National / International News

We got President Obama’s budget today, a couple of months late. In it, the president lays out his plans for FY2014. It comes on the heels of the Senate’s budget, and the House of Representatives’ budget. 

So, we’ve got these three thick documents. Do they have anything in common? Well, they’re all in English. That’s something.

According to Ross Baker, a professor of political science at Rutgers, for the most part, the similarities end there.

“You kind of put them together side by side, and it’s sort of like setting up a dinner party for a vegetarian, a vegan, and somebody who is on the Paleo Diet and eats nothing but meat,” he says.

I spent about 20 minutes at the printer today, printing out copies of the House’s budget, the Senate’s budget, and the president’s budget. Altogether, they are 478 pages. That’s about a ream’s worth of paper. And in all that, there’s not much overlap.

We see some, Baker says, between the president’s budget and the Senate’s budget. Now, keep in mind the Senate, which is controlled by the president’s party, passed its budget along party lines.

“Both of them call for tax increases on upper-income Americans,” he says. “The Ryan budget does not have that.”

That’s the House’s budget, drafted by Rep. Paul Ryan (R-Wis.). It calls for reforms to entitlement programs, including Social Security. There’s some of that in the president’s plan, but not in the Senate’s.

Even though we have three different budgets, Matthew Shapiro says he is “cautiously optimistic.”  He is the Lawrence R. Klein Collegiate Professor of Economics at the University of Michigan. “It’s a positive step that concrete proposals are on the table,” he says.

But will any of those proposals become law? That’s anyone’s guess.

The Obama administration defends its budget tomorrow, on Capitol Hill. Here in the D.C. bureau, we’ve stacked it on top of the House’s budget, and the Senate budget, and we’ve got a new doorstop. 

Along with the budget, immigration reform was heating up in Washington today. The bipartisan "Gang of Eight" senators is reportedly close to introducing a massive immigration reform bill. One big part of the bill is likely to be enforcement. Not just keeping undocumented immigrants from crossing the border, but making sure employers don't hire the ones that might make it across. And it looks like the so-called E-Verify program used by many -- but still not all employers -- will be a key component of that effort. Problem is, it's got a spotty record.

E-Verify works like this: You get hired for a new job, you give your new boss your ID. The boss feeds your information into E-Verify. It runs you through several government databases to be sure you’re authorized to work in the U.S.

It’s supposed to be painless. But it’s not foolproof. Just ask Jessica St. Pierre.

“I got fired for something I never heard of,” she says.

St. Pierre is now extremely well-acquainted with E-Verify. But, in November of 2010, it was new, and mystifying to her. St. Pierre’s parents are immigrants from Haiti and the Bahamas, but she was born in Florida, which was why she was confused when the phone company she was working for fired her that fateful November. E-Verify had flagged her as an unauthorized worker. Turns out her employer had made a simple clerical error. St. Pierre puts a period after the “saint” part of her last name, but her employer’s computer system didn’t do that, confusing E-Verify.

“What ended up happening was that the employer placed two spaces after the St. That is what caused all of this,” she explains.

That punctuation problem left St. Pierre unemployed for almost three months. She finally landed a new job, paying $2 less an hour.

So why would Congress consider making E-Verify mandatory for every employer, if it gets tripped up by an extra space in someone’s name?

“It’s a system that actually has shown improvements over time,” says Muzaffar Chishti, who is with the non-partisan Migration Policy Institute. Chishti has studied E-Verify since 1997. He says, yes, there’ve been mistakes with E-Verify saying legal employees, like St. Pierre, are not authorized to work. Or approving workers who are actually in the U.S. illegally. Chishti says, at first, E-Verify’s error rate was terrible -- 8 to 10 percent. But now, it’s down to less than 2 percent.

He says, “Clearly there is still error in the system, but it has certainly gone down over the years and that’s progress.”

But, immigrant rights groups say, even the lowest error rate of .8 percent works out to more than a million people being falsely labeled as unauthorized to work. And Chishti says E-Verify still isn’t quite ready for prime time. He says it couldn’t handle every single employee in the U.S. right away. Only 350,000 employers are using it now. That could spike to eight million under immigration reform. Still, employers are now assuming E-Verify will be part of any immigration legislation coming out of Washington.

“I would bet my house and my car that there’s going to be mandatory E-Verify for all U.S. businesses in any immigration reform that comes out of Congress this year,” says Tamar Jacoby, president of ImmigrationWorks, a federation of labor-intensive businesses like restaurants, and farms.

Jacoby says E-Verify is continuing to improve, experimenting with a self-serve system that gives workers a password and security questions so they prove their identity and eligibility to work.

That’s cold comfort for Jessica St. Pierre.  Jessica laughs a lot, joking with her grandmother in the kitchen of her north Miami home, occasionally lapsing into Creole as they plan a family vacation. But, despite her easy laugh, Jessica is still traumatized by her brush with E-Verify. She’s applied for a few jobs with employers that use it.

“Oh man, the stress comes back," she says. "What if they run my name through the system again? It’s something that, you know you constantly want to look over your shoulder because I got fired for it. I don’t want to get fired for it again.”

E-Verfiy is not up to par, St. Pierre says. And she worries that it never will be.

China’s new president Xi Jinping is a busy guy. He’s inherited a massive economy with a lot of problems. And now, next door, threats of Armageddon from a man the Chinese have nicknamed ‘Fat Little Kim.’ Over the weekend at an international conference, President Xi said nobody should be allowed to throw the world into chaos for selfish gains. It was the latest sign that China is growing annoyed by Kim Jong-un’s antics.

“I sense them coming to a kind of crunch point," says William McCahill, a former U.S. diplomat in Beijing who is now managing director of Religare Capital. “I know from my own conversations with Chinese officials that they warned the North Koreans in the strongest possible terms not to detonate the third nuclear test, and the Koreans went ahead and did that. The Chinese were absolutely livid."

A volatile North Korea is a big distraction for Xi Jinping. He’s been trying to focus on tough changes at home: Reforming China’s economy by seizing power from state-run companies. “A move against those (companies) is going to require all the political capital he can muster,” says McCahill.

The worst-case scenario for China would be war on the Korean peninsula. "The result would be a flood of North Korean refugees streaming over the border into China. That would be bad for China’s economy," says Cai Jian, a Korean studies professor at Fudan University.

North Korea has always been a buffer state between China and South Korea. A toppled regime in Pyongyang would also mean an important American ally with U.S. military support would suddenly be on China’s doorstep.

Many a smart person have warned against comparing a family's budget, or the budget of a business or corporation, to the federal budget.

That's mainly because rules are different. Households can't print money for instance, so no QE3 for you or me. But today’s unveiling by the White House of a proposed 2014 federal budget reveals that it does share at least one thing in common: politics.

From spending cuts to tax increases, political forces on both sides of the aisle have left their imprint on the proposed budget, and that’s one dynamic that many of us can relate to when it comes to balancing our own personal budget.

Budget politics in my house

In my house, for instance, politics plays out in the form of our family ledger, or “f#%*! ledger” as my wife calls it. In the age of Mint, we still use a paper ledger book to track each and every penny of income or expense that passes through our house. Make an ATM withdrawal? Log it in the ledger. Get a direct deposit paycheck? Log it in the ledger. Credit card purchase? That’s right, log it in the ledger.

As you might have concluded, my political view on the family budget is all about transparency: know what you have to spend and what you’re spending it on. I say it helps us make much better spending decisions and cuts down on frivilous purchases. I've even made a handy flow chart to refer to when faced with a tough spending decision. (Yes, my wife hates the flow chart, too.)

My kids, meanwhile, sit on the other side of the aisle. They let the discretionary spending run wild. My wife does most of the household shopping and is a firm protector of mandatory spending.

How does politics play into your household or businesses budget? We want to know, Tweet to us or post a comment below.

 

 

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President Obama released a budget proposal today that among other things calls for reducing Social Security payments by using a formula to calculate inflation that's stingier than the current one. It's called the "chained" Consumer Price Index. The idea is that when the price of certain goods goes up, consumers typically switch to lower-cost substitutes. If the price of steak rises, they switch to hamburger. But not everything has an easy "down market" replacement. Take health care for seniors.

Under the president's plan, we could save more than $100 billion on Social Security over the next 10 years by using this lower measure of inflation.

The problem is the elderly spend a much larger share of their incomes on health care than the rest of us. When prices go up on some aspects of health care, cheaper substitutes may not be available or as effective. If doctors order a particular test or procedure, most patients, particularly the elderly, are not going to argue in the first place.

The cost of health care has been rising faster than inflation. And because seniors need more of it, even Social Security's current inflation adjustment may understate the true impact of inflation on them.

Social Security benefits are already meager for most recipients. The median income of Americans over 65 is under $20,000 a year, and most depend on Social Security for more than half it. The average Social Security benefit is less than $15,000 a year.
Besides, Social Security doesn't contribute to the budget deficit and it's not in serious trouble. Its trust fund is flush for at least two decades.

If we want to ensure its solvency beyond that, we don't have to hurt beneficiaries. We could raise the cap on income subject to Social Security taxes, now $113,700. Or fully tax the payout for wealthy beneficiaries.

Why is the president even suggesting the chained CPI for Social Security? Republicans aren't asking for it. Not even Paul Ryan's draconian budget includes it. Democrats invented Social Security and have been protecting it for almost 80 years. They shouldn't be leading the charge against it.

VIDEO: Maria Carreiro of Toronto was thrilled when she thought she had won $40,000 in a Canadian lottery. When she found out her prize was 1,000 times better, she was ecstatic. See her tell the story and dance for joy.

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