State Department sees no environmental red flags on Keystone route

NEW YORK (CNNMoney)

If the company behind the pipeline, TransCanada, follows all the rules, its "construction and normal operation" of the pipeline should pose no major risks, the State Department said in its draft environmental impact statement. That statement is now open for a 45-day public comment period. The Obama administration will make its decision about the pipeline later this year, likely in mid-summer.

The project was delayed last year because of concerns about how it would affect Nebraska's sensitive Sand Hills region. The Obama administration -- which needs to approve the project because it crosses an international border -- turned down those plans, forcing TransCanada to draft a new proposed route.

The pipeline has touched off an intense debate in the United States. Supporters like it because it will carry 830,000 barrels a day of oil from Alberta, Canada, to the U.S. Gulf Coast, potentially reducing imports from other, more volatile areas. Its construction will create an estimated 5,000 jobs, according to the State Department. TransCanada forecasts even higher job growth.

Related: America has an energy boom. Now what?

Opponents hate it because oil from Canada's oil sands region produces 5% to 30% more greenhouse gases than other types of conventional crude. Extracting oil from the sands also uses massive amounts of water and can result in deforestation. Transporting it runs the risk of spills.

The State Department report did take into account the environmental impact of the sands' heavy oil, which it said is 17% dirtier than the average barrel of oil used in the United States. However, it also said that not building the pipeline would not significantly limit oil sands development, or U.S. consumption of heavy oil.

If Keystone is not constructed, that oil would be still be extract and used, State believes. It would simply be transported to buyers by rail or other means instead of through the pipeline.

The report was not well-received by environmentalists.

"It's a good thing this is a draft," said Susan Casey-Lefkowitz, international director at the Natural Resources Defense Council. "Certainly the public is going to have a lot to say in response."

First Published: March 1, 2013: 5:28 PM ET

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Obama signs order triggering spending cuts

NEW YORK (CNNMoney)

Known officially as sequestration, the president's order canceled $85 billion in federal funding over the next seven months.

As required, the White House budget office also sent to Congress a report detailing the magnitude of cuts that federal agencies will have to make.

In aggregate, defense spending must be cut by 13% over the next seven months and nondefense programs must be cut by 9%. Those percentage cuts will apply to all non-exempt programs, projects and activities.

(Related: 4 myths about the cuts)

In dollars, the spending reduction must be split evenly between defense and nondefense -- as a result, each category will lose nearly $43 billion in funding.

Some key areas of spending will be protected from the budget ax -- most notably military personnel, Medicare and Social Security benefits, as well as Medicaid and food stamps.

The funding reductions would come primarily from what's known as discretionary accounts, which make up the smallest part of the overall federal budget, accounting for a little over a third of all spending.

Discretionary spending supports a vast array of federal agencies from the FBI to the FDA to the National Transportation Safety Board, as well as education programs across the country.

The actual dollars cut from these and other areas varies widely since their normal funding levels do as well.

Navy operations and maintenance, for instance, will take a nearly $3.5 billion hit. National Science Foundation research funding will drop $290 million. The Nuclear Regulatory Commission will lose $52 million. And the Affordable Housing Program will see its budget cut by $10 million.

Few would dispute Obama's characterization of the cuts. In fact, it's one of the few things about the so-called sequester that Democrats and Republicans agree on. They failed to agree on how to replace them, however.

Both chambers of Congress passed the sequester as part of the deal that put an end to the ugly fight over the debt ceiling in 2011.

(Related: When the cuts will really bite)

The cuts were designed to be so distasteful that they would spur lawmakers to approve a smarter approach to deficit reduction. But they've failed to do so.

The cuts will result in many if not most federal workers furloughed for some period of time. And federal contracts and grants will be curtailed or not renewed. That, in turn, will create delays in services, travel hassles, less border security, fewer food inspections, interrupted medical research and less disposable income that has buoyed local communities.

Such ramifications will deliver a blow to economic growth, but not a fatal one -- a point the president acknowledged Friday.

"Even with these cuts in place, folks all across this country will work hard to make sure that we keep the recovery going. But Washington sure isn't making it easy," Obama said.

(Impact: IRS furloughs to spare tax season)

Congress will get another chance to forge an agreement over replacing the cuts this month, as lawmakers duke it out over spending levels for the rest of this fiscal year. They have until March 27 to approve a new funding bill. If they don't, the government will shut down, with the exception of essential services.

If they succeed in replacing the cuts by then, the disruption caused by the sequester may be limited, since its ramifications will unfold over several months as opposed to a few weeks.

First Published: March 1, 2013: 8:50 PM ET

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Medicare doctors' pay to be cut

Automatic spending cuts will trigger a 2% cut in Medicare reimbursement -- a reduction that experts say could make it harder for some patients to get care.

NEW YORK (CNNMoney)

Under the so-called sequester, Medicare payments to health care providers, health care plans and drug plans will be reduced by 2% starting April 1, according to the Centers for Medicare & Medicaid Services.

The bottom line is that doctors who treat Medicare beneficiaries will only be reimbursed 98 cents on every dollar for a vast array of services. Reimbursement for low-income beneficiaries is exempt.

Overall, the cut will mean $11 billion less for doctors, hospitals and other providers in 2013. Last year, the agency doled out more than $500 billion in such payments.

A 2% cut may not seem large, but Medicare payments to doctors have been lagging, said Dr. Jeremy Larazus, president of the American Medical Association.

Related: Doctors: Why we can't stay afloat

"Over the last 12 years, Medicare payments to physicians have increased by only 4%, while the cost of providing care has jumped 20%," said Lazarus.

The cuts could make it harder for patients to get care, Lazarus added. "One in five Medicare patients already is facing difficulties in finding a doctor to take them. If you cut their pay, this access problem will only get worse."

The threat of payment cuts isn't new for doctors who treat the nation's 47 million Medicare patients.

Federal law already triggers annual Medicare cuts to keep the program financial sound. But Congress has stepped in and blocked those cuts -- which now stand at 29% -- from happening more than two dozen times over the past decade.

Related: Doctors going broke

Dr. David Wilt is an internist at a primary care group practice in Kansas City. About 60% of patients treated at his practice are Medicare beneficiaries.

Wilt agrees with Lazarus that Medicare patients are having a tougher time finding doctors. It's happening at his practice, which has already stopped seeing Medicaid patients because of "abysmal reimbursement rates."

"At some point, we will do what we have to if it means keeping the practice afloat," said Wilt. "This includes reducing the number of patients whose payments are too low for us to run our business."

Dr. Jeffrey Cain, president of the American Academy of Family Physicians, is concerned that the 2% cut will catch on with private insurers, too.

Related: Military town in trouble

"Most private insurers base their payment rates on Medicare. We anticipate that they will also reduce reimbursement by 2%," he said

If this happens, Cain said doctors with small practices will take a greater hit.

"Small practices, especially in rural areas, are small businesses that run on razor thin margins," he said. "These cuts will force them to make a choice. Do we keep seeing the elderly or do we keep our practice afloat."

First Published: March 2, 2013: 7:40 AM ET

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Dish: CBS made 'Big Bang Theory' star delete Hopper tweet

Kaley Cuoco, star of 'The Big Bang Theory,' tweeted that the Dish Hopper was 'amazing.' The tweet was later deleted.

NEW YORK (CNNMoney)

The latest drama comes after Kaley Cuoco, star of CBS's hit show "The Big Bang Theory," sent a sponsored tweet on Wednesday about the Dish Hopper DVR. Dish (DISH, Fortune 500) had paid her to tweet that the Hopper was "amazing" and "awesome."

CBS (CBS, Fortune 500) and many other broadcasters are currently locked in a legal battle with Dish over Hopper's ad-skipping technology.

Cuoco's tweet has since been deleted, and Dish sent out a press release calling attention to that.

"It's disappointing that CBS -- once the exemplar of editorial independence and innovation -- continues to use its heavy hand to hold back progress from consumers," Dish CEO Joe Clayton said in a statement.

CBS shot back with its own strongly worded denial: "Once again, Joe Clayton demonstrates his dubious gift for hyperbole and hucksterism. No demands were made, but it's clear that Dish's culture of fabrication is alive and well."

A CBS spokesman said separately that the company did not contact Cuoco "at all."

The Cuoco kerfuffle comes a few weeks after CBS-owned tech site CNet put the Hopper on an awards shortlist. CBS stepped in, forcing CNet to remove the Hopper from consideration -- and banning the site from reviewing "products manufactured by companies with which we are in litigation with respect to such product."

Dish is also mired in lawsuits with Comcast's (CMCSA) NBC, News Corp.'s (NWS) Fox, Disney's (DIS, Fortune 500) ABC and other networks over the Hopper, which lets users record up to six channels at once and automatically skip commercials for primetime network shows.

"The Big Bang Theory" is produced by Warner Bros. Television, a subsidiary of CNNMoney parent company Time Warner. (TWX, Fortune 500)

First Published: March 1, 2013: 12:35 PM ET

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State Department sees no environmental red flags on Keystone route

NEW YORK (CNNMoney)

If the company behind the pipeline, TransCanada, follows all the rules, its "construction and normal operation" of the pipeline should pose no major risks, the State Department said in its draft environmental impact statement. That statement is now open for a 45-day public comment period. The Obama administration will make its decision about the pipeline later this year, likely in mid-summer.

The project was delayed last year because of concerns about how it would affect Nebraska's sensitive Sand Hills region. The Obama administration -- which needs to approve the project because it crosses an international border -- turned down those plans, forcing TransCanada to draft a new proposed route.

The pipeline has touched off an intense debate in the United States. Supporters like it because it will carry 830,000 barrels a day of oil from Alberta, Canada, to the U.S. Gulf Coast, potentially reducing imports from other, more volatile areas. Its construction will create an estimated 5,000 jobs, according to the State Department. TransCanada forecasts even higher job growth.

Related: America has an energy boom. Now what?

Opponents hate it because oil from Canada's oil sands region produces 5% to 30% more greenhouse gases than other types of conventional crude. Extracting oil from the sands also uses massive amounts of water and can result in deforestation. Transporting it runs the risk of spills.

The State Department report did take into account the environmental impact of the sands' heavy oil, which it said is 17% dirtier than the average barrel of oil used in the United States. However, it also said that not building the pipeline would not significantly limit oil sands development, or U.S. consumption of heavy oil.

If Keystone is not constructed, that oil would be still be extract and used, State believes. It would simply be transported to buyers by rail or other means instead of through the pipeline.

The report was not well-received by environmentalists.

"It's a good thing this is a draft," said Susan Casey-Lefkowitz, international director at the Natural Resources Defense Council. "Certainly the public is going to have a lot to say in response."

First Published: March 1, 2013: 5:28 PM ET

10.20 | 0 komentar | Read More

Obama signs order triggering spending cuts

NEW YORK (CNNMoney)

Known officially as sequestration, the president's order canceled $85 billion in federal funding over the next seven months.

As required, the White House budget office also sent to Congress a report detailing the magnitude of cuts that federal agencies will have to make.

In aggregate, defense spending must be cut by 13% over the next seven months and nondefense programs must be cut by 9%. Those percentage cuts will apply to all non-exempt programs, projects and activities.

(Related: 4 myths about the cuts)

In dollars, the spending reduction must be split evenly between defense and nondefense -- as a result, each category will lose nearly $43 billion in funding.

Some key areas of spending will be protected from the budget ax -- most notably military personnel, Medicare and Social Security benefits, as well as Medicaid and food stamps.

The funding reductions would come primarily from what's known as discretionary accounts, which make up the smallest part of the overall federal budget, accounting for a little over a third of all spending.

Discretionary spending supports a vast array of federal agencies from the FBI to the FDA to the National Transportation Safety Board, as well as education programs across the country.

The actual dollars cut from these and other areas varies widely since their normal funding levels do as well.

Navy operations and maintenance, for instance, will take a nearly $3.5 billion hit. National Science Foundation research funding will drop $290 million. The Nuclear Regulatory Commission will lose $52 million. And the Affordable Housing Program will see its budget cut by $10 million.

Few would dispute Obama's characterization of the cuts. In fact, it's one of the few things about the so-called sequester that Democrats and Republicans agree on. They failed to agree on how to replace them, however.

Both chambers of Congress passed the sequester as part of the deal that put an end to the ugly fight over the debt ceiling in 2011.

(Related: When the cuts will really bite)

The cuts were designed to be so distasteful that they would spur lawmakers to approve a smarter approach to deficit reduction. But they've failed to do so.

The cuts will result in many if not most federal workers furloughed for some period of time. And federal contracts and grants will be curtailed or not renewed. That, in turn, will create delays in services, travel hassles, less border security, fewer food inspections, interrupted medical research and less disposable income that has buoyed local communities.

Such ramifications will deliver a blow to economic growth, but not a fatal one -- a point the president acknowledged Friday.

"Even with these cuts in place, folks all across this country will work hard to make sure that we keep the recovery going. But Washington sure isn't making it easy," Obama said.

(Impact: IRS furloughs to spare tax season)

Congress will get another chance to forge an agreement over replacing the cuts this month, as lawmakers duke it out over spending levels for the rest of this fiscal year. They have until March 27 to approve a new funding bill. If they don't, the government will shut down, with the exception of essential services.

If they succeed in replacing the cuts by then, the disruption caused by the sequester may be limited, since its ramifications will unfold over several months as opposed to a few weeks.

First Published: March 1, 2013: 8:50 PM ET

10.20 | 0 komentar | Read More

Flowers Foods buys Wonder Bread from Hostess

Wonder Bread could be returning to stores.

NEW YORK (CNNMoney)

A $360 million bid by baker Flowers Foods (FLO) for Wonder and most other Hostess bread brands has been accepted, Flowers announced Thursday.

The deal still needs to be approved in bankruptcy court next month, and Flowers CEO George Deese said it may be several months before the deal is approved by regulators and finalized.

Hostess did not immediately respond to a request for comment.

Wonder Bread, Twinkies and other Hostess products have not been produced since November, when the company filed with the bankruptcy court to liquidate its business following a crippling strike by the Bakery Workers union.

But while Hostess is out of business, and most of its 18,500 employees have lost their jobs, the company has been auctioning off its various brands as part of the liquidation process.

Flowers was designated as the leading bidder for Hostess' bread business on Jan. 11. Besides Wonder, the deal includes Nature's Pride, Merita, Home Pride and Butternut bread brands, as well as 20 bakeries.

"We are pleased Flowers won the bid for Hostess' primary bread brands and bakeries without the need for an auction," Deese said in a statement, adding that Flowers has "proven experience in integrating acquisitions."

On Jan. 30, a joint $410 million bid by Apollo Global Management (APO) and Metropoulos & Co. was similarly tapped as the leading bidder for the iconic Twinkies brand, the Dolly Madison line of snacks, as well as five bakeries and some of the equipment.

Also in January, McKee Foods Corp. was tapped as the leading bidder with its $27.5 million offer for Hostess' Drake's brand and some of its equipment. Drake's products include Ring Dings, Yodels, Devil Dogs and Yankee Doodles, as well as its coffee cake.

A final decision on those two bids is still pending.

Anthony Michael Sabino, a business professor at St. John's University, said Flowers' bid for Wonder Bread was high enough to chase away interest from other potential bidders. The other products have apparently drawn more interest, meaning there will likely be auctions to determine the final purchaser, which could delay those products' return. Still, Sabino thinks Twinkies could be back on shelves by the time school starts in the fall.

"And not a moment too soon, with Americans hungering for a comfort food they never believed they would have to do without," he said.

Related: Last batch of Twinkies reaches the store shelves

Each of the bidders already has a track record selling baked goods and other food products.

Flowers owns the Nature's Own and Tastykake brands of products.

Metropoulos has experience turning around financially troubled food brands. The firm's food holdings include Pabst Blue Ribbon beer, and in the past have included Chef Boyardee canned pasta, Bumble Bee seafood, PAM cooking spray and Gulden's Mustard, all of which it eventually sold to ConAgra Foods Inc (CAG, Fortune 500).

McKee, a privately held company, is best known for its Little Debbie brand of snacks.

CNNMoney's James O'Toole contributed reporting.

First Published: February 28, 2013: 5:10 PM ET

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Groupon CEO Andrew Mason's severance: $378.36

Andrew Mason is scoring a token sum in his severance package.

NEW YORK (CNNMoney)

Mason, Groupon's 32-year-old co-founder, announced his departure on Thursday in typically blunt fashion: "I was fired today," he wrote in a staff memo that he released publicly. Groupon's (GRPN) IPO filing details his employment agreement, which calls for Groupon to keep paying his salary for six months after he leaves the company. (His health care and other benefits also continue for 180 days.)

Because Mason was making only $756.72 per year, that doesn't amount to much.

It's become common for tech executives who run companies they founded -- including Facebook's (FB) Mark Zuckerberg and Google's (GOOG, Fortune 500) Larry Page -- to take a $1 cash salary, since they already have a fortune in company stock.

Mason made a $180,000 base salary in 2010, but regulatory documents show that he asked the board to slash his salary in 2011, the most recent year for which his salary information is available. (It's unclear why the famously quirky Mason chose the strangely precise figure of $756.72.)

He won't be leaving as a pauper, though. Mason holds nearly 47 million shares of Groupon, worth about $213 million at Thursday's closing price.

Mason cashed out Groupon shares twice before the company's IPO, netting around $28 million, but hasn't sold any of his stake since the company went public in November 2011.

He fellow co-founder, Groupon executive chairman Eric Lefkofsky -- who provided the company's start-up cash and got the biggest chunk of its equity -- dwarfs Mason in the stock-sale game. Lefkosky made $382 million selling off Groupon shares before the company went public, at prices as high as $15.79 per share.

Groupon went public at $20 per share, but its value plunged rapidly. Shares ended trading Thursday at $4.53.

First Published: February 28, 2013: 7:09 PM ET

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High hopes for Japan's central banker

Masaaki Shirakawa is stepping down as Bank of Japan governor.

HONG KONG (CNNMoney)

Elected prime minister for a second time in December, Abe has argued forcefully that the central bank is not moving quickly enough to stimulate Japan's flagging economy. He favors aggressive monetary easing, and made that the centerpiece of his election campaign.

The idea is that further easing, combined with fiscal stimulus, could end years of deflation and coax the world's third largest economy out of recession.

The strategy got a boost Thursday as Abe nominated Haruhiko Kuroda to succeed Masaaki Shirakawa as Japan's top central banker.

Kuroda has deep ties within the international finance community. He has been a vocal critic of the central bank's timidity, and his policy prescriptions largely mirror those of Abe.

Even without much concrete action thus far by the central bank, markets have responded strongly in the hope that words will be turned into deeds under the new leadership.

The yen has weakened significantly, falling 20% against the U.S. dollar since the beginning of October. The Nikkei has been on a tear, adding more than 30% since the middle of November.

But what more can the Bank of Japan and its new governor do? And will markets be satisfied?

Interest rates, a central bank's main tool, are already very low. And Shirakawa has already set a new inflation target of 2%.

"A closer look at Kuroda's policy options suggests that the markets' expectations of much more aggressive easing are likely to be disappointed," Julian Jessop at Capital Economics wrote in a research note.

Related: Don't fight the BoJ

Kuroda favors setting a deadline to achieve the inflation target, perhaps within two years. It's a policy that markets will cheer in the short term, but the impact may pale compared with the setting of the higher 2% target in the first place.

Kuroda could also push the bank towards expanding its asset purchase program. It's already buying short-term debt, and could expand its balance sheet by buying more exotic assets or foreign currency bonds.

But those strategies might have a limited impact as the central bank has already increased its bond-buying program several times, while both Kuroda and Abe have balked at the prospect of buying foreign currency bonds - a move which would almost certainly bring renewed accusations that Japan is triggering a currency war.

"We think the most likely changes under Kuroda would be a further increase in [Japanese government bond] purchases and a lengthening of their maturity," Jessop wrote. "This may not be much different from what Shirakawa would have done and would still fall well short of the easing currently planned in the U.S."

Related: Japan's economy contracts for third straight quarter

Some analysts fear that investors are bound to feel like the bank's actions aren't living up to Abe's rhetoric.

'Some of the more radical options, including purchases of foreign bonds and a two-year horizon for the inflation target, are unlikely to gain sufficient support, all of which is setting up the markets for some major disappointment," Jessop said.

Others argue Japan has to try something.

"From a global point of view, is it good for the Japanese economy to continue to suffer from deflation ... and low growth?" Kuroda asked during an interview with the Wall Street Journal earlier this month. "That is not good for Japan, not good for the world economy."

First Published: February 28, 2013: 7:43 PM ET

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Senate confirms Jack Lew as Treasury Secretary

The Senate confirmed Jack Lew to be the next Treasury secretary.

WASHINGTON (CNNMoney)

Lew, 57, most recently served as the White House chief-of-staff.

As a former budget director for Presidents Obama and Bill Clinton, Lew has overseen budget talks in times of deficits and also surpluses.

As the secretary of the Treasury, Lew will run U.S. domestic financial policy and is charged with collecting federal taxes and managing public debt, among other duties.

Lew was confirmed with a 71-26 vote. Compared with the bruising confirmation battle of Chuck Hagel as Defense secretary, Lew's was a breeze.

President Obama said in a statement that he was "pleased that the Senate took bipartisan action today to confirm Jack Lew as our nation's next Treasury secretary."

"His reputation as a master of fiscal issues who can work with leaders on both sides of the aisle has already helped him succeed in some of the toughest jobs in Washington," Obama said.

Republicans who voted against Lew said they were concerned about his experience at Citigroup (C, Fortune 500) during the financial crisis. Lew had served as the chief operating officer at Citi Alternative Investments in 2008, which made bets against the housing market.

Lawmakers questioned an offshore investment in the Cayman Islands and a $900,000 bonus Lew received even as the bank was being bailed out by taxpayers.

"In the past, the president has railed again the 'fat cats' on Wall Street," Sen. Charles Grassley of Iowa, who opposed the confirmation, said Wednesday. "Today, the president nominates a man who took a bonus from a bailed-out financially insolvent bank.

Lew has said he did not make investment decisions at Citigroup and that he has paid taxes on all his investments, many of which he sold for a loss.

Other Republicans and some on Wall Street have said they're concerned about Lew's lack of business and financial markets experience.

Still, Lew garnered a stronger confirmation vote than his predecessor, Tim Geithner, who took office in 2009, after a 60-34 Senate vote.

Geithner stepped down in January. He was the last holdover from President Obama's original economic team.

Related: How much is a Treasury Secretary worth?

Lew is expected to jump right in to the debate over how to address some $85 billion in forced budget cuts that are scheduled to hit Friday. He was part of the team that came up with the original idea of the cuts, as a key player in the 2011 debt ceiling talks. At the time, nobody thought the cuts would ever come to pass, as they were intended to be so horrible that they'd force a budget deal.

First Published: February 27, 2013: 6:19 PM ET

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