“Every 21 minutes, our next possible leader is aborted.” This is the theme of a controversial anti-abortion billboard campaign that went up in the South Side of Chicago today. The posters feature an image of President Obama, and many are complaining that it's disrespectful and, well, just wrong.
The billboards are the work of a Texas-based pro-life group called Life Always, an organization that critics say targets Blacks and Black neighborhoods with its anti-abortion campaigns. It is the same group that placed a billboard ad in New York featuring the face of a young Black girl that read, “The most dangerous place for an African-American is in the womb.” That billboard was taken down because employees working in the building it was posted on were being harassed.
At a Tuesday morning press conference to unveil the campaign, the group justified the use of Obama’s image. “Our future leaders are being aborted at an alarming rate. These are babies who could grow to be the future president of the United States, or the next Oprah Winfrey, Denzel Washington or Maya Angelou,” said Life Always board member Rev. Derek McCoy.
Planned Parenthood Illinois said Tuesday that the billboards are “an offensive and condescending effort to stigmatize and shame African-American women while attempting to limit their ability to make private, personal medical decisions.”
Gaylon Alcaraz, the executive director of Chicago Abortion Fund, a pro-choice organization, finds the posters offensive and says they fail to address the social issues that force poor women to choose abortion in the first place. Only three of approximately 30 planned billboards have gone up so far.
CAF and other pro-choice organizations are reaching out to elected officials, urging them to denounce the campaign.
Thursday, March 31, 2011
Wednesday, March 30, 2011
Johnson & Johnson Issues Tylenol Recalls From Defunct Plant
(Reuters) - Johnson & Johnson said it was recalling more than 700,000 bottles or packages of Tylenol and other consumer medicines made at a now-closed plant, the latest in a litany of recalls by the company.
J&J's McNeil Consumer Healthcare unit recalled one lot of Tylenol 8 Hour Extended Release Caplets, or 34,056 bottles, from retailers, the company said.
The company cited a musty odor that has prompted many other J&J recalls. The product was made at its Fort Washington, Pennsylvania plant before J&J closed the facility in April 2010.
Separately, McNeil added 10 lots of other products, amounting to 717,696 bottles or packages, to a wholesale level recall it initiated on January 14. Those products included various forms of pain reliever Tylenol, as well as allergy drug Benadryl and cough/cold medicine Sudafed.
In that recall, McNeil said it was taking precautions after a review of records found instances where equipment cleaning procedures were insufficient or cleaning was not adequately documented, although it said it was unlikely to have hurt product quality.
J&J has recalled more than 300 million bottles and packages of adult and children's consumer medicines in the past 15 months. Although no injuries have been linked to the recalls, they have sullied J&J's reputation, pressured its share price and sparked Congressional investigations.
J&J's McNeil Consumer Healthcare unit recalled one lot of Tylenol 8 Hour Extended Release Caplets, or 34,056 bottles, from retailers, the company said.
The company cited a musty odor that has prompted many other J&J recalls. The product was made at its Fort Washington, Pennsylvania plant before J&J closed the facility in April 2010.
Separately, McNeil added 10 lots of other products, amounting to 717,696 bottles or packages, to a wholesale level recall it initiated on January 14. Those products included various forms of pain reliever Tylenol, as well as allergy drug Benadryl and cough/cold medicine Sudafed.
In that recall, McNeil said it was taking precautions after a review of records found instances where equipment cleaning procedures were insufficient or cleaning was not adequately documented, although it said it was unlikely to have hurt product quality.
J&J has recalled more than 300 million bottles and packages of adult and children's consumer medicines in the past 15 months. Although no injuries have been linked to the recalls, they have sullied J&J's reputation, pressured its share price and sparked Congressional investigations.
Evidence Ties Smoking To Throat, Stomach Cancers
(Reuters Health) - Smokers face an increased risk of certain types of throat and stomach cancers, even years after they quit, a new study finds.
Combining the results of 33 past studies, Italian researchers found that current smokers were more than twice as likely as nonsmokers to develop cancer, either in their esophagus or in a part of the stomach called the gastric cardia.
In some of the studies, the risk of esophagus cancer remained high even when people had quit smoking three decades earlier.
The two cancers, both known as adenocarcinomas, are relatively uncommon in Western countries. Rates elsewhere are much higher, especially in less developed countries. But in recent decades, rates of the cancers have been rising in the U.S. and Europe -- possibly related to growing rates of obesity.
Smoking has long been considered a risk factor for the two cancers.
But these latest findings offer a "better quantification" of the risks, said senior researcher Dr. Eva Negri, of the "Mario Negri" Institute of Pharmacological Research in Milan.
What's more, they suggest that the risks remain higher than average for some time after smokers quit.
"Stopping smoking is highly beneficial at any age, but it appears that for these cancers the risk decreases only slowly," Negri told Reuters Health in an email.
For their study, published in the journal Epidemiology, Negri and her colleagues pooled the results of 33 previous studies. In most of them, researchers had compared a relatively small group of patients with either esophagus or gastric cardia tumors against a cancer-free group. In three studies, researchers had followed large groups of adults over time, charting any new cases of esophageal or gastric cardia cancers.
Overall, Negri's team found, current smokers had more than double the odds of developing either of the cancers, compared to people who had never smoked.
And while that risk declined after people stopped smoking, it was still 62 percent higher in former smokers than in lifelong non-smokers. In some studies, the extra risk of esophagus cancer persisted up to 30 years after people had quit.
Since both esophageal and gastric cardia adenocarcinomas are fairly uncommon in the West, the absolute risks to any one smoker may be low.
According to the American Cancer Society, the average American has a one in 200 chance of developing any type of esophageal cancer over a lifetime, and a one in 114 risk of developing some form of stomach cancer.
By comparison, the odds of developing lung cancer are about one in 13 for men, and one in 16 for women -- counting both smokers and non-smokers. Smokers would be at much greater risk than lifelong non-smokers.
Lung cancer, heart disease and other ills are "numerically more important" than esophageal and gastric cardia cancers when it comes to the health consequences of smoking, Negri noted. The types of studies that were available for her team to analyze can't prove that smoking causes adenocarcinoma of the esophagus or gastric cardia. To do that, researchers would have to purposely expose some people to years of tobacco smoke and see what happens to them over time - and ethical reasons make a study like that impossible.
Still, Negri and her colleagues say, the risks seen in the current study offer smokers one more reason to quit -- and non-smokers one more reason to never start.
Combining the results of 33 past studies, Italian researchers found that current smokers were more than twice as likely as nonsmokers to develop cancer, either in their esophagus or in a part of the stomach called the gastric cardia.
In some of the studies, the risk of esophagus cancer remained high even when people had quit smoking three decades earlier.
The two cancers, both known as adenocarcinomas, are relatively uncommon in Western countries. Rates elsewhere are much higher, especially in less developed countries. But in recent decades, rates of the cancers have been rising in the U.S. and Europe -- possibly related to growing rates of obesity.
Smoking has long been considered a risk factor for the two cancers.
But these latest findings offer a "better quantification" of the risks, said senior researcher Dr. Eva Negri, of the "Mario Negri" Institute of Pharmacological Research in Milan.
What's more, they suggest that the risks remain higher than average for some time after smokers quit.
"Stopping smoking is highly beneficial at any age, but it appears that for these cancers the risk decreases only slowly," Negri told Reuters Health in an email.
For their study, published in the journal Epidemiology, Negri and her colleagues pooled the results of 33 previous studies. In most of them, researchers had compared a relatively small group of patients with either esophagus or gastric cardia tumors against a cancer-free group. In three studies, researchers had followed large groups of adults over time, charting any new cases of esophageal or gastric cardia cancers.
Overall, Negri's team found, current smokers had more than double the odds of developing either of the cancers, compared to people who had never smoked.
And while that risk declined after people stopped smoking, it was still 62 percent higher in former smokers than in lifelong non-smokers. In some studies, the extra risk of esophagus cancer persisted up to 30 years after people had quit.
Since both esophageal and gastric cardia adenocarcinomas are fairly uncommon in the West, the absolute risks to any one smoker may be low.
According to the American Cancer Society, the average American has a one in 200 chance of developing any type of esophageal cancer over a lifetime, and a one in 114 risk of developing some form of stomach cancer.
By comparison, the odds of developing lung cancer are about one in 13 for men, and one in 16 for women -- counting both smokers and non-smokers. Smokers would be at much greater risk than lifelong non-smokers.
Lung cancer, heart disease and other ills are "numerically more important" than esophageal and gastric cardia cancers when it comes to the health consequences of smoking, Negri noted. The types of studies that were available for her team to analyze can't prove that smoking causes adenocarcinoma of the esophagus or gastric cardia. To do that, researchers would have to purposely expose some people to years of tobacco smoke and see what happens to them over time - and ethical reasons make a study like that impossible.
Still, Negri and her colleagues say, the risks seen in the current study offer smokers one more reason to quit -- and non-smokers one more reason to never start.
Greater Brain Risks Eyed In "Real World" Ecstasy Use
(Reuters Health) - For a glimpse into real-world drug use, Australian researchers went to parties where people were using a drug known as ecstasy - and discovered that users' brains were at far more risk from the drug than anyone had suspected.
The researchers also found that ecstasy pills often contain a variety of other drugs.
"What's concerning is that most studies looking at toxicity in people or animals look at a single drug," said Dr. Thomas Newton, a professor at Baylor College of Medicine, who was not involved in this study.
"We have no idea what happens when you start mixing like this."
For this study, 56 people who had taken ecstasy at least five times in the past agreed to invite the researchers to house parties where they took ecstasy once again.
The researchers collected a sample of the pills and measured users' blood levels of MDMA - the chemical that's in ecstasy - every hour for 5 hours after people took the drug. At the end of the study, each user received AUS$200 (about US$205, or 128 GBP) for participating.
In some people, the amount of MDMA reached levels that cause injury or death in primates.
The researchers found that only half of the pills consisted entirely of MDMA. The other half also contained methamphetamine or chemicals related to MDMA: MDEA or MDA.
Some pills had no MDMA at all. The ones that did had amounts that ranged widely, from as low as 25 mg to ten times that amount.
"This highlights a significant public health concern, particularly regarding the existence of pills containing more than 200 mg of MDMA," the authors write in their report of the study, which is published in the journal Addiction.
Because the research was intended to capture a realistic snapshot of ecstasy use, the number of pills people took over the course of an evening varied as well. Most users ingested more than one pill; some people took as many as five.
"Taking multiple pills is likely to lead to very high blood concentration, which may be harmful," Dr. Rod Irvine, the lead author of the study, wrote in an email to Reuters Health.
That's because concentrations of MDMA in users' blood did not stop climbing during the 5 hours of sampling.
"We were surprised that the...concentrations continued to rise throughout the study," Irvine, a professor at the University of Adelaide, said. "The higher levels are approaching those that have been shown to be damaging to brain cells in animal models."
Three users had blood concentrations greater than 700 mg/L, which was poisonous to primates in laboratory studies. Another three users had concentrations very close to that level "Those are big numbers," Newton said of the blood concentrations.
Irvine said that most users continued to take more ecstasy throughout the night, even though their blood concentrations from the initial pill had not peaked.
The authors speculate that users might develop a tolerance to the drug while they're using it, making them feel less intoxicated even while their blood levels of the drug are increasing.
None of the users in the study suffered any immediate health problems from taking ecstasy.
According to the US National Institute on Drug Abuse, ecstasy can interfere with heart rate and temperature regulation and can cause brain damage.
Seven of every 100 twelfth-graders say they have tried ecstasy.
Irvine said that collecting data at parties is a valuable way to get a sense of what people are actually exposing themselves to.
For instance, in 14 people the amount of MDMA in the blood reached levels that had never been studied in humans in the lab.
In laboratory studies, ethical considerations prevent researchers from testing such high doses in people, so the amounts they experiment with "do not reflect the range used naturally," Irvine wrote.
Regarding the information Irvine's team collected, Newton said, "It's very unique to pull that off."
The research was funded by the National Health and Medical Research Council of Australia.
The researchers also found that ecstasy pills often contain a variety of other drugs.
"What's concerning is that most studies looking at toxicity in people or animals look at a single drug," said Dr. Thomas Newton, a professor at Baylor College of Medicine, who was not involved in this study.
"We have no idea what happens when you start mixing like this."
For this study, 56 people who had taken ecstasy at least five times in the past agreed to invite the researchers to house parties where they took ecstasy once again.
The researchers collected a sample of the pills and measured users' blood levels of MDMA - the chemical that's in ecstasy - every hour for 5 hours after people took the drug. At the end of the study, each user received AUS$200 (about US$205, or 128 GBP) for participating.
In some people, the amount of MDMA reached levels that cause injury or death in primates.
The researchers found that only half of the pills consisted entirely of MDMA. The other half also contained methamphetamine or chemicals related to MDMA: MDEA or MDA.
Some pills had no MDMA at all. The ones that did had amounts that ranged widely, from as low as 25 mg to ten times that amount.
"This highlights a significant public health concern, particularly regarding the existence of pills containing more than 200 mg of MDMA," the authors write in their report of the study, which is published in the journal Addiction.
Because the research was intended to capture a realistic snapshot of ecstasy use, the number of pills people took over the course of an evening varied as well. Most users ingested more than one pill; some people took as many as five.
"Taking multiple pills is likely to lead to very high blood concentration, which may be harmful," Dr. Rod Irvine, the lead author of the study, wrote in an email to Reuters Health.
That's because concentrations of MDMA in users' blood did not stop climbing during the 5 hours of sampling.
"We were surprised that the...concentrations continued to rise throughout the study," Irvine, a professor at the University of Adelaide, said. "The higher levels are approaching those that have been shown to be damaging to brain cells in animal models."
Three users had blood concentrations greater than 700 mg/L, which was poisonous to primates in laboratory studies. Another three users had concentrations very close to that level "Those are big numbers," Newton said of the blood concentrations.
Irvine said that most users continued to take more ecstasy throughout the night, even though their blood concentrations from the initial pill had not peaked.
The authors speculate that users might develop a tolerance to the drug while they're using it, making them feel less intoxicated even while their blood levels of the drug are increasing.
None of the users in the study suffered any immediate health problems from taking ecstasy.
According to the US National Institute on Drug Abuse, ecstasy can interfere with heart rate and temperature regulation and can cause brain damage.
Seven of every 100 twelfth-graders say they have tried ecstasy.
Irvine said that collecting data at parties is a valuable way to get a sense of what people are actually exposing themselves to.
For instance, in 14 people the amount of MDMA in the blood reached levels that had never been studied in humans in the lab.
In laboratory studies, ethical considerations prevent researchers from testing such high doses in people, so the amounts they experiment with "do not reflect the range used naturally," Irvine wrote.
Regarding the information Irvine's team collected, Newton said, "It's very unique to pull that off."
The research was funded by the National Health and Medical Research Council of Australia.
CDC Called To Alabama Hospitals Following Intravenous Nutrition Bacteria Outbreak; Nine Deaths Reported
(Reuters) - Nine patients in Alabama have died after receiving intravenous nutrition that authorities say was contaminated, but it was unclear whether the bacteria contributed to the deaths.
Alabama authorities said they were investigating an outbreak of Serratia marcescens bacteremia, a bacterial infection in the blood, in 19 patients at six hospitals in the state who all received total parenteral nutrition (TPN).
TPN is a nutritional solution fed to patients by injection.
"Of the 19 that received the substance, nine of those are no longer living ... These were very fragile individuals and it's not clear whether the bacteria contributed to their deaths," said Dr. Jim McVay, a senior official with the Alabama Department of Public Health.
Authorities identified bacteria first in the patients and then ran cultures on the TPN, he said.
"TPN is liquid nutrition fed through an IV using a catheter. Use of contaminated products may lead to bacterial infection of the blood," said a department statement.
The Centers for Disease Control and Prevention (CDC) is helping with an investigation, the department said.
"CDC's initial investigation identified TPN produced by a single pharmacy, Meds IV, as a potential common source and has determined that these hospitals received TPN from this pharmacy," the department said in a statement.
The pharmacy was notified and informed its customers of the possibility of contamination. On March 24, it recalled all of its IV compounded products and has discontinued all production.
The affected hospitals stopped using TPN received from this pharmacy, the statement said.
It said the U.S. Food and Drug Administration is aware of the voluntary recall, and that the pharmacy and the hospitals are cooperating with the investigation.
The affected hospitals are Baptist Princeton, Baptist Shelby, Baptist Prattville, Medical West, Cooper Green Mercy and Select Specialty Hospital in Birmingham.
Alabama authorities said they were investigating an outbreak of Serratia marcescens bacteremia, a bacterial infection in the blood, in 19 patients at six hospitals in the state who all received total parenteral nutrition (TPN).
TPN is a nutritional solution fed to patients by injection.
"Of the 19 that received the substance, nine of those are no longer living ... These were very fragile individuals and it's not clear whether the bacteria contributed to their deaths," said Dr. Jim McVay, a senior official with the Alabama Department of Public Health.
Authorities identified bacteria first in the patients and then ran cultures on the TPN, he said.
"TPN is liquid nutrition fed through an IV using a catheter. Use of contaminated products may lead to bacterial infection of the blood," said a department statement.
The Centers for Disease Control and Prevention (CDC) is helping with an investigation, the department said.
"CDC's initial investigation identified TPN produced by a single pharmacy, Meds IV, as a potential common source and has determined that these hospitals received TPN from this pharmacy," the department said in a statement.
The pharmacy was notified and informed its customers of the possibility of contamination. On March 24, it recalled all of its IV compounded products and has discontinued all production.
The affected hospitals stopped using TPN received from this pharmacy, the statement said.
It said the U.S. Food and Drug Administration is aware of the voluntary recall, and that the pharmacy and the hospitals are cooperating with the investigation.
The affected hospitals are Baptist Princeton, Baptist Shelby, Baptist Prattville, Medical West, Cooper Green Mercy and Select Specialty Hospital in Birmingham.
Arizona Enacts Bans On Abortions Based On Gender, Race
PHOENIX (Reuters) – Arizona Governor Jan Brewer on Tuesday signed into law a controversial bill that makes the state the first in the nation to outlaw abortions performed on the basis of the race or gender of the fetus.
The move comes as anti-abortion groups across the nation try to seize on gains made by political conservatives during the November elections, seeking enactment of new state laws to further restrict abortions.
Under the new Arizona statute, doctors and other medical professionals would face felony charges if they could be shown to have performed abortions for the purposes of helping parents select their offspring on the basis of gender or race.
The women having such abortions would not be penalized.
State legislators have said no such law exists anywhere else in the nation.
Backers of the measure said the ban is needed to put an end to sex- and race-related discrimination that exists in Arizona and throughout the nation. They insist the issue is about bias rather than any broader stance on abortion.
"Governor Brewer believes society has a responsibility to protect its most vulnerable -- the unborn -- and this legislation is consistent with her strong pro-life track record," a spokesman said.
But opponents have maintained that while such abortions may be happening in other countries like China, no clear evidence can found of it occurring in Arizona.
Planned Parenthood Federation of America also said the measure may erode a woman's rights, fearing that doctors for the first time would feel compelled to ask their patients the reasons for seeking an abortion.
A Planned Parenthood official in Arizona condemned the governor's action in a statement to Reuters.
"This law creates a highly unusual requirement that women state publicly their reason for choosing to terminate a pregnancy -- a private decision they already made with their physician, partner and family," said Bryan Howard, the group's chief executive.
The law contains no explicit provision requiring doctors to ask their patients their reasons for seeking an abortion, nor for patients to disclose such reasons. But opponents of the measure feel passage of the new law might make them feel more inclined to do so.
The law would take effect 90 days following the end of the current legislative session.
The move comes as anti-abortion groups across the nation try to seize on gains made by political conservatives during the November elections, seeking enactment of new state laws to further restrict abortions.
Under the new Arizona statute, doctors and other medical professionals would face felony charges if they could be shown to have performed abortions for the purposes of helping parents select their offspring on the basis of gender or race.
The women having such abortions would not be penalized.
State legislators have said no such law exists anywhere else in the nation.
Backers of the measure said the ban is needed to put an end to sex- and race-related discrimination that exists in Arizona and throughout the nation. They insist the issue is about bias rather than any broader stance on abortion.
"Governor Brewer believes society has a responsibility to protect its most vulnerable -- the unborn -- and this legislation is consistent with her strong pro-life track record," a spokesman said.
But opponents have maintained that while such abortions may be happening in other countries like China, no clear evidence can found of it occurring in Arizona.
Planned Parenthood Federation of America also said the measure may erode a woman's rights, fearing that doctors for the first time would feel compelled to ask their patients the reasons for seeking an abortion.
A Planned Parenthood official in Arizona condemned the governor's action in a statement to Reuters.
"This law creates a highly unusual requirement that women state publicly their reason for choosing to terminate a pregnancy -- a private decision they already made with their physician, partner and family," said Bryan Howard, the group's chief executive.
The law contains no explicit provision requiring doctors to ask their patients their reasons for seeking an abortion, nor for patients to disclose such reasons. But opponents of the measure feel passage of the new law might make them feel more inclined to do so.
The law would take effect 90 days following the end of the current legislative session.
The Price of Taxing the Rich
As Brad Williams walked the halls of the California state capitol in Sacramento on a recent afternoon, he spotted a small crowd of protesters battling state spending cuts. They wore shiny white buttons that said "We Love Jobs!" and argued that looming budget reductions will hurt the Golden State's working class.
Mr. Williams shook his head. "They're missing the real problem," he said.
The working class may be taking a beating from spending cuts used to close a cavernous deficit, Mr. Williams said, but the root of California's woes is its reliance on taxing the wealthy.
Nearly half of California's income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population's during the recession. When they crashed, they took California's finances down with them.
Mr. Williams, a former economic forecaster for the state, spent more than a decade warning state leaders about California's over-dependence on the rich. "We created a revenue cliff," he said. "We built a large part of our government on the state's most unstable income group."
New York, New Jersey, Connecticut and Illinois—states that are the most heavily reliant on the taxes of the wealthy—are now among those with the biggest budget holes. A large population of rich residents was a blessing during the boom, showering states with billions in tax revenue. But it became a curse as their incomes collapsed with financial markets.
Arriving at a time of greatly increased public spending, this reversal highlights the dependence of the states on the outsize incomes of the wealthy. The result for state finances and budgets has been extreme volatility.
Falling Fortunes
Many states are drawing in less money, partly due to lower incomes among high earners. Compare income tax receipts state by state and see the change from 2007 to 2009.
In New York before the recession, the top 1% of earners, who made more than $580,000 a year, paid 41% of the state's income taxes in 2007, up from 25% in 1994, according to state tax data. The top 1% of taxpayers paid 40% or more of state income taxes in New Jersey and Connecticut. In Illinois, which has a flat income-tax rate of 5%, the top 15% paid more than half the state's income taxes.
This growing dependence on wealthy taxpayers is being driven by soaring salaries at the top of the income ladder and by the nation's progressive income taxes, which levy the highest rates on the highest taxable incomes. The top federal income-tax rate has fallen dramatically over the past century, from more than 90% during World War II to 35% today. But the top tax rate—which applies to joint filers reporting $379,000 in taxable income—is still twice as high as the rate for joint filers reporting income of $69,000 or less.
The future of federal income taxes on the wealthy remains in flux. The top tax rate is 35%, following the Congressional tax battle last year. But in 2013, the rate is scheduled to go back to 39.6% unless Congress takes further action.
State income taxes are generally less progressive than federal income taxes, and more than a half-dozen states have no income tax. Yet a number of states have recently hiked taxes on the top earners to raise revenue during the recession. New York, for instance, imposed a "millionaire's tax" in 2009 on those earning $500,000 or more, although the tax is expected to expire at the end of 2011. Connecticut's top income-tax rate has crept up to 6.5% from 4.5% in 2002, while Oregon raised the top tax rate to 11% from 9% for filers with income of more than $500,000.
As they've grown, the incomes of the wealthy have become more unstable. Between 2007 and 2008, the incomes of the top-earning 1% fell 16%, compared to a decline of 4% for U.S. earners as a whole, according to the IRS. Because today's highest salaries are usually linked to financial markets—through stock-based pay or investments—they are more prone to sudden shocks.
The income swings have created more extreme booms and busts for state governments. In New York, the top 1% of taxpayers contribute more to the state's year-to-year tax swings than all the other taxpayers combined, according to a study by the Rockefeller Institute of Government. In its January report downgrading New Jersey's credit rating, Standard & Poor's stated that New Jersey's wealth "translates into a high ability to pay taxes but might also contribute to potential revenue volatility."
State budget shortfalls have other causes, of course, from high unemployment and weak retail sales to falling real-estate values and the rising costs of health-care and pensions. State spending has expanded rapidly over the past decade. California's total spending grew from $99.2 billion in 2000-01 to a projected $136 billion in 2010-11, not including federal funds, according to the state Department of Finance. Though California's spending slipped by 15% during the recession, it has since returned to near prerecession levels.
Some states may get a lifeline this year from the financial markets. Starting late last year, California, New Jersey and others began seeing higher-than-expected income-tax revenues and capital-gains revenues, suggesting the start of the next boom cycle. Still, because many states based their spending plans on the assumption that the windfalls from the wealthy would return every year, they are now grappling with multibillion-dollar shortfalls.
A recent study by the Pew Center on the States and the Rockefeller Institute found that in 2009, states overestimated their revenues by more than $50 billion, due largely to the unexpected fall-off in personal-income taxes. Sales and corporate taxes have also fallen, but they account for a much smaller share of tax revenue in many states.
Tax experts say the problems at the state level could spread to Washington, as the highest earners gain a larger share of both national income and the tax burden. The top 1% paid 38% of federal income taxes in 2008, up from 25% in 1991, and they earned 20% of all national income in 2008, up from 13% in 1991, according to the Tax Foundation.
"These revenues have a narcotic effect on legislatures," said Greg Torres, president of MassINC, a nonpartisan think tank. "They become numb to the trend and think the revenue picture is improving, but they don't realize the money is ephemeral."
Kicking the addiction has proven difficult, since it's so fraught with partisan politics. Republicans advocate lowering taxes on the wealthy to broaden state tax bases and reduce volatility. Democrats oppose the move, saying a less progressive tax system would only add to growing income inequality.
College students and faculty protest budget cuts in Sacramento on March 14. Income taxes account for more than half of California's general revenue.
In a blog post called "The Volatility Monster," California Democratic State Sen. Noreen Evans wrote that "the true response to solving the volatility problem is to make sure Californians are fully employed and decently paid. Preserving the state's progressive tax system is fundamental to combating the rising riches at the top and rising poverty at the bottom. Flattening our tax system would simply increase this already historic income inequality," she wrote.
U.S. Rep. Tom McClintock (R., Calif.) has for years advocated a flat tax in California to reduce volatility and keep high-earners from leaving the state. "California has one of the most steeply disproportionate income taxes in the nation," he said. "A flatter, broader tax rate would help stabilize the most volatile of California's revenues."
Rainy-day funds, which can help bail out governments during recessions, have also run into political opposition or proven too small to save state budgets. A study by the Center on Budget and Policy Priorities found that effective rainy day funds should be 15% of state operating expenditures—more than three times the state average before the crisis. Massachusetts, which saw a 75% drop in capital-gains collections during the recession, won plaudits from ratings firms and economists for creating a rainy-day fund in 2010 using future capital-gains revenues.
Economists and state budget chiefs say the best hedge is better planning. Budget staffers in New York, for instance, now spend more time studying Wall Street pay and bonuses to more accurately predict state revenues. The state's budget director avoids overly optimistic forecasts based on a previous year's strong growth.
"We're glad we have the revenue from the wealthy, and we want to encourage these people to stay and prosper," said Robert L. Megna, budget director for New York state. "But we have to recognize that because you have them, you'll have this big volatility."
The story of Mr. Williams, the former chief economist and forecaster for the California Legislative Analyst's Office, shows just how vulnerable states have become to the income shocks among the rich, and why reform has proven difficult.
In the mid-1990s, shortly after taking the job, Mr. Williams discovered he had a problem. Part of his job was to help state politicians plan their budgets and tax projections.
A lanky, 6-foot-4-inch 58-year-old, with piercing blue eyes and a fondness for cycling, Mr. Williams prided himself on his deep data dives. The Wall Street Journal named him California's most accurate forecaster in 1998 for his work the prior decade. He and his team placed a special focus on employment and age data and developed their own econometric models to make improvements.
Historically, California's tax revenues tracked the broader state economy. Yet in the mid-1990s, Mr. Williams noticed that they had started to diverge. Employment was barely growing while income-tax revenue was soaring.
"It was like we suddenly had two different economies," Mr. Williams said. "There was the California economy and then there were personal income taxes."
In all his years of forecasting, he had rarely encountered such a puzzle. He did some economic sleuthing and discovered that most of the growth was coming from a small group of high earners. The average incomes of the top 20% of Californian earners (households making $95,000 in 1998) jumped by an inflation-adjusted 75% between 1980 and 1998, while incomes for the rest of the state grew by less than 3% over the same period. Capital-gains realizations—largely stock sales—quadrupled between 1994 and 1999, to nearly $80 billion.
Mr. Williams reported his findings in early 2000, in a report called "California's Changing Income Distribution," which was widely circulated in the state capital. He wrote that state tax collections would be "subject to more volatility than in the past."
Mr. Williams wasn't the only one noticing the state's dependence on the wealthy. Economists and governors had for years lamented the state's high tax rates on the rich, and in 2009 a bipartisan commission set up by then Gov. Arnold Schwarzenegger recommended an across-the-board reduction in income-tax rates and a broader sales tax to reduce the state's dependence on the wealthy. The income-tax rate on Californians making more than $1 million a year is 10.3%, compared to less than 6% for those making under $26,600. Combined with the rising share of income going to the top, the state's progressive rates amplify the impact of the income gains or losses of the wealthy.
California's dependence on income taxes has also grown because of its shifting economy. Income taxes now account for more than half of its general revenue, up from about a third in 1981. Because the state's sales and use tax applies mainly to goods, rather than faster-growing services, it has declined in importance. The state's corporate tax has also shrunk relative to income taxes because of tax credits and other changes.
By the late 1990s, Mr. Williams realized that his job had changed. California's future was no longer tied to the broader economy, but to a small group of ultra-earners. To predict the state's revenue, he had to start forecasting the fortunes of the rich. That meant forecasting the performance of stocks—specifically, a handful of high-tech stocks.
He pored over SEC filings for Apple, Oracle and other California tech giants. He met with the financial advisers to the rich, asking them about the investment plans of their clients. He watched daily stock movements and stock sales reported by the state's tax collectors.
Working with the state's tax collectors, he did a geographic breakdown of capital gains. The vast majority were in Silicon Valley.
"We knew there was a bubble," he said, "We just didn't know when it would fall, or by how much."
After the dot-com bust, the state's revenues from capital gains fell by more than two-thirds, to $5 billion in 2003 from $17 billion in 2001, while personal-income taxes fell 15% over the same period. The recession created a mirror image of the boom, with the wealthy leading the crash and dragging tax revenues down with them. By 2002, California had a budget shortfall of more than $20 billion.
The deficit lingered for years, but its lessons seemed to be quickly forgotten in the state capital. By 2005, California was enjoying another surge in spending fed by the incomes of the wealthy.
Mr. Williams started warning of another government crisis. In 2005, he released a report stating that the state's tax revenues could vary by as much as $6 billion in a single year, and that such swings were "more likely than not." He recommended several potential reforms, including flatter income-tax rates, "income averaging," which allows the wealthy to spread their tax payments for unusual windfalls over a longer period of time, and a rainy-day fund.
His proposals failed to gain any traction with the legislature. Many Democrats refused to consider tax hikes on the middle class and lower rates for the rich. In 2009, voters rejected a proposed spending cap, which among other things, would have helped to create a rainy-day fund.
One of the leading advocates for such a fund is Roger Niello, a former Republican assemblyman who has long been among the top 1% of state earners. He and his family own a chain of luxury car dealerships, and during the recession, his income fell by more than half because of the decline of auto sales. Though he's still "fine financially," he said, his personal experience taught him that "people in this income group have the most variable incomes."
Darrell Steinberg, the Democratic leader of the state senate, agrees that the dependence on the wealthy is "one of our most fundamental problems." Yet he concedes that his own spending priorities—including a large expansion of mental-health programs funded by a millionaire's tax—have added to the current mismatch between revenues and spending.
"I have no regrets given the number of people we've helped," he said. "But I guess you could say I did my part with spending."
As time went by, Mr. Williams became increasingly frustrated. To do his job properly, he had to predict the stock market. "And that's impossible," he said. He also felt that all of his research and warnings fell on deaf ears. In 2007, he decided to retire, and he now he works for a consulting firm.
"I was a broken record," he said. "I just kept saying the same thing over and over. And with my job, there was no real pleasure in being right."
Mr. Williams shook his head. "They're missing the real problem," he said.
The working class may be taking a beating from spending cuts used to close a cavernous deficit, Mr. Williams said, but the root of California's woes is its reliance on taxing the wealthy.
Nearly half of California's income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population's during the recession. When they crashed, they took California's finances down with them.
Mr. Williams, a former economic forecaster for the state, spent more than a decade warning state leaders about California's over-dependence on the rich. "We created a revenue cliff," he said. "We built a large part of our government on the state's most unstable income group."
New York, New Jersey, Connecticut and Illinois—states that are the most heavily reliant on the taxes of the wealthy—are now among those with the biggest budget holes. A large population of rich residents was a blessing during the boom, showering states with billions in tax revenue. But it became a curse as their incomes collapsed with financial markets.
Arriving at a time of greatly increased public spending, this reversal highlights the dependence of the states on the outsize incomes of the wealthy. The result for state finances and budgets has been extreme volatility.
Falling Fortunes
Many states are drawing in less money, partly due to lower incomes among high earners. Compare income tax receipts state by state and see the change from 2007 to 2009.
In New York before the recession, the top 1% of earners, who made more than $580,000 a year, paid 41% of the state's income taxes in 2007, up from 25% in 1994, according to state tax data. The top 1% of taxpayers paid 40% or more of state income taxes in New Jersey and Connecticut. In Illinois, which has a flat income-tax rate of 5%, the top 15% paid more than half the state's income taxes.
This growing dependence on wealthy taxpayers is being driven by soaring salaries at the top of the income ladder and by the nation's progressive income taxes, which levy the highest rates on the highest taxable incomes. The top federal income-tax rate has fallen dramatically over the past century, from more than 90% during World War II to 35% today. But the top tax rate—which applies to joint filers reporting $379,000 in taxable income—is still twice as high as the rate for joint filers reporting income of $69,000 or less.
The future of federal income taxes on the wealthy remains in flux. The top tax rate is 35%, following the Congressional tax battle last year. But in 2013, the rate is scheduled to go back to 39.6% unless Congress takes further action.
State income taxes are generally less progressive than federal income taxes, and more than a half-dozen states have no income tax. Yet a number of states have recently hiked taxes on the top earners to raise revenue during the recession. New York, for instance, imposed a "millionaire's tax" in 2009 on those earning $500,000 or more, although the tax is expected to expire at the end of 2011. Connecticut's top income-tax rate has crept up to 6.5% from 4.5% in 2002, while Oregon raised the top tax rate to 11% from 9% for filers with income of more than $500,000.
As they've grown, the incomes of the wealthy have become more unstable. Between 2007 and 2008, the incomes of the top-earning 1% fell 16%, compared to a decline of 4% for U.S. earners as a whole, according to the IRS. Because today's highest salaries are usually linked to financial markets—through stock-based pay or investments—they are more prone to sudden shocks.
The income swings have created more extreme booms and busts for state governments. In New York, the top 1% of taxpayers contribute more to the state's year-to-year tax swings than all the other taxpayers combined, according to a study by the Rockefeller Institute of Government. In its January report downgrading New Jersey's credit rating, Standard & Poor's stated that New Jersey's wealth "translates into a high ability to pay taxes but might also contribute to potential revenue volatility."
State budget shortfalls have other causes, of course, from high unemployment and weak retail sales to falling real-estate values and the rising costs of health-care and pensions. State spending has expanded rapidly over the past decade. California's total spending grew from $99.2 billion in 2000-01 to a projected $136 billion in 2010-11, not including federal funds, according to the state Department of Finance. Though California's spending slipped by 15% during the recession, it has since returned to near prerecession levels.
Some states may get a lifeline this year from the financial markets. Starting late last year, California, New Jersey and others began seeing higher-than-expected income-tax revenues and capital-gains revenues, suggesting the start of the next boom cycle. Still, because many states based their spending plans on the assumption that the windfalls from the wealthy would return every year, they are now grappling with multibillion-dollar shortfalls.
A recent study by the Pew Center on the States and the Rockefeller Institute found that in 2009, states overestimated their revenues by more than $50 billion, due largely to the unexpected fall-off in personal-income taxes. Sales and corporate taxes have also fallen, but they account for a much smaller share of tax revenue in many states.
Tax experts say the problems at the state level could spread to Washington, as the highest earners gain a larger share of both national income and the tax burden. The top 1% paid 38% of federal income taxes in 2008, up from 25% in 1991, and they earned 20% of all national income in 2008, up from 13% in 1991, according to the Tax Foundation.
"These revenues have a narcotic effect on legislatures," said Greg Torres, president of MassINC, a nonpartisan think tank. "They become numb to the trend and think the revenue picture is improving, but they don't realize the money is ephemeral."
Kicking the addiction has proven difficult, since it's so fraught with partisan politics. Republicans advocate lowering taxes on the wealthy to broaden state tax bases and reduce volatility. Democrats oppose the move, saying a less progressive tax system would only add to growing income inequality.
College students and faculty protest budget cuts in Sacramento on March 14. Income taxes account for more than half of California's general revenue.
In a blog post called "The Volatility Monster," California Democratic State Sen. Noreen Evans wrote that "the true response to solving the volatility problem is to make sure Californians are fully employed and decently paid. Preserving the state's progressive tax system is fundamental to combating the rising riches at the top and rising poverty at the bottom. Flattening our tax system would simply increase this already historic income inequality," she wrote.
U.S. Rep. Tom McClintock (R., Calif.) has for years advocated a flat tax in California to reduce volatility and keep high-earners from leaving the state. "California has one of the most steeply disproportionate income taxes in the nation," he said. "A flatter, broader tax rate would help stabilize the most volatile of California's revenues."
Rainy-day funds, which can help bail out governments during recessions, have also run into political opposition or proven too small to save state budgets. A study by the Center on Budget and Policy Priorities found that effective rainy day funds should be 15% of state operating expenditures—more than three times the state average before the crisis. Massachusetts, which saw a 75% drop in capital-gains collections during the recession, won plaudits from ratings firms and economists for creating a rainy-day fund in 2010 using future capital-gains revenues.
Economists and state budget chiefs say the best hedge is better planning. Budget staffers in New York, for instance, now spend more time studying Wall Street pay and bonuses to more accurately predict state revenues. The state's budget director avoids overly optimistic forecasts based on a previous year's strong growth.
"We're glad we have the revenue from the wealthy, and we want to encourage these people to stay and prosper," said Robert L. Megna, budget director for New York state. "But we have to recognize that because you have them, you'll have this big volatility."
The story of Mr. Williams, the former chief economist and forecaster for the California Legislative Analyst's Office, shows just how vulnerable states have become to the income shocks among the rich, and why reform has proven difficult.
In the mid-1990s, shortly after taking the job, Mr. Williams discovered he had a problem. Part of his job was to help state politicians plan their budgets and tax projections.
A lanky, 6-foot-4-inch 58-year-old, with piercing blue eyes and a fondness for cycling, Mr. Williams prided himself on his deep data dives. The Wall Street Journal named him California's most accurate forecaster in 1998 for his work the prior decade. He and his team placed a special focus on employment and age data and developed their own econometric models to make improvements.
Historically, California's tax revenues tracked the broader state economy. Yet in the mid-1990s, Mr. Williams noticed that they had started to diverge. Employment was barely growing while income-tax revenue was soaring.
"It was like we suddenly had two different economies," Mr. Williams said. "There was the California economy and then there were personal income taxes."
In all his years of forecasting, he had rarely encountered such a puzzle. He did some economic sleuthing and discovered that most of the growth was coming from a small group of high earners. The average incomes of the top 20% of Californian earners (households making $95,000 in 1998) jumped by an inflation-adjusted 75% between 1980 and 1998, while incomes for the rest of the state grew by less than 3% over the same period. Capital-gains realizations—largely stock sales—quadrupled between 1994 and 1999, to nearly $80 billion.
Mr. Williams reported his findings in early 2000, in a report called "California's Changing Income Distribution," which was widely circulated in the state capital. He wrote that state tax collections would be "subject to more volatility than in the past."
Mr. Williams wasn't the only one noticing the state's dependence on the wealthy. Economists and governors had for years lamented the state's high tax rates on the rich, and in 2009 a bipartisan commission set up by then Gov. Arnold Schwarzenegger recommended an across-the-board reduction in income-tax rates and a broader sales tax to reduce the state's dependence on the wealthy. The income-tax rate on Californians making more than $1 million a year is 10.3%, compared to less than 6% for those making under $26,600. Combined with the rising share of income going to the top, the state's progressive rates amplify the impact of the income gains or losses of the wealthy.
California's dependence on income taxes has also grown because of its shifting economy. Income taxes now account for more than half of its general revenue, up from about a third in 1981. Because the state's sales and use tax applies mainly to goods, rather than faster-growing services, it has declined in importance. The state's corporate tax has also shrunk relative to income taxes because of tax credits and other changes.
By the late 1990s, Mr. Williams realized that his job had changed. California's future was no longer tied to the broader economy, but to a small group of ultra-earners. To predict the state's revenue, he had to start forecasting the fortunes of the rich. That meant forecasting the performance of stocks—specifically, a handful of high-tech stocks.
He pored over SEC filings for Apple, Oracle and other California tech giants. He met with the financial advisers to the rich, asking them about the investment plans of their clients. He watched daily stock movements and stock sales reported by the state's tax collectors.
Working with the state's tax collectors, he did a geographic breakdown of capital gains. The vast majority were in Silicon Valley.
"We knew there was a bubble," he said, "We just didn't know when it would fall, or by how much."
After the dot-com bust, the state's revenues from capital gains fell by more than two-thirds, to $5 billion in 2003 from $17 billion in 2001, while personal-income taxes fell 15% over the same period. The recession created a mirror image of the boom, with the wealthy leading the crash and dragging tax revenues down with them. By 2002, California had a budget shortfall of more than $20 billion.
The deficit lingered for years, but its lessons seemed to be quickly forgotten in the state capital. By 2005, California was enjoying another surge in spending fed by the incomes of the wealthy.
Mr. Williams started warning of another government crisis. In 2005, he released a report stating that the state's tax revenues could vary by as much as $6 billion in a single year, and that such swings were "more likely than not." He recommended several potential reforms, including flatter income-tax rates, "income averaging," which allows the wealthy to spread their tax payments for unusual windfalls over a longer period of time, and a rainy-day fund.
His proposals failed to gain any traction with the legislature. Many Democrats refused to consider tax hikes on the middle class and lower rates for the rich. In 2009, voters rejected a proposed spending cap, which among other things, would have helped to create a rainy-day fund.
One of the leading advocates for such a fund is Roger Niello, a former Republican assemblyman who has long been among the top 1% of state earners. He and his family own a chain of luxury car dealerships, and during the recession, his income fell by more than half because of the decline of auto sales. Though he's still "fine financially," he said, his personal experience taught him that "people in this income group have the most variable incomes."
Darrell Steinberg, the Democratic leader of the state senate, agrees that the dependence on the wealthy is "one of our most fundamental problems." Yet he concedes that his own spending priorities—including a large expansion of mental-health programs funded by a millionaire's tax—have added to the current mismatch between revenues and spending.
"I have no regrets given the number of people we've helped," he said. "But I guess you could say I did my part with spending."
As time went by, Mr. Williams became increasingly frustrated. To do his job properly, he had to predict the stock market. "And that's impossible," he said. He also felt that all of his research and warnings fell on deaf ears. In 2007, he decided to retire, and he now he works for a consulting firm.
"I was a broken record," he said. "I just kept saying the same thing over and over. And with my job, there was no real pleasure in being right."
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