Day: July 18, 2017

Nepalis stand to lose millions of dollars held in high-value Indian bank notes that India banned last year and has yet to exchange, a Nepali central bank official said on Tuesday.

Indian Prime Minister Narendra Modi in November banned 500 rupee ($7.77) and 1,000 rupee bank notes as part of a drive against unaccounted wealth in India that has also hit Nepal where Indian rupees are widely used.

People holding the notes in India were given a little less than two months to exchange them at banks.

In March, officials from the Reserve Bank of India (RBI) visited Nepal and promised to allow every Nepali citizen to exchange 4,500 Indian rupees ($70) worth of the old notes for new ones.

“That was only a verbal assurance but no formal decision from India has come to us,” said Chinta Mani Shivakoti, a deputy governor of the central Nepal Rastra Bank.

“Even if this amount was exchanged, individuals holding more than 4,500 Indian rupees risk losing the excess,” Shivakoti said.

Nepal depends heavily on funds from workers in India, who sent home $640 million in 2016, or about 3 percent of its gross domestic product.

The Indian central bank declined to comment. An Indian Finance Ministry spokesman also declined to comment, saying it was a central bank matter.

India fears that if it agrees to Nepal’s demand to allow Nepalis to exchange unlimited amounts, a large number of Indians may launder their ill-gotten old notes through Nepal.

Shivakoti said Nepal’s banks hold 78.5 million Indian rupees worth of the old notes, while business officials estimate that up to 10 billion in old Indian rupees ($155 million) may be held by individuals in Nepal’s informal sector.

Another NRB official, Bhisma Raj Dhungana, said the delay in resolving the issue was causing concern.

“India should have allowed the exchange facility much earlier,” Dhungana said.

Ordinary Nepalis say they have been hit badly by the delay.

“My savings are worth no more than waste papers. I can’t do anything about it,” said Saila Thakuri, who has 8,000 Indian rupees in old notes sent by his son who works in a restaurant in New Delhi.

 
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House Republicans on Tuesday unveiled a 10-year budget blueprint that would dramatically increase military spending while putting the GOP on record favoring Medicare cuts opposed by President Donald Trump.

The GOP plan, authored by Budget Chairman Diane Black, R-Tenn., would also pave the way for overhauling the U.S. tax code this fall, and would pair that effort with cuts to benefit programs such as food stamps. The plan also lays out a plan to balance the budget inside a decade through deep cuts to a wide swath of domestic programs — though GOP leaders have no intention of actually carrying out the cuts.

Black announced a committee vote for Wednesday, but action by the entire House could be delayed by an ongoing quarrel between the GOP’s tea party and moderate factions over spending cuts.

Medicare is the second largest mandatory program after Social Security, and the House GOP plan again proposes to turn Medicare into a voucher-like program in which future retirees would receive a fixed benefit to purchase health insurance on the open market. Republicans have proposed the idea each year since taking back the House in 2011, but they’ve never tried to implement it — and that’s not going to change now, even with a Republican as president.

The plan, in theory at least, promises to balance the budget through unprecedented and unworkable cuts across the budget. It calls for turning this year’s projected $700 billion or so deficit into a tiny $9 billion surplus by 2027. It would do so by slashing $5.4 trillion over the coming decade, including almost $500 billion from Medicare, $1.5 trillion from Medicaid and the Obama health law, along with enormous cuts to benefits such as federal employee pensions, food stamps, and tax credits for the working poor.

“The status quo is unsustainable. A mounting national debt and lackluster economic growth will limit opportunity for people all across the country,” Black said in a statement. “But we don’t have to accept this reality. We can move forward with an optimistic vision for the future and this budget is the first step in that process. This is the moment to get real results for the American people. The time for talking is over, now is the time for action.”

But in the immediate future the GOP measure is a budget buster. It would add almost $30 billion to Trump’s $668 billion request for national defense, which already exceeds an existing “cap” on spending by $54 billion. But while Trump proposed taking that $54 billion from domestic agencies and foreign aid, the GOP budget plan would restore most of the cuts, trimming non-defense agencies by just $5 billion.

All told, the GOP plan would spend about $67 billion more in the upcoming annual appropriations bills than would be allowed under harsh spending limits set by a failed 2011 budget and debt agreement and pads war accounts by $10 billion. And, like Trump’s budget, the House GOP plan assumes rosy economic projections that would erase another $1.5 trillion from the deficit over 10 years.

The measure, called a budget resolution, is nonbinding. It would allow Republicans controlling Congress to pass follow-up legislation through the Senate without the threat of a filibuster by Democrats. GOP leaders and the White House plan to use that measure to rewrite the tax code.

As proposed by House leaders, tax reform would essentially be deficit neutral, which means cuts to tax rates would be mostly “paid for” by closing various tax breaks such as the deduction for state and local taxes. However, the GOP plan would devote $300 billion claimed from economic growth to the tax reform effort.

But conservatives are insisting on adding cuts to so-called mandatory programs, which make up more than two-thirds of the federal budget and basically run on autopilot. After extended negotiations, Black would instruct 11 House panels to draw up $203 billion worth of mandatory cuts. But neither tea party lawmakers nor moderates are pleased with the idea. Conservatives want larger cuts, while moderates are blanching at voting to cut popular programs such as food stamps.
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The Trump Administration has launched “Made In America Week” to highlight the importance of U.S. manufacturing and tout its policies to bring more such jobs back home from overseas. But as VOA White House Bureau Chief Steve Herman reports, many Trump family products are made in foreign factories, leading to criticism of the president’s trade campaign.
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President Donald Trump inspected products brought to the White House on Monday from all 50 U.S. states to launch his “Made In America Week.”

On display from the easternmost state of Maine was a yacht. From the distant shores of Hawaii, more than 7,500 kilometers from the nation’s capital, there was a bottle of rum.

Even Marine One, the presidential helicopter, was turned into an expensive prop to tout Connecticut manufacturing.

The president hopped into a Wisconsin firetruck.

“Where’s the fire? I’ll put it out,” he asked as Vice President Mike Pence looked on and press secretary Sean Spicer snapped photos.

Highlighting US manufacturing prowess

Minutes later, Trump signed a proclamation declaring July 17 as Made in America Day, saying the “hard part now is done,” because his administration has removed regulatory barriers.  

“For decades Washington has allowed other nations to wipe out millions of American jobs through unfair trade practices,” said the president to representatives of the featured businesses from 50 states. “Wait ‘till you see what is up for you. You are going to be so happy.”  

The latest weekly-themed campaign of the six-month-old Trump administration (and there are more to come in the next few weeks) is meant to highlight the importance of U.S. manufacturing and tout its policies to bring more such jobs back from overseas.

Amid the continuing pursuit of health care legislation and the growing investigations into links between the Trump campaign and Russia, another themed week should have come as a welcome and positive distraction.

Monday’s launch, however, was somewhat overshadowed by the fact that many, if not most, of the Trump family business products are made in foreign factories.

Steel and aluminum to build some of the most recent Trump hotels in the U.S. came from China. Much of the merchandise sold in those hotels, as well as the president’s private golf courses, are of foreign origin.  

What about Trump products?

The Democratic National Committee calls the domestic promotion campaign “the epitome of hypocrisy,” saying the president, instead of lecturing, should try setting an example.

“If you’re going to preach something, start at home, start at home,” said Chuck Schumer, the Democratic Party’s leader in the Senate. “Trump shirts and ties: where are they made? China. Trump furniture: where is it made? Turkey.” 

The clothing line carrying daughter Ivanka Trump’s name is also made overseas. That point was repeatedly raised by reporters at Monday’s off-camera White House press briefing.

“Some products may not have the scalability or the demand here in this country,” acknowledged Spicer. “But like so many other things, if that demand – if there is enough of demand then hopefully somebody builds a factory and does it.”  

Globalization makes ‘Made in…’ obsolete

Trade analysts say it is not that simple, because we are now in an interconnected global economy.

“The factory floor has broken through its walls and now spans borders and oceans,” said Daniel Ikenson, who directs trade policy studies at a libertarian think tank, the Cato Institute. “So things, a final good on an American retail store shelf, tends to have components, value-added, in five, six, 10 countries.”

While internationalists acknowledge there is a problem with Americans displaced from their jobs by technological changes or trade treaties, “The way to address that is not to compel people to buy American. The way to address that is to get rid of the frictions in the labor market that will make it easier for people to adjust to the new conditions,” Ikenson told VOA.

White House policymakers are undeterred by such arguments, pursuing their protectionist agenda. It seeks to reverse decades of work by administrations of both parties – supported by major U.S. business groups — to promote international commerce and trade agreements. 
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Netflix is pulling in new viewers and award nominations in droves, but the online video service still faces a long-term problem: Its acclaimed programming line-up is costing far more money than what subscribers pay for it.

That hasn’t been a big issue so far, thanks to investors’ willingness to accept scant profits in exchange for robust subscriber growth.

Netflix delivered on that front again Monday, announcing that it added 5.2 million subscribers in the second quarter covering April to June. That’s the largest increase ever during the period, which has always been the company’s slowest time of year.

Wall Street rewarded Netflix by driving up its stock by more than 10 percent to $178.30 in extended trading, putting the shares on track to hit a new high in Tuesday’s regular trading.

International Costs

The Los Gatos, California, company now has 104 million subscribers worldwide. For the first time in its history, most of those subscribers (slightly more than 52 million) are outside the U.S.

That milestone could further complicate Netflix’s cost issues, since the company will need to keep creating more shows that appeal to the unique interests of viewers in countries such as Japan, India and Indonesia.

“It is going to be imperative for them to have more locally produced content,” says CFRA Research analyst Tuna Amobi. “They can’t afford to pursue a ‘one-size-fits-all’ strategy.”

As part of its efforts to boost its profits, Netflix is becoming more aggressive about dumping shows that aren’t drawing enough viewers to justify their costs. In the second quarter, Netflix jettisoned both the high-concept science fiction show “Sense 8” and the musical drama “The Get Down.”

In a Monday letter to shareholders, Netflix CEO Reed Hastings made it clear that the company plans to exert more discipline in the future. “They are becoming more like any other Hollywood studio and paying more attention to the economics of their shows,” Amobi said.

Programming Coups

The subscriber growth further validates Netflix’s decision to expand into original programming five years ago. Two of its longest running shows —  “House of Cards” and “Orange Is The New Black” — recently launched their latest seasons.

Those two series, along with new hits like “Master of None” and “13 Reasons Why,” helped Netflix easily surpass the average 1.8 million subscribers it has added in the second quarter over the past five years.

This fall, new seasons of two other hits, “Stranger Things” and “The Crown,” are due. Those two series accounted for about a third of the 91 Emmy nominations that 27 different Netflix programs received last week — more than any other TV network except its role model, HBO, which landed 111 nominations.

Cash Burn

But the success hasn’t come cheaply.

Netflix is locked into contracts requiring it to pay more than $13 billion for programming during the next three years, a burden that has forced the company to borrow to pay its bills.

After burning through $1.7 billion in cash last year, Netflix expects that figure to rise to as much as $2.5 billion this year. It’s continuing to invest in more original programming amid increasing competition from the likes of Amazon, Hulu and YouTube.

Netflix expects to be spending more money than it brings in for several more years. It posted a more detailed explanation about its negative cash flow to give investors a better grasp of its programming expenses.

The company is still profitable under corporate accounting rules, although its earnings remain puny by Wall Street standards. It earned $66 million on revenue of $2.8 billion in revenue during its latest quarter.

Funding international operations remains Netflix’s biggest financial drag, although the overseas losses are narrowing. The company now expects its international operation to produce a small operating profit for the full year.

Netflix also could make more money by raising its prices closer to the $15 per month that HBO charges for its streaming service, but the company has said no increases are planned in the near future. Netflix’s U.S. rates currently range from $8 to $12 per month.
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