2009: Year in Review

01.
U.S. healthcare reform steps away

The House of Representatives made history by becoming the first U.S. legislative chamber to pass an overhaul of the healthcare system. The new measure is designed to expand health coverage to tens of millions of Americans without insurance.

Only one Republican, Representative Joseph Cao of Louisiana, supported the bill. “I have always said that I would put aside partisan wrangling to do the business of the people.  My vote was based on my priority of doing what is best for my constituents,” Congressman Cao said over the weekend. On November 7, the House voted on the combined measure based on revisions from three committees and is now must pass through the Senate’s vote before negotiation talks begin between the two chambers.

Here’s a brief overview:

SIMILARITIES

INDIVIDUAL RESPONSIBILITY:
All Americans will be required by law to obtain health insurance. The combined measure will expand public option for coverage. A staggering 15 percent of U.S. residents, or some 46 million, lacked health insurance in 2008, according to the U.S. Census Bureau.

EXPANDING PUBLIC COVERAGE:
The Obama administration are determined to cover all Americans, however millions of non-eligible people will be excluded from Medicare, including millions of illegal immigrants.

NEW INSURER REQUIREMENTS:
Private insurance companies will no longer be able to reject applicants with pre-existing conditions. The measure will set new restrictions on premiums rates.

PREVENTATIVE CARE CAMPAIGN:
In order to reduce health-related costs, the new measure is designed to effectively lower long term healthcare costs for the privately insured and the federal government.

MEASURING METHODS:
American government has hinted at creating research centers to examine the efficacy of various healthcare services, devices, treatments and procedures. Health providers are not required by law to adopt new procedures or policies to cut costs at this time.

DIFFERENCES

PUBLIC OPTION TO CREATE COMPETITION:
The government will create a new government-run insurance program designed to compete with private companies, driving down rates
and premiums.

ATTENTION EMPLOYERS:
The new combined measure now requires that employers cover their workers or pay a penalty, with possible exemptions for struggling businesses. It is still under consideration.

WHO FOOTS THE BILL:
The House version would add a surtax on the wealthiest Americans, starting with households earning more than $1 million annually. The legislative chamber also designed a tax system to raise $20 billion over 10 years from medical device makers. The Senate would tax insurers on higher end benefit plans as well as add fees to insurers, medical-device manufacturers and drug makers in 2010.

Final negotiations will take place between the House and Senate before President Obama signs the bill.


02.
Elected leader of a lifetime causes the world to celebrate

On November 5, 2008, Barack Obama won with his historic mandate for hope and change. After several months on the election trail, the campaigning proved to be effective as traditional swing states Ohio and Florida went Democratic.

Americans came together on the presidential election night to make history, and witness Obama take the stand as the first black chief executive. Voters spilled out onto the streets and gathered in halls to mark the significant milestone in American politics. Many recollect the feeling of a ‘transformation,’ which had a ripple effect worldwide. President-elect Obama received accolades from country leaders and people including those in Africa, the European Union and the Middle East. The Afghan president Hamid Karzai said he wanted to “applaud the American people for their great decision.”

Obama defeated his Republican opponent John McCain in Ohio, a typical battleground in American politics, despite McCain’s great effort and his running mate, former Gov. Sarah Palin of Alaska who has since taken a side step from politics. Obama did lose a state to Senator Hillary Rodham Clinton of New York in the Democratic primary race. Clinton was appointed to Secretary of State, which she accepted and has since represented the U.S. government overseas, more recently at the Berlin Wall ceremonies.

03.
New administration puts economy on top of its agenda

When the economy first showed signs of a recession, the Democrats called for a much larger economic relief than what the Bush administration had passed in Congress. One of the first things the Obama office did was enact a robust fiscal policy or a so-called economic stimulus package.

Nearly a year ago, the House of Representatives passed an $819 billion stimulus plan, which passed without a single vote in favor from the Republicans.

Intensive negotiations were soon after underway on how to divvy up the cash amongst the numerous and particularly needy government programs ranging from military, education and training to public healthcare.

By the summer of 2009, a debate had developed over whether the stimulus bill was effectively used particularly with the enormous bailouts of large banks on Wall St. President Obama was among the world leaders in the Asian-Pacific to continue government economic stimulus plans, as announced at APEC in mid-November.

04.
Stock exchange bounces back

In November, Wall Street saw stocks rise steadily as investor confidence was boosted by a Group of 20 decision to maintain fiscal policies by way of stimulus plans in order to propel an economic recovery from recession. Market sentiment was lifted by a weekend decision by G20 finance ministers to continue with emergency stimulus support measures despite signs that the world was emerging from a long financial downturn, analysts said. It acted as an “impetus,” said Patrick O’Hare of Briefing.com as the ministers “tempered the market’s concerns about stimulus measures being withdrawn too soon.”

With the recent U.S. Federal Reserve announcement that interest rates will likely remain at exceptionally low levels for an extended period, a message has “effectively been sent that easy money policies will remain the rule and not the exception.” Some analysts say the market is gaining confidence slowly and that an economic recovery will take root soon. Others say last week’s rally after two weekly losses remains fragile. As of mid-November, the broad US stock market is up more than 66 percent from its March 9 lows. Among the stars was Boeing, rising 0.80 cents to 50.68 dollars and IBM at a rise of 0.77 cents to 127.03 dollars.

Bonds were mixed, however. The yield on the 10-year U.S. Treasury bond fell to 3.486 percent from 3.503 percent by mid-November. With that the 30-year bond rose to 4.401 percent from 4.394 percent.

Gold prices surged to record high $1,045 an ounce mid-November, after a report surfaced that global oil producers are planning to stop using the U.S. dollar for oil trade.

05.
Unemployment rate rises to 10.2 percent

While stocks are shaping up, the pink slips and severance packages are still being given out. The U.S. jobless rate surged to 10.2 percent last month. The record high was last seen when the government began keeping records in November 1982.

The number of unemployed Americans went up by 558,000 people to 15.7 million during October, according to the U.S. Bureau of Labor Statistics. “History tells us that job growth always lags behind economic growth, which is why we have to continue to pursue measures that will create new jobs,” U.S. President Barack Obama said in reaction to the latest jobs numbers.

Mid-November, President Obama signed a bill to extend unemployment benefits for up to 20 additional weeks, with the longest extensions for hardest-hit states. Current laws provide for 26 weeks of benefits.

06.
Government cracks down on executive pay

The U.S. Federal Reserve announced Thursday that it would monitor executive pay packages that encouraged bankers take great of risks. However, officials acknowledged that the plan might not reduce the biggest paychecks on Wall Street. The Federal Reserve joined the Treasury Department in mid-November in imposing new limits on executive pay, which extends the government’s control over compensation at taxpayer-owned companies to institutions that are merely government-regulated.

At the Treasury Department, President Obama’s pay czar, Kenneth Feinberg, announced significant cuts in pay for 175 top executives at the big seven banks and automakers that received hundreds of billions of dollars in federal bailout money at the peak of the recession. The new pay structures reduced the cash paid to some executives by 90 percent, a tie to more compensation to long-term stock awards. However, some senior officials believe the government would do nothing to curtail the lucrative pay at firms like Goldman Sachs and Morgan Stanley, both of which regulated since becoming bank holding companies last year during the financial crisis.

07.
The big three auto industry bailout

Sales for the Big Three began to decline in the spring of 2008 when gas prices soared. In the fall, as the current recession took hold, sales plunged, including a dismal 31.9 percent drop in October, to the lowest level recorded in 25 years. All three approached the government help for the first time in September 2008. Meanwhile, the big three leaders of the auto industry made headlines when lawmakers criticized their decision to fly to Washington to ask for taxpayer bailout money.

The chief executives Alan Mulally of Ford, Robert Nardelli of Chrysler and Richard Wagoner of GM were seeking support for a $25 billion loan package. Later that week, Senate Majority Leader Harry Reid reversed plans to hold a test vote on the measure.

When asked about company travel policies, the big three delegated spokespeople responded. “Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy,” GM spokesman Tom Wilkinson said in a statement.

Chrysler spokeswoman Lori McTavish said in a statement, “while always being mindful of company costs, all business travel requires the highest standard of safety for all employees.” Ford spokeswoman Kelli Felker pointed to the company’s travel policy and did not provide a statement elaborating.
These comments did little to mollify the critics, however.

In March 2009, President Obama rejected GM and Chrysler’s plans for reorganization. On April 30, Chrysler filed for bankruptcy after some of its bondholders hastily retorted the government’s terms for writing down its debt. In May, both companies announced unprecedented dealership closings, brought on by their financial crisis, as well as a huge drop in vehicle sales in the U.S.

By late May, the two companies had received close to $30 billion in federal aid. Mere weeks later however, GM filed for bankruptcy protection. On June 10, Chrysler completed an alliance with Fiat, selling the Italian automaker most of its assets and receiving $6.6 billion in exit financing from the government. A month later, GM came out of bankruptcy having completed the legal paperwork to officiate the GMC into a new company—now named Vehicle Acquisition Company but soon to be renamed the General Motors Company.

08.
U.S. housing market slowly coming back

The crippled US housing market—the collapse of which set off the global recession—is showing new signs of life. The latest is an unexpected surge in existing-home sales, which shot up by 9.4 percent last month.

The unraveled U.S. financial sector and crash of the country’s economy was triggered by falling home values. Any American recovery will be feeble unless the residential real estate can at least stabilize.

The good news is somewhat mixed, however. September’s growth in home sales, which was double the increase expected, elevated such transactions to the highest level in two years. But some analysts think most of that strength can be attributed to a generous $8,000 subsidy for first-time U.S. homebuyers, a support slated to expire by the end of November.

However, new pricing data shows that is unlikely. According to the National Association of Realtors, U.S. prices last month were up about 5 percent from their lows in April, once seasonal factors are eliminated, says consulting firm IHS Global Insight. Still, the Obama administration is being pressed to extend the existing homebuyers’ subsidy until mid-2010.

09.
Decline in advertisers hurts the publishing industry

During the stormy ad climate, the creative and publishing industry felt the brut end of the stick. Multiple publications folded almost on a weekly basis in late 2008. Last January, two of the four major U.S. wholesalers, Anderson News and Source Interlink, which together make up 50 percent of the American magazine market, announced a 7 cents-per-copy price increase on all copies distributed.

Meanwhile, declining ad sales lead to closures and massive staff layoffs right across the board from competitors Condé Nast and Meredith to the legendary New York Times newsroom. Early in the year, the New York Times Co. and Washington Post Co. hinted at cutting jobs at their flagship newspapers to help ease the burden of declining revenue during the economic recession. A story reported in the papers said they will resort to layoffs if they cannot get enough people to leave voluntarily. In an attempt to hold off as long as possible from letting go staff, the New York Times recently announced a new buyout offer in October. The paper reported on its website, adding that the goal is to cut 100 newsroom jobs—about eight percent of the newsroom staff.

At Time Inc., third quarter ad revenue fell $129 million or, 22 percent compared to earnings last year. That decline led to layoffs in the range of 400 to 500 people at Time Inc. Fortune Small Business folded.

Hot: Digitally-based publications much like the George Media Network and Viv Magazine.

Not: Newsprint. The outlook for newspapers is dim. A high-profiled Chicago-based entrepreneur who attempted to revive the flagging newspaper medium with a new business model has folded. Joshua Karp announced that The Printed Blog, a newspaper he founded last year that took all of its content from the Web, is suspending publication indefinitely due to a lack of outside investment capital.

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