Monday, March 11, 2013

Politicians look for credit in a rising economy

FILE - In this March 8, 2013 file photo, specialist Donald Civitanova, right, works at his post on the floor of the New York Stock Exchange. When it comes to the economy, presidents usually get the rap for downturns and reap benefits from upturns. But the main factors affecting the current recovery and the record activity in the stock market may have less to do with high-profile fiscal policy fights in Washington than they do in the decisions of the Federal Reserve Bank, which has pumped trillions of dollars into the economy, kept interests rates at near zero and pushed investors away from low-yield bonds to stocks. (AP Photo/Richard Drew, File)

FILE - In this March 8, 2013 file photo, specialist Donald Civitanova, right, works at his post on the floor of the New York Stock Exchange. When it comes to the economy, presidents usually get the rap for downturns and reap benefits from upturns. But the main factors affecting the current recovery and the record activity in the stock market may have less to do with high-profile fiscal policy fights in Washington than they do in the decisions of the Federal Reserve Bank, which has pumped trillions of dollars into the economy, kept interests rates at near zero and pushed investors away from low-yield bonds to stocks. (AP Photo/Richard Drew, File)

(AP) ? Increased hiring, lower unemployment, stock market on the rise. Who gets the credit?

It's a hotly debated point in Washington, where political scorekeeping amounts to who gets blame and who gets praise.

Following Friday's strong jobs report ? 236,000 new jobs and unemployment dropping to a four-year low of 7.7 percent ? partisans hurriedly staked out turf.

"Woot woot!" tweeted former White House economic adviser Austan Goolsbee. "With 12 million still unemployed?" countered Senate Republican leader Mitch McConnell's spokesman, Don Stewart.

Presidents usually get the rap for economic downturns and reap benefits when things improve. But the main factors affecting the current recovery and the record activity in the stock market may have less to do with high-profile fiscal policy fights in Washington than they do in the decisions of the Federal Reserve Bank, which has pumped trillions of dollars into the economy, kept interests rates at near zero and pushed investors away from low-yield bonds to stocks.

"From a policy standpoint, this is being driven primarily by the Fed," said Mark Vitner, an economist at Wells Fargo.

Yet to some, Washington deserves little recognition.

"Economies recover," said Douglas Holtz-Eakin, a former director of the nonpartisan Congressional Budget Office and now head of the American Action Forum, a conservative public policy institute. He acknowledged the Fed's monetary policies halted the initial free fall by the financial industry, but he said the economy has had to catch up to the Fed's low interest rates.

"It took a long time for the housing market for them to matter and for the auto market for them to matter," Holtz-Eakin said. "So I don't think that's a policy victory."

If Democrats are eager to give President Barack Obama acclaim for spurring the recovery with an infusion of spending in 2009, there are just as many Republicans who will claim his health care law and his regulatory regimes slowed it.

If there is common ground among economists, it is that the next step in fiscal policy should be focused on reining in long-term spending on entitlements programs, particularly Medicare, instead of continuing debates over short-term spending. But such a grand bargain has been elusive, caught in a fight over Obama's desire for more tax revenue and Republican opposition to more tax increases.

Obama and some Republicans are trying to move the process with phone calls and a dinner here and a luncheon there. Next week, the president plans to address Democrats and Republicans in the House and Senate in separate meetings to see, as he put it Saturday in his weekly radio and Internet address, "if we can untangle some of the gridlock."

Who gets credit does have political consequences. A strong economy would create more space for Obama to pursue other aspects of his second-term agenda. But it's an important question for the long term, too, because if the recovery is indeed accelerating it could validate the policies that the Obama administration and the Fed put in place.

Hiring has been boosted by high corporate profits and by strength in the housing, auto, manufacturing and construction sectors. Corporate profits are up. Still, it might be too soon to declare victory. While the recovery may be getting traction, the U.S. economy is not yet strong.

Economic growth is forecast to be a modest 2 percent this year. Unemployment, even as it drops, remains high nearly four years after the end of the Great Recession, with roughly 12 million people out of work.

Last year's early months also showed strong job gains only to see them fade by June.

March could prove to be a more telling indicator as the economy responds to a third month of higher Social Security taxes and as across-the-board spending cuts that kicked in March 1 begin to work their way through government programs. Economists say anticipation of the cuts already caused a downturn in the fourth quarter of last year as the defense industry slowed spending. The Congressional Budget Office and some private forecasters say the coming cuts could reduce economic growth by about half a percentage point and cost about 700,000 jobs by the end of 2014.

"My view is that aggressive monetary and fiscal policy response to the recovery has been a net positive," said Mark Zandi, chief economist at Moody's Analytics.

But referring to the automatic cuts, he said, "Fiscal policies have turned from a very powerful tailwind to a pretty significant head wind." And, he added, "the economy is going to be tested again in the next few months."

Obama has been distancing himself from the potential consequences of the automatic cuts, even though he signed the legislation that put them in place. Initially, they were designed to be so onerous that it would force all sides to work out a long-term deficit-reduction and debt-stabilization package. But that agreement never materialized.

If the recovery has been slow, White House officials argue, it is because Republicans have been unwilling to yield to Obama's demands for deficit reduction that combines tax increases and cuts in spending.

Obama himself seemed to touch on that viewpoint in his weekly address.

"At a time when our businesses are gaining a little more traction, the last thing we should do is allow Washington politics to get in the way," he said while heralding good economic news. "You deserve better than the same political gridlock and refusal to compromise that has too often passed for serious debate over the last few years."

Vitner, the Wells Fargo economist, argues that if anyone deserves credit for the recovery, it is the American public and American businesses "for being able to tune out all the noise that's coming from Washington."

"It's remarkable," he said, "that in the face of so much political uncertainty we've been able to see the growth that we have."

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/89ae8247abe8493fae24405546e9a1aa/Article_2013-03-09-Economy-Who%20Gets%20Credit/id-57ed4e9793554554b935c9db91d8c7f4

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Jeffrey Sachs: Professor Krugman and Crude Keynesianism

I recently published a Washington Post op-ed called "Deficits do Matter" that was co-authored with talk-show host, commentator and former Congressman Joe Scarborough. The piece argues that high and rising levels of public debt are a real concern. It also makes the case that the stimulus packages that began in 2009 --which have consisted mainly of temporary tax cuts and transfer payments -- have significantly raised the public debt while doing very little to solve the nation's long-term employment and growth problems.

That op-ed and others I've recently written have discussed the policy recommendations of Professor Paul Krugman, a Princeton economist and New York Times columnist. While I have tremendous respect for Professor Krugman, since 2008 he and I have disagreed consistently over the approaches needed to get the U.S. economy on the road to a real and sustained recovery. I've also spelled out my views in detail in my book The Price of Civilization (2012).

I have argued against short-term stimulus packages. Krugman has supported them, and indeed argued that they should have been even larger. I have been against temporary tax cuts and temporary spending programs, believing that instead we need a consistent, planned, decade-long boost in public investments in people, technology, and infrastructure. Such a sustained rise in public investment should have been paid for by ending the Bush-era tax cuts in 2010, or by adopting a comparable boost in revenues. Instead Obama and Congress have now made almost all of those tax cuts permanent, putting us into a deeper fiscal bind.

Yesterday, Krugman responded to my recent op-ed by digging in deeper on the deficit question. He argued yet again that the U.S. can and should incur more debt to pay for a short-term boost in aggregate demand. While he did not lay out a quantified plan (that has been the case from the start, so it's hard to know exactly what Krugman has in mind in a quantitative sense), the CBO has recently estimated that without the recent deficit-reduction actions of the White House and Congress, the public debt would rise to around 87 percent of GDP in a decade. I presume that Krugman would support that trajectory or something like it (he should tell us by now what path of deficits he actually recommends).

Let me address his points here in detail.

First off, here is what I mean when I say that Krugman is a crude Keynesian: he takes a simplistic and inadequate version of the Keynesian economic approach as his guide for budget policy. Keynes himself was far subtler. In 1937, with British unemployment still around 10 percent, Keynes wrote: "But I believe that we are approaching, or have reached, the point where there is not much advantage in applying a further general stimulus at the centre." He believed, for example, that more structural policies were needed to address the continued unemployment.*

There are four elements of crude Keynesianism and, indeed, of Krugman's position:

(1) The belief that multipliers on tax cuts and transfers are stable, predictable and large;
(2) The belief that America's employment and growth problems are overwhelmingly cyclical, not structural, and therefore remediable by short-term aggregate demand management;
(3) The belief that a growing debt burden is a minor nuisance as long as the economy is in recession;
(4) The belief that for practical purposes, the most urgent need is to raise aggregate demand rather than to focus on the quality and type of public spending.

I believe that all of these positions are misguided.

First, Krugman believes that fiscal multipliers are predictable and large. Thus, a $1 rise in government spending of any kind, according to Krugman, predictably leads to something like $1.50 in higher GDP. Similarly, a $1 cut in payroll taxes leads to something like a $1.30 rise in GDP.

The belief in stable, predictable, and large multipliers is belied by both theory and evidence. Households and local governments might simply use a temporary tax cut or temporary transfer, for example, to pay down debts rather than to increase spending, especially because the tax cut or transfer is seen to be temporary. Businesses, concerned about the buildup of public debt, might hold back on business investment in the face of large deficits, anticipating higher taxes in the future.

The original stimulus legislation was overwhelmingly of the form of temporary tax cuts and temporary transfer payments, the kind of deficit spending especially likely to have little effect on aggregate demand. Only $88 billion of the $787 billion stimulus-package was in direct purchases of goods and services by the federal government. The rest was temporary transfers and tax cuts.

(This was not an accident. A critical and predictable weakness of the 2009 stimulus is that House Democrats and the White House negotiated it in just a few weeks. In the unnecessary haste, there was no serious consideration given to long-term needs in infrastructure, for example. With presidential leadership we could -- and should -- have forged a decade-long strategy. Now we have no such strategy in place or likely to come into place.). Later stimulus packages (such as the 2010 two-year extension of the Bush tax cuts) have been even more weighted towards temporary tax cuts.

The Keynesian theory is that the stimulus would raise output and employment while the economy naturally returned fairly quickly to full employment and rapid growth from the cyclical downturn. This long-term recovery did not occur as projected. Growth has not resumed on a normal basis. The Keynesian CBO model failed very badly to track the U.S. economy.

Here is the CBO forecast made in mid-2009 and the actual growth outcomes:

2013-03-09-Graph.jpg
Why has the CBO model failed so badly? There are of course many theories. Krugman argues that the stimulus worked just as advertised, with the multipliers that were predicted, but that other factors held up recovery. He does not present a quantified model, so doesn't really account for the shortfall of the CBO Keynesian modeling. My own view is that the predicted multipliers were too high in the first place, especially for such a poorly designed tax-and-transfer program, and that recovery is impeded by structural factors. These structural components are not susceptible to a Keynesian diagnosis or to a Keynesian remedy. They require a long-term public investment response that has not been forthcoming.

Second, Krugman seriously and repeatedly downplays these structural changes occurring in the U.S. economy. He repeatedly emphasizes that we suffer a demand shortfall, pure and simple, one easily remedied by more stimulus. Yet it's increasingly hard to reconcile many features of the U.S. economy with this view.

Unlike the Great Depression, which Krugman repeatedly uses as his reference point, U.S. profits are soaring. Unlike the Great Depression, the world economy is growing rather rapidly (3 to 4 percent per year) so that more rapid U.S. export growth is feasible. Unlike the Great Depression, vacancy rates are recovering even as unemployment is stuck. (Technically, the Beveridge Curve has shifted to the right.)

The CBO also suggests that much of the slowdown in GDP growth after 2002 is the result of a slowdown in the growth of potential GDP. According to CBO, potential GDP growth was 3.1 percent per year during 1991-2001, but slowed to just 2.2 percent per year during 2002-2012.

What are some of the structural problems? These include large-scale offshoring of jobs, large-scale automation of jobs, decline in demand for low-skilled workers, skill mismatches, broken infrastructure, and rising global energy and food prices. These require various kinds of targeted public investment spending, not simply aggregate demand.

In view of these challenges, would a different kind of spending program have worked better? If the spending had been concentrated on long-term infrastructure and job skills, with investments carried out not for two years but over the course of a full decade (as in the 1950s-60s national highway program), the answer is probably yes. But such projects were not "shovel ready."

Such long-term investment programs are very different from quick-and-dirty Keynesian "stimulus" packages such as temporary tax cuts. Long-term investment programs require thinking and planning of the kind that has never happened with Obama's stimulus packages. Examples of long-term federal investment programs include the national highway system, the moon program, and the human genome project. A massive renewable energy program - R&D, renewable power generation, new transmission grid, urban smart grids, and related infrastructure (e.g. for electric vehicles) - is an example of what is needed over the course of a decade. It might have been feasible in 2009 when Obama had the upper hand and the momentum. It is, alas, very unlikely today.

The Administration should indeed have taken several months in 2009 to design and advocate for long-term investment programs for renewable energy, fast intercity rail, large-scale highway upgrading, large-scale skill and job training, and so forth, rather than rushing to pass a stimulus package of hundreds of billions of dollars of shortsighted and largely ineffective temporary tax cuts and transfer programs. The budget should have paid for such new long-term investments by allowing the temporary Bush-era tax cuts to expire on schedule in 2010 (or by negotiating equivalent revenues of 2-3 percent of GDP per year as the price for maintaining the Bush-era tax cuts).

One of the Obama arguments at the time was that the rush in the stimulus program was needed to avoid a Great Depression. This was and is highly doubtful (though, yes, it is widely accepted). The US economic emergency in late 2008 and early 2009 wasn't really an aggregate demand crisis but a financial crisis. The chaotic failure of Lehman Brothers had led to an intense panic and credit squeeze. The Fed therefore needed to flood the markets with liquidity, which it rightly did, in order to unwind the panic. The Fed's action was the real difference with 1933 (when the Fed allowed the banks to fail). It was the Fed, not the fiscal stimulus, which prevented a fall into depression.

Third, crude Keynesians like Krugman believe that we don't have to worry about the rising public debt for many years to come, perhaps well into the next decade. This is remarkably shortsighted. The public debt has already soared, from around 41 percent of GDP when Obama came into office to around 76 percent of GDP today (and with no lasting benefit to show for it). If Krugman had his way, and deficits were not restrained, the debt-GDP ratio would already be above 80 percent by now and would be rising rapidly towards 90 percent and above (as shown in the recent CBO alternative scenario).

Krugman now writes: "everyone repeat with me: there is no deficit problem." He says, in effect, that since the debt-GDP ratio is now likely to be stable at around 75%, we need not worry. But his claim is thoroughly misleading. The forecast of a stable debt-GDP ratio is precisely because Washington has rejected Prof. Krugman's advice. If DC instead followed his advice, the debt-GDP ratio would indeed already be significantly higher and would be rising rapidly.

It's true that we've not paid heavily so far for this rising debt burden because interest rates are historically low. Yet interest rates are likely to return to normal levels later this decade, and if and when that happens, debt service would then rise steeply, increasing by around 2 percent of GDP compared with 2012. Many people seem to believe that we can worry about rising interest rates when that happens, not now, but that is unsound advice. The build-up of debt will leave the budget and the economy highly vulnerable to the rise in interest rates when it occurs. The debt will be in place, and it will be too late to do much about it then.

According to the new CBO baseline, debt servicing within a decade is now on track to be around 3.3 percent of GDP, larger as of 2023 than the total of all non-defense discretionary spending and also all defense spending in that year! This high interest servicing cost will be the result of the large build-up of debt in recent years combined with the return of interest rates to historically normal levels. As interest service costs rise, vital public investments and other programs are likely to be shed. That's when we'll suffer the most severe fiscal consequences of our debt buildup of debt. Of course neither Prof. Krugman nor his followers seem to be much interested in looking ahead a few years.

In his first blog response to me, Krugman argues that the coming rise in debt servicing in the CBO baseline is somehow irrelevant because it will result from a rise in interest rates not from a continuing rise in the debt-GDP ratio. But he has missed the point. As a nation we should prepare sensibly for a return to normal interest rates in the future. The huge amount of debt that we've already taken on (not to mention the added debt that Prof. Krugman would like us to take on) makes the future budget very vulnerable to a return of interest rates to normal.

Fourth, crude Keynesians believe that for all intents and purposes, "spending is spending." Yes, Prof. Krugman acknowledges waste and all of that, but says that for aggregate demand reasons it is better to spend now on the waste than to cut wasteful spending. Here's the discussion on Charlie Rose the other day.

KRUGMAN: "Basically, any kind of spending cut right now is going to hurt the economy. Now -- "
ROSE: "Whether it's entitlements or not?"
KRUGMAN: "Whether it's entitlements or not. Even if it's defense, even if it's wasteful defense spending, it's going to hurt the economy if you cut it right now. It doesn't mean that we shouldn't look for ways to cure waste but right now to a large effect, spending is spending. So, do the kind of reform I want, and stop overpaying for Medicare, stop paying for unnecessary treatments. That's clearly what we want to do in the long run. But right now, it's going to mean less income for hospitals -- that is going to be a problem for the economy."

This approach is disastrous both politically and economically. Progressives like myself believe strongly in the potential role of public investments to address society's needs - whether for job skills, infrastructure, climate change, or other needs. Yet to mobilize the public's tax dollars for these purposes, it is vital for government to be a good steward of those tax dollars. To proclaim that spending is spending, waste notwithstanding, is remarkably destructive of the public's trust. It suggests that governments are indeed profligate stewards of the public's funds.

Yet it's even worse on the economic front. Spending is not spending. The U.S. needs productive public investments, not wasteful spending. We need to modernize our infrastructure, retool our energy system, make our cities more resilient, and help to train a new productive labor force. All of that is hard work. It requires careful government programs, working alongside the private sector, and good coordination with state and local governments. It requires facing down vested interests in both parties all too happy to continue the wasteful ways.

Keynesians ignore or even disdain this kind of hard budget work. Just spend and cut taxes, we are told, and the economy will recover and go back to normal. Sad.

So, to summarize, what is crude Keynesianism?

(1) The belief in large, stable, and predictable multipliers on taxes and transfers;
(2) The belief that our problems are due overwhelmingly to a deficiency of aggregate demand, rather than to structural problems that need a long-term approach;
(3) The belief that a rapidly rising debt-GDP ratio is largely benign because interest rates are low today and will stay so indefinitely;
(4) The belief that "to a large effect, spending is spending," thereby catering to waste and vested interests while ignoring America's urgent investment needs.

In my view the result of this misguided approach, adopted by the Obama Administration, has been a large build-up of public debt with no long-term benefits for an economy that instead needs a public-investment-led recovery. If we had followed Mr. Krugman's long-standing advice to double down on this failed approach the situation would have been even worse. Yes, Mr. Krugman, I believe that you are a crude Keynesian at a time when we need subtler, surer, longer-term policies.

That subtler set of policies should include:

(1) Decade-long public investment programs in renewable energy, upgraded public infrastructure, fast rail, job training and the like;
(2) Adequate fiscal revenues (including tolls on infrastructure) to pay for these investments over the course of a decade, including a downward path of the debt-GDP ratio;
(3) Increased revenues through taxation on high net worth, financial transactions, high incomes, capital gains and carried interest, offshore corporate earnings, and carbon emissions, and a stiff crackdown on tax havens and phony transfer pricing.

All of this would have been much easier if Obama had started down this long-term path in 2009, and had never conceded the permanence of the Bush-era tax cuts for almost all households. Instead, he followed a populist and shortsighted policy of "stimulus" and tax cuts.


*Keynes wrote that, "the evidence grows that -- for several reasons into which there is no space to enter here -- the economic structure is unfortunately rigid," therefore requiring more targeted public spending.

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Follow Jeffrey Sachs on Twitter: www.twitter.com/JeffDSachs

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Source: http://www.huffingtonpost.com/jeffrey-sachs/professor-krugman-and-cru_b_2845773.html

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Friday, March 1, 2013

Advertising Agencies Beg To Get Google Glass - Business Insider

Employees at ad agency kbs+ have made a Tumblr micro-site?in which?employees literally beg to get their hands on a pair of Google Glass.

Although Google initially only distributed early pairs to developers, it opened up a competition to the plebeians so that some members of the general public can buy a pair. There's no free ride ? winners still have to shell out $1,500.

The contest, which has closed, asked people to explain how they would use Google Glass in 50 words or less on Twitter or, of course, Google+ with the hashtag #IfIHadGlass.

So kbs+ jumped on the band wagon and had more than 70 of its employees come up with different reasons why they needed a pair.

While some are cutesy (a front end developer would use it to perfect the art of Nerf gun warfare; a product manager would use it to become whatever a "nail polish wizard" is), we think that President and Co-chief Creative Officer Ed Brojerdi really captures what all advertisers are thinking.

With a stoic face, Brojerdi says, "I want to help monetize Google Glass for brands and advertisers."

The video is titled "Ad$" ? the dollar sign acting as a not-so-subtle hint of the gold mine this product could be for advertisers.

Yup.

Although a source at Google told us that the company is nowhere near integrating ads into the Google Glass experience, CNN called the product the "holy grail" for advertisers.

Google already pools its consumer data from Gmail, searches, YouTube, and Google+ to improve its target advertising. So it's pretty insane to imagine how personalized ads could get if advertisers had the ability to track everything a person is seeing.

While we're sure other advertisers are trying to nab a pair, kbs+ is the only one we know about that created a micro-site entirely dedicated to sweetening up its bid for a pair.

Here's Brojerdi's video begging Google for a pair:

Here's a senior interaction designer who wants a Google Glass so she can own at karaoke:

Source: http://www.businessinsider.com/advertising-agencies-beg-to-get-google-glass-2013-3

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Senate Democrats' bill light on deficit cuts in 2013

WASHINGTON (AP) ? White House-backed legislation in the Senate to replace $85 billion in across-the-board spending cuts would raise the deficit through the end of the budget year by tens of billions of dollars, officials said late Wednesday as the two parties maneuvered for public support on economic issues.

The nonpartisan Congressional Budget Office said that under the Democratic measure, deficits also would rise in each of the next two years before turning downward.

Democratic officials had said earlier in the day their bill would spread one year's worth of anticipated savings ? $85 billion ? over a decade in an attempt to avoid damaging the shaky economic recovery.

The legislation would cancel across-the-board cuts due to begin on Friday. Instead, it would eliminate payments to some farmers, enact defense reductions beginning in two years and impose tax increases, mostly on millionaires.

White House spokesman Jay Carney recently told reporters at the White House the administration supports the measure.

The Senate is expected to vote on Thursday on rival Democratic and Republican plans to replace the spending cuts, known in Washington-speak as a "sequester." Both bills are expected to fail.

In an indication that across-the-board cuts are inevitable, President Barack Obama has set a meeting with congressional leaders for the day they take effect. While the administration has warned of severe cuts in government services as a result of the reductions, few, if any, are likely to be felt for several weeks.

That could give the administration and lawmakers breathing room to negotiate a replacement, although Senate Republican Leader Mitch McConnell said during the day there were limits to what could be negotiated.

"We can either secure those reductions more intelligently, or we can do it the president's way with across-the board cuts. But one thing Americans simply will not accept is another tax increase to replace spending reductions we already agreed to," he said.

Democrats said their proposal to replace across-the-board cuts was designed with the economy in mind.

It "seeks the same amount of savings in a more responsible way" as the $85 billion in cuts that will otherwise take effect, said Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid.

"The impact on the economy is much better. Sequestration as constituted would hurt economic growth and destroy jobs," he added.

Over a decade, the bill would cut deficits by an estimated $110 billion, half from higher taxes and half from the defense and farm program cuts.

That is in keeping with Obama's call for a balanced approach that combines selected spending cuts with closing tax loopholes.

Senate Democrats have been reluctant to spell out the details of their measure, although it is not clear if that results from its relatively small impact on the deficits through the end of the current budget year.

Across the Capitol, though, the party's leaders have talked openly of their desire to spread the cuts in their replacement measure over a longer period.

"It is entirely intentional," said Rep. Chris Van Hollen, D-Md., and the party's senior member on the House Budget Committee. "The whole idea is to achieve the equivalent deficit reduction without hurting jobs and having disruption in the economy. You do that by having targeted cuts and eliminating tax loopholes over a longer period of time," he added.

He said the Democrats' approach is the same as Federal Reserve Chairman Ben Bernanke's recommendation, which is to help the recovery gain strength before beginning to make cuts.

In the Senate, Republicans have yet to disclose their own sequester replacement measure. Most of the rank and file favors an alternative that lets Obama adjust the cuts to minimize any impact on the public, but that approach has its critics among lawmakers who fear giving the White House that much authority.

____

AP White House Correspondent Julie Pace contributed to this report.

Source: http://news.yahoo.com/senate-dems-bill-light-deficit-cuts-2013-205900124--finance.html

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Toxic oceans may have delayed spread of complex life

Feb. 28, 2013 ? A new model suggests that inhospitable hydrodgen-sulphide rich waters could have delayed the spread of complex life forms in ancient oceans. The research, published online this week in the journal Nature Communications, considers the composition of the oceans 550-700 million years ago and shows that oxygen-poor toxic conditions, which may have delayed the establishment of complex life, were controlled by the biological availability of nitrogen.

In contrast to modern oceans, data from ancient rocks indicates that the deep oceans of the early Earth contained little oxygen, and flipped between an iron-rich state and a toxic hydrogen-sulphide-rich state. The latter toxic sulphidic state is caused by bacteria that survive in low oxygen and low nitrate conditions. The study shows how bacteria using nitrate in their metabolism would have displaced the less energetically efficient bacteria that produce sulphide -- meaning that the presence of nitrate in the oceans prevented build-up of the toxic sulphidic state.

The model, developed by researchers at the University of Exeter in collaboration with Plymouth Marine Laboratory, University of Leeds, UCL (University College London) and the University of Southern Denmark, reveals the sensitivity of the early oceans to the global nitrogen cycle. It shows how the availability of nitrate, and feedbacks within the global nitrogen cycle, would have controlled the shifting of the oceans between the two oxygen-free states -- potentially restricting the spread of early complex life.

Dr Richard Boyle from the University of Exeter said: "Data from the modern ocean suggests that even in an oxygen-poor ocean, this apparent global-scale interchange between sulphidic and non-sulphidic conditions is difficult to achieve. We've shown here how feedbacks arising from the fact that life uses nitrate as both a nutrient, and in respiration, controlled the interchange between two ocean states. For as long as sulphidic conditions remained frequent, Earth's oceans were inhospitable towards complex life."

Today, an abundance of nitrate, in the context of an oxygenated ocean, prevents a reversion to the inhospitable environment that inhibited early life. Determining how Earth's oceans have established long-term stability helps us to understand how modern oceans interact with life and also sheds light on the sensitivity of oceans to changes in composition.

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The above story is reprinted from materials provided by University of Exeter.

Note: Materials may be edited for content and length. For further information, please contact the source cited above.


Journal Reference:

  1. R.A. Boyle, J.R. Clark, S.W. Poulton, G. Shields-Zhou, D.E. Canfield, T.M. Lenton. Nitrogen cycle feedbacks as a control on euxinia in the mid-Proterozoic ocean. Nature Communications, 2013; 4: 1533 DOI: 10.1038/ncomms2511

Note: If no author is given, the source is cited instead.

Disclaimer: Views expressed in this article do not necessarily reflect those of ScienceDaily or its staff.

Source: http://feeds.sciencedaily.com/~r/sciencedaily/most_popular/~3/CUPC19XVN4w/130228113447.htm

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