Economic Calendar

Monday, March 26, 2012

Plouffe Says Americans Don’t Want ‘Refight’ on Health Care

By Joshua Gallu and Michael Riley - Mar 26, 2012 2:46 AM GMT+0700

Senior White House adviser David Plouffe defended the health care law enacted by President Barack Obama as the Supreme Court prepares for three days of hearings to determine the fate of the measure.

“Where the American people are right now is they don’t want to go refight this battle again,” Plouffe said today on CNN’s “State of the Union” program. “You ask people, should we go back to square one? People don’t want to do that.”

The U.S. Supreme Court building in Washington. Photo: Andrew Harrer/Bloomberg

March 23 (Bloomberg) -- The U.S. Supreme Court will soon hear one of its most important cases in years -- the challenge to the Obama Administration's health care reform law. Bloomberg Law highlights what you need to know before the arguments begin, March 26-28. (Source: Bloomberg)

The Supreme Court is scheduled to hear arguments this week in a challenge that pits the Obama administration against 26 states that say Congress overstepped its authority by requiring Americans to obtain health insurance or pay a penalty. Obama’s health-care overhaul is shaping up as a prime issue in the presidential election, as is a Republican plan to cut taxes and federal spending.

The law signed by Obama in 2010 has been criticized by Republican presidential candidates, including Mitt Romney and Rick Santorum, who have said they would repeal it if they win the November presidential election.

“The important thing right now, what we can control is, implement this law well, make sure that we continue to try to educate people about what’s in the law,” Plouffe said in the interview. “The Supreme Court process will play out.”

Godfather of Mandates

Plouffe, speaking on NBC’s “Meet the Press,” called Romney the “godfather” of health-care insurance mandates, referring to the former governor’s role in enacting a law in Massachusetts that resembles the federal plan pushed by Obama.

In an interview today with CBS’s “Face the Nation,” Santorum echoed Plouffe on that count, calling Romney the “worst candidate” to campaign against Obama on the issue of health-care insurance.

“Heck, he created the blueprint for the government takeover of health care that President Obama followed,” Santorum, who won yesterday’s Republican presidential primary in Louisiana, said.

Romney, who leads in the number of delegates needed to win the Republican nomination, has said that, while he supported the individual mandate for the state of Massachusetts, the federal government shouldn’t impose the requirement in all states.

‘Rubber Stamp’

Plouffe, in an interview today with ABC’s “This Week,” said Romney would “rubber stamp” a budget proposal by House Budget Committee Chairman Paul Ryan that “showers huge additional tax cuts on the wealthy.”

On “Fox News Sunday,” Ryan, the architect of the House budget plan to cut federal spending over 10 years by $5.3 trillion below Obama’s budget, said that Republicans might consider eliminating popular tax breaks on only the highest earners.

Those include the home mortgage deduction, which congressional budget analysts estimate costs the Treasury $100 billion a year, or the exclusion of employer-provided health insurance from taxable income, which costs $164 billion a year. Ultimately, those details would have to be decided by the House Ways and Means Committee.

“Instead of giving those write-offs to people in the top tax brackets, take those tax shelters away,” Ryan said in the interview on Fox. “You get more revenue and we can lower everybody’s tax rate in return.”

To contact the reporters on this story: Joshua Gallu in Washington at; Michael Riley in Washington at

To contact the editor responsible for this story: Maura Reynolds at


Lawmakers Urge Investigation of Facebook Password Requests

By Michael Riley - Mar 26, 2012 3:12 AM GMT+0700

Two U.S. senators will ask the Justice Department to investigate whether employers who require job applicants to hand over confidential passwords to Facebook and other social networking sites are violating federal law, the lawmakers said today.

New York Senator Charles Schumer, the Senate’s third- ranking Democrat, and Senator Richard Blumenthal, a Democrat from Connecticut, will ask the U.S. Equal Employment Opportunity Commission to examine the practice as well.

The Facebook Inc. logo is reflected in the eyeglasses of a user. Photographer: David Paul Morris/Bloomberg

New York Senator Charles Schumer, the Senate's third-ranking Democrat, speaks at a news conference at the U.S. Capitol on March 21, 2012 in Washington, D.C. Photographer: Win McNamee/Getty Images

On Friday, Facebook Inc. (FB), the world’s biggest social networking site, said reports that some businesses were asking potential employees for passwords in order to view private posts and pictures as part of the job application process were “alarming.” The two Democratic lawmakers said the practice could violate federal anti-hacking statutes.

“Employers have no right to ask job applicants for their house keys or to read their diaries. Why should they be able to ask them for their Facebook passwords?” Schumer said in a press release sent to reporters.

Blumenthal said that by requiring job applicants to provide login credentials, employers could gain access to protected information that would be impermissible for them to consider when making hiring decisions. Those include religious affiliation and sexual orientation, which are protected categories under federal law.

Discrimination Lawsuits

Facebook said March 23 that accessing such information also could expose businesses to discrimination lawsuits. The company said it might ask policy makers to take action to stop the practice.

“An investigation by the Department of Justice and Equal Employment Opportunity Commission will help remedy ongoing intrusions and coercive practices,” Blumenthal said in the senators’ statement.

Laura Sweeney, a Justice Department spokeswoman who responded by e-mail, had no immediate comment on the lawmakers’ request.

Facebook and other sites are already used by some potential employers seeking additional background on job applicants because of the personal information posted there. As Facebook has given users additional ways to protect that information from public view, reports have surfaced of employers asking job applicants to voluntarily give them access by providing personal login credentials.

The Associated Press first reported the growth in the practice last week. Elliot Schrage, a Facebook spokesman, didn’t immediately respond to an e-mail requesting comment on the call for an investigation.

Anti-Hacking Law

In a copy of the letter sent to Attorney General Eric Holder and provided to reporters, Blumenthal and Schumer asked the department to investigate whether the practice is a violation of the Computer Fraud and Abuse Act, the primary federal anti-hacking statute.

The lawmakers also asked the department to investigate whether the practice violates the Stored Communications Act, which prohibits intentional access to electronic information without authorization or in excess of authorization.

In a letter to EEOC chairman Jacqueline Berrien, the lawmakers requested an investigation into whether the practice “may be used to unlawfully discriminate against otherwise qualified applicants.”

“We strongly urge the commission to investigate and issue a legal opinion,” the letter said.

To contact the reporter on this story: Michael Riley in Washington at

To contact the editor responsible for this story: Mark Silva at


Monti Signals Spanish Euro Risk as EU to Bolster Firewall

By Patrick Donahue - Mar 26, 2012 5:01 AM GMT+0700

Italy’s Prime Minister Mario Monti warned that Spain could reignite the European debt crisis as euro-area ministers this week prepare a deal to strengthen the region’s financial firewall.

Monti pointed to Spain’s struggle to control its finances ahead of a finance ministers meeting in Copenhagen starting on March 30, where officials will seek agreement to raise a 500 billion-euro ($664 billion) ceiling on bailout funding.

Italy’s Prime Minister Mario Monti speaks at the Chigi Palace in Rome on March 13, 2012. Photographer: Alessia Pierdomenico/Bloomberg

“It doesn’t take much to recreate risks of contagion,” Monti said during the weekend at a conference in Cernobbio, Italy. Days after his Cabinet approved a bill to overhaul Italy’s labor laws, Monti praised Spain’s efforts to loosen work regulations while advising it to focus on cutting the national budget. Spain “hasn’t paid enough attention to its public accounts,” he said.

The euro crisis has eased after the European Central Bank last month boosted liquidity through three-year loans to banks, while European Union leaders this month sealed a second Greek bailout package. Still, signs of a deepening economic recession in the region and struggles to meet austerity goals have kept decision makers on alert, underscored by rising Spanish and Italian yields.

Spain’s 10-year yields climbed for a third week last week after Willem Buiter, Citigroup Inc. chief economist, said the nation faced an increasing risk of debt restructuring. Yields on the security climbed by 19 basis points last week to 5.39 percent, while similar-maturity Italian debt rose 20 basis points to 5.06 percent.

Reinforcing Firewalls

EU Economic and Monetary Affairs Commissioner Olli Rehn said he was confident ministers will resolve their differences on providing more bailout funding for the euro. Speaking yesterday to reporters in Saariselkae, Finland, Rehn said that officials “will take a convincing decision on the reinforcement of the firewalls.”

Euro-area leaders have established two bailout funds, the temporary European Financial Stability Facility and the permanent 500 billion-euro European Stability Mechanism, which is scheduled to begin operations this year. Under current rules, unused EFSF funds would be passed on to the ESM, though disbursement could not exceed the half-trillion limit.

Policy makers are discussing how to add to the funds, for example by allowing the EFSF and ESM to work concurrently to make more money available. Deploying unused sums from the temporary fund while allowing the ESM to operate at capacity would bring a total crisis backstop to 692 billion euros.

General Strike

German Chancellor Angela Merkel and her finance minister, Wolfgang Schaeuble, have abandoned their opposition to combining the two funds, Der Spiegel reported yesterday, citing unnamed government officials. The two leaders have agreed that the EFSF and ESM may be “in operation” for a transitional period, the magazine reported.

The focus by policy makers and investors has shifted over recent weeks from Greece to Spain, where Prime Minister Mariano Rajoy is struggling to reduce the country’s budget deficit in the face of a looming recession.

Rajoy faces his first general strike on March 29 as unions protest against changes to employment laws making it cheaper to fire workers and cut wages. Three months after coming to power, he is due to present the 2012 budget on March 30, which is designed to cut the deficit.

ECB Loans

Meanwhile, Rajoy failed to win an outright majority in elections for Spain’s most populous region, Andalusia, last night. Even though his People’s Party took more seats in the legislature than any other, it fell short of the 55 needed. The region has been controlled by the Socialists since Spain’s return to democracy in 1978

The conundrum for European leaders was underscored on March 22, when a report showed that euro-area services and manufacturing output contracted more than economists forecast. The drop in March on declining domestic demand added to signs that the region’s economy is sliding into recession.

Leaders struggling to resolve the crisis have been given some space by the ECB’s three-year loans to banks, made between December and February. Speaking at the seminar he hosted in Saariselkae, north of the Arctic Circle, Prime Minister Jyrki Katainen warned that crisis management “can’t be outsourced” to the region’s central bank.

“While more than a trillion euros is not exactly small change,” the ECB’s loans “have certainly not solved the euro area’s problems once and for all,” Joachim Fels, chief economist at Morgan Stanley, wrote in a note yesterday.

As he lauded Rajoy’s efforts to loosen rules on employee dismissals, Monti pushed a bill to overhaul Italy’s labor laws through Cabinet on March 23, facing down opposition from unions and political allies needed to pass the measure in parliament.

Illustrating the difficulties in establishing consensus for change, Pier Luigi Bersani, the head of the Democratic Party on whom Monti relies for backing in parliament, has said he will seek to get the law amended during debate. The CGIL, Italy’s biggest union, has called a general strike.

The Italian premier, in office since replacing Silvio Berlusconi in November, opted not to force through a decree that would have implemented the measures immediately.

To contact the reporter on this story: Patrick Donahue in Berlin at

To contact the editor responsible for this story: James Hertling at


Bats Founder Says Suspend Bonuses, Resurrect IPO

By Nick Baker - Mar 26, 2012 4:23 AM GMT+0700

Bats Global Markets Inc. (BATS) should suspend employee bonuses and resurrect its botched initial public offering by the end of June, according to founder Dave Cummings, who defended the changes to U.S. equities markets that the company benefited from.

The third-largest operator of U.S. stock exchanges withdrew the IPO on March 23 after errors on its own computers kept the stock from trading and halted Apple Inc. Pulling the deal capped a day of embarrassments for the Lenexa, Kansas-based company, which rose to prominence with the electronic trading industry.

Dave Cummings, founder of Bats Global Markets Inc. Source: Bats Global Markets Inc. via Bloomberg

“This was a freak one-time event,” Cummings, 43, wrote in an e-mail today. He left Bats, which he founded in 2005, to rejoin high-speed trading firm Tradebot Systems Inc. in 2007. “American capitalism is sometimes messy, but it is what makes this country great.”

Chief Executive Officer Joe Ratterman said in an interview yesterday that the potential for “uncoordinated and chaotic” trading after bad code corrupted its computers prompted Bats to cancel the deal.

“Ironically, the software bug itself is probably the easiest thing to correct,” Cummings wrote. “Bats has built great software,” he said. “However, the code to open an IPO is new. It has been tested in the lab, but until this week not in real-world production. These systems are very complicated. Bugs do occur. Bats just happened to discover a bug at the most embarrassing time possible.”

Archipelago, Inet

Bats was formed two months after the New York Stock Exchange announced plans in 2005 to go public by combining with Archipelago Holdings Inc. and Nasdaq Stock Market announced its purchase of Inet ECN. Archipelago and Inet were then the largest electronic communication networks, or ECNs, which match buy and sell orders and compete with exchanges.

Cummings created Bats with 12 employees to counter the emerging NYSE and Nasdaq duopoly. Executives at Goldman Sachs Group Inc., Citigroup Inc., Merrill Lynch & Co. and other banks said in 2005 that the lack of competition after the purchases would hurt users by limiting their choice about how and where to execute orders and enabling exchanges to raise transaction fees.

“When the public wants to invest, they can push a button and get a fair fill in less than a second,” Cummings wrote today. “The markets will never be perfect, but the reality is that they work very well.”

Cummings, a Bats director, said employee bonuses should be suspended because of the failed offering.

“Bats won’t pay bonuses which were based on the completion of the IPO, since it wasn’t completed successfully,” Randy Williams, a Bats spokesman, said in an e-mail today.

To contact the reporter on this story: Nick Baker in New York at

To contact the editor responsible for this story: Nick Baker at