agency, and the entire federal government, should be even more zealous. She also cautioned that without barring those bad actors from all federal contracting, there was no way to know for certain that they haven’t found other government work elsewhere.

Article source: http://feeds.nytimes.com/click.phdo?i=ff29f9db9b7ed0bb352b36fff870aa80

Filed Under: Small Business Tagged With: , ,

Economix Blog: An Alarm Clock for Congress

August 19, 2011 by Leave a Comment

Via Mashable, I see there’s a new iPhone app that donates money to charity every time you hit “snooze” on your phone’s alarm clock.

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

It’s not an entirely original idea — Peter Orszag, for example, has said that he contributes to a charity he dislikes when he doesn’t achieve his running goals — but it’s a creative idea nonetheless, and a nice application for behavioral economics.

I wonder: Would it be possible to design a similar mechanism for Congress?

After all, legislators keep giving themselves a deadline by which they must decide on fiscal policy reforms, and then at the last minute they defer action by saying they’ll come up with a new policy proposal by a new deadline. And when that deadline comes, the process repeats itself, creating even more uncertainty with each iteration. I’d say that all these deferments are the equivalent of hitting snooze on the debt clock.

What constructive penalty could motivate them to finally wake up, as it were?

Article source: http://feeds.nytimes.com/click.phdo?i=3ea5d6e99bf6b143a45e830e6d74556f

Filed Under: Economy News Tagged With: , ,

Agency Cuts Greece’s Debt Rating Again

June 13, 2011 by Leave a Comment

The downgrade comes at a particularly awkward time for Greece. The government is attempting to persuade legislators to accept a fresh set of austerity measures. At the same time, Germany, the dominant economy in the 17-member euro zone, is proposing that private sector bond holders accept some form of a loss on their Greek bonds as a condition for a broader rescue package for Greece that could approach 100 billion euros.

While one more downgrade for Greece is unlikely to change matters much, it does put some more pressure on the Germans who have been facing pressure from the European Central Bank to not restructure Greek debt.

In its press release, SP said that its downgrade reflected the reality that any form of debt exchange — whereby bondholders would trade their shorter-term debt for longer-dated paper — would be seen as harmful to creditors and thus, in the eyes of SP, would be equal to a default. SP said if that it occurred, Greece’s rating would reach the level of D.

The ratings agency also mentioned the continuing depths of the Greek economic slump, pointing out that unemployment rate was now at 16.2 percent. Greece has financing needs of close to 160 billion euros through 2014. Given these steep requirements and the difficulties the government is having in pushing through its austerity package, SP concluded that some form of restructuring is now more likely than not.

Article source: http://feeds.nytimes.com/click.phdo?i=85733ecfd63fac3747b528785db7f07c

Filed Under: Business News Tagged With: , ,