Medicare levy increase to fund disability plan

The average worker will pay an extra $1 a day in Medicare levies to support the federal government's national disability care scheme.

Prime Minister Julia Gillard on Wednesday announced details of the levy increase, which starts on July 1, 2014, saying the money raised will go into a special national fund.

'The choice that I and my colleagues have made is that DisabilityCare Australia should be supported by a 0.5 per cent increase in the Medicare levy,' she told reporters in Melbourne.

This would take the total annual Medicare levy on wage earners to two per cent.

Under the change, an average worker on $70,000 a year would pay the equivalent of $1 a day, Ms Gillard said.

The government then intends to use some of the money going into the special fund to make grants to the states and territories under 10 year arrangements.

A quarter of the total would be given to those governments to help them build up to running the full disability care scheme across the nation.




 After 10 years, there'll be a review of the funding share between federal, state and territory governments.

Ms Gillard says she'll take the levy increase plan to the next election due on September 14, after last year ruling out such a change.

She says the amount of tax money coming to the government isn't what they expected, adding that it's also clear the states need extra help to afford their share of the scheme.

The prime minister's acknowledged it's not an easy choice to make for Australian taxpayers, but it is the right one for people with disabilities and their families.

Ms Gillard stressed the money raised from the Medicare levy increase would not cover the complete cost of the disability care scheme when it was fully operational.

'The government will need to make savings for that full cost and there will be no free ride for states and territories - they'll need to step up too,' she said.

Treasurer Wayne Swan said money would accumulate in the fund during the early years from mid-2014, ready to 'kick-start' the scheme when it came into full operation in 2018/19.

The accumulated money would total about $20 billion.

The scheme will cost $8 billion a year, while the levy measure will raise about $3 billion.

Disability reform minister Jenny Macklin also tried to allay the fears of families worried about reports the government was planning changes to the disability support pension in the May budget.

'There will not be further changes to the disability support pension in the coming budget,' she said.

She noted changes to the pension in recent years had led to a drop in the number of new pension recipients.

'Major changes have been delivered but I do want to reassure those people who need the disability support pension ... that this very important part of the social security safety net will remain.'

Mr Swan said he expected some 'political pain' to come from the plan to raise the Medicare levy.

'There's a greater public good here,' Mr Swan said.

Ms Gillard said it was the right decision for Australia's future.

'I know I'm asking Australians in their millions to step up and pay an increase in the Medicare levy,' she said.

'Australians will be able to ask of themselves that question when they vote in September - whether or not they think it's worthwhile, just like Medicare is, when we all contribute and we all benefit to have DisabilityCare.'

'We are prepared to fight for this,' she said.

Legislation to support the levy rise would likely be considered by the next parliament.

'Obviously, we will see what the responses are in the parliament as to what people's dispositions are on the legislation but I anticipate the legislation will need to be dealt with in the next parliament,' Ms Gillard said.

The plan is expected to fund about 60 per cent of the commonwealth's additional expenditure for the scheme, Mr Swan says.

It will raise $3.2 billion for NSW, $2.3 billion for Victoria, $1.9 billion for Queensland, $976 million for WA, $727 million for South Australia, $216 million for Tasmania, $192 million for the ACT and $92 million for the Northern Territory.

'It's the same proposition that Labor fought for election after election ... on Medicare, which is that we all contribute and we all share,' Ms Gillard said.

Ms Gillard said federal Opposition Leader Tony Abbott also needed to step up.

'Mr Abbott needs to shoulder that burden too and if he's got a different way of doing this, spell out every dollar and every cent,' she said.

source: bigpondmoney.com.au

Top Senate Dems urge Obama to take unilateral action on debt ceiling

WASHINGTON –  If President Obama were to break the impasse with Republicans over raising the debt limit by taking unilateral action, such a move would have the potential to set off a firestorm of controversy and spark a protracted legal battle.

Top Senate Democrats say, go for it.

The White House has dismissed talk that Obama would rely on unusual measures to raise the nation's debt limit without Congress' approval, but administration officials also have warned that the country could default on its debt and trigger a new economic crisis if lawmakers don't increase the limit on borrowing.

Senate Majority Leader Harry Reid, D-Nev., is among those urging Obama to consider options like invoking the 14th Amendment to the Constitution to find ways around the $16.4 trillion legal cap on government borrowing. The amendment states that the "validity of the public debt of the United States ... shall not be questioned," which some lawmakers believe permits a way out of the debt limit jam.

The government hit the debt limit last month and is juggling the books to buy additional time for Congress to act. But those moves only buy a few weeks of wiggle room, which requires Congress to act -- likely by mid- to late-February -- to avoid a market-quaking default on U.S. obligations.

The White House has said emphatically that it does not believe that the 14th Amendment permits Obama to ignore the debt cap on U.S. borrowing, though it considered the question during the 2011 debt crisis.

"There is no Plan B. There is no backup plan," White House spokesman Jay Carney said Wednesday. "There is no alternative to Congress raising the debt ceiling."

A letter to Obama on Friday from Reid and Sens. Dick Durbin, D-Ill., Chuck Schumer, D-N.Y., and Patty Murray, D-Wash., doesn't mention the 14th Amendment, but aides to the senators said that's what they have in mind in urging the president to consider unilateral action.

"We believe you must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis -- without congressional approval, if necessary," the letter said.

Battling House and Senate leaders have made virtually no progress on a strategy for legislation to lift the debt cap. House Speaker John Boehner, R-Ohio, insists that any debt increase be matched by equivalent spending cuts. Obama, buoyed by his re-election victory, says he won't negotiate as he did in 2011, when he traded a $2.1 trillion debt increase for tight spending limits on agency budgets and automatic, across-the-board spending cuts if a congressional "supercommittee" failed to reach a budget agreement.

"Senate Democrats cannot ignore their responsibilities for political convenience -- and the American people will not tolerate an increase in the debt limit without spending cuts and reforms," said Boehner spokesman Michael Steel.

The impasse has people on both sides scratching their heads over how it will be resolved. The anxiety is such that some on the left are urging Obama to mint a coin worth perhaps $1 trillion to be deposited at the Federal Reserve and drawn upon to meet government obligations.

source: foxnews.com

83 billion more reasons for national catastrophic insurance program.

As if the “fiscal cliff” negotiations in Washington weren’t tough enough, there’s a new $83 billion problem.

That’s how much politicians from New York, New Jersey and other states want for damages from Hurricane Sandy. Plus, they want approval by the end of the year. For those who lament the lack of bipartisanship in Congress, Sandy has brought the parties together. In normal times, Sen. Charles Schumer, D-N.Y., and Rep. Peter King, R-N.Y., might not agree on where to eat lunch. With Sandy, they are united in their demand for federal money.

President Barack Obama’s opening bid to the Northeast was $50 billion. At this point, no one can be sure of an accurate number. Different pieces of government are compiling damage estimates; mass transit in New York took an especially hard hit. Private insurance will cover some repairs, but some homeowners whose dwellings were washed away may not have had federal flood insurance. A construction trade group pegs the homeowner rebuilding cost at $15 billion to $20 billion. Some money will go not just for rebuilding but for hardening against the next storm.

Whatever the number, the issue will further complicate budget talks that reportedly now are between just President Obama and House Speaker John Boehner, R-Ohio. Whatever the number, the money will come out of the treasury at a particularly bad time.

As we have editorialized many times, it doesn’t have to be this way. Congress could create a national catastrophic insurance program for what the industry calls “uninsurable perils.” In shirtsleeve English, a normal market can’t provide reasonably priced insurance to cover storms like Sandy. A normal market also can’t provide reasonably priced coverage for acts of terrorism, which is why the federal government has a public-private terrorism insurance program. In 2007, President George W. Bush signed an extension through 2014.

Similarly uninsurable perils include an 8.5 earthquake in downtown San Francisco — the earthquake there in 1906 led to a nationwide financial panic — and a Category 5 hurricane striking Miami before moving across the state to Tampa. That’s why former U.S. Rep. Ron Klein sponsored, and the House passed, a national catastrophic insurance plan under which the federal government would underwrite private bonds to pay damages. Those billions would not come out of the treasury.

The plan was designed not by the insurance industry but by wonks at the Congressional Research Service. States would have to first create their own layers of coverage, as Florida has, for lesser storms. The main opposition continues to come from the global, unregulated reinsurance industry, which sells the coverage for those worst-case scenarios. That cost is the main driver of premium increases.

Sandy was a tragedy. Given climate change and weird weather, there will be more. Congress needs no more evidence to justify a national catastrophic insurance program.

source: palmbeachpost.com