By Doug Porter
Today’s the day.
Twenty three million Americans, including four million in California and more than a quarter million in San Diego will see a 5% reduction in their food stamp benefits starting November 1st.
As many as one in nine California families receive food benefits from the Supplemental Nutrition Assistance Program — known as CalFresh in this state. The cuts mean a family of four will receive $632, or $36 less per month in federal food assistance, even as California food costs rise. That is the equivalent of losing roughly 21 individual meals per month based on calculations used by the Department of Agriculture.
Walmart’s CEO Bill Simon says they’re “cautious but modestly optimistic” about those cuts, despite the fact that $14 billion of the $80 billion appropriated for food stamps was spent in their stores last year. Simon told a meeting of financial analysts earlier this year when the benefits are cut, price becomes more important to the consumers, which he said will play to Walmart’s advantage.
The House of Representatives has already approved a Republican measure to further cut benefits by $40 billion over the next 10 years. They believe this is a much-needed overhaul to a bloated entitlement and will encourage able-bodied adults to get back into the workforce.
Children, seniors, and people with disabilities make up the majority of the recipients in California. About 44% of workers in the restaurant and food services sector have a family member enrolled in a public assistance program, according to a recent UC Berkeley study.
Despite the Walmart CEO’s spin on the subject his own company’s analysts aren’t so sure. From the Wall Street Journal:
On the business side of the equation, the cuts will fall particularly hard on the grocers, discounters, dollar stores and gas stations that depend heavily on low-income shoppers. Weak spending in that stressed consumer segment has already led retailers including Wal-Mart Stores Inc. and Target Corp. to lower their sales forecasts for the rest of the year ahead of holidays.
Temecula School District Sued Over Drug Sting
Catherine and Doug Snodgrass, whose autistic child was swept up in an undercover drug operation last year, have filed suit against the Temecula Valley Unified School District and individuals employed by the district seeking damages for negligence, intentional infliction of emotional distress and other charges.
Their child, who suffers from a range of disabilities, was falsely befriended by a police officer who repeatedly asked the boy to provide him drugs. After more than three weeks, 60 text messages and repeated hounding by the officer, the student was able to buy half a joint from a homeless man he then gave to his new – and only – “friend,” who had given him twenty dollars weeks before. He did it once again before refusing to accommodate the officer, at which point the officer broke off all ties with the child. Shortly thereafter, the student was arrested in school in front of his classmates as part of a sting that nabbed 22 students in all, many of them children with special needs.
Rep. Peters Votes Yes on Another Loser Bill
Earlier this week Congressman Scott Peters joined with 29 other Democrats and 224 Republicans in approving H.R. 2374, the innocuously named “The Retail Investor Protection Act”.
On the surface this legislation purports to protect consumers from fees resulting from the imposition of a fiduciary standard by the labor department that insists all financial advisers be legally required to work in the best interest of clients, not the companies whose products they sell.
Huh? What are they protecting us from? They’re “protecting” us from proposed regulations that make a person selling you retirement products be honest about who’s paying the bill for that “free” consultation.
The Department of Labor is seeking to promulgate improved rules under which broker-dealers and advisers recommending retirement investments would be held to a clear fiduciary standard. It is a sad commentary that many in the industry oppose or seek to dilute these simple rules. Millions of families would actually benefit from expert guidance in managing their expenses, their savings, and their long-term investments. This guidance must be provided under conditions of greater integrity and clarity regarding the amount and source of professional compensation.
Some broker-dealer argue that the imposition of a fiduciary standard would lead them to charge investment clients directly, and that under this business model, low- and moderate-income consumers would receive more limited financial advice. There is some rough truth to this argument. It’s jarring to be charged $250 for a one- hour consultation. It goes down all-too-easily when the consultation is free, but results in (say) a 0.5% higher annual fee on a $75,000 rollover IRA account. If it took you a long moment to figure out the incredible difference in expense here, you are glimpsing another aspect of the problem.
Get it yet? Here. Try the New Republic explanation:
The short version here is that when the country turned away from guaranteed pensions in the 1980s and started encouraging individual employees to gamble with their retirement nest eggs on the stock market, it also threw them into the arms of a predatory financial services industry. And it’s a big business; IRAs and 401(k) plans hold roughly $10.5 trillion in total assets.
Currently, it is depressingly common for financial advisers, more than 80 percent of whom are not fiduciaries, to self-deal when offering advice. First off, they obtain large fees from the retirement products they sell. According to the think tank Demos, a median-income, two-earner household will pay $155,000 during their lifetime to financial advisers on average. (The lifetime gains for two-earner households from retirement accounts are around $230,000, meaning that nearly two-thirds of the profits go to the industry.) Second, non-fiduciary financial advisers can enjoy kickbacks; right now there is no rule against an adviser from a mutual fund company encouraging clients to put their money in specific funds sold by that company. In fact, that’s the norm, and the adviser typically receives a commission for the sale.
Conflicts of interest like this cost retirement investors at least $1 billion a month, because the funds they get channeled into underperform the alternatives. Financial advisers also encourage rollovers into high-cost IRAs when an individual changes jobs. None of these schemes have to be disclosed to the customer, under the current standard. The National Bureau for Economic Research found in a recent study that “adviser self‐interest plays an important role in generating advice that is not in the best interest of the clients.”
So in the middle of a retirement crisis, when the majority of Americans already aren’t accumulating the savings they need to maintain their standard of living, sellers of retirement products are skimming close to $60 billion a year off the top through deceptive practices, making a bad situation even worse.
In other words, Republicans and Democrats like Peters just voted to sell you out to Wall Street.
Goodwill Stores Get Petitions Calling for Better Wages
Disability advocacy groups in California made a sizeable delivery to Goodwill Industries offices in Sacramento yesterday. Rather than secondhand clothing or gently-used goods, they unloaded thousands of signed petitions from citizens who are demanding that the nonprofit clean up its labor practices.
In an effort to increase public awareness of Goodwill’s labor practices, the National Federation of the Blind and Autistic Self Advocacy Network sponsored a Change.org petition, gathering more than 170,000 signatures. Goodwill headquarters and stores in Providence, RI; New York, NY; Corpus Christi, TX; Rockville, MD; and Seattle, WA also received this “special delivery” yesterday.
More than 100 Goodwill entities nationwide employ workers through the Special Wage Certificate program, a Depression-era loophole in federal labor law that allows organizations to pay subminimum wages to people with disabilities. In May, a Watchdog.org investigation revealed that these same Goodwill entities that use the special wage program simultaneously spent $53.7 million in total executive compensation.
The organizations hope their public awareness campaign will increase support for federal legislation to close the loophole. Rep. Gregg Harper, R-Miss., has introduced the Fair Wages for Workers with Disabilities Act of 2013, which would outlaw this practice.
Up and Down at the UT-San Diego
Don Bauder over at the San Diego Reader quotes a report from the Alliance for Audited Media (formerly the Audit Bureau of Circulations) indicating U-T San Diego’s average Sunday circulation dropped to 381,303 for the six months ended September 30 from 409,796 for the six months ended March 31.
I’m sure UT execs are pointing out that this most recent number is higher than last year’s report at the same time (351,303). But last year’s number didn’t include the North County Times’ circulation (as I recollect, about 75,000), which has now been folded into the daily’s Sunday figures.
You do the math. By any measure the general trend is down, down, down.
Waterfall and Agile are NOT NSA Code Names
Voice of San Diego has published a very interesting essay by Ben Katz positing the premise that Information Technology (IT) is the elephant in the room when it comes to issues in the mayoral race. Among the factoids is one that should be on concern to Obamacare fans and detractors: 94 percent of all large IT projects are partial or complete failures.
At the root of the city’s IT problem, according to Katz, is the method through which computer based solutions are created.
From the article:
In the Waterfall development method, an extensive specification is written before coding begins, and very little deviation from the specs is tolerated. With Agile, there is a cycle of design, development, testing and repeating. There is an overwhelming consensus in the tech community today that Agile is the right way to approach software development.
Yet government and government contractors continue using the Waterfall method. It leads to cost overruns and buggy software that is difficult and time-consuming to fix. That’s what we got with HealthCare.gov, along with everything San Diego doesn’t need in an IT approach. It is worth noting that CGI, the biggest contractor on HealthCare.gov, is also one of the city of San Diego’s biggest IT contractors.
We need a mayor with an understanding of information technology, including things like Waterfall and Agile development, so that he is capable of making the smart, cost-effective decisions that truly serve the critical needs of the city and the residents of San Diego.
On This Day: 1512 – Michelangelo’s paintings on the ceiling of the Sistine Chapel were first exhibited to the public. 1894 – “Billboard Advertising” was published for the first time. It later became known as “Billboard.” 1950 – Charles Cooper became the first black man to play in the National Basketball Association.
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