Just Explain It: Why the Fiscal Cliff May Trigger a Recession

Lawmakers in Washington appear to be making little to no progress in avoiding the impending so-called fiscal cliff.  House Speaker John Boehner, R-Ohio, said Friday the negotiations are "almost nowhere." On Thursday Boehner rejected a proposal from the Obama administration saying that the Democrats need to "get serious about real spending cuts."
President Obama's offer continues to call for higher taxes on the wealthy and an extension of the payroll tax cut.   But Republicans say they will not agree to a plan that raises taxes.
As the country continues to head toward the fiscal cliff, this Just Explain It helps to make sense of what it is.
On December 31st, most of us would like to be thinking about a prosperous new year ahead…drinking bubbly and singing Auld Lang Syne with friends.  But there's a chance we could be singing a different tune if President Obama and Congress don't agree on measures to avoid the fiscal cliff.
First, let me explain what the fiscal cliff is.
The fiscal cliff refers to the potentially disastrous situation the U-S faces at the end of this year.  At midnight on December 31st, a number of laws are set to expire.  If the President and the Republicans don't reach an agreement before then, Americans could face broad government spending cuts and tax increases on January 1st.   The combined amount would total over 500 billion dollars. Those 500 billion dollars equal about three to four percent of the nation's entire gross domestic product.  This is what's referred to as the fiscal cliff.
If there isn't a resolution, here are the specifics of what will happen.
Taxes would go up for almost every taxpayer and many businesses. The Bush-era tax cuts, which tax relief for middle and upper-class tax payers, would be a thing of the past.  So would President Obama's payroll tax cut which added about a thousand dollars a year to the average worker's income.
Government spending would be slashed.  That means less money for most military, domestic and federal programs.  $26 billion in emergency unemployment-compensation would be gone. Medicare payments to doctors would be reduced by $11 billion. Federal programs would take the biggest hit.  They stand to lose a total of $65 billion.
If the fiscal cliff isn't avoided, some investors will be hit hard.  Those who receive qualified dividends could see the tax rate on those dividends go from 15% to almost 40% in 2013.
Many business owners believe going over the fiscal cliff will cripple the economy, triggering a deep recession.  They fear demand for their products or services will decrease because consumers will have less money to spend.  It also means that they won't be able to afford new hires or expand their businesses.   Since most Americans would be paying more in taxes, they'd be less inclined to make big purchases, like a home or a new car.
None of this is set in stone, but that's part of the problem.  Markets, businesses and people in general hate uncertainty. The fear of the unknown facing us at the beginning of next year is exactly why so many people are so worked up over the fiscal cliff.
Did you learn something? Do you have a topic you'd like explained?  Give us your feedback in the comments below or on twitter using #justexplainit.

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Woman’s ‘Dystextia’ Stroke Sign: ‘Some is where!’

Smartphone autocorrect is famous for scrambling messages into unintelligible gibberish but when one man received this garbled text from his 11-week-pregnant wife, it alarmed him:
“every where thinging days nighing,” her text read. “Some is where!”
Though that may sound like every text you’ve ever received, the woman’s husband knew her autocorrect was turned off. Fearing some medical issue, he made sure his 25-year-old wife went immediately to the emergency room.
When she got there, doctors noted that she was disoriented, couldn’t use her right arm and leg properly and had some difficulty speaking. A magnetic resonance imaging scan — MRI — revealed that part of the woman’s brain wasn’t getting enough blood. The diagnosis was stroke.
Fortunately, the story has a happy ending. A short hospital stay and some low-dose blood thinners took care of the symptoms and the rest of her pregnancy was uneventful.
Click here to read about how texting pedestrians risk injuries
The three doctors from Boston’s Harvard Medical School, who reported the case study online in this week’s Archives of Neurology, claim this is the first instance they know of where an aberrant text message was used to help diagnose a stroke. In their report, they refer to the woman’s inability to text properly as “dystextia,” a word coined by medical experts in an earlier case.
Dystextia appears to be a new form of aphasia, a term that refers to any trouble processing language, be it spoken or written. The authors of the Archives paper said that at least theoretically, incoherent text messages will be used more often to flag strokes and other neurological abnormalities that lead to the condition.
“As the accessibility of electronic communication continues to advance, the growing digital record will likely become an increasingly important means of identifying neurologic disease, particularly in patient populations that rely more heavily on written rather than spoken communication,” they wrote.
Even though jumbled texts are so common, Dr. Larry Goldstein, a neurologist who is the director of the stroke center at Duke University, said he also believes it’s possible they can be used to sound the alarm on a person’s neurological state, especially in a case like this where the text consisted of complete words that amounted to nonsense rather than the usual autocorrected muddle.
“It would have been very easy to dismiss because of the normal problems with texting but this was a whole conversation that wasn’t making sense,” Goldstein said. “I might be concerned about a patient based on a text like this if they were telling me they hadn’t intended to send a disjointed jumble but they weren’t able to correct themselves.”
In diagnosing stroke, Goldstein said both patients and medical professionals tend to discount aphasic symptoms, even in speech, but they can often be the first clue something is up. In this woman’s case, other signs were there. Her obstetrician realized in retrospect that she’d had trouble filling out a form earlier in the day. She had difficulties speaking too which might also have been picked up sooner if a recent upper respiratory infection hadn’t reduced her voice to a whisper.
But unlike this woman, most people leave their autocorrect turned on. If we relied solely on maddeningly unintelligible text messages to determine neurological state, neurologists might have lines out the door.

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Link between pot, psychosis goes both ways in kids

Marijuana (cannabis) use may be linked to the development of psychotic symptoms in teens - but the reverse could also be true: psychosis in adolescents may be linked to later pot use, according to a new Dutch study.
"We have focused mainly on temporal order; is it the chicken or the egg? As the study shows, it is a bidirectional relationship," wrote the study's lead author Merel Griffith-Lendering, a doctoral candidate at Leiden University in The Netherlands, in an email to Reuters Health.
Previous research established links between marijuana and psychosis, but scientists questioned whether pot use increased the risk of mental illness, or whether people were using pot to ease their psychotic symptoms, such as hallucinations and delusions.
"What is interesting in this study is that both processes are going on at the same time," said Dr. Gregory Seeger, medical director for addiction services at Rochester General Hospital in upstate New York.
He told Reuters Health that researchers have been especially concerned about what tetrahydrocannabinol (THC), the active property in pot, could do to a teenager's growing brain.
"That's a very vulnerable period of time for brain development," and individuals with a family history of schizophrenia and psychosis seem to be more sensitive to the toxic effects of THC, he said.
A 2010 study of 3,800 Australian teenagers found that those who used marijuana were twice as likely to develop psychosis compared to teens who never smoked pot (see Reuters Health article of March 1, 2010 here:).
But that study also found that those who suffered from hallucinations and delusions when they were younger were also more likely to use pot early on.
CHICKEN v. EGG
For the new study, published in the journal Addiction, the researchers wanted to see which came first: pot or psychosis.
Griffith-Lendering and her colleagues used information on 2,120 Dutch teenagers, who were surveyed about their pot use when they were about 14, 16 and 19 years old.
The teens also took psychosis vulnerability tests that asked - among other things - about their ability to concentrate, their feelings of loneliness and whether they see things other people don't.
Overall, the researchers found 940 teens, or about 44 percent, reported smoking pot, and there was a bidirectional link between pot use and psychosis.
For example, using pot at 16 years old was linked to psychotic symptoms three years later, and psychotic symptoms at age 16 were linked to pot use at age 19.
This was true even when the researchers accounted for mental illness in the kids' families, alcohol use and tobacco use.
Griffith-Lendering said she could not say how much more likely young pot users were to exhibit psychotic symptoms later on.
Also, the new study cannot prove one causes the other. Genetics may also explain the link between pot use and psychosis, said Griffith-Lendering.
"We can say for some people that cannabis comes first and psychosis comes second, but for some people they have some (undiagnosed) psychosis (and) perhaps cannabis makes them feel better," said Dr. Marta Di Forti, of King's College, London, who was not involved with the new research.
Di Forti, who has studied the link between pot and psychosis, told Reuters Health she considers pot a risk factor for psychosis - not a cause.
Seeger, who was also not involved with the new study, said that there needs to be more public awareness of the connection.
"I think the marijuana is not a harmless substance. Especially for teenagers, there should be more of a public health message out there that marijuana has a public health risk," he said.
Griffith-Lendering agrees.
"Given the severity and impact of psychotic disorders, prevention programs should take this information into consideration," she said.

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Early Childhood Obesity Rates Might Be Slowing Nation-Wide

About one in three children in the U.S. are now overweight, and since the 1980s the number of children who are obese has more than tripled. But a new study of 26.7 million young children from low-income families shows that in this group of kids, the tidal wave of obesity might finally be receding.
Being obese as a child not only increases the risk of early-life health problems, such as joint problems, pre-diabetes and social stigmatization, but it also dramatically increases the likelihood of being obese later in life, which can lead to chronic diseases, including cancer, type 2 diabetes and heart disease. Children as young as 2 years of age can be obese--and even extremely obese. Early childhood obesity rates, which bring higher health care costs throughout a kid's life, have been especially high among lower-income families.
"This is the first national study to show that the prevalence of obesity and extreme obesity among young U.S. children may have begun to decline," the researchers noted in a brief report published online December 25 in JAMA, The Journal of the American Medical Association. (Reports earlier this year suggested that childhood obesity rates were dropping in several U.S. cities.)
The study examined rates of obesity (body mass index calculated by age and gender to be in the 95th percentile or higher--for example, a BMI above 20 for a 2-year-old male--compared with reference growth charts) and extreme obesity (BMI of more than 120 percent above that of the 95th percentile of the reference populations) in children ages 2 to 4 in 30 states and the District of Columbia. The researchers, led by Liping Pan, of the Division of Nutrition, Physical Activity and Obesity at the U.S. Centers for Disease Control and Prevention, combed through 12 years of data (1998 to 2010) from the Pediatric Nutritional Surveillance System, which includes information on roughly half of all children on the U.S. who are eligible for federal health care and nutrition assistance.
A subtle but important shift in early childhood obesity rates in this low-income population seems to have begun in 2003. Obesity rates increased from 13.05 percent in 1998 to 15.21 percent in 2003. Soon, however, obesity rates began decreasing, reaching 14.94 percent by 2010. Extreme obesity followed a similar pattern, increasing from 1.75 percent to 2.22 percent from 1998 to 2003, but declining to 2.07 percent by 2010.
Although these changes might seem small, the number of children involved makes for huge health implications. For example, each drop of just one tenth of a percentage point represents some 26,700 children in the study population alone who are no longer obese or extremely obese. And if these trends are occurring in the rest of the population, the long-term health and cost implications are massive.
Public health agencies and the Obama Administration have made battling childhood obesity a priority, although these findings suggest that early childhood obesity rates, at least, were already beginning to decline nearly a decade ago. Some popular prevention strategies include encouraging healthier eating (by reducing intake of highly processed and high-sugar foods and increasing fruit and vegetable consumption) and increased physical activity (both at school and at home).
The newly revealed trends "indicate modest recent progress of obesity prevention among young children," the authors noted. "These finding may have important health implications because of the lifelong health risks of obesity and extreme obesity in early childhood.

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One in 12 in military has clogged heart arteries

 Just over one in 12 U.S. service members who died in the Iraq and Afghanistan wars had plaque buildup in the arteries around their hearts - an early sign of heart disease, according to a new study.
None of them had been diagnosed with heart disease before deployment, researchers said.
"This is a young, healthy, fit group," said the study's lead author, Dr. Bryant Webber, from the Uniformed Services University of the Health Sciences in Bethesda, Maryland.
"These are people who are asymptomatic, they feel fine, they're deployed into combat," he told Reuters Health.
"It just proves again the point that we know that this is a clinically silent disease, meaning people can go years without being diagnosed, having no signs or symptoms of the disease."
Webber said the findings also show that although the U.S. has made progress in lowering the nationwide prevalence of heart disease, there's more work that can be done to encourage people to adopt a healthy lifestyle and reduce their risks.
Heart disease accounts for about one in four deaths - or about 600,000 Americans each year, according to the Centers for Disease Control and Prevention.
The new data come from autopsies done on U.S. service members who died in October 2001 through August 2011 during combat or from unintentional injuries. Those autopsies were originally performed to provide a full account to service members' families of how they died.
The study mirrors autopsy research on Korean and Vietnam war veterans, which found signs of heart disease in as many as three-quarters of deceased service members at the time.
"Earlier autopsy studies... were critical pieces of information that alerted the medical community to the lurking burden of coronary disease in our young people," said Dr. Daniel Levy, director of the Framingham Heart Study and a senior investigator with the National Institutes of Health.
The findings are not directly comparable, in part because there was a draft in place during the earlier wars but not for Operations Enduring Freedom and Iraqi Freedom/New Dawn. When service is optional, healthier people might be more likely to sign up, researchers explained.
Still, Levy said the new study likely reflects declines in heart disease in the U.S. in general over that span.
Altogether the researchers had information on 3,832 service members who'd been killed at an average age of 26. Close to 9 percent had any buildup in their coronary arteries, according to the autopsies. And about a quarter of the soldiers with buildup in their arteries had severe blockage.
Service members who had been obese or had high cholesterol or high blood pressure when they entered the military were especially likely to have plaque buildup, Webber and his colleagues reported Tuesday in the Journal of the American Medical Association.
More than 98 percent of the service members included were men.
"This study bodes well for a lower burden of disease lurking in young people," Levy, who wrote an editorial published with the report, told Reuters Health.
"Young, healthy people are likely to have a lower burden of disease today than their parents or grandparents had decades ago."
That's likely due, in part, to better control of blood pressure and cholesterol and lower rates of smoking in today's service members - as well as the country in general, researchers said.
However, two risks for heart disease that haven't declined are obesity and diabetes, which are closely linked.
"Obesity is the one that has not trended in the right direction," Levy said.
"Those changes in obesity and diabetes threaten to reverse some of the dramatic improvements that we are seeing in heart disease death rates," he added.

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Obesity declining in young, poorer kids: study

The number of low-income preschoolers who qualify as obese or "extremely obese" has dropped over the last decade, new data from the Centers for Disease Control and Prevention show.
Although the decline was only "modest" and may not apply to all children, researchers said it was still encouraging.
"It's extremely important to make sure we're monitoring obesity in this low-income group," said the CDC's Heidi Blanck, who worked on the study.
Those kids are known to be at higher risk of obesity than their well-off peers, in part because access to healthy food is often limited in poorer neighborhoods.
The new results can't prove what's behind the progress, Blanck told Reuters Health - but two possible contributors are higher rates of breastfeeding and rising awareness of the importance of physical activity even for very young kids.
Blanck and her colleagues used data on routine clinic visits for about half of all U.S. kids eligible for federal nutrition programs - including 27.5 million children between age two and four.
They found 13 percent of those preschoolers were obese in 1998. That grew to just above 15 percent in 2003, but dropped slightly below 15 percent in 2010, the most recent study year included.
Similarly, the prevalence of extreme obesity increased from nearly 1.8 percent in 1998 to 2.2 percent in 2003, then dropped back to just below 2.1 percent in 2010, the research team reported Tuesday in the Journal of the American Medical Association.
Whether kids are obese is determined by their body mass index (BMI) - a measure of weight in relation to height - and by their age and sex.
For example, a four-year-old girl who is 40 inches tall would be obese if she was 42 pounds or heavier. A two-year-old boy who is 35 inches tall qualifies as obese at 34 pounds or above, according to the CDC's child BMI calculator. (The CDC's BMI calculator for children and teens is available here:.)
The new findings are the first national data to show obesity and extreme obesity may be declining in young children, Blanck said.
"This is very encouraging considering the recent effort made in the field including by several U.S. federal agencies to combat the childhood obesity epidemic," said Dr. Youfa Wang, head of the Johns Hopkins Global Center on Childhood Obesity in Baltimore.
Blanck said between 2003 and 2010 researchers also saw an increase in breastfeeding of low-income infants. Breastfeeding has been tied to a healthier weight in early childhood.
Additionally, states and communities have started working with child care centers to make sure kids have time to run around and that healthy foods are on the lunch menu, she added.
Parents can encourage better eating by having fruits and vegetables available at snack time and allowing their young kids to help with meal preparation, Blanck said.
Her other recommendations include making sure preschoolers get at least one hour of activity every day and keeping television sets out of the bedroom.
"The prevalence of overweight and obesity in many countries including in the U.S. is still very high," Wang, who wasn't involved in the new study, told Reuters Health in an email.
"The recent level off should not be taken as a reason to reduce the effort to fight the obesity epidemic.

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Carlyle takes on KKR in race for Reynolds and Reynolds: sources

Private equity firms Carlyle Group LP and KKR & Co LP have emerged as the lead contenders to take over Reynolds and Reynolds, a software company hoping to sell itself for $5 billion, three people familiar with the matter said. Dayton, Ohio-based Reynolds, which provides business management software for auto dealers in North America and Europe, had hired technology-focused investment bank Qatalyst Partners to run a sale, people familiar with the matter told Reuters in October. The process has progressed and is now in its final stages, though no decision is expected before January, the sources said. Reynolds may be sold to Carlyle or KKR for between $4 billion and $5 billion, less than the company had hoped, one of the people added. The people spoke on condition of anonymity because the negotiations are confidential. Spokesmen for Reynolds, Carlyle and KKR declined to comment. Reynolds sells software tools that allow car dealers to run their operations, including providing car dealer websites, digital advertising and marketing services, as well as data archiving. Reynolds was founded in 1866 by Lucius Reynolds and his brother-in-law as a company that prints standardized business forms. It started to serve automotive retailers as major clients in the 1920s. In October 2006, the company was acquired by Universal Computer Systems (UCS) for $2.8 billion. The merged company retained the Reynolds name and is currently headed by Chairman and Chief Executive Bob Brockman, who used to run UCS. Brockman's $2.8 billion buyout was funded primarily by a group of investors that included Goldman Sachs Capital Partners, the private equity arm of Goldman Sachs Group Inc, and Vista Equity Partners.

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