- - Thursday, February 3, 2011

FEDERAL RESERVE

Bernanke says jobs needed for recovery

The nation can’t fully recover from the worst recession in decades until hiring improves, Federal Reserve Chairman Ben S. Bernanke said Thursday.

The economy is strengthening and likely will grow at a faster pace this year as more confident consumers and companies spend more, Mr. Bernanke said in a speech to the National Press Club. But he warned that growth won’t be strong enough to drive down the unemployment rate quickly.

“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” he said.

His remarks suggest the Fed will stick with its program to prime the economy by purchasing $600 billion of Treasury bonds by the end of June.

The Fed chief also issued a stern warning to Congress and the White House to come up with a plan to reduce the government’s bloated budget deficits. He also told Congress not to play political games with the Treasury Department’s request to boost the government’s borrowing authority beyond the current $14.3 trillion statutory cap.

HOUSE

Finance panel member files for bankruptcy

An eight-term congressman who serves on the House Financial Services Committee has filed for personal bankruptcy and is blaming his family meat company for his problems.

According to federal bankruptcy court documents, Rep. Ruben Hinojosa, Texas Democrat, has $2.9 million in liabilities, though he also has nearly $1.5 million in assets.

Most of the money Mr. Hinojosa owes - $2.6 million - is a claim by Wells Fargo Bank. The congressman said it is a result of a loan he personally guaranteed for the H&H Meat Products Co., which went bankrupt.

The Financial Services panel has jurisdiction over legislation affecting banks. House aides and outside analysts say the House has no rules forbidding a lawmaker who owes large sums to a bank from serving on that committee.

TREASURY

Thousands erred in tax credit for electric cars

Car companies such as General Motors and Nissan are slowly rolling out rechargeable electric cars. That didn’t stop thousands of U.S. taxpayers, including prisoners and some Internal Revenue Service employees, from incorrectly claiming lucrative tax credits for the electric vehicles last year.

A report from the Treasury Department’s inspector general says nearly 13,000 taxpayers erroneously claimed about $33 million in credits for plug-in electric and alternative-fuel vehicles during the first six months of 2010. The inspector general said about 20 percent of the $163.9 million in credits provided to taxpayers were claimed in error. The report did not indicate whether the taxpayers made the claims out of confusion or purposely tried to take advantage of incentives for which they were not qualified.

President Obama has pushed for 1 million electric cars on the road by 2015, and the tax breaks are part of that strategy. The government has offered numerous incentives to drum up interest in the vehicles, including a $7,500 tax credit for a plug-in electric-drive motor vehicle and incentives for converting a car into a plug-in.

Auto companies are just beginning to mass-market the vehicles. Since December, GM has sold 647 Chevrolet Volts, electric cars with a backup gasoline-powered engines. During the same period, Nissan sold 106 versions of the Leaf, which is powered by a rechargeable battery.

HHS

Feds give states advice for cutting Medicare costs

Answering a fiscal 911 call from the nation’s governors, the Obama administration Thursday gave cash-strapped states a menu for cutting Medicaid spending, one of their biggest budget headaches.

It didn’t have one item that many governors, particularly Republicans, are seeking.

In a letter to governors, Health and Human Services Secretary Kathleen Sebelius was cool to the idea of cutting beneficiaries from the Medicaid rolls by restricting eligibility as Arizona has requested and other states are considering.

Instead, Mrs. Sebelius urged states to find savings through other approaches, including charging higher co-payments for some services, limiting certain benefits, managing high-cost patients more efficiently, squeezing drug costs and cracking down on improper payments.

Medicaid covers more than 50 million low-income people, including one in four children and most seniors and disabled patients in nursing homes. Although Washington pays an average of close to 60 cents of every $1 spent on the federal-state program, Medicaid is generally the first or second most expensive item on state budgets.

States are facing budget shortfalls of roughly $175 billion over the next two years. Money from President Obama’s stimulus bill runs out this year, and the easy budget cuts already have been made.

CONSUMER SAFETY

Agency warns parents about drop-side cribs

A federal consumer agency is warning that SafetyCraft brand full-size and portable drop-side cribs manufactured or distributed by Generation 2 Worldwide contain drop-side hardware that may be dangerous to toddlers and infants.

The Consumer Product Safety Commission said Thursday that the hardware found on SafetyCraft drop-side cribs can fail and place infants and toddlers at risk of strangulation and suffocation.

The agency’s staff urges parents and caregivers to stop using these cribs immediately and find an alternative, safe sleeping environment for their babies. They say people should not attempt to fix these cribs.

The commission said Generation 2 Worldwide of Dothan, Ala., ceased operations in 2005.

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