Psychiatric Drug Use Skyrockets in US Military
July 26, 2010
Natural News
By: David Gutierrez
Use of prescription psychotropics has skyrocketed among U.S. military personnel in recent years, according to an investigation by Military Times.
At least 17 percent of active-duty military personnel are currently taking an antidepressant, including as many as 6 percent of all deployed troops. In contrast, the rate of antidepressant use in the wider U.S. public is only 10 percent.
Overall, one in six military service members takes at least one type of psychiatric drug. The numbers are probably higher than estimated, since troops are also known to share and trade prescription drugs with each other, even while in combat zones.
Data obtained from the Defense Logistics Agency show that overall use of psychiatric drugs increased by 76 percent between 2001 and 2009. More specifically, use of anti-seizure drugs increased 70 percent, use of sedatives and anxiety drugs increased 170 percent, and antipsychotic use increased 200 percent.
Spending on anticonvulsants increased from $16 million to $35 million per year, spending on anxiety drugs and sedatives increased from $6 million to $17 million, and spending on antipsychotics increased from $4 million to $16 million.
Although antidepressants are among the drugs most commonly taken by military personnel, their use increased only 40 percent between 2001 and 2009. Spending actually dropped by 16 percent, likely reflecting the new availability of less-expensive generic drugs.
According to a 2009 study by the Veterans Affairs Administration, approximately 60 percent of psychiatric drug use by military personnel is for “off-label” uses not approved by the FDA. Thus, antipsychotic drugs intended for the treatment of schizophrenia are now being widely prescribed for post-traumatic stress disorder symptoms such as anger, headaches, nervousness and nightmares.
“Patients may be exposed to drugs that have problematic side effects without deriving any benefit,” said Robert Rosenheck of Yale University. “We just don’t know. There haven’t been very many studies.”
Further compounding concern over side effects, many troops regularly mix two or more drugs together into untested cocktails. The effects of multiple drugs acting in unison have rarely been tested. When both drugs act on the same organ — in this case, the brain — the chance of unforeseen interactions is even greater.
“In the case of poly-drug use — the ‘cocktail’ — where you are combining an antidepressant, an anticonvulsant, an antipsychotic, and maybe a stimulant to keep this guy awake — that has never been tested,” Breggin said.
Among the side effects that some health professionals worry about are impaired motor skills, reduced reaction time, increased suicide risk, irritability, aggressiveness and hostility.
“Imagine causing that in men and women who are heavily armed and under a great deal of stress,” psychiatrist Peter Breggin said.
Some observers have suggested that the 150 percent increase in suicides in the Army since 2001 and the 50 percent increase in the Marines may be caused in part by the 76 percent increase in the use of psychiatric drugs.
The widespread use of psychotropics, including off-label use and cocktails, is “really a large-scale experiment,” said former Navy psychiatrist Grace Jackson. “We are experimenting with changing people’s cognition and behavior.”
It is difficult to determine the exact causes of increase psychotropic use in the military. Some analysts have pointed to the increased stress of multiple ongoing wars and longer deployments since 2001.
Others, such as Frank Ochberg of Michigan State University, note the faster growth rate of mood-dulling drugs such as antipsychotics and anticonvulsants, and suggest that these drugs are being prescribed to troops readjusting to civilian life.
“The ultimate effect of both of these drugs is to take the heightened arousal — the hypervigilance and all the emotions that served you once you were deployed — and help to turn that back down,” Ochberg said.
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Goldman Sachs Admits Bailout Cash Went To Offshore Banks
July 26, 2010
USA Today
By Karen Mracek and Thomas Beaumont, Des Moines Register
Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public Friday night.
Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia.
Asked the significance of the list, Grassley said, “I hope it’s as simple as taxpayers deserve to know what happened to their money.”
He added, “We thought originally we were bailing out AIG. Then later on … we learned that the money flowed through AIG to a few big banks, and now we know that the money went from these few big banks to dozens of financial institutions all around the world.”
Grassley said he was reserving judgment on the appropriateness of U.S. taxpayer money ending up overseas until he learns more about the 32 entities.
Goldman Sachs (GS) received $5.55 billion from the government in fall of 2008 as payment for then-worthless securities it held in AIG. Goldman had already hedged its risk that the securities would go bad. It had entered into agreements to spread the risk with the 32 entities named in Friday’s report.
Overall, Goldman Sachs received a $12.9 billion payout from the government’s bailout of AIG, which was at one time the world’s largest insurance company.
Goldman Sachs also revealed to the Senate Finance Committee that it would have received $2.3 billion if AIG had gone under. Other large financial institutions, such as Citibank, JPMorgan Chase and Morgan Stanley, sold Goldman Sachs protection in the case of AIG’s collapse. Those institutions did not have to pay Goldman Sachs after the government stepped in with tax money.
Shouldn’t Goldman Sachs be expected to collect from those institutions “before they collect the taxpayers’ dollars?” Grassley asked. “It’s a little bit like a farmer, if you got crop insurance, you shouldn’t be getting disaster aid.”
Goldman had not disclosed the names of the counterparties it paid in late 2008 until Friday, despite repeated requests from Elizabeth Warren, chairwoman of the Congressional Oversight Panel.
“I think we didn’t get the information because they consider it very embarrassing,” Grassley said, “and they ought to consider it very embarrassing.”
The initial $85 billion to bail out AIG was supplemented by an additional $49.1 billion from the Troubled Asset Relief Program, known as TARP, as well as additional funds from the Federal Reserve. AIG’s debt to U.S. taxpayers totals $133.3 billion outstanding.
“The only thing I can tell you is that people have the right to know, and the Fed and the public’s business ought to be more public,” Grassley said.
The list of companies receiving money includes a few familiar foreign banks, such as the Royal Bank of Scotland and Barclays.
DZ AG Deutsche Zantrake Genossenschaftz Bank, a German cooperative banking group, received $1.2 billion, more than a quarter of the money Goldman paid out.
Warren, in testimony Wednesday, said that the rescue of AIG “distorted the marketplace by turning AIG’s risky bets into fully guaranteed transactions. Instead of forcing AIG and its counterparties to bear the costs of the company’s failure, the government shifted those costs in full onto taxpayers.”
Grassley stressed the importance of transparency in the marketplace, as well as in the government’s actions.
“Just like the government, markets need more transparency, and consequently this is some of that transparency because we’ve got to rebuild confidence to make the markets work properly,” Grassley said.
AIG received the bailout of $85 billion at the discretion of the Federal Reserve Bank of New York, which was led at the time by Timothy Geithner. He now is U.S. treasury secretary.
“I think it proves that he knew a lot more at the time than he told,” Grassley said. “And he surely knew where this money was going to go. If he didn’t, he should have known before they let the money out of their bank up there.”
An attempt to reach Geithner Friday night through the White House public information office was unsuccessful.
Grassley has for years pushed to give the Government Accountability Office more oversight of the Federal Reserve.
U.S. Rep. Bruce Braley, a Waterloo Democrat, said he would propose that the House subcommittee on oversight and investigations convene hearings on the need for more Federal Reserve oversight. Braley is a member of the subcommittee.
Braley said of Geithner, “I would assume he would be someone we would want to hear from because he would have firsthand knowledge.”
Braley also noted that the AIG bailout was negotiated under President George W. Bush, a Republican.
He said he was confident that the financial regulatory reform bill signed by President Obama this week would help provide better oversight than the AIG bailout included.
“There was no regulatory framework in place,” Braley said. “We had to put something in place to begin reining them in. I’m confident they will begin to be able to do that.
Health Insurers Stop Coverage For Children
July 26, 2010
Yahoo! Finance
Some major health insurance companies will no longer issue certain types of policies for children, an unintended consequence of President Barack Obama’s health care overhaul law, state officials said Friday.
Florida Insurance Commissioner Kevin McCarty said several big insurers in his state will stop issuing new policies that cover children individually. Oklahoma Insurance Commissioner Kim Holland said a couple of local insurers in her state are doing likewise.
In Florida, Blue Cross and Blue Shield, Aetna, and Golden Rule — a subsidiary of UnitedHealthcare — notified the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.
The major types of coverage for children — employer plans and government programs — are not be affected by the disruption. But a subset of policies — those that cover children as individuals — may run into problems. Even so, insurers are not canceling children’s coverage already issued, but refusing to write new policies.
The administration reacted sharply to the pullback. “We’re disappointed that a small number of insurance companies are taking this unwarranted and unnecessary step,” said Jessica Santillo, a spokeswoman for the Health and Human Services department.
Starting later this year, the health care overhaul law requires insurers to accept children regardless of medical problems — a major early benefit of the complex legislation. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.
Blue Cross and Blue Shield of Florida issues about 9,000 to 10,000 new policies a year that only cover children. Vice president Randy Kammer said the company’s experts calculated that guaranteeing coverage for children could raise premiums for other individual policy holders by as much as 20 percent.
“We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims,” said Kammer. “Guaranteed issue means you could technically buy it on the way to the hospital.”
Kammer said the company did not make the decision lightly. “We were looking at all our other individual policy holders who pay a lot for coverage, and we didn’t think it was fair to given them that kind of an increase to benefit a small population that receives a greater advantage than they do,” she said.
Industry officials estimate that children’s policies account for 8 percent of single coverage plans sold directly to consumers.
To get around the problem, insurance companies and state insurance commissioners are pressing the federal government to require an open enrollment period for the guaranteed children’s coverage.
Parents could only get the guaranteed coverage during a designated month each year, or if the family went through a major change, such as a divorce or a parent losing their job. Open enrollment periods are standard for most employer health plans, and some government programs.
“That seems to be a fairly reasonable approach,” said Holland, the Oklahoma commissioner, a Democrat. “It would create a mechanism to get children into coverage but limit the ability to misuse the system.”
State insurance commissioners who have brought the problem to the attention of the Obama administration say many insurers could stop issuing individual coverage for children. “We are attempting to convince (federal officials) that this is a serious enough concern to work with (insurers) to give them some relief,” Holland said.
Final regulations for the new children’s coverage are due before Sept. 23. The requirement to cover kids with pre-existing medical problems will apply to new plans starting after that date.
HHS spokewoman Santillo would not say how the administration intends to address the problem. “We are working with the insurance industry to help ensure that quality coverage is available nationwide for children with pre-existing conditions,” she said.
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Britain Plans To Decentralize Health Care
July 26, 2010
The New York Times
By: Sarah Lyall
Perhaps the only consistent thing about Britain’s socialized health care system is that it is in a perpetual state of flux, its structure constantly changing as governments search for the elusive formula that will deliver the best care for the cheapest price while costs and demand escalate.
Even as the new coalition government said it would make enormous cuts in the public sector, it initially promised to leave health care alone. But in one of its most surprising moves so far, it has done the opposite, proposing what would be the most radical reorganization of the National Health Service, as the system is called, since its inception in 1948.
Practical details of the plan are still sketchy. But its aim is clear: to shift control of England’s $160 billion annual health budget from a centralized bureaucracy to doctors at the local level. Under the plan, $100 billion to $125 billion a year would be meted out to general practitioners, who would use the money to buy services from hospitals and other health care providers.
The plan would also shrink the bureaucratic apparatus, in keeping with the government’s goal to effect $30 billion in “efficiency savings” in the health budget by 2014 and to reduce administrative costs by 45 percent. Tens of thousands of jobs would be lost because layers of bureaucracy would be abolished.
In a document, or white paper, outlining the plan, the government admitted that the changes would “cause significant disruption and loss of jobs.” But it said: “The current architecture of the health system has developed piecemeal, involves duplication and is unwieldy. Liberating the N.H.S., and putting power in the hands of patients and clinicians, means we will be able to effect a radical simplification, and remove layers of management.”
The health secretary, Andrew Lansley, also promised to put more power in the hands of patients. Currently, how and where patients are treated, and by whom, is largely determined by decisions made by 150 entities known as primary care trusts — all of which would be abolished under the plan, with some of those choices going to patients. It would also abolish many current government-set targets, like limits on how long patients have to wait for treatment.
The plan, with many elements that need legislative approval to be enacted, applies only to England; other parts of Britain have separate systems.
The government announced the proposals this month. Reactions to them range from pleased to highly skeptical.
Many critics say that the plans are far too ambitious, particularly in the short period of time allotted, and they doubt that general practitioners are the right people to decide how the health care budget should be spent. Currently, the 150 primary care trusts make most of those decisions. Under the proposals, general practitioners would band together in regional consortia to buy services from hospitals and other providers.
It is likely that many such groups would have to spend money to hire outside managers to manage their budgets and negotiate with the providers, thus canceling out some of the savings.
David Furness, head of strategic development at the Social Market Foundation, a study group, said that under the plan, every general practitioner in London would, in effect, be responsible for a $3.4 million budget.
“It’s like getting your waiter to manage a restaurant,” Mr. Furness said. “The government is saying that G.P.’s know what the patient wants, just the way a waiter knows what you want to eat. But a waiter isn’t necessarily any good at ordering stock, managing the premises, talking to the chef — why would they be? They’re waiters.”
But advocacy groups for general practitioners welcomed the proposals.
“One of the great attractions of this is that it will be able to focus on what local people need,” said Prof. Steve Field, chairman of the Royal College of General Practitioners, which represents about 40,000 of the 50,000 general practitioners in the country. “This is about clinicians taking responsibility for making these decisions.”
Dr. Richard Vautrey, deputy chairman of the general practitioner committee at the British Medical Association, said general practitioners had long felt there were “far too many bureaucratic hurdles to leap” in the system, impeding communication. “In many places, the communication between G.P.’s and consultants in hospitals has become fragmented and distant,” he said.
The plan would also require all National Health Service hospitals to become “foundation trusts,” enterprises that are independent of health service control and accountable to an independent regulator (some hospitals currently operate in this fashion). This would result in a further loss of jobs, health care unions say, and also open the door to further privatization of the service.
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Deadly Cosmetics
July 23, 2010
Natural News
A new animation video from The Story of Stuff Project, the Campaign for Safe Cosmetics and Free Range Studios deals a devastating blow to the chemical industry with a straightforward, hard-hitting and entertaining look at the toxicity of cosmetics and personal care products.
Narrated by Annie Leonard, who also narrated the hugely popular Story of Stuff animations, this new cosmetics animation takes aim at the toxic cosmetics industry, exposing how many popular brand-name products contain cancer causing chemicals.
Talking about shampoo products, Annie says, “Pantene contains a chemical linked to cancer. And lots of other products in my bathroom, from sunscreen to lipstick and even baby shampoo, also contain chemicals linked to cancer or other problems like learning disabilities, asthma and even damaged sperm.”
The animation goes on to explain the aggregate toxic burden of personal care products on the lives of everyday consumers:
“The average woman in the U.S. uses about twelve personal care products daily… each product containing a dozen or more chemicals. Less than 20 percent of the chemicals used in cosmetics have been assessed for safety by the industry safety panel, so we just don’t know what they do to us when we use them.”
“It’s like a giant experiment,” Annie continues. “We’re using all these mystery chemicals and just waiting to see what happens… The FDA doesn’t even assess the safety of personal care products or their ingredients… they don’t even require that all the ingredients be listed on the label!”
Why telling the truth threatens Big Business in America
Annie has done a great job with The Story of Cosmetics. The information presented in this video is unusually blunt for someone who has achieved mainstream popularity and recognition in the popular press.
The video takes direct aim at Herbal Essences shampoo from Proctor & Gamble (the company I consider to be the Monsanto of the body care industry), saying, “This is Proctor & Gamble. They’re the ones offering me Herbal Essences, the number two shampoo in the country. It contains toxic petrochemicals made from oil. Since when is oil an herb?”
Astonishingly, Annie even takes aim at the bogus pink ribbon breast cancer fundraising scam by showing an image of an Estee Lauder product with a pink ribbon on the package. She says, “Ooh, here’s Estee Lauder offering me a chance to help find a cure for breast cancer. That’s nice, but wait… they’re also using chemicals linked to cancer! Don’t you think the best way for Estee Lauder to fight cancer is to stop using those chemicals in the first place?”
Sounds like Annie has been reading NaturalNews, eh? Good for her! In fact, if you just read the script of the video, you might think it was written by NaturalNews. It’s the kind of information we’ve been putting out for years. Similarly, the Organic Consumers Association has been leading the charge on organic body care labeling reform, and experts like Dr. Samuel Epstein has been on the march even longer, attempting to warn Americans about the toxicity of cosmetics and personal care products for over a decade.
Now with this Story of Cosmetics, Annie Leonard has joined the ranks of those who ruffle the feathers of big industry. You can now expect a massive assault on Annie from privately-contracted hackers, social network spammers, flamers, character assault specialists and other muckrakers who are secretly hired by the corporations who stand to lose big if Annie’s message results in new regulation. Welcome to the club, Annie: In America, telling the truth always gets you in trouble. Especially if you tell the sort of truth that protects the People from the toxic chemicals promoted by Big Business.
I wonder if Annie will someday do a video called The Story of Chemotherapy and expose the scam of the cancer industry, too? That would be beyond hilarious…
How about The Story of Fluoride and the mass poisoning of the water supply with a toxic, cancer-causing chemical?
Or even better, The Story of Psychiatric Drugging of Children which exposes the mass chemical poisoning of our children with psych drugs. That story, of course, is already being told over at CCHR through other videos.
I don’t know if Annie Leonard has the courage to go after these industries, but she’s shown some real backbone in attacking the toxic personal care industries, that’s for sure. Give her credit where it’s due: She’s managed to find an entertaining, mass-media way to tell the truth about toxic personal care products, and she’s getting good traction with the mainstream media on this issue, too. For that, she deserves a medal or something. But instead of a medal, she’ll probably get raked over the coals by the chemical industry goons. If there’s one thing Big Business can’t stand in America, it’s someone telling people the truth that exposes industry lies.
Exposing the lies of the toxic chemical industries in America comes with a very heavy price. Yet it remains the most important task we can all pursue right now because to take back our health, we must all speak out and dare to tell the truth about the chemicals, pharmaceuticals and vaccines that are killing us all and destroying the future of life on our planet.
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Pepsi Goes Healthy – in 10 Years
July 23, 2010
Natural News
PepsiCo has announced a worldwide plan to decrease its contribution to poor health through widespread changes to its product line, drawing both praise and skepticism.
The company has committed to reduce the sodium content of “key foods” by 25 percent by 2015, the saturated fat content of “key foods” by 15 percent by 2020, and the added sugar content in “key drinks” by 25 percent by 2020. It plans to incorporate more fruits, vegetables, nuts, whole grains and low-fat dairy into its product line and to develop new artificial salts and low- or no-calorie sweeteners. Pepsi also plans to expand and triple the sales of its healthier product lines, including Naked juice, Tazo tea, Tropicana and Quaker.
The announcement that drew the most attention, however, is the company’s commitment to stop selling full-sugar beverages in schools worldwide by 2012. The move is an expansion of a policy implemented in U.S. schools in 2006.
Under the new policy, Pepsi will sell only water, fat-free and low-fat milk, and sugar-free juice for general consumption in primary schools. Gatorade will be made available only “when physical activity is carried out — in special relation to sports, not for everyday use,” according to Derek Yach, the company’s senior vice president of global health policy. The same rules will be in force in secondary schools, except that low-calorie (diet) drinks may be sold in those schools.
Pepsi garnered praise for the move, with Kelly Brownell of Yale University comparing it favorably with country-specific pledges by the tobacco industry. Yet even the much-lauded school policy has its loopholes. Aside from the vague guidelines over when sugary sports drinks can be sold, the new policy still allows Pepsi to sell sugary fruit juices. In addition, Brownell noted, whether the policies will lead to an overall decrease in caloric consumption remains to be seen.
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Music Improves Your Nervous System?
July 23, 2010
Natural News
Researchers from Northwestern University recently published a series of data in the journal Nature Reviews Neuroscience, revealing that music plays an important role in nervous system development. According to various, diverse scientific literature, musical training improves the brain’s overall ability to learn new things.
After poring through data from numerous labs and research centers around the world, Nina Kraus, lead author of the report, and her team, came to realize how valuable music is in enhancing learning ability.
“The brain is unable to process all of the available sensory information from second to second, and thus must selectively enhance what is relevant. Playing an instrument primes the brain to choose what is relevant in a complex process that may involve reading or remembering a score, timing issues and coordination with other musicians,” she explained.
In other words, musical training helps to develop the foundation for thinking by which cognitive function is able to improve throughout a person’s lifetime.
“Science has studied the effects on humans of various kinds of sound, and the consensus is that the right sort of music definitely has a beneficial effect on our state of health,” explains Alfred Vogel in his book The Nature Doctor: A Manual of Traditional and Complementary Medicine.
The data also revealed that children who receive musical training are more adept at interpreting pitch changes in speech, and they generally have a better vocabulary and reading ability than children who receive no musical training.
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Swishing Carbs Gives Energy Boost
July 23, 2010
Natural News
by: Jonathan Benson
Many athletes often grab a quick snack or sugary drink to get an extra energy and performance boost during a race or game, but researchers have found that simply swishing a beverage in your mouth that contains carbohydrates triggers the same response. And athletes do not even have to swallow it in order to derive benefit.
Asker Jeukendrup, an exercise physiologist at the University of Birmingham, and his team of researchers first set out to discover how and why carbohydrates worked to help athletes during short exercise sessions. After all, the body is unable to process carbohydrates fast enough to provide the quick boosts of energy that many athletes seem to get from consuming them.
What the team came to realize is that the simple presence of carbohydrates in the mouth triggers a brain response that improves performance.
“Your brain tells your body, ‘carbohydrates are on the way’, and with that message, muscles and nerves are prompted to work harder and longer”, explained Matt Bridge, a senior lecturer in coaching and sports science at the University of Birmingham.
In tests, runners given a quick swish of flavorless carbohydrate water performed better than those given plain water. Whether or not the beverage was sweet did not make a difference; the mere presence of carbohydrates was enough to provide a little extra boost.
Scott Montain, an exercise researcher at the United States Army Research Institute of Environmental Medicine, explained his belief that, while a carbohydrate swish does provide a measurable energy boost, “endurance competitors are better off just consuming the calories” rather than “sipping and then spitting out expensive, sticky spit.”
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Scientists Have Ties to Drug Companies?
July 23, 2010
Natural News
More than 90 percent of researchers who have published studies favorable to the controversial diabetes drug Avandia had a financial stake in the issue, according to a study conducted by researchers from the Mayo Clinic.
The Mayo Clinic is one of the few research organizations in the United States that does not accept corporate funding.
Sales of GlaxoSmithKline’s bestselling drug Avandia plunged in 2007, after evidence emerged linking the drug to an increased risk of heart attack and death. These reports sparked a debate over the drug’s safety that continues to this day.
In an analysis of more than 200 studies, articles, editorials and letters published in scientific journals since 2007, Mayo Clinic researchers have concluded that financial conflict of interest continues to play a major role in that debate. Fully 87 percent of all authors who expressed positive views about Avandia had financial ties to GlaxoSmithKline, while another 7 percent had ties to other pharmaceutical companies involved with diabetes. Among authors with financial conflicts of interest, only 30 percent “expressed unfavorable views” of the drug.
In contrast, authors who were critical of Avandia were “largely free of identifiable conflicts of interest,” the researchers said.
The conflicts of interest cut both ways. Of 29 authors who recommended the drug Actos as a safer alternative to Avandia, 25 had ties to that drug’s maker, Eli Lilly.
In order to identify conflicts of interest, the Mayo Clinic researchers searched through multiple published works by each given author, as well as conducting investigations on the Internet. This research uncovered that while 47 percent of all authors surveyed had a financial stake in the diabetes drug debate, 23 percent failed to disclose these links. Most of these authors merely remained silent about their conflicts of interest, while three actually lied and said they had none.
“The implication is that there should be better disclosure,” lead researcher Mohammad Murad said. “People [with financial links to companies] should realize they are probably biased, and as readers we should be aware of probable bias.”
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Wealthy Tax Cuts to Expire
July 23, 2010
The Wall Street Journal
By: Deborah Solomon
The Obama administration will allow tax cuts for the wealthiest Americans to expire on schedule, Treasury Secretary Timothy Geithner said Thursday, setting up a clash with Republicans and a small but vocal group of Democrats who want to delay the looming tax increases.
Mr. Geithner said the White House would allow taxes on top earners to increase in 2011 as part of an effort to bring down the U.S. budget deficit. He said the White House plans to extend expiring tax cuts for middle- and lower-income Americans, and expects to undertake a broader revision of the tax code next year.
“We believe it is appropriate to let those tax cuts that go to the most fortunate expire,” Mr. Geithner said at a breakfast with reporters.
His comments came as a number of Democrats, among them North Dakota Sen. Kent Conrad, have begun agreeing with Republicans and some economists who want to extend the Bush-era tax cuts for all earners, including couples earning above $250,000 and individuals earning above $200,000. Sen. Joseph Lieberman, a Connecticut independent, added his voice on Thursday, saying through a spokesman that he was “concerned about the impact of allowing the tax cuts to expire during our fragile economic recovery.”
Mr. Geithner said there’s “still some uncertainty about how strong the recovery is going to be,” which may be affecting spending decisions by businesses and individuals. He discounted that as a reason to extend the tax cuts for top earners, saying most private forecasts show moderate economic growth and increasing public confidence in the recovery.
Pressure is growing on the administration from a small number of Democratic lawmakers to extend all the Bush cuts, which include taxes on investment income and capital gains.
“I think given the fragility of the recovery, the timing is wrong for any kind of tax increase of this nature,” Rep. Gerry Connolly (D., Va.) said. “I know that puts me out of step with many in my own caucus, but it’s important for members to remember the top 5% [of earners] generates 30% of consumer spending.”
Mr. Connolly said there were “lots of conversations going on sotto voce” among House Democrats over whether to extend current tax levels for all earners, not just the middle class.
Federal Reserve Chairman Ben Bernanke told lawmakers Thursday the U.S. “should maintain our stimulus in the short term.” Extending the Bush tax cuts “is one way” of doing that, he said. “There are other ways as well.”
Many economists say raising rates on top earners could prompt consumers to rein in spending. A Goldman Sachs research report projects the expiration of the tax cuts could shave just under 0.5 percentage points off growth in 2011.
All the Bush-era tax cuts are set to expire at the end of this year, meaning Congress must act if it wants to avoid raising taxes across the board. Political strategists said that could give Republicans an edge, since they could essentially hold the entire package hostage unless Democrats agree to extend the cuts for high-income earners.
“The question is, do Republicans think they can get this to the end game, where Democrats face a choice of seeing an income tax increase on everybody,” said Tom Gallagher, a Washington-based analyst with ISI Group, a Wall Street research firm. He speculated that a compromise could include a short extension for higher earners.
A Senate Democratic leadership aide said as of now, neither a partial extension of the Bush tax cuts nor a full extension could win the 60 votes needed to break an expected Senate filibuster. Liberals would try to block a full extension. Republicans would try to block an extension of just the middle-class tax cuts.
House Majority Leader Steny Hoyer of Maryland planned to lay out Democrats’ agenda on the economy in a speech Friday. He is expected to criticize Republicans by lumping their support for tax cuts with their opposition to government regulation of Wall Street and the oil industry.
Even if Republicans and centrist Democrats succeed in winning an extension of current tax levels for the next year or two, taxes could be going up after that. A top Republican on President Obama’s blue-ribbon fiscal commission, Sen. Judd Gregg of New Hampshire, said tax increases are on the table in the bipartisan panel’s negotiations, along with spending cuts.
The administration estimates that allowing tax cuts to expire for upper-income earners would increase U.S. revenue by more than $800 billion over the next 10 years. It also plans to push to reinstate the estate tax to the 2009 level of 45%.
House Speaker Nancy Pelosi of California appeared to back Mr. Geithner in ruling out a compromise. “Our position has been that we support middle-income tax cuts,” she said at a press briefing. “The tax cuts at the high end have increased the deficit enormously and…have not created jobs in the eight years of the Bush administration.”
