Another wave of sales; GE emerges a company vastly changed
Tuesday, June 26
NEW YORK (AP) — General Electric shed more of its major assets, announcing plans to cast away its health care business and sell its interests in the oil-services company, Baker Hughes.
The company’s latest round of winnowing arrived Tuesday, the first time since 1907 that General Electric Co. will not be a member of the exclusive Dow Jones industrial average at the opening bell.
The company said it will be able to reduce its debt by $25 billion and remove additional risk as it reimagines itself as something very different from the multinational conglomerate it was before the Great Recession.
Given the steady drumbeat of asset sales (GE said Monday that it would sell its distributed power unit to Advent International for $3.25 billion), it is easy to lose sight of how radically the company has changed in less than a decade. On the cusp of the recession, GE was one of the nation’s biggest lenders, its appliances were sold by the millions to homeowners around the world and it oversaw a multinational media conglomerate.
On Tuesday, General Electric presented itself as a vastly reduced entity focused on aviation, power, and renewable energy, dropping health care entirely from its plans.
“Today marks an important milestone in GE’s history,” Flannery said in prepared remarks. “We are aggressively driving forward as an aviation, power and renewable energy company_three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger.”
Flannery said during a conference call that the new GE will have more of a high tech and industrial focus.
“We’ve changed many things, but the essence of GE endures,” he said.
GE will sell approximately 20 percent of the health care business straight away and distribute the rest to its shareholders over the next 12 to 18 months as the company sheds those assets. It will take two to three years to sell its two-thirds stake in Baker Hughes, valued at around $23 billion.
Flannery, upon taking over the company just over a year ago, vowed to divest $20 billion in assets. On Tuesday, GE said that those asset sales are essentially complete.
On Tuesday, the drugstore chain Walgreens Boots Alliance replaced General electric on the 30-company blue chip index. It was an original member of the Dow Jones industrials dating back to 1896.
But its shares have been cut in half over the past year, drastically reducing the market capitalization of General Electric.
Shares jumped almost 8 percent when the market opened.
Point: Increase the Public Debt at Your Peril
January 07, 2018 by Desmond Lachman
Milton Friedman never tired of reminding us that in economics there is no such thing as a free lunch. If ever his adage had validity it has to be in relation to the question of running up excessive government debt. While throwing caution to the wind and increasing our public debt now might allow our government to finance a large unfunded tax cut, it does so at the very real risk of mortgaging our children and our grandchildren’s economic future.
Among the reasons to be concerned that the Republican majority abandoned its long-held principles of sound public-finance management by going along with a large unfunded tax cut is that the United States already has a compromised public debt position. Indeed, according to the Organization for Economic Cooperation and Development, our country’s public debt is already close to 100 percent of GDP. This is a level that is widely considered by economists to be in the danger zone.
With such a high public debt level, one would have thought the last thing that the country could now afford was a large tax cut that would increase that debt further by as much as $1.5 trillion over the next decade.
Sound public finance management would underline how ill advised it was for us to have chosen this particular economic juncture to put ourselves on an ever-increasing public debt path. The basic principles of sound public finance suggests that in the good economic times, when the economy is humming along well and when unemployment is low, one should make every effort to reduce the public debt. One does so in order to leave room for increasing the budget deficit and running up public debt in the bad times when the economy might need a fiscal boost.
One might ask with U.S. unemployment already down to a decade long low of around 4 percent and with the economy growing at a healthy 3 percent clip, did the economy really now need a fiscal boost? Further one might ask whether we should not already now be thinking about how our public finances will deteriorate further if the economy were for any reason to go into recession?
By having used up our fiscal space now in the good times, we run the risk of not having room to increase the budget deficit in the bad economic times to provide the economy a boost when it might really be needed.
Those who seem to be unconcerned by our country’s budget deficit and by its already large public debt level point to the currently very low long-term interest rates at which the U.S. government can presently fund itself. What they fail to take into account is that these low interest rates have been the artificial product of the Federal Reserve’s extraordinarily easy monetary policy over the last eight years to get the economy back onto its feet.
As such, those interest rates are unlikely to stay permanently low and when they start rising the government could have difficulty financing itself cheaply. Indeed, now that the economy is approaching full employment, the Fed has already started the process of raising interest rates and reducing the size of its balance sheet.
Worse yet, the currently expansive budget policy might force the Fed to raise interest rates at a faster pace than it otherwise would have done. When it does so, the government’s interest rate costs are surely bound to rise.
Those who are sanguine about increased budget deficits and rising public debt also fail to take into account how increasingly reliant such a policy course makes us on foreign financing. Increasing our budget deficit has the effect of reducing the level of our country’s public savings and, by forcing interest rates higher, it also tends to increase the value of the dollar. That in turn has the effect of increasing our trade deficit, which requires yet more resort to foreign financing.
Those who are unconcerned by our increased reliance on foreign financing seem to turn a blind eye to how heavily indebted our country’s government already is to countries like China, which are not particularly well disposed to us. One would have thought that such considerations would have dictated that, far from further increasing our reliance on such foreign sources of finance, we should have been making every effort to reduce our external economic vulnerability by paying down our debt.
The book of Psalms teaches us that what one might sow in tears one might reap in joy. Sadly, there are all too many reasons to think that by our sowing in joy with an unfunded tax cut, our children are likely to reap in sorrow the fruits of lower long-run economic growth.
Desmond Lachman is a resident fellow at the American Enterprise Institute. He was formerly a Deputy Director in the International Monetary Fund’s Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney.
Counterpoint: Debts and Deficits — Should We Be Worried?
January 07, 2018 by Dean Baker
With the Republican tax cut projected to add $1.5 trillion to the national debt over the next decade, we are seeing a new round of fear-mongering over the debt. While this tax cut is a poor use of public funds, the whining over the debt and deficits is best ignored. It is easy to scare people with talk of multi-trillion dollar debts, but this is a politics of fear, not a basis for constructing reality-based policy.
There are three ways in which deficits or debt can be seen as a problem. First, large deficits can overheat the economy leading to high interest rates and/or high inflation. Second, a large debt can impose a significant interest burden on the government and implicitly on future taxpayers. The third way is that excessive indebtedness can cause a country to become not creditworthy, making it difficult or impossible to finance the government. None of these issues plausibly apply to the United States at present.
The first point is the classic story in which large amounts of government borrowing pulls capital away from the private sector. This would be bad news because businesses and state and local governments would have to pay higher interest rates, which would reduce their investment. With less investment, we would see less productivity growth, which would mean that we would be poorer in the future.
There are times when excessive deficits may crowd out investment, but this is clearly not one of them. Interest rates are extraordinarily low. In fact, they are far lower than in the years at the end 1990s when we were running surpluses.
There also is no evidence that excessive spending has led to inflation. The Federal Reserve Board has been struggling for most of the last decade to raise an inflation rate it views as too low.
The second issue is that the debt service — the amount of interest that we pay on the debt each year — will impose a large burden requiring either higher taxes or cuts in other spending or some combination. There also is no basis for this concern at present.
The interest that the government pays on its debt each year comes to around 1.0 percent of GDP, after we subtract the amount that was paid to the Federal Reserve Board and then refunded back to the Treasury. By comparison, the interest burden was more than 3.0 percent of GDP at the start of the 1990s.
It is also worth noting that the much larger interest burden of the 1990s did not prevent us from having a very prosperous decade. In other words, there is a long way to go before we face any serious problem by this measure.
Finally, there is the argument that we could end up in the same situation as Greece was in a few years back, where no one wants to lend money to the U.S. government. There are two major reasons the United States will not end up like Greece.
First, we borrow in our own currency. The U.S. prints dollars; we don’t have to worry about being able to borrow them. By contrast, Greece borrowed in euros, which it did not print.
This brings up the second point; we could print so much money that we face hyperinflation, like Zimbabwe did in the last decade. In principle, that could happen, but the problem in that case would be having a weak economy, not having a large debt. As long as the U.S. economy remains strong and grows at a respectable pace, we will never end up like Zimbabwe.
If we need proof of this fact, we need only look at Japan. The country has a debt that is two-and-a-half times as large as the U.S. debt relative to the size of its economy. Nonetheless, it can borrow long-term at a near zero interest rate. Its inflation rate has also been near zero as the government has been desperately trying to increase inflation for the last two decades.
In short, the country has many real problems. Tens of millions of young people struggle to pay for college. Young parents struggle to pay for quality child care and tens of millions of people have inadequate health care insurance.
These are all issues that deserve our attention. The federal debt is just a huge distraction.
About the Author
Dean Baker is co-director of the Center for Economic and Policy Research and author of several books, including “Getting Back to Full Employment: A Better Bargain for Working People,” “The End of Loser Liberalism: Making Markets Progressive,” “The United States Since 1980,” “Social Security: The Phony Crisis” (with Mark Weisbrot), and “The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer.”
Analysis: Government set to borrow nearly $1 trillion this year, an 84 percent jump from last year
Tuesday, July 3, 2018
Ohio Secretary of State Announces Certified Signature Totals for Candidate Seeking Independent Gubernatorial Bid
COLUMBUS – Ohio Secretary of State Jon Husted today announced Jonathan Heavey and Adam Hudak, who had filed petitions to run as independent candidates for governor and lieutenant governor in the 2018 General Election, failed to meet the minimum valid signature requirements for certification to the November ballot.
To qualify for the ballot, independent candidates must collect at least 5,000 valid signatures. Mr. Heavey submitted 16,137 signatures from 22 counties, of which, 4,253 signatures were deemed valid by the respective county boards of elections.
The 2018 General Election will be held Tuesday, November 6, 2018.
Husted Announces Plans for Latest Round of HAVA Funding
Monday, June 25, 2018
Initiatives focus on security improvements and enhancements to election technology
COLUMBUS – Ohio Secretary of State Jon Husted today announced the State of Ohio has submitted a plan to the United States Election Assistance Commission (EAC) for the distribution and use of funding made available through the Help America Vote Act (HAVA).
Earlier this year, Congress appropriated additional HAVA funds to states as part of the Consolidated Appropriations Act of 2018. The initiative aims to improve the administration of federal elections, with a particular focus on security improvements and technological advancements.
Ohio will receive $12,186,021 in federal funding, while also providing a 5 percent match of $609,301 by March 23, 2020.
“We continue to invest in technologies that both improve election security and the voting experience,” Secretary Husted said. “This is not a one-time event, it is a continuous process to assess and address potential threats and risks we face. We want voters to be reassured that Ohio is taking the necessary steps to keep our elections secure.”
The plan submitted to the EAC contains six policy initiatives, each with a target completion date of December 31, 2020. The proposal includes:
Statewide Voter Registration System Database Improvements ($3.9 million) – A series of upgrades are planned for Ohio’s statewide voter database, including the introduction of multi-factor identification; improved communications lines; enhanced encryption techniques; computer and software updates; and long-term security planning.
Pathfinders ($4.9 million) – Support will be provided to the county boards of elections so they may enter standing partnerships with various federal security resources. These resources include the Election Infrastructure Information Sharing and Analysis Center (EI-ISAC) and the U.S. Department of Homeland Security for phishing campaign assessment and vulnerability scanning. Additionally, county boards will be required to utilize the Center for Internet Security’s Elections Infrastructure Playbook for assistance in identifying and mitigating information technology risks.
Enhanced Cybersecurity Service ($100,000) – ECS leverages classified information through U.S. government intelligence to assist in the detection and prevention of malicious server traffic.
Table-top Exercises & Training ($186,021) – The Secretary of State’s Office will host regional table-top exercises (TTX) for elections officials in 2018. The training is modeled after similar exercises conducted by the Kennedy School of Government’s Belfer Center for Science and International Affairs at Harvard University. The workshops will provide board of elections staff an opportunity to evaluate their readiness to deal with cyber threats, while also assessing their ability to perform tasks critical to procedural standards.
IT & Email Support Pilot Project ($1 million) – A pair of pilot programs designed to strengthen and align information technology maintained by the county boards of elections with resources operated within the Ohio Secretary of State’s Office.
Post-Election Audits ($2.1 million) – Funding will be reserved to offset costs for local and state election officials conducting post-election audits through 2020. Through permanent directive, all county boards of elections must conduct a post-election audit following each presidential primary election and regular federal general election.