budget deal restores some cuts

WASHINGTON >> Shedding gridlock, key members of Congress reached a modest budget agreement today to restore about $63 billion in automatic spending cuts from programs ranging from parks to the Pentagon.

The spending increases would be offset by a variety of increased fees and other provisions elsewhere in the budget totaling about $85 billion over a decade, leaving enough for a largely symbolic cut of about $23 billion in the nation's debt, now $17 trillion and growing.

Federal workers, retired members of the military under age 62, airline travelers and health care providers who treat Medicare patients would bear much of the cost.

The budget deal was one of a few major measures left on Congress' to-do list near the end of a bruising year that has produced a partial government shutdown, a flirtation with a first-ever federal default and gridlock on President Barack Obama's agenda.

In a blow to Democrats, the agreement announced by Sen. Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis., omitted an extension of benefits for workers unemployed longer than 26 weeks. The program expires on Dec. 28, when payments will be cut off for an estimated 1.3 million individuals.

Aides predicted bipartisan approval in both houses in the next several days, despite grumbling from liberals over the omission of the unemployment extension and even though tea party-aligned groups are pushing Republican conservatives to oppose the deal.

The White House quickly issued a statement from Obama praising the deal as a "good first step." He urged lawmakers to both parties to follow up and "actually pass a budget based on this agreement so I can sign it into law and our economy can continue growing and creating jobs without more Washington headwinds."

The deal "reduces the deficit by $23 billion and it does not raise taxes. It cuts spending in a smarter way" than the ones in effect, said Ryan, the Wisconsin Republican who chairs the House Budget Committee.

Murray said the agreement "breaks through the recent dysfunction to prevent another government shutdown and roll back sequestration's cuts to defense and domestic investments in a balanced way." Sequestration is Washington budget-speak for across-the-board cuts.

"It's a good step in the right direction that can hopefully rebuild some trust and serve as a foundation for continued bipartisan work," Murray said.

Obamacare cheaper than expected

Amidst the dark skies of the Healthcare.gov launch, some daylight may finally be emerging with respect to one of the critical goals of the Affordable Care Act -- bending the cost curve of America's expensive health care system.

According to a New York Times report earlier this week, the Congressional Budget Office has quietly removed hundreds of billions of dollars from the projected costs of Obamacare, primarily the result of an anticipated decrease in the federal government's contribution to the Medicaid expansion program along with the projected cost of the subsidy payments to those buying private insurance policies on the healthcare exchanges.

Why the good news?

The more favorable projections are the direct result of the slowing trend in the growth of health care spending over the past five years leading to a slowdown in rising costs. While, 10 years ago, per-capita spending on health care had been growing by an average annual rate of 5 percent, that number was dramatically cut to 1.8 percent during the 2007-2010 period and reduced even further to 1.3 percent in the years following 2010.

Do we have Obamacare to thank for this highly successful "bending" of the cost curve?

Naturally, the answer depends upon who you ask as there simply is no definitive way of knowing -- yet.

Nelson Mandela

JOHANNESBURG » Nelson Mandela, who became one of the world's most beloved statesmen and a colossus of the 20th century when he emerged from 27 years in prison to negotiate an end to white minority rule in South Africa, has died. He was 95.

South African President Jacob Zuma made the announcement at a news conference late today, saying, "This is the moment of our deepest sorrow. Our nation has lost its greatest son."

His death closed the final chapter in South Africa's struggle to cast off apartheid, leaving the world with indelible memories of a man of astonishing grace and good humor. Rock concerts celebrated his birthday. Hollywood stars glorified him on screen. And his regal bearing, graying hair and raspy voice made him instantly recognizable across the globe.

As South Africa's first black president, the ex-boxer, lawyer and prisoner No. 46664 paved the way to racial reconciliation with well-chosen gestures of forgiveness. He lunched with the prosecutor who sent him to jail, sang the apartheid-era Afrikaans anthem at his inauguration, and traveled hundreds of miles to have tea with the widow of Hendrik Verwoerd, the prime minister at the time he was imprisoned.

His most memorable gesture came when he strode onto the field before the 1995 Rugby World Cup final in Johannesburg. When he came on the field in South African colors to congratulate the victorious South African team, he brought the overwhelmingly white crowd of 63,000 to its feet, chanting "Nelson! Nelson! Nelson!"

For he had marched headlong into a bastion of white Afrikanerdom — the temple of South African rugby — and made its followers feel they belonged in the new South Africa.

Detroit's bankruptcy

Earlier this year, Detroit filed for Chapter 9 bankruptcy making it the largest municipal bankruptcy in American history. On Dec. 3 at 9 a.m., Judge Steven Rhodes will decide if the city can proceed with its bankruptcy. The ultimate decision will have huge implications for pensioners, bondholders, and ordinary residents, who are wondering if the city will be allowed to revise the terms of its long-term obligations.

Regardless of the judge's ruling, Detroit faces daunting challenges on both the revenue and expense side of the ledger. I recently looked at some of the documents relating to the bankruptcy, and was struck by how desperate the situation has become. Below are some of the more shocking facts I discovered.

1. Detroit's revenue, in inflation-adjusted dollars, fell 40% from 1962 to 2012.

2. The city currently has just 9,700 workers, yet has 21,000 retirees drawing benefits.

3. Detroit's population has declined 63% since 1950, including a 26% decline since 2000. As of December 2012, its population was 684,799 – down from 1,849,600 in 1950.

4. Unemployment has tripled since 2000. As of June 2012, it's 18.3%, which is more than double the national average.

5. The number of employed residents has dropped more than 53% since 1970.