KeNo's Housing and Economic Portal: Tuesday December 28 Housing and Economic stories

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Christie Says ‘Day of Reckoning’ Has Arrived for State Budgets - (www.bloomberg.com) New Jersey Governor Chris Christie said U.S. states face a “day of reckoning” as they contend with looming budget deficits in the wake of the longest recession since the 1930s. Christie, who cut $1.3 billion in aid to schools and municipalities this year to close a $10.7 billion deficit, said states’ pension and debt costs have grown to be “unsustainable.” Benefits, education and health care will be reduced in many states, he said in an interview aired last night on CBS Corp.’s “60 Minutes.” “The day of reckoning has arrived,” said Christie, 48, a first-term Republican. Areas such as education and pensions “were third rails of politics. We are now left with no alternatives.” The recession caused the biggest nationwide decline in state tax receipts on record, according to the nonpartisan Center on Budget and Policy Priorities in Washington. States have filled more than $425 billion in funding gaps since fiscal 2009; the combined imbalance is likely to reach $140 billion in the next budget year, the center said.

Top Spine Surgeons Reap Royalties, Medicare Bounty - (online.wsj.com) Norton Hospital in Louisville, Ky., may not be a household name nationally. But five senior spine surgeons have helped put it on the map in at least one category: From 2004 to 2008, Norton performed the third-most spinal fusions on Medicare patients in the country. The five surgeons are also among the largest recipients nationwide of payments from medical-device giant Medtronic Inc. In the first nine months of this year alone, the surgeons—Steven Glassman, Mitchell Campbell, John Johnson, John Dimar and Rolando Puno—received more than $7 million from the Fridley, Minn., company. Medtronic and the surgeons say the payments are mostly royalties they earned for helping the company design one of its best-selling spine products. Corporate whistleblowers and congressional critics contend such arrangements—which are common in orthopedic surgery—amount to kickbacks to stoke sales of medical devices. They argue that the overuse of surgical hardware ranging from heart stents to artificial hips is a big factor behind the soaring costs of Medicare, the government medical-insurance system for the elderly and disabled.

Debt Pyramid Scheme Now the Norm in America: Roger Lowenstein - (www.bloomberg.com) The tax compromise that the president, after protracted bargaining with Congress, signed into law Friday represents the worst of each party’s principles. Democrats agreed to forgo their insistence on raising taxes to narrow the widening budget deficit. Republicans forgot (again) that they are supposedly the party of smaller government. In effect, each party stuck to the portion of its principles that will be popular with the electorate right now -- and dismissed the part that would be unpopular. The Washington compromise is symptomatic of the disease infecting government at many levels. It is known as short-termism. The better course would have been the simplest one: Let the Bush tax cuts -- on every income group -- expire. Democrats (I am one) have generally supported raising tax rates only on the rich. I never liked that approach because it’s an attempt to curry favor with the majority of the public by saying, “The deficit is not your problem; it’s only the problem of wealthy people.” It sends a misleading, as well as divisive, message that, for the majority of Americans, incremental government services, such as stimulus spending or rising health-care expenditures, are free.

A bad year for California - (www.marketwatch.com) For 2010 at least, that seems to be the lesson as six of the Golden State’s metro areas fell to the bottom 10 in MarketWatch’s annual survey of the best U.S. cities for business. All six are roughly two hours away from California’s shores, with most in the San Joaquin Valley, between the state’s coastal mountain range and the Sierra Nevada mountain range. A sixth city, Riverside, lies between metropolitan Los Angeles and the Coachella Valley that includes Palm Springs. Along with Riverside, Fresno, Stockton, Modesto, Sacramento and Bakersfield sunk to the bottom of the pack. And jobs are the main culprit. “If you’re looking at unemployment and job growth, it was not a good year for California,” said Stephen Levy, director of the Center for Continuing Study of the California Economy. California holds the third-highest unemployment rate in the nation at 12.4%, but four of those cities are at the very top of that list. Stockton is the worst of the cities in the survey with a 16.6% jobless rate, followed by Modesto at No. 2 with 16.2%, Fresno at No. 3 with 15.2% and Bakersfield at No. 4 with 15.1%.

Google TV Faces Delays Amid Poor Reviews - (www.nytimes.com) Google TV has just enacted its first programming cancellation. The Consumer Electronics Show next month in Las Vegas was meant to be the great coming-out party for Google’s new software for televisions, which adds Web video and other computer smarts to TV sets. Although Google already has a deal with Sony for its Internet TVs, other television makers — Toshiba, LG Electronics and Sharp — were prepared to flaunt their versions of the systems. But Google has asked the TV makers to delay their introductions, according to people familiar with the company’s plans, so that it can refine the software, which has received a lukewarm reception. The late request caught some of the manufacturers off guard. And it illustrates the struggles Google faces as it tries to expand into the tricky, unfamiliar realm of consumer electronics, and drum up broad interest in a Web-based TV product that consumers want.