Archive for July, 2009

WSJ — Federal Reserve Charts — Heritage Foundation Center For Data Analysis – DOL Stats

obamaeconomicsTalk about Lipstick on a Pig!  One would expect more out of the WSJ!  I should start reading the Huffington Post for economic news.  Blowing smoke is more like it… It is becoming more apparent each day the American media is losing all credibility.  Foreign sourced newspapers are becoming much better reading material to find out what is really going on in our own country.

I wonder what the below WSJ article title would have been if President Bush was still in office?  Look at the charts below and form your own opinion.

Update:  Added Below Docstoc Link 7:27 pm 8/1/09



I KNEW SOMETHING WAS UP WITH THE #s — LuckyBogey was not born yesterday!

The government plans big revisions to historical economic data… See Page 5 of above DOC/BEA.


Pace of GDP Contraction Slowed in Second Quarter


July 31, 2009

WASHINGTON — The U.S. recession appears to be near an end, government figures suggest, even as revisions to prior years’ data show that the downturn has been even more severe than previously thought.

Gross domestic product fell at a seasonally adjusted 1.0% annual rate April through June, the U.S. Commerce Department said Friday in the first estimate of second-quarter GDP. That was better than the 1.5% decline Wall Street economists had expected.

GDP fell 6.4% in the first quarter and 5.4% in the fourth quarter, at the pit of the recession. The third quarter of last year was revised to show a much sharper drop than first estimated. The numbers were revised as part of the government benchmark revision to data going back several decades.

GDP has now fallen four-consecutive quarters, the first time that has happened since quarterly records began being kept in 1947.

But with the pace of decline waning, “the worst recession since the Great Depression is likely coming to an end,” said Sung Won Sohn, a professor at California State University.

The main engine of the economy, consumer spending, surprisingly fell last quarter. Job fears and stagnant wages appear to be keeping wallets tight, and are seen muting the economy’s expected recovery in the second half of 2009.

What limited the rate of contraction were much smaller declines in exports and business spending. Also, inventory liquidation took less of a bite out of the economy; company replenishing of goods should boost output going forward.

The recession began in December 2007, according to the semi-official arbiter, the National Bureau of Economic Research in Cambridge, Mass. The nonprofit research group uses a broader definition of a recession than do many economists, including industrial production and employment. Another popular definition of a recession is two consecutive quarters of a shrinking GDP.

Economists expect a rise in GDP starting this quarter, suggesting the recession is at or near its end.

“We’re going to expect to see growth in the economy in the second part of this year,” Federal Reserve Chairman Ben Bernanke said in a town-hall meeting Sunday that was sponsored by the Public Broadcasting Service.

A couple of reports on the economy this week bolstered that case. New-home sales rose a fourth time in six months during June as buyers jumped to take advantage of fallen prices for property. Durable-goods orders fell for the month, but orders outside of transportation rose and a gauge of capital spending by businesses climbed.

Friday’s report showed inventory liquidation subtracted less from GDP in the second quarter than it did in the first quarter, 0.83 of a percentage point versus 2.36 percentage points. Economists think companies — including auto makers amid signs that the government’s cash-for-clunkers program is an early success — will have to restock soon as consumption stabilizes.

“The fact that inventories were still falling in the second quarter raises the odds that they [will] add a huge amount to GDP’s plus-column in the third quarter,” said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi.

Real final sales of domestic product, which is GDP less the change in private inventories, decreased at only a 0.2% annual rate last quarter, a big improvement from the first quarter’s 4.1% slump.

Business spending dropped by 8.9%, after plunging 39.2% in the first quarter. Investment in structures fell 8.9%. Equipment and software spending slid by 9.0%.

About 70% of GDP is made up of consumer spending, which fell 1.2% from April through June, after increasing 0.6% in the first quarter.

Rising unemployment and more precautionary saving will likely keep a lid on spending — and the economy — in the second half of this year. Mr. Bernanke said during Sunday’s town-hall meeting that he expects GDP to rise only 1%, at an annual rate, in the second half, a rate that is insufficient to prevent further increases in unemployment.

Trade acted as a boost to GDP in the second quarter, adding 1.38 percentage points. U.S. exports fell by 7.0% and imports decreased 15.1%.

Residential fixed investment, which includes spending on housing, plunged by 29.3%, after dropping 38.2% in the first quarter — demonstrating that the slump in housing continued to take a toll on the overall economy.

Spending by the federal government in the second quarter rose 10.9%, after declining 4.3% in the first quarter.

Inflation remained under wraps. The government’s price index for personal consumption expenditures, or PCE, climbed 1.3% after falling 1.5% in the first quarter. The PCE price gauge excluding food and energy rose 2.0%, after increasing 1.1% in the first quarter.

In a separate report, the Labor Department said compensation costs advanced just 0.4% on a quarterly basis between April and June. The 1.8% 12-month rise was the smallest on record, a sign that rising unemployment is taking a toll on paychecks.


Unemployment - Selected


In June, the percentages of the unemployed who had been out of work for less than 5 weeks and for 5–14 weeks fell;  the percentages for 15–26 weeks and for 27 weeks and over rose. The mean duration of unemployment rose to 24.5 weeks and the median duration rose to 17.9 weeks.

Corporate Profits


In the first quarter of 2009, according to revised estimates, corporate profits before tax rose $157.2 billion (annual rate) and profits after tax rose $123.0 billion.

Bus Sales - Inventories -- Mft and Trade


In April, according to current estimates, manufacturing and trade sales fell 0.4 percent and inventories fell $16.6 billion. According to advance estimates, retail sales rose 0.5 percent in May. Retail and food services sales also rose 0.5 percent.

Production - Business Activity

Industrial production and capacity utilization fell in May.




Chart 1 shows the seasonally adjusted change month over month in the Consumer Price Index (CPI-U), and the Producer Price Index (PPI). CPI-U measures how much in constant dollars urban consumers are paying for the goods and services they buy. Investment items, life insurance, and collectibles are excluded from CPI-U. Chart 1 also tracks seasonally adjusted changes in the Producer Price Index (PPI). PPI measures the average amount in constant dollars producers of goods and services in the U.S. are receiving for their output. Chart 1 shows PPI for all finished goods.


Corporate bonds are sold by corporations to provide them with operating cash that they later pay back with interest to the buyers of the bonds. Moody’s Investors Service is an independent company that issues ratings for corporate issuers of bonds. The highest rated corporations receive an Aaa rating. An Aaa rating means that Moody’s rates a company safer than any other rating it gives to pay investors in its corporate bonds back. The slightly lower Moody’s credit rating of baa means that Moody’s rates a company receiving a baa rating as more likely to default on their corporate bonds sold to investors. A company defaults on its corporate bonds if it goes out of business, and the remaining assets when sold do not raise enough money to pay the corporate bond holders back. An Aaa company can pay less interest on its bonds because there is less perceived risk of it defaulting on the loan. Chart 2 shows the percentage point spread between Aaa rated corporate bonds and baa rated corporate bonds. When there is a wide spread, it generally means that many corporations are thought of by investors as being in danger of going out of business.


Chart 3 tracks the number of initial weekly jobless claims. This is the number, in a week, of first-time applications for unemployment benefits in the United States. Initial weekly jobless claims is a lagging indicator, which means it starts to rise after a recession is already underway, and does not recede until the economy has already started to recover.


This chart shows the monthly percentage of the labor force that has been unemployed for 15 weeks or longer. Short-term unemployment frequently occurs in strongly growing economies, but growth in the long-term rate indicates economic contraction.




Industrial production decreased 0.4 percent in June after having fallen 1.2 percent in May. For the second quarter as a whole, output fell at an annual rate of 11.6 percent, a more moderate contraction than in the first quarter, when output fell 19.1 percent. Manufacturing output moved down 0.6 percent in June, with declines at both durable and nondurable goods producers. Outside of manufacturing, the output of mines fell 0.5 percent in June, and the output of utilities increased 0.8 percent. The rate of capacity utilization for total industry declined in June to 68.0 percent, a level 12.9 percentage points below its average for 1972-2008. Prior to the current recession, the low over the history of this series, which begins in 1967, was 70.9 percent in December 1982.
Industrial Production

Market Groups

The production of consumer goods declined 0.3 percent in June. The output of consumer durables fell 1.0 percent; this index decreased 6.8 percent (annual rate) in the second quarter, a substantially smaller decline than the decrease of 40.7 percent in the first quarter. Within consumer durables, the indexes for automotive products; appliances, furniture, and carpeting; and home electronics all fell in June; the index for miscellaneous durable goods posted a small increase. The output of consumer nondurable goods edged down 0.1 percent: Higher production of energy products was more than offset by widespread declines in the output of other products. For the second quarter as a whole, the output of non-energy nondurable goods decreased 3.4 percent (annual rate) after having fallen 5.6 percent (annual rate) in the first quarter.

The output of business equipment fell 0.8 percent in June. The production of industrial and other equipment and of information processing equipment declined, while the output of transit equipment was unchanged. In the second quarter, industrial and other equipment and information processing equipment both declined at rates similar to those posted in the first quarter. Transit equipment fell in the second quarter after having increased substantially in the first quarter, when the output of aircraft rebounded from a strike. The output of defense and space equipment increased 0.8 percent in June, and the index rose at an annual rate of 2.0 percent for the second quarter as a whole.

The production of construction supplies edged down 0.2 percent in June; this index fell 15.3 percent (annual rate) in the second quarter after having dropped 34.0 percent (annual rate) in the first quarter. The output of business supplies rose 0.1 percent in June but declined 11.3 percent (annual rate) for the second quarter as a whole. The output of materials fell 0.6 percent in June, and each of its major components–durable, nondurable, and energy materials–registered declines. Among durable materials, output dropped for consumer parts and equipment parts, while among nondurables, the indexes for both paper materials and chemical materials decreased.

Capacity Utilization

Industry Groups

Production in manufacturing fell 0.6 percent in June after having dropped 1.1 percent in May. The factory operating rate declined further in June to a historical low of 64.6 percent; prior to this recession, the low for this series, which begins in 1948, was 68.6 percent in December 1982. For the second quarter as a whole, manufacturing output fell at an annual rate of 10.5 percent, a decline that was about one-half the rate of decrease recorded in the first quarter. Production of durable goods fell 0.7 percent in June: The indexes for machinery; computer and electronic products; electrical equipment, appliances, and components; and motor vehicles and parts all posted decreases of more than 1 percent. Output increased for several industries, most notably for wood products, primary metals, and miscellaneous manufacturing. The gain of 1.7 percent for primary metals follows 10 consecutive monthly decreases for the industry. The output of nondurable goods fell 0.4 percent: Declines in the indexes for food, beverage, and tobacco products; apparel and leather; paper; and chemicals were only partly offset by increases in the indexes for printing and support, petroleum and coal products, and plastics and rubber products.

The index for other manufacturing industries (non-NAICS), which consists of publishing and logging, decreased 0.5 percent in June.

The output of electric and gas utilities increased 0.8 percent in June, and the operating rate for utilities moved up 0.5 percentage point, to 79.7 percent. Mining production fell 0.5 percent, and capacity utilization in this industry edged down to 81.0 percent, a rate 6.6 percentage points below its 1972-2008 average.

Capacity utilization rates in June at industries grouped by stage of process were as follows: At the crude stage, utilization fell 0.6 percentage point, to 77.5 percent, a rate 9.1 percentage points below its 1972-2008 average; at the primary and semifinished stages, utilization increased 0.1 percentage point, to 65.8 percent, a rate 16.2 percentage points below its long-run average; and at the finished stage, utilization decreased 0.4 percentage point, to 66.6 percent, a rate 11.1 percentage points below its long-run average.

Note. The statistics in this release cover output, capacity, and capacity utilization in the U.S. industrial sector, which is defined by the Federal Reserve to comprise manufacturing, mining, and electric and gas utilities. Mining is defined as all industries in sector 21 of the North American Industry Classification System (NAICS); electric and gas utilities are those in NAICS sectors 2211 and 2212. Manufacturing comprises NAICS manufacturing industries (sector 31-33) plus the logging industry and the newspaper, periodical, book, and directory publishing industries. Logging and publishing are classified elsewhere in NAICS (under agriculture and information respectively), but historically they were considered to be manufacturing and were included in the industrial sector under the Standard Industrial Classification (SIC) system. In December 2002 the Federal Reserve reclassified all its industrial output data from the SIC system to NAICS.

Industrial Production - High Tech

For release at 4:30 p.m. Eastern Time; July 30, 2009

The Board’s H.3 statistical release, “Aggregate Reserves of Depository Institutions and the Monetary Base,” has been modified to incorporate a loan restructuring adjustment associated with the credit extended to American International Group, Inc. (AIG).

The credit extended to AIG is listed in table 1a and has been renamed “Credit extended to American International Group, Inc., net.” Footnote 3, which is related to the credit extension, clarifies that the loan is reported net of the unamortized commitment fees and is now reported net of the adjustment for the loan restructuring.

Table 1
Aggregate Reserves of Depository Institutions and the Monetary Base
Adjusted for changes in reserve requirements1
Seasonally adjusted unless noted otherwise
Millions of dollars
Date Reserves of depository institutions Monetary base5 Total borrowings  from the Federal Reserve, NSA
Total2 Nonborrowed3 Required Excess, NSA4
Jun 2008 44366 -126913 42098 2267 832449 171278
Jul 2008 44293 -121370 42376 1917 838367 165664
Aug 2008 45458 -122620 43486 1972 842981 168078
Sep 2008 102767 -187338 42713 60054 905164 290105
Oct 2008 315498 -332821 47594 267904 1130295 648319
Nov 2008 609939 -88846 50901 559039 1433496 698786
Dec 2008 821034 167468 53635 767398 1651270 653565
Jan 2009 858406 294909 60172 798233 1703114 563496
Feb 2009 700972 118475 57485 643486 1557491 582497
Mar 2009 779951 167840 55319 724632 1643140 612111
Apr 2009 881553 323359 57176 824378 1749791 558194
May 2009 901292 375844 57191 844100 1770195 525448
Jun 2009 809020 370298 57641 751379 1680625 438722
Two weeks ending7
Jun 3, 2009 896119 398436 57623 838496 1765227 497684
Jun 17, 2009 848622 390382 56819 791802 1720110 458240
Jul 1, 2009 746273 342176 58531 687742 1618580 404097
Jul 15, 2009 805773 417944 61912 743861 1673835 387829
Jul 29, 2009 p 792177 444960 63334 728843 1663951 347217

1. Reserves and monetary base figures incorporate adjustments for discontinuities, or “breaks,” associated with regulatory changes in reserve requirements. (For more information, refer to table 3.)

2. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break-adjusted required reserves plus unadjusted excess reserves. (Also, refer to footnote 2 in table 2 and footnote 2 in table 3.)

3. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, break-adjusted total reserves less unadjusted total borrowings from the Federal Reserve.

4. Excess reserves NSA equals unadjusted total reserves (table 2, column 1) less unadjusted required reserves (table 2, column 3).

5. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally adjusted, break-adjusted total reserves plus (2) the seasonally adjusted currency component of the money stock plus (3), for all quarterly reporters on the “Report of Transaction Accounts, Other Deposits and Vault Cash” and for all those weekly reporters whose vault cash exceeds their required reserves, the seasonally adjusted, break-adjusted difference between current vault cash and the amount applied to satisfy current reserve requirements. (Also, refer to footnote 3 in table 2 and footnote 4 in table 3.)

6. Prorated averages of biweekly averages.

7. Averages of daily figures.

p preliminary

Table 3
Aggregate Reserves of Depository Institutions and the Monetary Base
Adjusted for changes in reserve requirements1
Not seasonally adjusted
Millions of dollars
Date Reserves of depository institutions Monetary base1
Total2 Nonborrowed Required3
Jun 2008 44903 -126375 42636 831994
Jul 2008 45037 -120627 43120 839507
Aug 2008 44940 -123138 42968 840331
Sep 2008 102491 -187614 42437 900639
Oct 2008 314816 -333503 46912 1125955
Nov 2008 609420 -89366 50381 1435235
Dec 2008 821219 167654 53821 1659319
Jan 2009 860643 297147 62409 1707648
Feb 2009 701247 118750 57760 1557795
Mar 2009 778115 166004 53483 1642476
Apr 2009 881812 323618 57434 1748345
May 2009 902913 377465 58813 1770584
Jun 2009 809829 371107 58451 1679800
Two weeks ending6
Jun 17, 2009 846836 388596 55034 1718519
Jul 1, 2009 749426 345329 61684 1617892
Jul 15, 2009 803119 415291 59258 1677198
Jul 29, 2009 p 797076 449859 68233 1665954

Note: Current and historical H.3 data are available each week on the Federal Reserve Board’s website ( Monthly data are available back to January 1959, and weekly data are available back to January 1975 for most series. For information about individual copies or subscriptions, contact Publications Services at the Federal Reserve Board (phone 202-452-3245, fax 202-728-5886). For paid electronic access to current and historical data, call STAT-USA at 1-800-782-8872 or 202-482-1986.

1. Figures reflect adjustments for discontinuities, or “breaks,” associated with regulatory changes in reserve requirements.

2. Break-adjusted total reserves equal break-adjusted required reserves (table 3, column 3) plus excess reserves NSA (table 1, column 4).

3. To adjust required reserves for discontinuities due to regulatory changes in reserve requirements, a multiplicative procedure is used to estimate what required reserves would have been in past periods had current reserve requirements been in effect. Break-adjusted required reserves are equal to break-adjusted required reserves against transactions deposits.

4. The break-adjusted monetary base equals (1) break-adjusted total reserves plus (2) the (unadjusted) currency component of the money stock plus (3), for all quarterly reporters on the “Report of Transaction Accounts, Other Deposits and Vault Cash” and for all those weekly reporters whose vault cash exceeds their required reserves, the break-adjusted difference between current vault cash and the amount applied to satisfy current reserve requirements.

5. Prorated averages of biweekly averages.

6. Averages of daily figures.

p preliminary
Release dates | Historical data | About
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Statistical releases

Mfg Shipments - Inv and Orders

In May, manufacturers’ shipments, inventories, and unfilled orders fell; while new orders rose.

Statistics & Historical Data

Federal Reserve statistical releases and historical data have been divided into two pages: Statistics and Historical Data and Surveys and Reports. This page now also includes links to data previously published as part of the discontinued Statistical Supplement.

<!–Bank Asset Quality

Bank Asset Quality


Bank Assets and Liabilities

Business Finance

Exchange Rates and International Data

Flow of Funds Accounts

Household Finance

Industrial Activity

Interest Rates

Money Stock and Reserve Balances



–> <!–



Latest Numbers

June 2009
June 2009
June 2009
June 2009
June 2009
2nd Qtr 2009
1st Qtr 2009
June 2009
July 25, 2009
July 25, 2009
(p) preliminary; (c) corrected

Related Links

Bloomberg:  Recession Worse Than Prior Estimates, Revisions Show

CNBC:  Economy Shrinks Modestly, But Consumption Falls

CNBC:  But Can You Trust These Numbers?

LA Times:  California’s default rate soars to 9.5%

IBD:  Barack Obama’s Stealth Socialism

Docstoc Files Uploaded: (View Docs Without Downloading)

Economic Indicators Jun 2009 – As of July 2

CBO Projections



Updates:  Added Docstoc Link to Dept of Commerce/BEA data.



Federal Cookie Policy — Computer World (Cookie Privacy Concerns) — Computer World (P2P Security Breach) — Pittsburgh Tribute Review (Tiversa)



Archive for the ‘Cookie Policy’ Category

Federal Websites: Cookie Policy

Friday, July 24th, 2009

Posted by Michael Fitzpatrick and Vivek Kundra

During the Open Government Initiative outreach, Federal employees and the public have asked us questions about the federal government’s policy on cookies. As part of our effort to create a more open and innovative government, we’re working on a new cookie policy that we’ll want your input on. But before we get into that, let’s provide some context.

In June 2000, the OMB Director issued a memorandum (M-00-13, later updated by M-03-22)) that prohibited Federal agencies from using certain web-tracking technologies, primarily persistent cookies, due to privacy concerns, unless the agency head approved of these technologies because of a compelling need. That was more than nine years ago. In the ensuing time, cookies have become a staple of most commercial websites with widespread public acceptance of their use. For example, every time you use a “shopping cart” at an online store, or have a website remember customized settings and preferences, cookies are being used.

This past June, we blogged about ways to enhance citizen participation in government through basic policy changes, including revisions to the current policy on web-tracking technologies. We heard a lot of informal comments on that blog, so we decided to pursue the more formal comment route through the Federal Register. The goal of this review is to develop a new policy that allows the Federal Government to continue to protect the privacy of people who visit Federal websites while, at the same time, making these websites more user-friendly, providing better customer service, and allowing for enhanced web analytics.

Under the framework we’re looking at, any Federal agency using web tracking technologies on a Federal Government website would be subject to basic principles governing the use of such technologies and would be required to:

  • Adhere to all existing laws and policies (including those designed to protect privacy) governing the collection, use, retention, and safeguarding of any data gathered from users;
  • Post clear and conspicuous notice on the website of the use of web tracking technologies;
  • Provide a clear and understandable means for a user to opt-out of being tracked; and
  • Not discriminate against those users who decide to opt-out, in terms of their access to information.

OMB is considering a three-tiered approach to the use of web tracking technologies on Federal Government websites:

  • 1st – Single-session technologies, which track users over a single session and do not maintain tracking data over multiple sessions or visits;
  • 2nd – Multi-session technologies for use in analytics, which track users over multiple sessions purely to gather data to analyze web traffic statistics; and
  • 3rd – Multi-session technologies for use as persistent identifiers, which track users over multiple visits with the intent of remembering data, settings, or preferences unique to that visitor for purposes beyond what is needed for web analytics.

We expect that there would be more stringent restrictions or review of the technologies within the tiers that might have higher privacy risks.

To share your comments on this approach, you can post a comment here, submit comments directly in response to the Federal Register notice mentioned above, or email them to:  Comments submitted by August 10, 2009 in one of these three ways, will be taken into consideration though we strongly encourage you to comment here so that others can respond. Comments submitted via email will also be republished here. We’re hoping to hear your thoughts on:

  • The basic principles governing the use of such technologies;
  • The appropriate tiers;
  • The acceptable use and restrictions of each tier;
  • The degree of clear and conspicuous notice on each website that web tracking technologies are being used;
  • The applicability and scope of such a framework on Federal agency use of third-party applications or websites;
  • The choice between an opt-in versus opt-out approach for users;
  • Unintended or non-obvious privacy implications; and
  • Any other general comments with respect to this issue.

We appreciate the feedback that we’ve received already, and we look forward to hearing more.

Michael Fitzpatrick is Associate Administrator, OMB Office of Information and Regulatory Affairs
Vivek Kundra is Federal CIO



Use of tracking cookies on government sites sparks privacy concern

July 28, 2009, 06:22 PM — Computerworld —

Privacy advocates are raising questions about a proposal to revamp the use of tracking cookies on federal government Web sites.

Under the proposal, U.S. government agencies would be allowed to use single-session and multi-session cookies, including persistent cookies, to track users — as long as security and privacy standards governing the collection and use of tracking information are met. The agencies would have to post clear notice of data collection and allow users to opt-out.

The idea is to make government Web sites more user-friendly and to enable better customer service and Web analytics, according to federal CIO Vivek Kundra and Michael Fitzpatrick, the associate administrator at the Office of Information and Regulatory Affairs. They wrote about the proposed changes in a blog post Friday.

Agencies and the public have until Aug. 10 to comment on the proposal, which came from the Office of Management and Budget.

If the plan is adopted, it would mark a departure from a policy first put in place in 2000 and updated in 2003 that prohibits government sites from using persistent cookies “or any other means” such as Web beacons to track visitor activity, unless agency heads authorize thier use. When tracking cookies are used, agencies must conspicuously post the reasons for collecting information, spell out the sort of data collected and detail privacy safeguards.

Privacy advocates have for some time maintained that such restrictions protect site visitors from being tracked and profiled. They have argued that users should reasonably expect privacy when visiting a government site and that any attempt to dilute the protections is ill-advised. Those concerns have grown in recent months, with many worried that the Obama Administration’s espousal of Web 2.0 technologies and social networking tools will affect long-held privacy protections.

Soon after Obama took office, for instance, privacy advocates were up in arms over a White House policy change that permitted the use of tracking cookies in YouTube videos embedded on the Web site.

“The Obama Administration must tread very carefully here and think about our civil liberties in the digital era,” said Jeffery Chester, executive director of the Center for Digital Democracy (CDD), a privacy rights advocacy group. “Given the unique data collection and targeting power of online media, the government should be limited in the information it can collect on us.”

As administrations change, policies regarding the use of data collected by Web analytics tools could also change, he said. “[The] government could have an arsenal of profiling data that could be used to influence voters and the public.” While there are benefits from using cookies, the blog post by Fitzpatrick and Kundra “glossed over” concerns that have been previously expressed by many including lawmakers.

Cindy Cohn, legal director of the Washington-based Electronic Frontier Foundation said that the government needs to clearly articulate what it wants to do with any data it gets. “The devil is going to be in the details,” she said. While session cookies can yield information that is useful in delivering a better user experience, the use of persistent cookies on government Web sites should be studied carefully.

“We would want to see a pretty serious case effort … showing us why the information would be useful,” what officials would do with the data and what kind of checks would be there to ensure compliance, Cohn said.

Just because commercial enterprises have been using persistent cookies doesn’t automatically mean that government agencies should be allowed to use them, she said. “The government doesn’t need to do the same sort of analytics that commercial companies do. The government doesn’t have the same interests and shouldn’t have the same interests.”



Details on presidential motorcades, safe house for First Family, leak via P2P

Lawmakers eye bill to ban P2P use on government, contractor networks

By Jaikumar Vijayan

July 29, 2009 02:53 PM ET

Computerworld – Details about a U.S. Secret Service safe house for the First Family — to be used in a national emergency — were found to have leaked out on a LimeWire file-sharing network recently, members of the House Oversight and Government Reform Committee were told this morning.

Also unearthed on LimeWire networks in recent days were presidential motorcade routes and a sensitive but unclassified document listing details on every nuclear facility in the country, Robert Boback, CEO of Tiversa Inc. told committee members.

The disclosures prompted the chairman of the committee, Rep. Edolphus Towns, (D-N.Y.), to call for a ban on the use of peer-to-peer (P2P) software on all government and contractor computers and networks. “For our sensitive government information, the risk is simply too great to ignore,” said Towns who plans to introduce a bill to enforce just such a P2P ban.

Tiversa is a Cranberry Township, Pa.-based provider of P2P monitoring services. In the past, it has served up dramatic examples of highly sensitive information found on file-sharing networks. In January for instance, the company disclosed how it had discovered sensitive details about the President’s helicopter, Marine One, on an Iranian computer after a document leaked out over a P2P network.

Today’s hearing continued in that vein, with Tiversa providing new sensational examples of leaked information. Boback showed off a document, apparently from a senior executive of a Fortune 500 company, listing every acquisition the company planned to make — along with how much it was willing to pay. Also included in the document were still-private details about the company’s financial performance. Boback also showed numerous documents listing Social Security numbers and other personal details on 24,000 patients at a health care system, as well as FBI files, including surveillance photos of an alleged Mafia hit man that were leaked while he was on trial. He demonstrated to members of the committee how pedophile predators troll file-sharing networks looking for images and data.

Speaking with Computerworld before the hearing, Boback said that all of the information was readily available on LimeWire’s file-sharing network after apparently being leaked. The data on the nuclear sites was found on computers associated with four IP addresses in France, though it is not immediately clear where the data came from. The files containing information about the president and his family had Barack Obama’s seal on it and a July date.

Though the information was not classified, it was sensitive enough that under normal circumstances it would not have been available even via a Freedom of Information Act request, he said.

This is the third time that the House Oversight committee has held a hearing on the topic of data leaks on P2P networks. The last hearing was two years ago and featured similar revelations from Tiversa and others.

The problem is well understood, but it remains difficult to stop. The leaks typically occur when a user installs a P2P client such as Kazaa, LimeWire, BearShare, Morpheus or FastTrack on a computer for the purposes of sharing music and other files with others on the network. In many cases, users inadvertently expose not just the files they want to share, but also every other file on their computers.

Boback and others have warned that leaks have resulted in file-sharing networks becoming vast treasure troves of information for identity thieves, corporate spies and even foreign intelligence agencies. That has prompted calls for lawmakers to force software vendors to implement stricter security controls in their applications.

The only vendor at today’s hearing was Mark Gorton, chairman of Lime Group LLC, the umbrella organization that runs Lime Wire LLC, developer of LimeWire, which is the most-used P2P client available. Gorton testified two years ago and promised at that time to implement changes in the company’s products to make it harder for users to inadvertently share files.

Today he insisted that the company had implemented many of those changes and that the latest version of LimeWire makes it much harder for data to be inadvertently leaked. Those claims were largely rejected by members of the committee, who blasted Gorton for failing to live up to his promises.

Pointing to the examples offered by Boback, Towns said that the file-sharing industry’s promises to regulate itself had clearly failed. “Specific examples of recent LimeWire leaks range from appalling to shocking,” Towns said. “As far as I am concerned, the days of self-regulation should be over for the file-sharing industry.”

Other members want the issue investigated by the Federal Trade Commission, the Securities and Exchange Commission and law enforcement authorities. They said that the continued failure by companies such as LimeWire to take more proactive steps to stop inadvertent file-sharing is tantamount to enabling illegal activity resulting from the data leaks.

Towns plans to meet with the chairman of the FTC to determine whether the failure to stop inadvertent file-sharing constitutes an unfair trade practice by P2P companies.



Detection of security leak spotlights firm

By Mike Cronin


Wednesday, March 4, 2009

Its discovery that someone in Iran shared online the engineering and avionics data about one of the helicopters in President Barack Obama’s fleet has thrust a Cranberry Internet security company into the public eye this week.

Tiversa Inc. had become well-known among national security officials as early as 2004 — after a meeting among company co-founders Robert Boback and Sam Hopkins and Sen. Orrin Hatch, R-Utah, then chairman of the Senate Judiciary Committee.

The Pittsburgh-area natives told Hatch that Tiversa found Arabic-language training videos that al-Qaida operatives were sharing using peer-to-peer networking over the Internet — and that Tiversa’s technology also found the individuals who were searching for those files, Boback said.

“Senator Hatch kept us overnight in Washington, D.C., and set up meetings for us with the CIA in Langley (Va.) the next day,” said Boback, chief executive officer of Tiversa.

“He told us he said to George Tenet, who headed the CIA back then: ‘George, I don’t know if the CIA has this capability, but if they don’t, they better.'”

Today, Tiversa employs nearly 40 employees, all of whom make at least $45,000 — and the company provides Internet security monitoring services for companies around the globe, Boback said.

“I’m 99.9 percent sure that Tiversa is the only game in town. They’re pretty unique in what they do, and how they do it,” said Larry Ponemon, chairman and founder of Michigan-based Ponemon Institute, an independent research company that focuses on information security and data protection.

Ponemon now sits on Tiversa’s advisory board after being so impressed with the company’s technology, he asked to join.

Media coverage of Tiversa grew after the company alerted the federal government Feb. 25 that someone in Iran had shared a file on potentially sensitive data about a helicopter in President Obama’s fleet, said Keith Tagliaferri, director of operations for Tiversa.

An executive for a Bethesda, Md., defense contractor inadvertently released the file last fall while using peer-to-peer file-sharing software, Tagliaferri said.

Computer users most often employ that type of software to share music or video files, said Dave Andersen, a Carnegie Mellon University computer science professor. LimeWire and BitTorrent are examples of such software, he noted.

The “outside-in” approach that Tiversa uses enables the company to identify information that already has leaked, Andersen said.

“It’s a huge problem in industries from health care to finance,” Andersen said.

Leaks happen for many reasons. Sometimes employees misconfigure files, he said. In other instances, people who work from home using personal computers might unintentionally make their entire hard drive available to those on file-sharing networks, Andersen said.

The possibility of those kinds of leaks is why health-insurance company Highmark Inc., Downtown, has purchased Tiversa’s services.

“Not a lot of companies are aware of that exposure,” said Kimberly Gray, Highmark’s chief privacy officer, in Camp Hill, Cumberland County. “We want to protect our employers, the patients in our network and the doctors in our network. We’re fortunate that Tiversa is located in the Pittsburgh marketplace. They understood this arena far better than anyone else we’d spoken with.”


  • Canada’s Privacy Commissioner Criticizes Facebook

    PC Magazine – 07.17.2009

    The popular social networking site Facebook is not doing enough to protect the personal information it gets from subscribers, and it gives users confusing and incomplete information about privacy matters, Canada’s privacy commissioner said on Thursday.

  • Tech Giants Again Defend Data Collection Policies

    PC Magazine – 06.19.2009

    Can you anonymously surf the Web and peruse social networks without consequence, or are today’s top tech companies compiling a FBI-like file on your behavior?

  • Google Changing Street View to Appease EU

    PC Magazine – 06.12.2009

    At the request of a European data protection group, Google has made a few changes to the international version of its Street View feature.

  • New P2P Bills Focus on Security, Not Copyright

    PC Magazine – 05.05.2009

    In the wake of news reports that classified and confidential information is popping up on file-sharing networks worldwide, Congress on Tuesday tackled two bills intended to protect users from unlawful use of their information via data breaches or P2P networks.

  • FTC Says Internet Firms Near ‘Last Chance’

    PC Magazine – 04.28.2009

    Companies that track consumer behavior on the Web for targeted advertising without proper consent are near their “last chance” to self-regulate, the head of the U.S. Federal Trade Commission said on Monday.

  • House Ponders Bill to Prevent ISP Snooping

    PC Magazine – 04.23.2009

    House members went back to the drawing board on Internet consumer protection Thursday; once again tackling the subject of how much personal data Web companies should collect about you, and whether or not Congress needs to legislate a solution.

  • House Members Probe P2P Security Risks

    PC Magazine – 04.22.2009

    Several members of Congress have requested for a renewed examination of the privacy and security risks associated with P2P networks.

  • Google Gives Advice on Cloud Computing

    PC Magazine – 03.20.2009

    Google has commissioned a report that unsurprisingly touts the benefits of cloud computing, and offers recommendations for policy makers looking at the technology.

  • FTC Asked to Investigate Google’s Privacy Breaches

    ExtremeTech – 03.18.2009

    In a letter to the Federal Trade Commission, the Electronic Privacy Information Center (EPIC) claimed Google doesn’t secure its cloud-computing services enough, and called on the FTC to investigate.

  • Can You Afford to Run Free Antivirus Software?

    PC Magazine – 07.22.2009

    Recently a top Symantec executive made a bit of a stink by arguing that it’s dangerous to rely on free antivirus software. While it may be a nakedly self-interested one, he does have a point.

  • Report: Social Networks Can Lead to Cybercrime

    PC Magazine – 07.22.2009

    The popularity of Facebook and other popular social networking sites has given hackers new ways to steal both money and information, the security company Sophos said in a report released on Wednesday.

  • Microsoft Sues Alleged Seattle ‘Spimmers’

    PC Magazine – 07.20.2009

    Microsoft has filed a civil lawsuit in King County Superior Court in Seattle, alleging that Funmobile Ltd. has conducted a spamming campaign of malicious links and other content against Windows Live Messenger users.

  • Glitch May Trip Windows Security Center Warning

    PC Magazine – 07.17.2009

    Has your Windows Security Center tray icon turned red lately? It might be that your anti-malware software hasn’t updated its Windows interfaces.

  • How We Test Anti-Malware

    PC Magazine – 07.16.2009

  • How We Test Antispam

    PC Magazine – 07.16.2009

  • Panda Internet Security 2010

    PC Magazine – 07.15.2009

    Panda Internet Security 2010 offers reduced performance impact and impressive malware removal accuracy–but not real-time anti-malware protection.

  • Microsoft Lists Targets of ActiveX Vulnerability

    PC Magazine – 07.13.2009

    Microsoft has released a security advisory disclosing a vulnerability in an old ActiveX control from Microsoft Office. Here are the products it affects.

  • Norton Internet Security 2010 Looks Good So Far

    PC Magazine – 07.09.2009

    I spent a day or so putting Norton Internet Security 2010 beta through its paces, and I’m very impressed.

Related Previous Links

New Cyber Attacks Against American Government and Business Networks

NIST: Developing ADP Standards/Guidelines For Federal Computer Systems

White House Cyberspace Policy Review Requires Full Implementation of HSPD-12

Privacy Concerns: Is Einstein Listening and Watching You?

Wrap-Up of Open Government Brainstorming: Transparency

Related Links

CW:  Cookie use in YouTube videos on prompts privacy concerns

ABC:  P-to-P Users Expose U.S. Government Secrets, July 2007

Michelle Malkin:  Bully boys: A brief history of White House thuggery

Updated Links:

Trail Blazers Blog (Dallas Morning News:  Cornyn to White House: Quit collecting health care info

Hot Air: Cornyn to Obama: Shut down Snitch Central


Ronald Reagan Socialized Medicine Quotes — The Hill Blog — NYT Economix  (Socialized Medicine) — WSJ (Critical Condition) — Ronald Reagan/Milton Friedman You Tube Videos


  • Freedom is never more than one generation away from extinction. We didn’t pass it on to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children what it was once like in the United States when men were free.
    • Address to the annual meeting of the Phoenix Chamber of Commerce, (1961-03-30).
    • Later variant : Freedom is a fragile thing and is never more than one generation away from extinction. It is not ours by inheritance; it must be fought for and defended constantly by each generation, for it comes only once to a people. Those who have known freedom and then lost it have never known it again.
      • California Gubernatorial Inauguration Speech (1967-01-05).


  • Back in 1927, an American socialist, Norman Thomas, six times candidate for President on the Socialist Party ticket, said that the American people would never vote for socialism but he said under the name of liberalism the American people would adopt every fragment of the socialist program.
    • Ronald Reagan Speaks Out Against Socialized Medicine (recording) (1961)


  • But at the moment I’d like to talk about another way because this threat is with us and at the moment is more imminent. One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It’s very easy to disguise a medical program as a humanitarian project. . . . Now, the American people, if you put it to them about socialized medicine and gave them a chance to choose, would unhesitatingly vote against it. We have an example of this. Under the Truman administration it was proposed that we have a compulsory health insurance program for all people in the United States, and, of course, the American people unhesitatingly rejected this.
    • Ronald Reagan Speaks Out Against Socialized Medicine (recording (1961)


  • The doctor begins to lose freedom. . . . First you decide that the doctor can have so many patients. They are equally divided among the various doctors by the government. But then doctors aren’t equally divided geographically. So a doctor decides he wants to practice in one town and the government has to say to him, you can’t live in that town. They already have enough doctors. You have to go someplace else. And from here it’s only a short step to dictating where he will go. . . . All of us can see what happens once you establish the precedent that the government can determine a man’s working place and his working methods, determine his employment. From here it’s a short step to all the rest of socialism, to determining his pay. And pretty soon your son won’t decide, when he’s in school, where he will go or what he will do for a living. He will wait for the government to tell him where he will go to work and what he will do.
    • Ronald Reagan Speaks Out Against Socialized Medicine (recording (1961)


  • Government is like a baby. An alimentary canal with a big appetite at one end and no responsibility at the other.
    • Joke during his 1965 campaign for Governor of California, as quoted in The New York Times Magazine (14 November 1965), p. 174
    • Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.
      • As quoted in The Reagan Wit (1981) by Bill Adler, p. 30


  • Welfare’s purpose should be to eliminate, as far as possible, the need for its own existence.
    • Interview, Los Angeles Times (1970-01-07)


If it’s to be a bloodbath, let it be now.

Appeasement is not the answer…



Five things you need to know about the House Democrats’ health care bill (Rep. Cynthia Lummis)

July 29th, 2009

1. New Government Run Plan to “Compete” with Private Companies

* Doctor Payments Based on the Medicare Model. Plan would reimburse providers at Medicare payment rates for at least the first three years, with a 5% bonus payment. After that, reimbursement could be no more than Medicare rates. The Secretary of Health and Human Services could coerce doctors to participate in the program by tying participation to other government run health programs.

* Lawsuits. Bill exposes employers operating group health plans to state law remedies and private causes of action, but the government run plan can only be sued in federal court.

* Rationing. A new Health Care Commissioner would have unprecedented authority to determine what is “acceptable” health care coverage and set all the rules for what an health care coverage must include in addition to what treatments patients could receive and at what cost.

* The “Invisible” Government Run Plan. Requires private insurers to comply with new coverage and underwriting rules in order to offer insurance products both inside and outside of the new national and state insurance exchanges.


2. Costs Go Up for the Government and Everyone Else

* CBO Director Elmendorff said on July 16th that, “…the legislation significantly expands the federal responsibility for health care costs… The way I would put it is that the [cost] curve is being raised…”

* Bigger Deficits. CBO estimates that the bill will increase the deficit by $239 billion in the first ten years. Even this is misleading though, since the tax increases in the bill start immediately, but the new spending is delayed. Once the spending fully starts, the bill adds over $60 billion a year to the deficit.

* New Tax on Individuals of 2.5% if they don’t purchase “acceptable coverage.”

* Many Currently Insured Individuals Will Face More Expensive Insurance Premiums based on new rules for “acceptable” insurance coverage.

* Expands Medicaid eligibility to all individuals up to 133% of poverty and “low income” subsidies” can go to a family of four making more than $88,000.


3. Pay or “Play” Employer Mandate

* An 8 percent Payroll Tax on: Employers who can’t afford to offer health insurance to their employers; employers who do the right thing and offer health coverage to their employees but it’s deemed “insufficient” by the government; and employers who aren’t paying at least 72.5% of an employee’s premium (65% for family coverage).

* Fines of up to $500,000 on employers who make an honest mistake, thinking they had provided what the government deemed “sufficient” coverage.


4. If You Like What You Have, You Can’t Keep It

* 2 out of 3 Workers will Lose Coverage. Independent analysis by the Lewin Group shows that 2 out of every 3 people would lose their current coverage, including over 114 million people who receive health benefits through their employer or other current coverage.

* 11 million Seniors will Lose Medicare Advantage Plans

* More than 8 million Health Savings Accounts not deemed “acceptable coverage.”

* It will be Illegal to Renew your Current Health Insurance and you will be left only with plans approved by a new federal regulator—plans that can’t compete with a new government run plan.


5. Raises Taxes on Small Businesses through Surtax Increase

* Filers making $280,000 ($350,000 joint) will be hit with a 1% surtax, filers making $400,000 ($500,000) will be hit with a 1.5% surtax and filers making $800,000 ($1,000,000) will be hit with a 5.4% surtax. The Democrats imbedded an automatic tax increase in their bill by doubling the 1% and 1.5% small business tax in 2013 continuing their revenue grab from small businesses.

* Of taxpayers who file in the top brackets more than half of them are small business. The Democrat plan, according to a study by the Tax Foundation, would raise the top tax rate in 39 states to more than 50%.

* According the National Association of Manufactures, an industry hit hard by the economy, 68% of manufactures file as S-corporations with an average income of $570,000, well above the $350,000 base the Democrats have set for the surtax.




What Is ‘Socialized Medicine’?: A Taxonomy of Health Care Systems

Uwe E. Reinhardt is an economics professor at Princeton.

With another “national conversation” about health reform upon us — as it is every decade or so — we will hear a lot of derisive talk about the evils of “socialized medicine.”

The term is regularly confused with “social health insurance,” which is not at all the same concept. The chart below may be helpful in appreciating the distinction.


Socialized medicine refers to health system in which the government owns and operates both the financing of health care and its delivery. Cell A in the chart represents socialized medicine.

Social health insurance, on the other hand, refers to systems in which individuals transfer their financial risk of medical bills to a risk pool to which, as individuals, they contribute taxes or premiums based primarily on ability to pay, rather than on how healthy or sick they are.

Socialized medicine is one form of social insurance. More typically, however, social insurance is coupled on the health-care delivery side with a mixture of government-owned facilities (e.g., municipal hospitals), private nonprofit hospitals (roughly 90 percent of all American hospital beds) or private for-profit facilities (investor-owned hospitals, private medical practices, pharmacies and so on). It follows that one cannot simply treat social insurance as socialized medicine. In principle, one could have social insurance with 100 percent private for-profit delivery facilities.

Under private commercial insurance, individuals also transfer the financial risk of bills for health care to a risk pool, but the premium the individual contributes to the risk pool reflects that individual’s health status. These premiums are, as actuaries put it, “medically underwritten” and “actuarially fair.” The risk pools under private insurance can be operated by not-for-profit or for-profit insurers. And like social insurance, private insurance typically is coupled with a mixed private and public delivery system.

In the chart, cells A, B, C jointly represent single-payer social insurance — e.g., traditional Medicare. Cells D, E, F jointly represent multiple-payer social insurance — e.g., Medicaid Managed Care. Cells G to L jointly represent individually purchased private insurance with actuarially fair premiums. Finally, cells M, N and O represent the uninsured or the cost-sharing portion of insured persons.

In between these distinct systems falls employment-based health insurance.

Large employers typically self-insure and use private insurers only to procure health care on behalf of employees (e.g., negotiate fees with the providers of health care) and administer claims. Other employers do not self-insure and instead purchase so-called group health insurance policies for all their employees jointly, as if they were one large family. The premium for a group policy is “experience rated” over the covered group of employees, which means that they reflect the average actuarial cost of all of one company’s employees.

The individual employee’s own contribution toward his or her employment-based insurance, however, is divorced from the individual’s (or the attached family’s) health status. In this sense, then, employment-based insurance could be described as “private social insurance,” as distinct from “government-run social insurance.

Former Mayor Rudolph Giuliani of New York has exemplified the perennial confusion in this country over socialized medicine. In his ill-fated presidential bid, and subsequently as a supporter of Senator John McCain’s bid for the presidency, Mr. Giuliani routinely decried as socialized medicine (or “socialist”) any proposal presented by Democratic candidates, because typically the latter advocated tax-financed subsidies toward the purchase of health private insurance or expansions of public insurance programs. But technically none of them advocated socialized medicine.

Perhaps Mr. Giuliani was unaware that Americans all along the ideological spectrum reserve the purest form of socialized medicine — the V.A. health system — for the nation’s veterans. I find this cognitive dissonance amusing. Indeed, if socialized medicine is so evil, why didn’t Republicans privatize the V.A. health system when they controlled both the White House and the Congress during 2001-06?

Mr. Giuliani also seems to forget that, in 1996, he found social health insurance a perfect solution to the financial problems faced by former Mayor John V. Lindsay, who fell on financially hard times during the 1990s as a result of chronic illness.

In a fit of compassion, then Mayor Giuliani rushed to his friend’s assistance with — you guessed it — taxpayers’ money, rather than with a private sector solution. He did so by appointing Mr. Lindsay to two no-show city jobs that came with tax-financed municipal health insurance and a tax-financed pension.

It seems fair, then, to ask Mr. Giuliani why it was perfectly fine to bail out a financially distressed man who had been wealthy enough in his younger years to provide adequately for his old age, when proposals to extend the same kind of assistance to hard-working, uninsured members of lower-income families are decried by him as “socialism.”

One can only hope that our members of Congress and the typical American voter can make the right distinctions.



Critical Condition

A transcript of the weekend’s program on FOX News Channel.

Paul Gigot: Up next:

President Obama: We will pass reform that lowers cost, promotes choice, and provides coverage that every American can count on, and we will do it this year.

Gigot: President Obama’s health-care scramble amid falling poll numbers and Democrats in disarray. Will he get the bill he wants when he wants it? Plus, your stake in the overhaul. Can you really keep your current insurance plan, and will the middle class get stuck paying the bill? We’re breaking down the policy and the politics of health care on this special edition of “The Journal Editorial Report.”


Gigot: Welcome to “The Journal Editorial report.” I’m Paul Gigot.

Well, from a prime-time press conference to a town-hall meeting in Ohio, it was a full-court press by President Barack Obama this week to sell his health-care reform plan to an increasingly skeptical public. A new FOX News/Opinion Dynamics poll shows that nearly half of all Americans, 45%, think the quality of their family’s health care would be worse under the proposed reforms. Just 29% think it would be better. Are they right to be worried?

Former New York lieutenant governor Betsy McCaughey is a patient advocate and chairman of the Committee to Reduce Infection Deaths. She joins me now.

Good to have you back again.

McCaughey: Thank you.

Gigot: Now, you wrote this week that seniors could be the biggest losers under this health-care reform plan that’s emerging in Congress. How so?

McCaughey: Certainly seniors bear the brunt under this bill, the House bill, and under the companion Senate bill, produced largely by Sen. Kennedy’s staff, for several reasons. One is–first, they will pay for with it cuts to Medicare. The $1 trillion to $1.6 trillion price tag on these bills will be paid for by tax hikes. Everybody’s heard about those.

Gigot: Right.

McCaughey: But by at least $500 billion to $550 billion in cuts to Medicare.

Gigot: Estimated over 10 years.

McCaughey: That’s right, and that’s about a 10% cut in the Medicare budget at the same time that Medicare enrollment will be increasing by about 30% as the baby boomers reach Medicare age.

Gigot: Well, this is fascinating to me, because how can they cut Medicare spending–because doctors are already complaining they get reimbursed by Medicare, only 20% or 30% less than the real costs of their procedures. Hospitals as well.

McCaughey: It’s going to mean reductions in hip replacements, knee replacements, bypass surgery, angioplasty–the major procedures that have enabled this generation of the elderly to–

Gigot: Lead better lives.

McCaughey: –avoid disability, avoid deteriorating in nursing homes, and instead lead active lives.

Gigot: Well, wait a minute. How is that going to happen? I mean, doctors are not going to stop prescribing these things. How is that–what is that mechanism?

McCaughey: Well, they will have to. They will have to. Tucked into the stimulus package that was signed into law on Feb. 17 was a provision for computers to be in doctors’ offices and hospitals at bedside–computers that would deliver protocols to doctors electronically on what the government deems cost-effective and appropriate care. And there will be penalties built-in for doctors who are not meaningful users of this system. In March, the president appointed Dr. David Blumenthal national coordinator of health information technology, and he’s going to oversee ensuring that doctors obey these protocols. In fact, on April 9 in The New England Journal of Medicine, he wrote an article describing how he’s going do it. And he said he does anticipate some push-back, some rebellion from doctors who don’t like losing their autonomy over what’s good for their patients.

Gigot: I would think push-back too from Congress. Do you really think that this is something that the American public is going to stand for? Won’t Congress push back?

McCaughey: Well, that’s why Peter Orszag, head of the Office of Management and Budget–again, part of the White House–went to Congress earlier this week and asked for permission to really remove those decisions from Congress. He asked Congress to delegate the authority to make these decisions about what Medicare covers and how doctors are paid instead to a body outside of Congress, either MedPAC–a body that already exists, an advisory board–or a council created within the White House.

Gigot: This MedPAC idea–the president really, really hit this hard at his press conference this week. And this would be a group, a council of wise men and women, medical experts presumably, who would propose protocols for spending–for saving costs, in particular, trying to be more effective, they say, with their medical procedures–then present those as a package to Congress, which could vote up or down. And what’s wrong with that? Why shouldn’t we turn this away from these political types in Congress and give it to a panel of experts?

McCaughey: Well, Congress is accountable, and seniors would certainly raise a lot of fury if suddenly they could not avoid the crippling affects of arthritis by getting a knee replacement. And the fact is that the president likened this proposal to a base-closing commission so it would be immune from those popular impacts.

But the fact is, I don’t believe we can count on the doctors that would be appointed to this to make the right decisions because, for example, the doctors that the president has already chosen to be his chief health advisers are ardent advocates of limiting care for the elderly. Dr. Ezekiel Emanuel, for example–brother of president’s chief of staff, Rahm Emanuel–highly educated man who has written extensively on his views that the elderly should get less care, that Americans are too enamored with high-tech care, and that people who have incurable illnesses–and he uses specifically the example of dementia–should not be guaranteed health care because they no longer contribute to society. These are views that most of us don’t share.

Gigot: All right. Well, we certainly need a debate about this. But let’s get another clip of the president on this point.

Obama: Overall, our proposals will improve the quality of care for our seniors and save them thousands of dollars on prescription drugs, which is why the AARP has endorsed our reform efforts.

Gigot: Why wouldn’t the American Association of Retired Persons oppose this if what you say is in fact going to happen?

McCaughey: Paul, I am shocked at the AARP’s behavior, and frankly, to me they’ve betrayed seniors. I’m amazed that seniors continue to pay their dues to the AARP. The AARP says that they support universal coverage. Well, seniors already have that. And they have so much to lose under this.

One of the other things that’s very dangerous to seniors in this legislation is the dramatic shift in funding for–away from specialty medicine to primary care, on the misconception that Americans overuse specialists and drive up health costs in the process. But study after study showed that people with heart disease who rely on primary-care medicine are frequently misdiagnosed and incorrectly treated.

Gigot: Cardiologists are better at heart care.

McCaughey: That’s right. They are readmitted to the hospital far more often, and they die sooner.

Gigot: All right, Betsy. Thanks so much.

We’re going to have much more. When we come back, the House and Senate health care plans up close. What exactly is in the proposed legislation, and how do they plan to pay for it? Our panel breaks it down and answers the big questions, next.


Obama: If you have health insurance, the reform we’re proposing will provide you with more security and more stability. It will keep government out of health-care decisions, giving you the option to keep your insurance if you’re happy with it.

Gigot: Perhaps the biggest concern for many Americans, being able to keep their current health-care plan. President Obama says you can. But for how long?

We’re back with Betsy McCaughey. Also joining the panel, Wall Street Journal assistant editorial page editor James Freeman, senior editorial page writer Joseph Rago and Washington columnist Kim Strassel.

All right, Joe, let’s take them one by one. Let’s start with that claim you will be able to keep your health plan if you want to. Can you? Is that true?

Rago: Well, no. I don’t think so at all. First, you’re going to have a government insurance option, like Medicare but open to the middle class, that will pay doctors and hospitals submarket rates, undercut private insurers. Private insurers will be regulated to within an inch of their life basically. And then you’ve got the government mucking around with some of these rules that allow large employers to offer coverage to their employees.

Gigot: And avoid state mandates and state rules because they have national plans.

Rago: And a lot of federal rules, too. So now this will be sort of be subject to a Health Choices Administration that will gradually make employer-sponsored coverage work just as poorly as the rest of the insurance markets.

McCaughey: It’s not a matter of speculation, however, or even prediction. The letter of the bills say that you will be able to keep your existing plan. You will be forced to move into a managed-care plan that restricts your access to specialists and diagnostic tests.

If you look on the Senate bill, page 15 through 17, or in the House bill–excuse me, the House bill, 15 to 17, the Senate bill, 56 to 58–you will see that you are required to enroll in a qualified plan. That means a plan that the government deems appropriate. And it has to be managed care. That’s spelled out in the bill. If you get your insurance through your employer–if you get your insurance through your employer, as most Americans do, your employer will have a grace period in which to move you into managed care. If you buy your insurance individually, through a broker, for example, you won’t have a grace period. As long as anything changes in your current contract, your co-pay changes–

Gigot: So once the contract changes, then you go into this government–new government regulation, OK.

McCaughey: So it’ll be in a few months, right, because usually those things change every year.

Gigot: All right, but what about the fact that you have these union plans that are done, that are the product of collective bargaining done in good faith, that are often very, very good health care. Are they really going to abrogate these contracts?

McCaughey: Some of the union plans are exempted under these bills. But most employers will only have the grace period to move their employees, all of them, into these lower-grade HMOs, because the point of these bills is not to just cover the uninsured. It’s to limit everyone’s health care consumption–and using managed care will do that–and to ensure that everyone has the same health-care experience regardless of ability to pay. They don’t want executives or people who go out and buy more-expensive plans to have a different health-care experience.

Gigot: All right, James, let me ask you about this–the public option. Because the president says, Look, all this is, is going to compete with the private plans, keep them honest. The insurers are making a lot of money right now. We need to keep them honest.

Freeman: Right, and I think the beauty of this is we don’t need to guess or estimate or just posit what might happen, because the people of Massachusetts since 2006 have been running the experiment for all of us, and we can go to school on it.

Gigot: Thanks to Mitt Romney, former Republican governor.

Freeman: That’s right.

Gigot: Or no thanks to Mitt Romney.

Freeman: And it’s very clear what happens. Private insurance goes away, more people go on the public plan, costs explode, more costs go onto small business, and people lose their jobs or they get salary freezes.

McCaughey: That’s a very important point that more and more people are losing their jobs in Massachusetts. I was reading about an employer just today, who had to close up part of her business, close one office, sell a couple of trucks, and lay off an employee in order to meet the government requirement to pay for health insurance.

Gigot: OK, Kim Strassel, let me ask you about the cost question, because that’s an important one. CBO said–the president of the Congressional Budget Office said the president’s proposal–the House proposal will not save money. But can you save money overall, somehow, if you cover more people, if you cover 44 million more people? How do you save money?

Strassel: Well, the argument that the White House has always made is that if you did that and you had more competition and you somehow managed to get more efficiency across the board, that you could lower costs in the long term. The CBO has blown that up. They have done an initial analysis of the House bill. It says that there’s going to be about $820 billion in new taxes, most of them on families and small businesses. And even with that, there’s still going to be another $250 billion of more deficit spending over the next 10 years. And even then, that doesn’t count in the fact that both of these bills, bear in mind, are designed to hide a lot of the costs that are going to come up front, and only have them start to kick in toward the end of the bill. So what we’re actually looking at is trillions in new spending over the upcoming years.

Joe, I want to give the House Democrats credit for one thing. By raising, by proposing–putting this tax increase on the table, a 5.4-percentage-point surtax, they’ve at least showed people this is not going to be a free lunch, that somebody is going to have to pay for it. Now they claim that it’s only going to be the wealthy will have to pay that, to the tune of $550 billion. But this thing is going be enormously expensive.

Rago: Yeah, I mean, all government health programs start small and grow over time.

Gigot: That was the experience with Medicare.

Rago: Experience with Medicare. And this is sort from the same playbook. On the taxes, you know when you’ve got some states–California, New York–with top rates pushing 50%–.

Gigot: Sixty percent.

Rago: Sixty pecent.

Gigot: Higher than Sweden! Federal-state combination: Oregon, California, New York, New Jersey would have top marginal tax rates higher than almost all of Europe.

Rago: Yeah, and the truth is you can’t finance health care for 98% of the population with tax increases on 2%.

Gigot: On 2% of the population.

Rago: So eventually this is just going to have to reach down into the middle class. There’s just no way to make the money work.

Gigot: All right, thank you all.

Still ahead, the politics of health-care overhaul. Amid the president’s falling numbers and Democratic disarray, all eyes are on Republican senator Chuck Grassley. We’ll tell you why when we come back.


Gigot: We’ll get to the Republicans in a minute. But as the president touts his health-care overhaul and his plan to tax the rich to pay for it, he’s finding he can’t even count on some members of his own party. There’s the so-called Blue Dog Coalition that met with President Obama this week at the White House, and some freshmen Democrats from the nation’s wealthiest congressional districts are balking at the plan as well.

All right, Kim, so, what’s the problem the president has with these Democrats? Or maybe, what problem do the Democrats have with his plan?

Strassel: The problem that he has is that he stepped back and let some of the most liberal members of Congress write the bills that have come out of both the House and the Senate, so Ted Kennedy in the Senate and Nancy Pelosi and Henry Waxman in the House. And what has happened is these bills that have come out with these soaring taxes, these business mandates, individual mandates, the lack of choice for consumers, have scared a lot of Blue Dog and freshmen Democrats. Remember, Mrs. Pelosi’s margin was based on winning a lot of seats in very conservative districts over 2006 and 2008. These guys do not want to go home and say they voted for a bill that looks like this. So he cannot get his caucus together.

Gigot: So what the president’s saying now to get the Blue Dog Democrats on board, who care a lot about costs, is, he’s talking about MedPAC, which Betsy and I talked about before, which is this idea that a council of wise men and women would somehow propose things that would keep costs down. Is that kind of cover going to work for them, Joe?

Rago: Well, it might. I mean, the Blue Dogs are always looking for a reason to roll over–

Gigot: Roll over and vote for it, yeah.

Rago: –and vote for what they said they weren’t going to.

And I think the larger issue is that Congress tries all sorts of schemes like this all the time, and it never happens, so spending continues to rise. The only thing that would prevent that from happening is when the liabilities are just so large that they’re swamping the entire federal budget.

McCaughey: I predict that there will be real rebellion to the decisions of this MedPAC commissioner or other commissions, because baby boomers are not going to want to live their later years in pain.

Gigot: But will that happen before this passes, Betsy? That’s the question. The Blue Dogs are looking for political cover, and the president is trying to give it to them by saying we have this commission that will solve everything.

McCaughey: You know, I’m curious about why the Republicans have not much more aggressively proposed a fix-what’s-broken-leave-the-best-alone alternative that reaches out to provide coverage for the 24.7 million or so people who are involuntarily uninsured–they can’t afford a health care plan; they earn too much to be eligible for Medicaid or Schip–and we could take this issue of the uninsured simply off the table in a compassionate way and say we’ve fixed the problem.

Gigot: But the Republicans have proposed some ideas like that, through a refundable tax credit, for example. Now, they haven’t gotten a lot of publicity because everybody is focused–rightly so, I think–on what the Democrats, who run Congress and the White House, are proposing. So there are some other ideas out there that could–you’re saying, solve this problem in a more humane and less costly way.

McCaughey: Oh yes, it would cost $28 billion to $49 billion a year, depending on the level of coverage provided to uninsured individuals in this income group–lower-middle-income families who are struggling to pay for health insurance. And it could be implemented quickly, because in all 50 states, debit-card technology has enabled state governments to deliver purchasing power to families, even people who need it temporarily. And 22% of the uninsured are just in a temporary dilemma.

Gigot: All right, I think that those are excellent points. But that’s not going to happen in Congress unless–right now, because the president is focused on these current efforts that we’ve been describing. That’s where the Republicans come in.

Freeman: Yeah, he’ll have to abandon them, and these alternatives are going to start to get a lot more attention, because right now his sales pitch is higher taxes, less care for the elderly, and Washington’s going to decide whether your kid gets a tonsillectomy. This is not a winner as a political sales pitch. So these alternatives–using the tax code, fixes to encourage more people to get insurance–are going to start to get more attention.

Gigot: But in the immediate term, as he’s dealing–trying to get through this Congress–Kim Strassel, what you’re seeing is the president really trying to work with some Republicans in the Senate, particularly Iowa Republican Chuck Grassley, senior Republican on the Senate Finance Committee, to get him to sign on with Senate Democrats and maybe some other Senate Republicans to some kind of compromise they can then get through the Senate, get the 60 votes they need. And so they’re looking for that Republican cover. What role do you think Grassley’s playing?

Strassel: Well, up to now, I mean–and you’re right, this is all about cover. They need Grassley to bring along both a handful of Republicans and reassure their conservative Democrats. But the role he is playing here is–I mean, Chuck Grassley is increasingly the guy who is either going to blow up some of these bad ideas–and he has the power to do that by stepping back and saying no–or the guy who may become the Republican known for delivering the nation socialized health care. So he’s really in the middle. He’s been working very hard with Max Baucus to try and get a compromise. We don’t know what’s happening in those negotiations. They now have an extension of time because the president has basically said he’ll step back and wait to see what happens after the August recess.

Gigot: So the president hauled in the CBO director, Doug Elmendorf, who had given that bad score that–brought him in with a phalanx of White House aides. Was that subtle pressure?

Rago: I don’t think it was subtle at all. It sort of put LBJ to shame. But you know, I think what the Republicans really have to do now is kill this thing as it is, so that opens up the space for other alternatives. Otherwise, they’re just going to be providing a bipartisan gloss on what is really a terrible plan.

Gigot: But Republicans can’t kill it. Democrats have to kill it. If every Republican voted against this, it could still pass.

McCaughey: When Democrats go home, they will hear loud and clear from their constituents that people don’t want to give up the health plans they have now for the rigors of managed care. They rejected it in the 1990s, and they want to stick with the health plans they have.


Related You Tube Links:

Ronald Reagan speaks out on Socialized Medicine – Audio

Ronald Reagan on Capitalism and Socialism – Audio

Milton Freidman – Socialism vs. Capitalism

The Power of Choice – Milton Friedman

Charlie Rose – An Appreciation of Milton Friedman

Other Related Links:



Congressional Budget Office
Additional Information Regarding the Effects of Specifications
in the America’s Affordable Health Choices Act Pertaining to
Health Insurance Coverage
July 26, 2009
The Congressional Budget Office (CBO) and the staff of the Joint Committee on
Taxation (JCT) recently completed a preliminary analysis of the specifications related to
health insurance coverage that are reflected in the America’s Affordable Health Choices
Act. That analysis, which was transmitted in a letter to the House Committee on Ways
and Means, was released on July 14, 2009; subsequent analysis, which took into account
the other parts of the legislation that would raise taxes or reduce other spending, was
released on July 17. Among other things, those specifications would establish a mandate
for most legal residents to obtain health insurance, significantly expand eligibility for
Medicaid, regulate the pricing and terms of private health insurance policies, set up
insurance “exchanges” through which certain individuals and families could receive
federal subsidies to reduce the cost of purchasing insurance, and offer a “public plan”
option similar to Medicare through those exchanges.
This report provides additional information about the effects of the specifications in that
act regarding health insurance coverage. In particular, it examines their likely effects on
enrollment in private coverage, in the new public plan, and in Medicaid; the effects on
private-sector insurance premiums and the labor market; the longer-term cost of the plan;
and the allocation of its net budget impact between outlays and revenues. For reference,
the table released on July 14 summarizing the preliminary analysis of the coverage
specifications is included in this report. The report, however, does not represent a formal
or complete cost estimate for the draft legislation.
Effects on Enrollment in Private Coverage
Compared with what would happen under current law, the legislation would induce some
people to move out of employment-based coverage and others to move into employmentbased
coverage, and our estimate of the net effect of those changes is shown in the
attached table. A number of questions have arisen about that estimate—particularly
regarding our conclusion that only a small share of firms would choose to stop offering
health insurance to their workers once the new subsidies became available in the
insurance exchanges. Several factors contribute to that conclusion:
• Workers who get insurance through their employer receive a significant subsidy
because the cost of that insurance is not treated as taxable earnings for the worker and
thus avoids both income and payroll taxes. In most cases, that exclusion applies to the
portion of the premium that workers pay as well as the amount the employer
contributes. On average, that tax exclusion gives workers a subsidy of roughly
30 percent for purchasing insurance through their employer—a subsidy that would be
forgone if the employer chose not to offer coverage and the workers instead obtained
coverage in the new insurance exchanges.
• In general, firms that decided to stop sponsoring insurance coverage for their workers
would not be able to reduce their operating costs because, in a competitive labor
market, they would have to offer higher wages and other forms of compensation
instead. Indeed, workers might be particularly motivated to demand such increases
under the proposal because they would be required to obtain insurance. That added
compensation would generally be taxable. (This consideration and the preceding one
help explain why most workers are offered health insurance by their employers
• Under the proposal, nearly 90 percent of workers would be employed by firms that
would either have to offer qualified coverage and contribute a significant share
toward the premium or pay a tax equal to 8 percent of their total payroll. That “playor-
pay” penalty would constitute a substantial portion of the average cost of providing
insurance coverage, which has been estimated at about 12 percent of payroll currently
(but which would rise over time). In dollar terms, the penalty would obviously vary
depending on a firm’s payroll; for example, a firm with average wages of $40,000 per
year that did not offer qualified coverage would have to pay a penalty of $3,200 per
worker. Moreover, that penalty would make no direct contribution to those workers’
insurance costs; they would then need to obtain coverage from another source in
order to fulfill the individual mandate.
• Many firms have a mix of employees with differing levels of individual or family
income—some of whom would qualify for relatively generous subsidies in the new
insurance exchange and some of whom would not. Consistent with the available
evidence, we anticipate that an employer would generally take into account the
effects on all of its workers in deciding whether or not to offer coverage. In most
cases, having their employer offer coverage would be the best option for the
workforce overall, even with the new insurance exchanges.
• Finally, the available evidence indicates that in making decisions about offering
insurance, many firms are not very responsive to the availability of outside options
for their workers to obtain coverage; in particular, that responsiveness tends to
decline as firm size increases. One reason is that larger firms have relatively low
administrative costs that would generally make it advantageous for their workers to
keep that coverage rather than pay higher administrative costs for a plan in an
insurance exchange. Because larger firms account for the lion’s share of all
employment-based coverage, that lack of responsiveness limits the likely extent of
any erosion in coverage.1
In most cases, the combination of the subsidy from the current tax exclusion and the
penalty for firms that did not offer qualified coverage would provide a strong financial
inducement for employers to continue offering coverage to their workers.2 To give an
example in today’s terms, the average employment-based health insurance plan currently
has a premium of about $5,000 for single coverage and $13,000 for family coverage. The
subsidy provided by the tax exclusion is thus worth about $1,500 for single coverage and
about $4,000 for family coverage, on average. For a firm with average wages of $40,000,
the $3,200 penalty combined with the subsidy from the tax exclusion would roughly
equal the total amount of the single premium and would constitute more than half of the
typical cost of family coverage. Only workers who would receive larger percentage
subsidies in the exchanges would be better off if their employer stopped offering
coverage—and that would be a distinct minority of workers.3
Taking those considerations into account, some firms would probably decide not to offer
coverage, CBO and the JCT staff estimate. That option would be most attractive to firms
with lower-wage workers—both because the play-or-pay penalty for not offering
coverage would be smaller in dollar terms and because their workers would be eligible
for larger subsidies in the insurance exchanges (or through Medicaid). An additional
factor is that smaller firms (those with an annual payroll of less than $400,000) would
either be exempt from the play-or-pay penalty or would pay a lower tax rate. However,
an offsetting consideration is that small employers with low-wage workers would be
eligible for a tax credit covering up to 50 percent of the employer’s contribution toward
health insurance premiums. On balance, CBO and the JCT staff estimate that, in 2016,
about 3 million people (including spouses and dependents of workers) who would be
covered by an employment-based plan under current law would not have an offer of
coverage under the proposal.
Other people would have an offer of coverage from an employer but would choose to
make use of the subsidies that would be available in certain cases through the exchanges.
1 For further discussion of the factors affecting employer coverage, see Congressional Budget Office, Key
Issues in Analyzing Major Health Insurance Proposals (December 2008), pp. 4–8 and 43–48; and CBO’s
Health Insurance Simulation Model: A Technical Description, Background Paper (October 2007).
2 In the legislation considered by the Senate Committee on Health, Education, Labor, and Pensions, the
penalty amounts per worker are much smaller. However, that proposal would also provide less inducement
for employers to stop offering coverage, because it would provide no new subsidies for insurance coverage
for individuals with income below 150 percent of the federal poverty level.
3 Over time, as the costs of health care rose more rapidly than payrolls, the penalties would gradually
decline in importance relative to the tax exclusion and exchange subsidies. That evolution is incorporated
in CBO’s analysis and helps explain why the estimated effect of the proposal on employer coverage
changes gradually over time.
In 2016, nearly 3 million people who would be covered under an employment-based plan
under current law—and who could be covered by that plan under the proposal—would
choose instead to obtain coverage in the exchanges because the employer’s offer would
be deemed unaffordable and they would therefore be eligible to receive subsidies through
the exchanges. In addition, some part-time employees, who could receive subsidies via an
exchange even though they had an employer’s offer of coverage, would choose to do so.
All told, we estimate that, in 2016, about 9 million people who would otherwise have had
employer coverage would not be enrolled in an employment-based plan under the
The net effect of the proposal on employment-based health insurance reflects larger
changes in the other direction, however. We estimate that about 12 million people who
would not be enrolled in an employment-based plan under current law would be covered
by one in 2016, largely because the mandate for individuals to be insured would increase
workers’ demand for insurance coverage through their employer. On net, therefore, about
3 million more people would have their primary coverage through an employer under the
proposal than under current law (as shown in the attached table).
Enrollment in the Public Plan
A related question concerns how many firms would provide coverage to their workers but
would do so by letting their workers purchase coverage in the insurance exchanges—and,
in particular, how many of those enrollees would end up in the new public plan. Under
the proposal, firms with 20 or fewer workers would be given the option to let their
workers buy coverage through the insurance exchanges starting in 2014, and the official
overseeing the exchanges would be allowed to let larger employers purchase coverage in
that way starting in 2015. In those cases, the workers would not receive exchange
subsidies but would instead be subsidized through the tax exclusion as under current law;
as a result, CBO’s table showing the effect of the proposal on sources of insurance
coverage counts those enrollees as being covered by employment-based insurance rather
than as exchange enrollees.
For the preliminary estimate of the proposal, CBO and the JCT staff assumed that only
firms with 50 or fewer employees would be permitted to buy coverage through the
exchanges, and we estimated that about 6 million workers and their dependents would
obtain coverage in that way. We also estimated that about one third of those enrollees
would choose the public plan—an assessment that is consistent with our overall estimate
of the share of people in the exchanges choosing that plan.
What options employers would have under the proposal depends on whether the official
overseeing the insurance exchanges would give larger firms access to the exchanges, and
predicting what that official would do is difficult. On the one hand, workers at some
firms would find that option attractive, particularly in areas where the public plan has
relatively low premiums, and they might apply pressure to be admitted to the exchanges.
On the other hand, providers of health care and private insurers might be opposed to
expanding access to the public plan, and they might apply pressure to keep larger firms
out of the exchanges. In addition, the official might be concerned about the potential for
adverse selection into the exchanges, which could arise if employers choosing to take
advantage of the option had older or less healthy workers.
If we assumed that workers at larger firms would be allowed to purchase coverage
through the exchanges, our estimate of the number of enrollees involved would
undoubtedly be greater than 6 million, but we have not estimated the magnitude. Analysts
at the Lewin Group recently estimated that if all employers were given access to the
insurance exchanges, more than 100 million people would end up enrolling in the public
plan.4 For several reasons, we anticipate that our estimate of the number of enrollees in
the public plan would be substantially smaller than the Lewin Group’s, even if we
assumed that all employers would have that option.
One consideration that would affect our analysis is that large employers would generally
have lower administrative costs for health insurance than would plans offered in the
exchanges, because (under the proposal) those plans would need to sign up enrollees
individually; as a result, employees of large firms would be less likely than those of small
firms to find the option of purchasing coverage through the exchange attractive, holding
other factors equal. Although we assumed that the public plan would have somewhat
lower administrative cost per enrollee than would private plans in the exchanges, the
public plan would probably have to incur much of the same cost in order to attract and
retain members.
More generally, the Lewin analysis uses a much larger gap than does our analysis
between the premium of the public plan and the premiums of the private plans against
which it would be competing. As indicated in our letter of July 14, we estimate that the
public plan’s premium would, on average, be about 10 percent lower than that of a
typical private plan offered in the insurance exchanges. That estimate is based in part on
available data from the Medicare Advantage program about the difference in costs
incurred by private plans and the traditional Medicare plan to provide the same set of
benefits. Indeed, the most recent analysis of that difference concluded that the costs of the
traditional Medicare plan were only 2 percent lower, on average, than the costs of private
plans participating in Medicare to provide the same benefits (though that difference
varied geographically and by the type of private plan that was offered).5
Another factor relevant to our estimate is our assessment that some providers would
choose not to participate in the public plan, which would discourage some enrollees from
choosing that plan despite its lower average premium. Even so, we expect that the
4 Statement of John Sheils, Vice President, The Lewin Group, before the House Committee on Energy and
Commerce, The Impact of the House Health Reform Legislation on Coverage and Provider Incomes (June
25, 2009).
5 See Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy (March
2009), Chapter 3. CBO’s larger estimate of the gap in premiums between the public plan and private plans
under the proposal also incorporates expected differences in such factors as benefit management and
providers’ payment rates.
provider network would be large enough to attract a sizable minority of participants in the
Because all of these factors are uncertain, estimating enrollment in the public plan is
especially difficult—as we emphasized in our earlier letter. Given our assessment of the
likely difference in premiums, however, offering more firms the option of letting their
workers purchase insurance through the exchanges would probably have a limited effect
on the proposal’s net budgetary impact. As noted above, workers with employment-based
insurance who obtained coverage through the exchanges would receive no exchange
subsidies and would have the same tax preference as if they had obtained coverage
outside the exchanges. Thus, if more employers purchased coverage through the
exchanges than we anticipate and purchased somewhat less expensive insurance via the
public plan, the principal effect on federal deficits is that those employers would end up
increasing their workers’ taxable compensation and thereby would generate slightly
higher tax revenues. Greater enrollment in the public plan would also increase the plan’s
outlays and premium collections, which would be included in the federal budget, but as
long as the public plan charged premiums that covered its costs (as it is supposed to do
under the proposal), those amounts would be offsetting.
Effects of the Proposed Medicaid Expansion
A further question is the number of people who we estimate would enroll in Medicaid
under the proposal that would have private coverage under current law. CBO does not
anticipate a substantial shift from private insurance to Medicaid. Specifically, we
estimate that about 1 million people who would otherwise have employment-based
insurance or individually purchased coverage would end up enrolling in Medicaid in
2016. We also estimate that about 10 million people would newly enroll in Medicaid
under the proposal, but the great majority of them would be people who would otherwise
be uninsured rather than privately insured. As a result, our estimated rate of crowd-out—
that is, the share of people gaining Medicaid coverage who would otherwise be insured
privately—is about 10 percent under this proposal.
Although the proposal would sharply increase the number of people eligible for
Medicaid, several factors help to explain the relatively low rate of crowd-out of private
insurance that we expect:
• The expansion of Medicaid would encompass relatively poor people (including some
childless adults whose income is well below the poverty level), who are less likely
than people with higher income to have private insurance coverage. Our analysis
indicates that only about a quarter of the people who would be made newly eligible
for Medicaid under the proposal would have private coverage under current law.
• Unlike prior expansions of public coverage on which estimates of crowd-out are
generally based, this proposal would impose a considerable penalty on employers that
did not offer qualified insurance and contribute a substantial share of the premium.
Those requirements would help offset the incentives under the proposal for employers
to cease offering coverage as a result of the expansion in Medicaid eligibility.
• Unlike past expansions of Medicaid, the proposal would include a requirement for
people to obtain insurance. As a result, those who would be eligible for Medicaid
(whether under current law or because of the expansion) and who would otherwise be
uninsured would be more likely to enroll in that program.
In sum, because of the specific features of the proposal, the number of people who might
leave private coverage for Medicaid would be relatively small, and the number of people
who would newly enroll in Medicaid would be relatively large—so together, those
features of the proposal would reduce the expected rate of crowd-out.6
Effects on Private-Sector Premiums
Many observers have asked about the effect of the proposal on health insurance
premiums in the private sector outside the insurance exchanges. After 2012, all newly
issued policies purchased by individuals would have to be bought through the insurance
exchanges; as a result, the proposal’s effects on premiums outside the exchanges would
be seen in premiums for coverage provided by or through employers (which is the
predominant source of insurance for the nonelderly population under current law and
would remain so, in our estimation, under this proposal). The proposal contains a number
of elements that could affect those premiums, both directly and indirectly—some of
which could cause the premiums to increase and some of which could cause them to
decrease. Although the direction of the overall impact is not certain, the magnitude of the
effect on average premiums would probably be modest.
Effects on the Risk Pool
One concern that has been expressed about proposals to establish and subsidize coverage
through the new insurance exchanges is that firms would see their relatively young or
healthy enrollees switch to those plans. If that happened, the average costs for covering
the remaining enrollees would be higher. Under the proposal, however, full-time workers
with an offer of coverage from their employer would generally be prohibited from
receiving subsidies through the exchanges—a restriction known as a “firewall,” which we
believe would be largely effective.7 Moreover, the proposal would allow premiums in the
insurance exchanges to vary only by age and then only to a limited degree, so the plans
available in the exchanges might not be substantially more attractive to younger and
6 For more information about the potential effect of expanding public insurance coverage on the number of
people with private insurance, see Congressional Budget Office, The State Children’s Health Insurance
Program (May 2007), pp. 7–13.
7 An exception would be granted for full-time workers who had to pay more than 11 percent of their
income for their employer’s insurance. In addition, part-time workers could receive subsidies via the
exchanges regardless of the availability or cost of coverage through their employers. As noted above, CBO
and the JCT staff estimated that several million workers would take advantage of those exceptions.
healthier workers than they would be for other workers—reducing the incentive to
circumvent the firewall.
At the same time, CBO and the JCT staff estimate that several million more people, on
balance, would enroll in employment-based insurance than is projected under current
law. The resulting pool of enrollees would be somewhat healthier, on average, than is the
pool of enrollees in employment-based insurance today; as a consequence, the average
cost of covering those enrollees would be several percent lower than under current law
(holding other factors equal). The extent and manner in which that change would affect
premiums for employment-based coverage is more difficult to determine; for example,
that effect might be seen primarily in the premiums for single coverage (rather than
family coverage) because most of the younger and healthier enrollees who would sign up
for employment-based coverage as a result of the proposal would choose that type, but
how premium costs are allocated within firms is less clear. Also, the main reason some
people would be paying less for their coverage is because newly enrolled people would
be making premium payments they would not otherwise have made—so the changes in
premiums would largely represent a transfer among workers rather than an improvement
in the efficiency of employment-based insurance plans.
The proposal’s restrictions on insurance markets could also affect premiums for
employment-based coverage. In particular, the proposal would prohibit insurers from
varying the premiums charged to employers to reflect differences in the health status or
likely costs of their employees. Existing policies would be exempt from that requirement
through 2017 but would then have to come into compliance with that prohibition.
(Insurers would still be permitted to adjust premiums, albeit to a limited degree, to reflect
the age of the enrollees.) That change would not apply to employers who chose to bear
the financial risk of providing health insurance to their workers, but it would affect
employers who purchased such coverage from an insurer. Relative to current law (under
which relatively few states impose the same restrictions on variation in premiums), those
limits might not have a substantial effect on the average premium paid by employers, but
they would tend to increase premiums for firms with relatively healthy workers and
decrease them for firms with relatively unhealthy workers.
Effects of Cost Shifting
A less direct way in which the proposal could cause private-sector premiums to change is
by affecting the extent of “cost shifting”—a phenomenon in which lower rates paid to
health care providers for some patients (such as uninsured people or enrollees in
government insurance programs) can lead to higher payment rates for others (privately
insured individuals). The proposal would have opposing effects on the pressures for such
cost shifting to occur.
On the one hand, the proposal’s expansion of eligibility for Medicaid and other
provisions would substantially increase enrollment in that program (by an estimated
10 million to 11 million people in the latter part of the 2010–2019 period). In addition,
many provisions of the proposal would reduce payments to hospitals and other providers
under Medicare. Furthermore, the legislation would establish a public plan to be offered
in the insurance exchanges; that plan would be set up by the Secretary of Health and
Human Services and pay Medicare-based rates to providers of health care. By
themselves, those changes would tend to increase the pressure on providers to shift costs
to private payers.
On the other hand, we estimate that the proposal would ultimately reduce the uninsured
population by roughly two-thirds, which would greatly attenuate the pressure to shift
costs that arises today when uncompensated or undercompensated care is provided to
people who lack health insurance. One recent estimate indicates that hospitals provided
about $35 billion in such care in 2008—an amount that would grow under current law but
would be expected to decline considerably under the proposal. (Recent evidence also
indicates that physicians collectively provide much smaller amounts of uncompensated or
undercompensated care, so all else held equal, the overall impact of expanded insurance
coverage on their payments rates would also be smaller.)
The net effect of those opposing pressures would thus depend on their relative magnitude
and also on the degree to which cost shifting occurred in each case. Given the size of the
annual decline in undercompensated care that seems likely to ensue, the adverse effects
on hospital finances stemming from greater enrollment in Medicaid, cuts in Medicare
payment rates, and enrollment in the public plan would also have to be substantial to
offset those savings for hospitals as a group. (The net effect would differ from hospital to
hospital.) As for the extent of cost shifting, CBO’s assessment of the evidence is that
some does occur but that it is not as widespread or extensive as is commonly assumed.
Well-designed studies have found that a relatively small share of the changes in payment
rates for the government’s programs is passed on to private payment rates, and the impact
of changes in uncompensated care is likely to be similar.8 Overall, therefore, the effect
the proposal would have on private-sector premiums via cost shifting is unclear.
Changes in Payment Methods
In addition to proposed changes in Medicare’s payment rates, the proposal would also
alter some of Medicare’s payment methods—or at least test such changes—which might
ultimately reduce private insurance costs to a limited degree. For example, the proposal
would establish a demonstration project to examine the use of “accountable care
organizations” and would make other modifications that could encourage reductions in
health care spending.9 To the extent that future steps to implement such changes in a
more aggressive way also changed how doctors treated privately insured patients, some
benefits could “spill over” to the private sector. However, such effects would probably
represent a small fraction of privately insured medical costs over the next 10 years,
8 For a more extensive discussion of this issue and the evidence about its effects, see Congressional Budget
Office, Key Issues in Analyzing Major Health Insurance Proposals (December 2008), pp. 112–116.
9 For an explanation of how accountable care organizations might reduce Medicare spending, see Option 37
in Congressional Budget Office, Budget Options, Volume 1: Health Care (December 2008), p. 72.
paralleling the relatively small effects in Medicare itself as a proportion of total program
spending in that period.
Impact on the Labor Market
This proposal, like others to reform the health insurance system, could affect labor
markets in several ways.10 In general:
• Requiring employers to offer health insurance—or pay a fee if they do not—would be
likely to reduce employment, although the effect would probably be small.
• Providing new subsidies for health insurance that decline in value as a person’s
income rises could discourage some people from working more hours.
• Increasing the availability of health insurance that is not related to employment could
lead more people to retire before age 65 or choose not to work at younger ages. It
might also encourage other workers to take jobs that better match their skills, because
they would not have to stay in less desirable jobs solely to maintain their health
Under the proposal, employers with annual payroll above specified levels would be
required to offer health insurance to their workers and contribute a significant share
toward the premium or pay a tax equal to as much as 8 percent of their total payroll. For
the firms that chose not to offer qualified insurance, that penalty would increase the cost
of employing each worker by somewhat less than 8 percent (because total compensation
generally exceeds the taxable payroll to which this fee would apply). The overall impact
on employment would probably be muted, however, because employers would be
expected to pass the costs of such fees on to workers in the form of lower wages than
would otherwise be paid—just as the costs paid by employers for health insurance are
generally passed on to workers. Because the requirement would not be instituted until
2013, employers would be able to plan for its implementation; CBO also projects that the
economy will have largely recovered from the current recession by that date.
Nonetheless, such a change would tend to reduce the hiring of workers at or near the
minimum wage, because their wages might not be able to decline by the full amount of
the fee (or by the costs of the health insurance that would have to be provided to avoid
the fee). Still, the impact of the proposal on low-wage workers would probably be small
because studies suggest that moderate increases in the minimum wage generally have
limited effects on employment. An 8 percent increase in the cost of hiring a worker
10 For a more extensive discussion, see Congressional Budget Office, Effects of Changes to the Health
Insurance System on Labor Markets, Issue Brief (July 13, 2009). The overall impact of health reform
proposals on labor markets is difficult to predict. Although economic theory and experience provide some
guidance as to the effect of specific provisions, large-scale changes to the health insurance system could
have more extensive repercussions than have previously been observed and could also involve numerous
factors that would interact—affecting labor markets in significant but potentially offsetting ways.
making the minimum wage—which was just increased to $7.25 per hour—would amount
to roughly $0.60 per hour, which is also about the size of the increase in the minimum
wage that just took effect. Moreover, firms with an annual payroll below $250,000 would
be exempt from the play-or-pay requirement.
Another feature of the proposal relevant to labor markets is that the subsidies for
insurance coverage offered via the exchanges would phase out as enrollees’ income rose,
effectively reducing the compensation they would receive for each additional hour
worked. That effect, which is an “implicit tax,” can lead people to work fewer hours than
they otherwise would, in the same way that income and payroll taxes can. Specifically,
the proposal would provide subsidies to help cover the costs of purchasing insurance and
would phase out those subsidies as income increased from 133 percent to 400 percent of
the federal poverty level. Over that range, the share of income that enrollees would have
to pay in premiums for coverage in the exchanges would increase from 1.5 percent to
11 percent, and the extent of coverage that would be subsidized would also decline so
that enrollees with higher income would pay higher out-of-pocket costs as well. With
limited exceptions, the subsidies would not be available to the vast majority of workers
who had a qualified offer of health insurance from their employer; in addition, some
workers who would not have employment-based insurance would have income above
400 percent of the poverty level. As a result, changes in the work hours of people affected
by this implicit tax would have a much smaller proportionate effect on total hours worked
in the U.S. economy.11
To express those effects in round terms using current levels of premiums and income, the
subsidy might decline from roughly $5,000 to zero for single adults over an income range
of about $30,000, and from roughly $13,000 to zero for a family of four over an income
range of about $60,000. Thus, the implicit tax rate over that income range—that is, the
extent to which those subsidies would decline as income rose—would be around
20 percent (but would vary somewhat across income levels because the subsidies would
not phase out in a uniform way).12 A proposal that phased out subsidies more quickly
would yield even higher implicit tax rates; for example, the implicit tax rate would range
from about 28 percent to about 35 percent if the same subsidies were phased out
uniformly between 133 percent and 300 percent of the federal poverty level. Conversely,
those implicit tax rates could be reduced by extending the subsidies further up the income
scale, but doing so would expand the number of people affected by this implicit tax and
would also increase the budgetary cost of the proposal. In any event, the implicit tax rates
created by the phase-out of subsidies would come on top of existing income and payroll
tax rates.
11 The proposal would also raise tax rates on higher-income taxpayers through a surcharge. This report does
not address the effects of that surcharge.
12 Over time, as the costs of health care rose more rapidly than income, the implicit tax rate would increase.
Through the insurance exchanges and expanded eligibility for Medicaid, the proposal
would enhance access to health insurance for people who are not employed and would
provide subsidies for insurance to people with income below 400 percent of the federal
poverty level who do not have employment-based coverage. Those provisions could
encourage more people to retire before age 65, and they might lead some people to
choose not to work at younger ages. The provisions might also lead to better matches
between workers and jobs, because workers would not have to stay in less desirable jobs
solely to maintain their health insurance.
Longer-Term Costs of the Proposal
Estimating the effects of major changes to the health care and health insurance systems
over the next 10 years is very difficult and involves substantial uncertainty; generating
longer-term estimates is even more challenging and is fraught with even greater
uncertainty. As a result, CBO does not provide formal cost estimates beyond the 10-year
budget window. However, we have said that in evaluating proposals to reform health
care, the agency will endeavor to offer a qualitative indication of whether they would be
more likely to increase or decrease the budget deficit over the second decade.13
The starting point for such an analysis of the recent House proposal is our estimate of the
proposal’s impact on the federal budget deficit in the first 10 years. As discussed in
CBO’s letter of July 17, we estimate that the proposal as a whole would increase federal
deficits by $239 billion over the 2010–2019 period. That estimate has three major
components: the net effect of the coverage specifications, which affect both spending and
revenues and which would add an estimated $1,042 billion to cumulative deficits over
that period; the effect of other provisions, primarily regarding Medicare, that would
reduce direct spending by a net $219 billion; and the effect of still other provisions
(primarily, an income tax surcharge on high-income individuals) that would increase
revenues by $583 billion. Under the proposal, federal spending on health care would
increase by approximately the difference between the net cost of the coverage
specifications and the reductions in direct spending.
Looking ahead to the decade beyond 2019, CBO tries to evaluate the rate at which the
budgetary impact of each of those broad categories would be likely to change over time.
The net cost of the coverage provisions would be growing at a rate of more than 8 percent
per year in nominal terms between 2017 and 2019; we would anticipate a similar trend in
the subsequent decade. The reductions in direct spending would also be larger in the
second decade than in the first, and they would represent an increasing share of spending
on Medicare over that period; however, they would be much smaller at the end of the
10-year budget window than the cost of the coverage provisions, so they would not be
likely to keep pace in dollar terms with the rising cost of the coverage expansion.
Revenue from the surcharge on high-income individuals would be growing at about
5 percent per year in nominal terms between 2017 and 2019; that component would
13 For discussion of our approach to developing such qualitative information, see the CBO Director’s Blog,
“The Effects of Health Reform Legislation beyond the Next Decade” (July 24, 2009).
continue to grow at a slower rate than the cost of the coverage expansion in the following
decade. In sum, relative to current law, the proposal would probably generate substantial
increases in federal budget deficits during the decade beyond the current 10-year budget
Under any proposal that provided new federal subsidies for the purchase of health
insurance, the rate of growth in federal spending would depend importantly on how the
subsidies were indexed over time. As long as overall spending for health care continued
to expand as a share of the economy, people’s share of insurance costs would continue to
rise faster than their income, or the government’s subsidy costs would continue to rise
faster than the tax base, or both. The proposal limits the share of income that eligible
people would have to pay when they purchased coverage in the insurance exchanges, and
that share of income would not change over time. In addition, insurance plans offered
through the exchanges would be required to pay a specified share of costs for covered
services (on average), and that share also would not change over time. Combining those
provisions, increases in health care spending in excess of the rate of growth in income
would be borne entirely by the federal government in the form of higher subsidy
payments—because those payments would have to cover the entire difference between
the total premium for insurance coverage and the capped amount that enrollees would
pay. Those factors help explain why the costs of the coverage provisions would continue
to grow rapidly in the decade after 2019.
Allocation of the Net Budgetary Impact Between
Outlays and Revenues
On July 14, CBO and the JCT staff provided preliminary estimates of the effects of the
proposal’s specifications regarding insurance coverage on the federal budget; the relevant
table from that letter is attached for reference. Those estimates included the major cash
flows that would affect the budget and the net effects on the budget deficit during the
2010–2019 period, but they did not allocate the net budgetary impact into changes in
outlays and changes in revenues. Moreover, the preliminary estimates did not include all
of the cash flows that would appear in a formal and complete cost estimate.
The amounts shown in the table for new federal spending on Medicaid and the Children’s
Health Insurance Program would be outlays, as would the spending for subsidies to
purchase insurance coverage through the new exchanges. Those two streams of outlays
would amount to an estimated $1,211 billion over 10 years.
All of the other flows of funds shown in the table would represent changes in revenues,
netting to a projected increase in federal revenues of $169 billion over 10 years. Increases
in revenues would include the payments by employers to the exchanges for workers who
received coverage there (amounting to $45 billion); payments of penalties by uninsured
individuals ($29 billion); and payments of play-or-pay penalties by employers
($163 billion). Together, those provisions would increase federal revenues by a total of
$238 billion over 10 years. Other flows would represent decreases in revenues. Under the

Politico (WH Marine Evening Parade) — Washington Post (Marshall Plan for Protocol Chief) — China Daily (Chinese Flag To Be Flown At WH) — Woody’s Place Video Link


Mr President — Your Attention Please

Only one flag besides the Stars and Stripes that represents the United States has ever flown over the White House in Washington, DC.   Only one flag is ever displayed in the U.S. Capitol Rotunda.  That flag is not one that represents an individual state, branch of service, or other select group.   It is the POW/MIA (Prisoners of War/Missing In Action) Flag that calls to mind the sacrifice and plight of those Americans who have sacrificed their own freedom, to preserve liberty for all of us.  It’s presence serves to remind us that, while we enjoy the privileges of freedom, somewhere there are soldiers who have not been accounted for and may, in fact, be held against their will by the enemies of Freedom.


POTUS and FLOTUS at the Marine Corps Evening Parade

By CAROL E. LEE | 7/25/09

POTUS and FLOTUS at the Marine Corps Evening Parade, where POTUS was the guest of honor.

POTUS, FLOTUS and a Marine got into the limo outside the White House residence at 7:45 p.m. Motorcade arrived at Marine barracks in southeast DC at 7:53 p.m.

POTUS addressed a small group of Marines and family after arriving. Pool was not permitted to be present for his remarks, which our handlers said have same press procedures as Embassy staff visits, which are traditionally closed press. Pool could vaguely hear a well-miked POTUS from the 5-by-30 foot patch of grass where we were set, but was unable to make out anything he said.

POTUS and FLOTUS, along with the Commadant of the Marine Corps, Gen. James T. Conway, and his wife, entered the yard where the parade was held at 8:50 p.m.

POTUS, FLOTUS and the Conways walked down the center walk, flanked with grass, to their front row seats in the bleechers. POTUS’s seat was second one in from the walkway. POTUS greeted Gen. James Jones, whose seat was directly behind POTUS’s. FLOTUS gave Jones a kiss on the cheek.

Conway sat next to POTUS on the left, then FLOTUS, then Conway’s wife. In the seat to POTUS’s right was the Colonel of the DC barracks, Col. Andrew H. Smith.

First the President’s Own Marine Band performed. Their opening number was titled Chicago Tribune, which made POTUS smile – and the audience laughed – when it was announced. Then they played Stars and Stripes Forever.

After they finished and the lights dimmed, POTUS leaned in to say something to the Colonel of the barracks and stuck his hand out. They shook hands and chatted briefly – your pooler, still on the swathe of grass a short distance away, couldn’t hear anything that was said.

Then there was the presentation of the colors. POTUS did not salute as the color guard took its place, as Conway and Smith did.

There were drill routines and more tunes from the Commandant’s Own Marine Band. And, a cameo from Lance Corporal Chesty XIII – the English bulldog mascot of the barracks.

At 10:03 POTUS walked out to the center walk with Colonel Smith and Commandant Conway for the Commandant’s review. The band played the National Anthem. POTUS put his hand on his heart.

During the review POTUS seemed to struggle to figure out if he should salute when the Commandant and Colonel did. At first he went to lift his right hand but stopped. The next time the Commandant and Colonel saluted POTUS saluted quickly, like he does when boarding Marine One, while the Commandant and Colonel held theirs. At one point the Commandant and Colonel saluted, and POTUS did quickly. But this time the Commandant and Colonel held their salute for a long time. POTUS kept his hand at his side for a bit. Then at one point he put his hand on his heart. Then it was back by his side.

At 10:18 the parade ended and POTUS and FLOTUS greeted the Color Guard and other Marines in the center walk.

POTUS and FLOTUS even bent down to pet the mascot, Lance Corporal Chesty XIII.

POTUS and FLOTUS posed for a photo and exited to cheers at 10:25 p.m.

Motorcade was moving at 10:39 p.m., arriving back at the White House about 8 minutes later.

We have a lid. Your pooler apologizes in advance for any military terminology she screwed up in this report.



Office of the Press Secretary
For Immediate Release                                 May 13, 2009

President Obama Announces More Key Administration Posts

WASHINGTON, DC – Today, President Barack Obama announced his intent to nominate the following individuals for key administration posts: Capricia Penavic Marshall, Chief of Protocol, with the rank of Ambassador during her tenure of service, Department of State; Evan Segal, Chief Financial Officer, United States Department of Agriculture; and Rocco Landesman, Nominee for Chairman of the National Endowment for the Arts. The President also announced that he will be designating Gregory B. Jaczko, currently a Commissioner at the U.S. Nuclear Regulatory Commission, as Chairman of the U.S. Nuclear Regulatory Commission.

President Obama said, “This impressive group of people will add valued voices to my administration as we work to tackle the many challenges our nation faces. I am grateful for their decision to serve, and I am confident they will work hard as we put our country on a path towards prosperity and security.”

President Obama announced his intent to nominate the following individuals today:

Capricia Penavic Marshall, Nominee for Chief of Protocol, with the rank of Ambassador during her tenure of service, Department of State

Capricia Penavic Marshall has had an extensive career in public service. In 1992, after graduating from Case Western University School of Law, she joined Governor Bill Clinton’s Presidential campaign as Special Assistant to Hillary Rodham Clinton. Upon entering the White House in 1993, Marshall served as Special Assistant to the First Lady, traveling extensively and coordinating her agenda, meetings and public appearances. In October 1997, at the age of 32, Marshall was appointed Deputy Assistant to the President and Social Secretary to the White House, becoming the youngest Social Secretary in recent history. Marshall’s official responsibilities included the planning and execution of all White House international and domestic events. Marshall continued working with President Clinton helping to advance his work in policy, politics and community initiatives. In 2001, she began working as a consultant to a number of nonprofit and private sector organizations. In 2006, Marshall joined the re-election efforts for Senator Hillary Clinton, and subsequently joined Senator Clinton’s 2008 presidential campaign. As Senior Advisor, she led the Surrogate Speakers Program and helped coordinate women’s outreach. In 2008, Marshall became Executive Director of Hillpac and Friends of Hillary and is currently overseeing the closure of both committees. A first generation American and native of Cleveland, Ohio, Marshall graduated from Purdue University with a Bachelor of Arts in Political Science and International Studies. She studied at the University of Madrid for a year and traveled extensively through Europe. Marshall holds a law degree from Case Western Reserve University School of Law.



A Marshall Plan for Protocol Chief

marshall15By The Reliable Source | May 15, 2009

After months of waiting, the White House sent Capricia Marshall’s name to the Hill this week for the plum chief of protocol slot — but it’s not quite the job it used to be.

If confirmed, the former White House social secretary and Hillary Clinton confidante gets the title of ambassador, but not necessarily the usual seat on Air Force One when POTUS travels abroad, reports our colleague Al Kamen. President Obama plans to name someone he knows better to be at his side on foreign visits.

It’s a big change for the high-profile post, which typically had three main duties: babysitting the diplomatic corps, handling U.S. visits by foreign leaders and accompanying the president on official trips abroad. On those trips, it was the chief’s job “to interface with his or her counterpoint in the host country — to smooth over glitches, but basically to keep the show on the road,” said Ambassador Donald Ensenat, chief of protocol from ’01 to ’07. Ensenat joined his Yale roommate George W. Bush on 40 trips, working with almost every major foreign leader. “I loved it,” he told us yesterday. “Best thing I’ve ever done.”

Some big names have held the job: Shirley Temple Black, tobacco heir-diplomat Angier Biddle Duke, billionaire Leonore Annenberg, social titans Lucky Roosevelt and Lloyd Hand. In many ways, the glamorous and energetic Marshall — a JD with an MD husband, popular in both social and political circles — fits the profile.

However: While on paper the job is part of Clinton’s State Department, its primary focus is White House diplomacy. Which is why most presidents handpick close friends for the gig. Marshall, though, is a longtime soldier in Clinton’s camp, a veteran of her Senate and presidential campaigns.

But one administration official, speaking on the condition of anonymity, denied the change represents a slight by the White House. “It’s a different dynamic. … She’s going to have a much higher workload” from State because of Clinton’s reliance on her and Clinton’s own busy travel schedule. Marshall said she can’t talk to the media during her confirmation process.



China’s national flag to go up in White House on Sept 20

By Hou Lei (

Updated: 2009-07-13 16:45

The national flag of the People’s Republic of China (PRC) will be hoisted at the South Lawn of the White House in Washington on September 20, media reported Sunday.

Chinese associations in the United States had applied to hold a ceremony in front of the US President’s residence to celebrate the 60th anniversary of the founding of PRC.

Chen Ronghua, chairman of Fujian Association of the United States, told reporters that their application was approved not only because of the sound Sino-US relations but also because China is a responsible country.

“Many Americans admire China due to the success of last year’s Beijing Olympics,” said Chen.

More than 1,000 people will attend the ceremony and the performances held after it, according to Zhao Luqun, who will direct the performances.

Zhao said the performances will demonstrate the friendship, magnanimous spirit and kindness of modern Chinese people.



From Wiki:

The final design was red with a large golden five-pointed star and four smaller golden five-pointed stars (arranged in a vertical arc toward the middle of the flag) in the upper hoist-side corner. The color red symbolizes the spirit of the revolution, and the five stars signify the unity of the people of China under the leadership of the Chinese Communist Party. The flag was officially unveiled in Beijing’s Tiananmen Square on October 1, 1949, the formal announcement of the founding of the People’s Republic of China.

… The current design uses red as its background and golden for its stars. The red background symbolizes the blood of heroes who died during the revolution. The golden colour mainly symbolizes the glorious history and culture of the Chinese people and was partly inherited from the colours of the flag of Soviet Union, which was also a combination of red and gold, in which case the gold symbolizes the brightness of the communist future.

The larger star symbolizes the leadership of the Communist Party of China and the four smaller stars that surround the big star symbolize the four classes of Chinese that were considered unitable by Mao at that historical time (from one of Mao’s work: On The People’s Democratic Dictatorship); these are the Workers, Peasants, Petty Bourgeoisie (i.e. Small Business Class), and National Bourgeoisie (i.e. Chinese non-governmental businessmen). The most popular modern interpretation is the four stars represent the four occupations most esteemed by the Communist Party of China, which are farmers, workers, teachers, and soldiers. An interpretation under a more historical context is the four stars represent the traditional four categories of the people in the state, which are Workers (gōng, 工), Farmers (nóng, 农), Intellectuals (shì, 士), and Businessmen (shāng, 商) (see also Four occupations). It is worth noticing that the color of the Chinese flag, red, used to be the symbolic color of the mighty Han dynasty. The Chinese people are known as ” the Han people” in Chinese language.”Five stars rising on the east” was considered a bless to the dynasty in old Chinese culture. It is also worth noticing that the color of the stars on the flag, yellow, was the symbolic color of another great dynasty in Chinese history, the Tang dynasty.

It is sometimes stated that the five stars of the flag represent the five largest ethnic groups.[1][2] This is generally regarded as an erroneous conflation with the “Five Races Under One Union” flag, used 1912–28 in the early Republic of China, whose different-colored stripes represented the Han, Manchus, Mongols, Hui/Uyghurs, and Tibetans.[1][3]

  • ^ a b Shambaugh, David (June 1994). “Book reviews”. The China Quarterly (CUP for SOAS) (No. 138): 517–520.
  • ^ Mayall, James (1998). “Nationalism”. The Columbia History of the 20th Century. ed. Richard W. Bulliet. Columbia University Press. pp. 186. ISBN 0231076282.

·  ^ Zarrow, Peter Gue (2005). “Revolution and Civil War”. China in War and Revolution, 1895-1949. Routledge. pp. 363. ISBN 0415364485.


Related Links

HotAir:  Shocker: New Obama appointee has a tax problem & Obamateurism of the Day

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NYT:  Obama’s First Ride on Marine One

Breitart TV: Air Force Vet Convicted for Ripping Down Mexican Flag on College Campus

US Flag FAQ:  Betsy Ross Homepage Flag Rules and Regulations

LB YouTube VideoObama-HandshakeSnub

Woody’s Place:  A Fallen Soldier’s Homecoming (Video) “The good people of Georgia give respect to one of their fallen soldiers returning home from Afghanistan”  WARNING **BE PREPARED TO CRY**


Update:  Added Woody’s Place Video Link


La Depeche — Blog Citizen Of A Former Captain Folha Online — France 24 Video — Eurocockpit


AF 447 : a Synopsis of a Synopsis

“I’m sure that Airbus and EADS and the FAA (as well as Thales) are now quietly aware that they each played their part in this accident. How? Well they never studied the possible ramifications of a Thales pitot icing event at high level – and what sort of confusion and control problems it could lead to. They came up with a quite innocuous Service Bulletin and a fatuous homespun procedure for pilots to simply fly “power and attitude” once the speed indication becomes suspect and the ADIRS turns introspective.”


… now in case of a serious incident related to the pitot probes. In fact, (ref BEA Report Annex 5), in this case, the crew must perform 9 ECAM procedures, 1 procedure and 3 procedures QRH paper, hence the need for a single procedure “BLOCKING PITOT”Les dossiers noirs du transport aérien (Records of Black Aviation)

Blog Citizen Of A Former Captain


da Folha Online 23/07/2009 – 17h17 (English Translation)

Identified 49 of the 50 recovered bodies of victims of the Air France flight 447

The Secretariat of Social Defense of Pernambuco announced on the afternoon of Thursday that six more bodies of victims of the accident with the aircraft of Air France – which fell into the Atlantic Ocean on May 31 this year, when 447 was the flight from Rio to Paris – were identified.

Therefore, up to 49 the number of bodies identified by the IML (Instituto Médico Legal) from Recife, a total of 50 bodies and rescued by Navy Aeronautics.

According to the Bureau, identified the six victims were male, three Brazilians and three foreigners. Three occupants were identified exclusively from DNA tests and the other three also with the aid of dental examinations.

Only one body has not yet been identified, a male victim. At the request of families, the names of the occupants of the plane of Air France identified are not disclosed. The nationalities of the three foreigners were not informed.

According to [Secretariat of Social Defense of Pernambuco], work to identify the six bodies were completed on the last Tuesday (21), but released only today.



Crash of flight AF 447 – Published on 25/07/2009 07:56 | File Gil Bousquet

The CEAT has unveiled yesterday the remnants of the returnees Airbus in Toulouse.

The expertise will begin in August

It is in the quiet lobby of the 42 test center near Aviation Balma de Toulouse (CEAT) that are now stored the debris of the Airbus flight Rio-Paris. Yesterday, for the first time, investigators have released the 650 elements of the A330, which arrived by convoy on the outskirts of Toulouse last week for technical expertise. The first work of the investigators is the identification of various debris and the sealing of each of them. The soldiers of the gendarmerie of the air (GTA) who conduct the investigation under the authority of Lieutenant-Colonel Xavier Mulot (see below) are supported by five to eight people in the Investigations Section after the incident or accident CEAT . Also with the help of four including two forensic experts were present at Balma, the dozen investigators begin toulousains expert “in the month of August.”


Second convoy in August

These experts will analyze the documents carefully to try to understand what happened. The bending, deformation, breaks and cuts from different parts of the aircraft will be investigated through metallurgical tests and then used to develop hypotheses to explain the crash. The experts also looking for possible signs of combustion including electrical circuits. If doubts about traces of explosives appear, leave the room for the criminal research institute in Paris. In their work, investigators have attempted to reconstruct the skeleton of the plane wreck gathered Wednesday Through a serial number inscribed on the coins or their composition, the experts are able to determine what part of the plane corresponds debris.

They are among 650 (recovered by the Brazilian Army) in August which added 450 new pieces collected by the french ship Le Mistral. This second wave of parts arrive at Toulon in August and will be transported to Toulouse by road convoy. The personal items of passengers on the Airbus had already been repatriated at Roissy by diplomatic pouch. But a tiny part of the aircraft was recovered. It is especially lightweight often trade (galleys, seats …) that do not provide a decisive. The building blocks such as landing gear, wings and the nose of the aircraft are based by 3 000 to 5 000 meters deep. This investigation was entrusted to an elite aviation investigators with powerful tools coordinated by the policeman who led the investigation into the crash of the Concorde.

The slopes of the investigation

Without the black boxes (see above, against), experts have unfortunately little elements. In total, 1 100 debris collected represent only 2 to 3% of the A330 damaged at sea, at most. With so few elements, we will do that probabilities can not deduct any reliable scenario, “said Ronan Hubert, Director, Office of Archives of aircraft accidents (BAAA). Messages Accars who reported 24 outages in four minutes before losing contact with the Airbus will be very valuable. “It happened something very unusual” says a source close to the investigation. One of the specialties of CEAT is the resistance of the systems and subsystems for various electromagnetic attacks like lightning that could strike the aircraft. The BEA will continue to investigate the pitot probes.

The black boxes

Research continues on the area of the crash of the Airbus. Even if the transponders are no longer the objective of the research teams is to locate the wreckage of the aircraft. Housed in the rear part of the Airbus, the black boxes may be obtained through the submarine Ifremer and its arms. “It is quite feasible, it still must find the wreckage,” says one aviation expert. To find it, we must explore deep and relief using a sonar. Problem: The area to cover supposed to be the impact of aircraft on the water is immense and reaches 16 000 km2. The new grid will last four to six weeks. A sonar survey of the terrain is towed marine cable at the end of 1 500 meters long on the “Why not? “To locate the wreckage.

Air France : anger pilots

Four unions of pilots of Air France Tuesday wrote to the boss of the company to demand action “visible” to improve security in the daily operation of the airline. After the trauma created by the accident of flight AF447 Paris-Rio on June 1 which was 228 dead, Alter, R’Way, SPAF and Unpl believe it is “urgent and precautionary measures visible prior to more profound reform of the functioning of the company. Pilots talk of “failure of the company” on the flight safety and are demanding that the management of flight safety is directly linked to the Chief Executive. “Now it is a sub-fife who has no power” as the leader of one of the unions.

The families of victims

According to a judicial source, the National Federation of victims of disasters (Fenvac) and 36 families of victims have made civil parties in the investigation into the accident of flight AF 447 Rio de Janeiro-Paris.

Lawyers for the families and the Fenvac will have access to file and will be able to make requests for investigative action. Counsel for the first family Civil Party, Me Sophie Bottai, had said in June that “some families of victims felt that the whole truth was not known” and “see a manifest filtering of information” . Since opening on June 5 in Paris of the investigation against X for manslaughter, no request for damages was rejected by one of the judges, Sylvie Zimmerman. The President of the Union of Air France pilots, Gérard Arnoux, who wants to Civil Party, has stated that it “did not believe the unions are welcome in this case” and feared that the trail of “the human error “is preferred.


Investigators piece together wreckage from doomed Air France jet (Contains Investigation Video)

France 24 – July 25, 2009

The French bureau leading the technical side of the investigation into the crash of Air France flight 447 on June 1 said this month that an initial study of crash debris showed the plane was intact when it hit the Atlantic Ocean. The cause of the crash, however, is still unknown.

The flight’s black boxes have never been found. Over the next few months, four experts will be analyzing all the wreckage, which thus far includes 650 pieces of debris.

According to Lieutenant-Colonel Xavier Mulot, chief investigator for AF flight 447, “We’re expecting a lot from this study because, thanks to the way the debris was broken and traces of burns, it’ll eventually allow us to understand what happened.”

Aeronautical specialists are combing through hundreds of pages of documents, examining everything from flight records to mechanical inspections.

They are also reviewing a map showing where the passengers were seated during the flight, with the seat assignments of the 51 bodies recovered marked in colour.

Since the tragedy occured, investigators have come up with more than 200 documents for their files.

Families of the victims of last month’s crash have registered as civil plaintiffs in the French courts to gain access to the case files, officials said on Thursday.

The head of an association representing families of those killed in the crash of flight 447 had earlier this month accused Air France of keeping relatives in the dark about the accident.


English Version:  According to Lieutenant-Colonel Xavier Mulot, chief investigator for AF flight 447, “We’re expecting a lot from this study because, thanks to the way the debris was broken and traces of burns, it’ll eventually allow us to understand what happened.”  The video also stated  there were 650 pieces of aircraft and another 450 to arrive in August.

Caution: Most pilot forums have concluded that “Lieutenant-Colonel Xavier Mulot did not say that trace of burn were actually observed, only that he was merely exploring possibilities and… another BEA technical expert was interviewed (on other TV channels) and they were more cautious about this study given the available data.”  Other French TV (France2) channels apparently show a part of the landing gear were also recovered.

French TV (Videos) (JT video appears to be same as France24)(AF 447 begins approx 12-15 in middle of broadcast)

JT de 13h

JT de 20h

France 3


Disclaimer:  The following information is based on the above France 24 video and is speculative, however most respected pilot forum commenters have concluded based on the assumption the aircraft seated 219 passengers, and 216 passengers were on board, leaving 3 seats vacant:

Seats 29B and 39B are colored white and may have been vacant.

Assuming that 29B and 39B were vacant, the numbers are:

  • forward cabin: 8 of 40 seats is 20.0%
  • midships: 9 of 75 seats is 12.0%
  • aft: 21 of 102 seats is 20.6%
  • Aisles A,B: 8 of 58 seats is 13.8%
  • Aisles J,K 16 of 62 seats is 25.8%
  • Center aisles D,E,F,G: 14 of 97 seats is 14.4%
  • Starboard/Right side: 24 of 108 seats is 22.2%
  • Port/Left side: 14 of 104 seats is 13.5%


Additional Pilot Forum Questions/Comments:

  • Where was the third vacant seat?
  • The Galley is from further back and not from the 2nd door area as we thought.
  • What I find interesting: “more in the section just rear of doors L3/R3… Which is where a split might occur in a nose up low forward velocity “pancake fall”… but then, maybe just a coincidence.”



France24 Video Close-up of Identified Passengers/Seating


AF 447: The crew of Air France had long warned …

Eurocockpit (English Translation)

BEA has launched the press on a siding track conditions of the impact of the plane, we can now avoid to address the conditions that led to the impact of the aircraft. Thus, the consequences of losing control of the aircraft that are preferred to the cause of this loss of control. The management of Air France is beginning to suggest that the crew could not know how to use his radar. The BEA and Air France and converge slowly towards the fault of the crew would have embedded in the huge huge storm, which seems to fix all the world … While Pitot probes have always temporary ban (permanently) to be the cause of the accident … While this fact of the failure of the Pitot is proved (ACARS) and that its consequences are already known, seems to be undertaken to be absolutely rejected.

According to the BEA and Air France, Pitot failure would be “a cause” but “not the cause” of the main accident … What would be so then the “other causes” and “THE” original cause another? Nobody said … It is just obviously necessary that there be other causes, or that asserts without evidence that there are others, because if only the Pitot as the main origin of this accident the responsibilities may be overwhelming for many …

We understand much better what obsessive behavior – to exclude any cost Pitot – the crew of Air France had previously warned the company by reporting incident particularly detailed. Clearly, they were not taken into account as they should have been.

These incident reports are called ASR (Air Safety Report) and the regulations are sent to the airline but also on BEA and the Authority (DGCA, EASA). The ASR should enable those entities to identify potential risks that reveal the reported situations and take preventive measures to avoid these risks. In addition, the RAS should be used to prevent the occurrence of similar incidents or accidents which reported the incident could be a precursor …

In retrospect of the occurrence of the AF 447 and given the formal role of these reports of an incident, it is more qu’édifiant to read the ASR previously created and transmitted … obviously for nothing …

Therefore, measuring the willingness to declare that the cause of the accident, allegedly unknown, can not and will never be the failure of the Pitot tube. One thing is certain in this investigation long, complicated and clear: this is not what we do not whether this, or anything but out of pity, not Pitot!

“Chronicles of a reported accident” has tragically been the title of each ASR Eurocockpit which delivers a prime example.

This is a flight of Air France, Paris (CDG) to Antananarivo (TNR) xx/08/2008 on the Airbus A340, registration F-GNIH.

Thus it is forbidden to think, except at the risk of criminalizing Pitot …, the sequence of ACARS messages for this flight – and they reflect failures – is the same as the AF 447 … Also on the flight day, the duration of the incident is about 4 minutes …

The crew was faced with the alarm stall (STALL) – announcing that the flight was driving dangerously affected – but did not appear voluntarily CLB and the power base of 5 ° – Cabrera – provided by the “Actuation of emergency.” Instead of responding as well, the captain brought the aircraft down. Moreover, the crew was fortunate to recover quickly enough indication of correct speed … What may be missed in the middle of the night, with the AF 447.

R is “translated” into plain language or accompanied by comments as to its place when it can facilitate our understanding for lay readers. For a better understanding of the situation, we suggest to all our readers to extinguish the bright lights, putting himself in a night and read the ASR in less than 4 minutes …

IMPORTANT NOTE: it is “in the right circles” that there were actually 10 ASR (not 6) written on the subject. Everyone will understand the exceptional collection of work that the profession must do if we do not want the BEA “forgets” a little too quickly on these issues Pitot probes. It is the honor of the profession, the memory of our colleagues and that of their passengers. If you have written, or if you know a colleague who wrote a RAS on the subject, if you have access to such a document, please contact us. We guarantee the anonymity of our sources, never betrayed a guarantee for 10 years now.


Symbol Number 1: Note “Director” does not disappear!

PFD Special characters (Restrictions) are replaced by Orange Crosses!



CBD PF in the left seat and OPL XXXXX PNF in the right seat, OPL XXXXX rest.

The captain sits on the left seat, he is the driver function (PF) on this trip, a co-pilot seat is right and responsible tasks of the pilot not in function (PNF), while a other rests.

At FL 370 with a SAT to -51 ° C and a wind from 080 to about 18 Kts on AWY UB612 with an OFFSET 1R, between the OBD and MLK in radio contact with Khartoum, as we were at the edge of cloud with some slight turbulence, I tied PAX. We were at dusk with low brightness.

The aircraft was 000 feet at 37, moved along a nautical mile on the right of the route followed, in accordance with existing regulations in this region to prevent the risk of collision with other aircraft using the same route in reverse . The term “limit layer” means that the flight took place just above a cloud layer.

Then we entered the layer, and soon after we started having a slight burning smell that lasted about twenty seconds and that did not appear to be of volcanic origin (no smell of rotten eggs), but rather electrical smell to me and smell the air conditioning for the OPL. Then the smell has disappeared. The odor was confirmed by the PAX booth and PNC between rows 3 and 14 thereafter.

The aircraft did not change altitude, entering the cloud layer due to the diffuse and irregular aspect thereof, parts of which are higher than others.

We had the weather radar in motion on calibrated without echoes still apparent in the layer and approximately one minute after the smell of burning, we had severe turbulence. I did the message “Here the cockpit sitting PNC Attached turbulence. I reduced the speed of Mach 0.80 (a little over green dot).

The weather radar was no storm. When the aircraft entered a zone turbulence, the captain made the announcement for the rest of the crew sit and focus, the passengers having been preventively the same record in lighting of the light signal. The captain then slightly reduced speed (Mach) of the aircraft to bring it below the maximum recommended speed in turbulence. The captain pointed out that this reduction in speed brought the aircraft to fly with a low margin of speed over the speed called “green dot” corresponding to the minimum speed to meet operating and calculated according to a report to stall speed “down”.

A few seconds after the indication of speed on the PFD passes abruptly OPL 280 Kts to 100 Kts in the red band and it lasted for many seconds. At the same time on the PFD variation CBD high speed with speed 15Kts green dot less speed and a trend at least 50 Kts.

The speed shown on the screen of the first moves suddenly and abruptly from 280 knots (518 km / h) at 100 knots (185 km / h) and remains at this value for many seconds. At the same time on the screen of the Commander, the speed begins to vary with a very high amplitude, reaching a value of less than 15 knots at the minimum speed “green dot”. The display of the speed trend “(indication of the trend calculations speed) is below 50 knots, which means that the speed will be lower than 50 knots within 10 seconds if the force of acceleration (which is ie a deceleration) remains constant.

At the same time (it was 15:10 GMT) Red Alarm A / P OFF and then in the wake alarm amber ADR Disagree, IAS DISCREPENCY, ALTN LAW LOST PROT, W REAC / S FAULT DET.

15h11 monitoring of the alarm RUD TRV LIM amber FAULT.

At the same time, at 15.10 UTC, the autopilot disconnects and multiple alarms appear on the central screen. Editor’s note: These alarms are also messages on ACARS flight AF 447 …

Followed immediately by the alarm STALL STALL STALL (without the associated alarm cricket) with TOGA LK. As I always speed trend within 50 Kts, I steered the plane manually, with a call for light downhill and turn right to exit the AWY. The aircraft responding very weakly with the CBD several regressions PFD speed in the lower red stripe. At the same time I asked the OPL to send a MAYDAY. During the descent noise impact (hail?) Heard in the cockpit.

The stall alarm “STALL” immediately sounds and a message appears indicating that the engine thrust is fixed to the value of maximum thrust (TOGA). The captain pilot in the aircraft manual and the aircraft is descending into account the loss of speed which, if true, would only stall. In this logic, it must be down to try and retrieve speed. It also urges a turn to leave the route and avoid the risk of collision with a device located in a lower flight level on the same road.

Descent to FL 340. The aircraft speed is correct again I disconnected the ATHR out of TOGA LK. The rate is similar side CBD and OPL, but down 2 on the PFD speed scale indication SPD LIM red remained until the end of the flight.

Descent to FL 340. The aircraft speed is correct again I disconnected the ATHR out of TOGA LK. The rate is similar side CBD and OPL, but down 2 on the PFD speed scale indication SPD LIM red remained until the end of the flight.

After being in the emergency management of the aircraft, the crew focuses on the “IAS DOUBTFUL. Then, the speed seemed again consistent Commander rehire mechanics.

At no time have we had ice detection alarm.

I woke up the second OPL was at rest, then we addressed the ECAM checklist.

Descent to FL 330 and then cancel the MAYDAY and continued flight at this level.

The aircraft fell in ALT LAW (MAX IAS 330Kts/M.82) I have a favorite beach area expanded flight and continued the flight at Mach 0.80.

The deterioration of the Steering Law (Alternate Law) and the resulting loss of protection caused by this event led the Commander to increase its speed margin in relation to stall high and low. He therefore decided to continue the flight at a lower altitude (33 000 feet instead of 37 000 feet at the time of the incident) and at a speed of Mach 0.80.

At the balance sheet:

ALT LAW aircraft confirmed by the status and crosses on the PFD amber;


The messages of failure and the aircraft configuration match what the messages reveal ACARS flight AF 477

It is important to note that the indication on the circuit of the screen SD of RUDDER TRAVEL LIMITER was amber, but halfway between neutral and full deflection rudder. Contact with the CCP for what was the state of the cabin and PAX. Only the strong turbulence was felt by PAX. I called SAT COM maintenance to further research the issues and their subsequent recommendations we reset all the computers VOL PRIM and SEC without any result. (at that time we had the fuel for a return to NCE or FCO).

The crew finds that the excess deflection of the rudder is fixed at a value between neutral and full deflection. The loss of RUD TRV LIM (Editor’s note: also present in the messages of ACARS 447) led the blocking of excess travel. The Commander shall contact the Chief Cabine Principal to inquire about the situation in the cabin. The contact with the satellite communication services now resulted in the suggestion of an attempt to “reset” of computers to control flight (PRIM and SEC), which does not recover the operating system inoperative.

The crew finds that the excess deflection of the rudder is fixed at a value between neutral and full deflection. The loss of RUD TRV LIM (Editor’s note: also present in the messages of ACARS 447) led the blocking of excess travel. The Commander shall contact the Chief Cabine Principal to inquire about the situation in the cabin. The contact with the satellite communication services now resulted in the suggestion of an attempt to “reset” of computers to control flight (PRIM and SEC), which does not recover the operating system inoperative.  New call SAT COM QB who has not found any additional explanation on the difference in steering component, then the CCO to see them for the theft and troubleshooting of the aircraft, the return to Europe n ‘as much as possible with the remaining fuel, the problem then the decision to continue on TNR or divert to RUN. Decision to continue on TNR with a request for me to postpone the revival of colleagues who had to return the aircraft in view of CDG 05h00 minimum fault-finding to TNR.

The crew finds a contradiction between two checklists to be applied (Editor’s note: one more!), One seeking to land with the flaps in position 2 and the other with the flaps in position 3 (robberies involving different speeds and distances different landing …). Contacts with maintenance services (QB) do not provide an explanation. Editor’s note: The crew will have to “cope”. It provides a diversion to La Reunion (RUN) and decides to continue on Antananarivo.’’

We have continued the flight with the pitot heat on and on radar calibration MAX.

Is doubt as to the origin of the problem, but apparently in suspecting the Pitot …, the crew continued the flight with starting the manual heating Pitot probes, to overcome any possible malfunctioning of automatic heating and using the radar on the maximum sensitivity, to overcome a possible malfunction of the radar gain setting “calibrated”.

Is important to note that the indication on the circuit of the screen SD of RUDDER TRAVEL LIMITER was amber, but halfway between neutral and full deflection rudder. Contact with the CCP for what was the state of the cabin and PAX. Only the strong turbulence was felt by PAX. I called SAT COM maintenance to further research the issues and their subsequent recommendations we reset all the computers VOL PRIM and SEC without any result. (at that time we had the fuel for a return to NCE or FCO).

The crew finds that the excess deflection of the rudder is fixed at a value between neutral and full deflection. The loss of RUD TRV LIM (Editor’s note: also present in the messages of ACARS 447) led the blocking of excess travel. The Commander shall contact the Chief Cabine Principal to inquire about the situation in the cabin. The contact with the satellite communication services now resulted in the suggestion of an attempt to “reset” of computers to control flight (PRIM and SEC), which does not recover the operating system inoperative.

On the checklist developed for F / CTL ALTN LAW (PROT LOST) could be read to APPR PROC FOR USE LDG FLAP 3. (There is no indication in the QRH on the table of correction after failure) by the developed against the F / CTL RUD TRV LIM in APPR PROC FAULT FOR USE LDG FLAP 2, which is confirmed by the QRH in the table of correction fail. As it appeared that discrepancies between the QRH requesting arise part 2 and the status which requires us to ask strands 3 and it was therefore necessary to conduct further research and therefore the decision of a later call to QB. New call SAT COM QB who has not found any additional explanation on the difference in steering component, then the CCO to see them for the theft and troubleshooting of the aircraft, the return to Europe n ‘as much as possible with the remaining fuel, the problem then the decision to continue on TNR or divert to RUN. Decision to continue on TNR with a request for me to postpone the revival of colleagues who had to return the aircraft in view of CDG 05h00 minimum fault-finding to TNR.

The crew finds a contradiction between two checklists to be applied (Editor’s note: one more!), One seeking to land with the flaps in position 2 and the other with the flaps in position 3 (robberies involving different speeds and distances different landing …). Contacts with maintenance services (QB) do not provide an explanation. Editor’s note: The crew will have to “cope”. It provides a diversion to La Reunion (RUN) and decides to continue on Antananarivo.

We continued the flight with the pitot heat on and on radar calibration MAX.

In doubt as to the origin of the problem, but apparently in suspecting the Pitot …, the crew continued the flight with starting the manual heating Pitot probes, to overcome any possible malfunctioning of automatic heating and using the radar on the maximum sensitivity, to overcome a possible malfunction of the radar gain setting “calibrated”.

It should be noted that throughout the down ALT LAW, the aircraft was not responding to my request regression speed via the control of the FCU SPD (we were in the Open), and I therefore disengage the AP for reducing speed. Piloting the plane gave me the impression of an airplane flying very soft, which was not the feeling of flying during takeoff and climb. Because of the difference between the QRH and status, so I followed the status and we laid 3 strands.

During the final descent to Madagascar, the pilot of the aircraft had to be manually taken in light of the failure modes as a result of the degradation of the Act Steering Alternate Law. The captain reported a feeling of a lack of response from the aircraft to the stresses on the flight.

Looking ACMS we saw indications of Pitot 1 & 2, 2 and 3 & 1 & 3 to 15h10TU fault.

A post-flight, reading the ACMS system of the aircraft (Aircraft Condition Monitoring System = system that monitors and records the malfunction of the plane), reveals the primary failure, one that has triggered first at 15.10 UTC PITOT 1 & 2, 2 & 3, 1 & 3 FAULT. Editor’s note: this is the primary message was transmitted ACARS flight AF447 …

In post flight report

  • 15h07 : BMC 3

Editor’s note: the message PFR (Post Flight Report) reports the same messages of alarms that were sent successively by ACARS flight AF447 in CFR (Current Flight Report).

I did the tour of the aircraft with one of the OPL and both the radome pitot that appeared intact. Only the side impact sensor OPL was heavily tilted nearly vertical. There was no evidence of impact or scratches on the paint of the radome and on the windshields. I did, after meeting all the crew (TFN / PNC) a debriefing to explain what we had lived and reassure everyone and answer questions.

In matters of the DM

Flight to FL 370 not experienced wind shear (wind 080/18Kts) wind was stable for more than a half hour in strength and direction. Flight at mach 0.80 as slight turbulence (PAX Attached) No audible presence of hail in the early incidents (but we have heard during the descent of noise impacts to the cockpit (hail ???). SAT Temperature -51 ° C (we have never had ice detection alarm). No thunderstorms phenomenon (no weather radar was not calibrated and a flash of lightning visible). Top of strong turbulence to 15h09 followed alarms cited above and 15h11 to 15h10 GMT the speedometer OPL later rose from 280 to 100 Kts Kts in the red band and remained in as many seconds.

CBD side the speed is increased from green dot – 15 Kts with a speed trend to -50 Kts. STALL alarm (no alarm cricket) series with several incursions of speed shown in the lower red stripe. Stabilization aircraft at FL340 and continued flight to FL 330. Duration estimated 3 to 5 minutes.

Duration estimated 3 to 5 minutes.

Commander summarizes the conditions under which the incident that he is analyzed retrospectively by the Company – including maintenance services – for the Authority (DGAC / EASA) and the BEA . The ASR, like RAS, was used as feedback to generate a study of risks and prevent the occurrence of a new incident of same type, even a possible accident for which the incident could be harbinger …

Unfortunately, it did not happen …

published on 2009-07-19 17:59 by EuroCockpit.


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Updated Close-up pics (Landing Gear France3 — Hydraulics France24)


Symbol Number 1: Note “Director” does not disappear!

PFD Special characters (Restrictions) are replaced by Orange Crosses!