Analysis: "Fiscal cliff" deal called a dud on deficit front

Speaker of the House John Boehner (R-OH) arrives at the U.S. Capitol in Washington January 1, 2013. The Senate moved the U.S. economy back from the edge of a ''fiscal cliff'' on Tuesday, voting to avoid imminent tax hikes and spending cuts in a bipartisan deal that could still face stiff challenges in the House of Representatives.

Credit: Reuters/Mary F. Calvert

By Kim Dixon

WASHINGTON | Tue Jan 1, 2013 7:05pm EST

WASHINGTON (Reuters) - In the controversy surrounding the "fiscal cliff" issue, it's easy to forget that the origin of the entire debate was a professed desire to reduce swollen federal deficits.

Whether the target was $4 trillion over 10 years, as proposed by the Bowles-Simpson deficit reduction commission, or in the $2 trillion range, as tossed around by House of Representatives Speaker John Boehner and President Barack Obama, the idea was to rein in total debt that now tops $16 trillion.

By those standards, the bill passed by the U.S. Senate early on New Year's Day to avoid the cliff's automatic steep tax hikes and across-the-board spending cuts, looks paltry indeed.

The legislation, which as of Tuesday evening had yet to be passed by the House, would add nearly $4 trillion to federal deficits over a decade compared to the debt reduction envisioned in the extreme scenario of the cliff, according to the non-partisan Congressional Budget Office.

This is largely because it extends low income tax rates for nearly every American except the relative handful above the $400,000 threshold.

It's also because it put off for at least two months the automatic budget cuts that were part of the cliff and would have saved about $109 billion in federal spending on defense and non-defense programs alike.

The Senate bill, which ultimately came down to a fight about tax equity rather than federal spending, did to deficit reduction what Obama and congressional leaders always promise to resist: It "kicked the can down the road" to a later date.

In explaining the measure to the news media, the White House, which helped broker it, gave no particular figure for how much it would bring down the deficit, stating only that, somehow, "with a strengthening economy," it would.

Whether it ultimately succeeds will depend in part on what happens to the now-delayed "automatic" spending cuts, including whether Obama follows through on reductions in outlays.

FULL CIRCLE

The Senate bill also sets up what is likely to be an even more heated fight in late February when the Treasury Department must come to Congress to seek an increase in the government's borrowing limit.

That will bring everything full circle to where the cliff originated during a struggle between Obama and Republicans over raising the federal debt ceiling above $14.5 trillion.

That struggle ended in August, 2011 with a bipartisan deal designed to scare Congress into legislating significant long-term cuts in federal spending.

The idea was that by setting a strict deadline of January 2, 2013 and dire consequences in the form of draconian spending cuts for failing to meet it, the White House and Congress would be forced into action.

Republican Representative Paul Ryan, a self-described deficit hawk who served as the Republican vice-presidential candidate, declared the moment a "huge cultural change."

Coincidentally, low tax rates that originated during the administration of President George W. Bush were also set to expire on December 31, making the prospect of inaction so threatening that the Congressional Budget Office determined that failure to intervene could cause a new recession.

But the controversy over taxes, coming on the heels of a presidential campaign built around Obama's demand for middle-class tax justice, ultimately consumed the argument over the cliff, leaving deficit reduction as the forgotten issue.

Among those disappointed by the process was Alice Rivlin, a Brookings Institution scholar, former U.S. budget director and co-author of another widely discussed deficit reduction plan named for herself and former U.S. Senator Pete Domenici, a Republican from New Mexico.

"I'd been optimistic," Rivlin said in an interview with Reuters. "I thought that we might get might get it done" and that Boehner and Obama "might get to a grand bargain."

Maya MacGuineas, a budget hawk who has led a group of corporate chieftains in a group called "Fix the Debt," was also unenthusiastic about the bill.

"This is one of the lowest common denominator deals," MacGuineas said. "I wish I had something nice to say, but not so much."

(Reporting By Kim Dixon, Rachelle Younglai, David Lawder and Richard Cowan and Fred Barbash; Editing by Fred Barbash and Eric Walsh)

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Analysis: Economy would dodge bullet for now under fiscal deal

U.S. Senate Minority Leader Mitch McConnell (C) departs the senate floor with an aide after a senate vote in the early morning hours at the U.S. Capitol in Washington January 1, 2013.

Credit: Reuters/Jonathan Ernst

By Jason Lange

WASHINGTON | Tue Jan 1, 2013 7:26am EST

WASHINGTON (Reuters) - A deal worked out by Senate leaders to avoid the "fiscal cliff" was far from any "grand bargain" of deficit reduction measures.

But if approved by the House of Representatives, it could help the country steer clear of recession, although enough austerity would remain in place to likely keep the economy growing at a lackluster pace.

The Senate approved a last-minute deal early Tuesday morning to scale back $600 billion in scheduled tax hikes and government spending cuts that economists widely agree would tip the economy into recession.

The deal would hike taxes permanently for household incomes over $450,000 a year, but keep existing lower rates in force for everyone else.

It would make permanent the alternative minimum tax "patch" that was set to expire, protecting middle-income Americans from being taxed as if they were rich.

Scheduled cuts in defense and non-defense spending were simply postponed for two months.

Economists said that if the emerging package were to become law, it would represent at least a temporary reprieve for the economy. "This keeps us out of recession for now," said Menzie Chinn, an economist at the University of Wisconsin-Madison.

The contours of the deal suggest that roughly one-third of the scheduled fiscal tightening could still take place, said Brett Ryan, an economist at Deutsche Bank in New York.

That is in line with what many financial firms on Wall Street and around the world have been expecting, suggesting forecasts for economic growth of around 1.9 percent for 2013 would likely hold.

At midnight Monday, low tax rates enacted under then-President George W. Bush in 2001 and 2003 expired. If the House agrees with the Senate - and there remained considerable doubt on that score - the new rates would be extended retroactively.

Otherwise, together with other planned tax hikes, the average household would pay an estimated $3,500 more in taxes, according to the Tax Policy Center, a Washington think tank. Budget experts expect the economy would take a hit as families cut back on spending.

Provisions in the Senate bill would avoid scheduled cuts to jobless benefits and to payments to doctors under a federal health insurance program.

AUSTERITY'S BITE

Like the consensus of economists from Wall Street and beyond, Deutsche Bank has been forecasting enough fiscal drag to hold back growth to roughly 1.9 percent in 2013. Ryan said the details of the deal appeared to support that forecast.

That would be much better than the 0.5 percent contraction predicted by the Congressional Budget Office if the entirety of the fiscal cliff took hold, but it would fall short of what is needed to quickly heal the labor market, which is still smarting from the 2007-09 recession.

"We continue to anticipate a significant economic slowdown at the start of the year in response to fiscal drag and a contentious fiscal debate," economists at Nomura said in a research note.

In particular, analysts say financial markets are likely to remain on tenterhooks until Congress raises the nation's $16.4 trillion debt ceiling, which the U.S. Treasury confirmed had been reached on Monday.

While the Bush tax cuts would be made permanent for many Americans under the budget deal, a two-year-long payroll tax holiday enacted to give the economy an extra boost would expire. The Tax Policy Center estimates this could push the average household tax bill up by about $700 next year.

The suspension of spending cuts sets up a smaller fiscal cliff later in the year which still could be enough to send the economy into recession, said Chinn.

He warned that ongoing worries about the possibility of recession could keep businesses from investing, which would hinder economic growth.

"You retain the uncertainty," Chinn said.

(Reporting by Jason Lange; Editing by Eric Walsh)

(This story was refiled to remove extraneous punctuation in the first paragraph)

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Analysis: For Romney, some troubling signs among older voters

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney greets supporters at a campaign rally in Sarasota, Florida, September 20, 2012.
Credit: Reuters/Jim YoungBy David Morgan
WASHINGTON | Mon Sep 24, 2012 1:36am EDT
WASHINGTON (Reuters) - Even before his running mate was booed by a lobbying group for older Americans on Friday, Republican presidential nominee Mitt Romney was losing support among such voters, whose backing is crucial to his hopes of winning the November 6 election.
New polling by Reuters/Ipsos indicates that during the past two weeks - since just after the Democratic National Convention - support for Romney among Americans age 60 and older has crumbled, from a 20-point lead over Democratic President Barack Obama to less than 4 points.
Romney's double-digit advantages among older voters on the issues of healthcare and Medicare - the nation's health insurance program for those over 65 and the disabled - also have evaporated, and Obama has begun to build an advantage in both areas.
Voting preferences among seniors could change in the final six weeks of the campaign, but the polling suggests that a series of recent episodes favoring Obama and the Democrats could be chipping away at Romney's support among older Americans.
Romney's selection of Wisconsin congressman Paul Ryan as his vice presidential running mate put the federal budget and Medicare at center stage in the campaign. But the debate over spending and entitlement programs that Romney seemed to be seeking has not unfolded the way Republicans wanted.
At the Democratic convention in Charlotte, North Carolina, on September 5, former President Bill Clinton gave a folksy but blistering critique of Ryan's plan to revamp Medicare, warning that it could leave seniors unprotected from escalating healthcare costs.
Meanwhile, Democrats' efforts to portray Romney as a wealthy former private equity executive with little sympathy for the less fortunate got a boost last week, from Romney himself.
On a secretly recorded video released by the liberal magazine Mother Jones, Romney was shown telling supporters at a $50,000-a-person fundraiser that 47 percent of Americans would never vote for him because they do not pay federal income taxes, feel they are "victims," and depend on government benefits.
Democrats accused Romney of dismissing a range of Americans, including elderly people who depend on government programs such as Medicare and Social Security.
Romney's campaign rejected that, but the recent polls suggest that such claims may be resonating with Americans aged 60 and older, who for months had been the only age group to consistently support Romney over Obama.
Analysts say that if Romney cannot reverse the trend among older voters, he won't win on November 6.
"If Romney loses seniors, he loses this election, period," said Jonathan Oberlander, a health policy specialist at the University of North Carolina. "A bad showing nationally (among older voters) does not bode well for Florida and other states with big senior populations."
THE RYAN PLAN
Ryan's plan for Medicare would limit the program's costs by converting it from a provider of popular benefits to a system that would give future beneficiaries a financial stipend to help pay for private insurance or traditional Medicare.
Obama and fellow Democrats say Ryan's approach, which largely has been embraced by Republicans including Romney, would further expose seniors to rising healthcare costs and hasten Medicare's financial instability.
Republicans argue that their plan would preserve Medicare for future generations.
Medicare serves nearly 50 million retired and disabled Americans, and polls show stiff public resistance to the Ryan plan, with older voters opposing it by a 2-to-1 ratio.
Until now, however, there have been few tangible signs that opposition to Ryan's plan would translate into a preference for president.
A TURNAROUND FOR DEMOCRATS?
Pollsters say Obama's recent rise in popularity among older Americans could signal that Democrats are winning the advertising battle over Medicare.
That would be something of a turnaround for Democrats.
For much of the past two years, Republicans have helped to sway public opinion against Obama's signature legislative achievement, his overhaul of the healthcare system, by casting it as a government overreach that will kill jobs by raising costs for employers.
Republicans also said Obama would cut $716 billion from Medicare, an allegation rejected by Democrats and independent analysts. Even so, the Republican claims of Medicare cuts drew large numbers of seniors to the polls in the 2010 elections, when Republicans won control of the U.S. House of Representatives.
AARP, a grass-roots lobbying group with 37 million members aged 50 and up, backed Obama's healthcare plan against Republican critics. So it wasn't too surprising last week when Ryan, speaking at an AARP convention in New Orleans, faced a tough audience.
Less than five minutes into Ryan's speech, there were boos and cries of "No!" as he laid out the Republican message on Medicare and vowed to repeal "Obamacare."
But the data from Reuters/Ipsos polling - along with similar results from survey data of older voters by the Pew Research Center - indicate that the crowd's response in New Orleans could symbolize more than just one large group's discomfort with the Romney-Ryan ticket.
A Pew poll, conducted September 12-16 and released last week, showed Romney with only a 47 to 46 percent lead among registered voters aged 65-plus. He also trailed Obama by 7 points among people aged 45 to 64 - a huge potential voting bloc that analysts say is increasingly concerned about retirement security.
To illustrate the challenge that Romney could face in November, analysts note that Republican John McCain won 53 percent of the vote among those 65 and older in 2008, and lost to Obama with 46 percent of the overall vote.
"This is certainly a bit of a game changer," Ipsos pollster Julia Clark said of the increasing support for Obama among older Americans. "Older individuals vote. They're the ones who turn up on Election Day, for sure."
Romney and Ryan are likely to need a clear victory among older voters to win the election, given Obama's advantages among other important voting groups such as women, minorities and young adults, analysts said.
"For Romney to win the election, he has to have the majority of the vote from people over 50," said Robert Blendon, a political analyst at the Harvard School of Public Health. "If they share voters over 50, Romney's really going to take a loss here."
(Editing by David Lindsey and Eric Beech)

View the original article here

Analysis: For Romney, some troubling signs among older voters

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney greets supporters at a campaign rally in Sarasota, Florida, September 20, 2012.

Credit: Reuters/Jim Young

By David Morgan

WASHINGTON | Mon Sep 24, 2012 1:36am EDT

WASHINGTON (Reuters) - Even before his running mate was booed by a lobbying group for older Americans on Friday, Republican presidential nominee Mitt Romney was losing support among such voters, whose backing is crucial to his hopes of winning the November 6 election.

New polling by Reuters/Ipsos indicates that during the past two weeks - since just after the Democratic National Convention - support for Romney among Americans age 60 and older has crumbled, from a 20-point lead over Democratic President Barack Obama to less than 4 points.

Romney's double-digit advantages among older voters on the issues of healthcare and Medicare - the nation's health insurance program for those over 65 and the disabled - also have evaporated, and Obama has begun to build an advantage in both areas.

Voting preferences among seniors could change in the final six weeks of the campaign, but the polling suggests that a series of recent episodes favoring Obama and the Democrats could be chipping away at Romney's support among older Americans.

Romney's selection of Wisconsin congressman Paul Ryan as his vice presidential running mate put the federal budget and Medicare at center stage in the campaign. But the debate over spending and entitlement programs that Romney seemed to be seeking has not unfolded the way Republicans wanted.

At the Democratic convention in Charlotte, North Carolina, on September 5, former President Bill Clinton gave a folksy but blistering critique of Ryan's plan to revamp Medicare, warning that it could leave seniors unprotected from escalating healthcare costs.

Meanwhile, Democrats' efforts to portray Romney as a wealthy former private equity executive with little sympathy for the less fortunate got a boost last week, from Romney himself.

On a secretly recorded video released by the liberal magazine Mother Jones, Romney was shown telling supporters at a $50,000-a-person fundraiser that 47 percent of Americans would never vote for him because they do not pay federal income taxes, feel they are "victims," and depend on government benefits.

Democrats accused Romney of dismissing a range of Americans, including elderly people who depend on government programs such as Medicare and Social Security.

Romney's campaign rejected that, but the recent polls suggest that such claims may be resonating with Americans aged 60 and older, who for months had been the only age group to consistently support Romney over Obama.

Analysts say that if Romney cannot reverse the trend among older voters, he won't win on November 6.

"If Romney loses seniors, he loses this election, period," said Jonathan Oberlander, a health policy specialist at the University of North Carolina. "A bad showing nationally (among older voters) does not bode well for Florida and other states with big senior populations."

THE RYAN PLAN

Ryan's plan for Medicare would limit the program's costs by converting it from a provider of popular benefits to a system that would give future beneficiaries a financial stipend to help pay for private insurance or traditional Medicare.

Obama and fellow Democrats say Ryan's approach, which largely has been embraced by Republicans including Romney, would further expose seniors to rising healthcare costs and hasten Medicare's financial instability.

Republicans argue that their plan would preserve Medicare for future generations.

Medicare serves nearly 50 million retired and disabled Americans, and polls show stiff public resistance to the Ryan plan, with older voters opposing it by a 2-to-1 ratio.

Until now, however, there have been few tangible signs that opposition to Ryan's plan would translate into a preference for president.

A TURNAROUND FOR DEMOCRATS?

Pollsters say Obama's recent rise in popularity among older Americans could signal that Democrats are winning the advertising battle over Medicare.

That would be something of a turnaround for Democrats.

For much of the past two years, Republicans have helped to sway public opinion against Obama's signature legislative achievement, his overhaul of the healthcare system, by casting it as a government overreach that will kill jobs by raising costs for employers.

Republicans also said Obama would cut $716 billion from Medicare, an allegation rejected by Democrats and independent analysts. Even so, the Republican claims of Medicare cuts drew large numbers of seniors to the polls in the 2010 elections, when Republicans won control of the U.S. House of Representatives.

AARP, a grass-roots lobbying group with 37 million members aged 50 and up, backed Obama's healthcare plan against Republican critics. So it wasn't too surprising last week when Ryan, speaking at an AARP convention in New Orleans, faced a tough audience.

Less than five minutes into Ryan's speech, there were boos and cries of "No!" as he laid out the Republican message on Medicare and vowed to repeal "Obamacare."

But the data from Reuters/Ipsos polling - along with similar results from survey data of older voters by the Pew Research Center - indicate that the crowd's response in New Orleans could symbolize more than just one large group's discomfort with the Romney-Ryan ticket.

A Pew poll, conducted September 12-16 and released last week, showed Romney with only a 47 to 46 percent lead among registered voters aged 65-plus. He also trailed Obama by 7 points among people aged 45 to 64 - a huge potential voting bloc that analysts say is increasingly concerned about retirement security.

To illustrate the challenge that Romney could face in November, analysts note that Republican John McCain won 53 percent of the vote among those 65 and older in 2008, and lost to Obama with 46 percent of the overall vote.

"This is certainly a bit of a game changer," Ipsos pollster Julia Clark said of the increasing support for Obama among older Americans. "Older individuals vote. They're the ones who turn up on Election Day, for sure."

Romney and Ryan are likely to need a clear victory among older voters to win the election, given Obama's advantages among other important voting groups such as women, minorities and young adults, analysts said.

"For Romney to win the election, he has to have the majority of the vote from people over 50," said Robert Blendon, a political analyst at the Harvard School of Public Health. "If they share voters over 50, Romney's really going to take a loss here."

(Editing by David Lindsey and Eric Beech)

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Analysis: For Romney, some troubling signs among older voters

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney greets supporters at a campaign rally in Sarasota, Florida, September 20, 2012.

Credit: Reuters/Jim Young

By David Morgan

WASHINGTON | Mon Sep 24, 2012 1:36am EDT

WASHINGTON (Reuters) - Even before his running mate was booed by a lobbying group for older Americans on Friday, Republican presidential nominee Mitt Romney was losing support among such voters, whose backing is crucial to his hopes of winning the November 6 election.

New polling by Reuters/Ipsos indicates that during the past two weeks - since just after the Democratic National Convention - support for Romney among Americans age 60 and older has crumbled, from a 20-point lead over Democratic President Barack Obama to less than 4 points.

Romney's double-digit advantages among older voters on the issues of healthcare and Medicare - the nation's health insurance program for those over 65 and the disabled - also have evaporated, and Obama has begun to build an advantage in both areas.

Voting preferences among seniors could change in the final six weeks of the campaign, but the polling suggests that a series of recent episodes favoring Obama and the Democrats could be chipping away at Romney's support among older Americans.

Romney's selection of Wisconsin congressman Paul Ryan as his vice presidential running mate put the federal budget and Medicare at center stage in the campaign. But the debate over spending and entitlement programs that Romney seemed to be seeking has not unfolded the way Republicans wanted.

At the Democratic convention in Charlotte, North Carolina, on September 5, former President Bill Clinton gave a folksy but blistering critique of Ryan's plan to revamp Medicare, warning that it could leave seniors unprotected from escalating healthcare costs.

Meanwhile, Democrats' efforts to portray Romney as a wealthy former private equity executive with little sympathy for the less fortunate got a boost last week, from Romney himself.

On a secretly recorded video released by the liberal magazine Mother Jones, Romney was shown telling supporters at a $50,000-a-person fundraiser that 47 percent of Americans would never vote for him because they do not pay federal income taxes, feel they are "victims," and depend on government benefits.

Democrats accused Romney of dismissing a range of Americans, including elderly people who depend on government programs such as Medicare and Social Security.

Romney's campaign rejected that, but the recent polls suggest that such claims may be resonating with Americans aged 60 and older, who for months had been the only age group to consistently support Romney over Obama.

Analysts say that if Romney cannot reverse the trend among older voters, he won't win on November 6.

"If Romney loses seniors, he loses this election, period," said Jonathan Oberlander, a health policy specialist at the University of North Carolina. "A bad showing nationally (among older voters) does not bode well for Florida and other states with big senior populations."

THE RYAN PLAN

Ryan's plan for Medicare would limit the program's costs by converting it from a provider of popular benefits to a system that would give future beneficiaries a financial stipend to help pay for private insurance or traditional Medicare.

Obama and fellow Democrats say Ryan's approach, which largely has been embraced by Republicans including Romney, would further expose seniors to rising healthcare costs and hasten Medicare's financial instability.

Republicans argue that their plan would preserve Medicare for future generations.

Medicare serves nearly 50 million retired and disabled Americans, and polls show stiff public resistance to the Ryan plan, with older voters opposing it by a 2-to-1 ratio.

Until now, however, there have been few tangible signs that opposition to Ryan's plan would translate into a preference for president.

A TURNAROUND FOR DEMOCRATS?

Pollsters say Obama's recent rise in popularity among older Americans could signal that Democrats are winning the advertising battle over Medicare.

That would be something of a turnaround for Democrats.

For much of the past two years, Republicans have helped to sway public opinion against Obama's signature legislative achievement, his overhaul of the healthcare system, by casting it as a government overreach that will kill jobs by raising costs for employers.

Republicans also said Obama would cut $716 billion from Medicare, an allegation rejected by Democrats and independent analysts. Even so, the Republican claims of Medicare cuts drew large numbers of seniors to the polls in the 2010 elections, when Republicans won control of the U.S. House of Representatives.

AARP, a grass-roots lobbying group with 37 million members aged 50 and up, backed Obama's healthcare plan against Republican critics. So it wasn't too surprising last week when Ryan, speaking at an AARP convention in New Orleans, faced a tough audience.

Less than five minutes into Ryan's speech, there were boos and cries of "No!" as he laid out the Republican message on Medicare and vowed to repeal "Obamacare."

But the data from Reuters/Ipsos polling - along with similar results from survey data of older voters by the Pew Research Center - indicate that the crowd's response in New Orleans could symbolize more than just one large group's discomfort with the Romney-Ryan ticket.

A Pew poll, conducted September 12-16 and released last week, showed Romney with only a 47 to 46 percent lead among registered voters aged 65-plus. He also trailed Obama by 7 points among people aged 45 to 64 - a huge potential voting bloc that analysts say is increasingly concerned about retirement security.

To illustrate the challenge that Romney could face in November, analysts note that Republican John McCain won 53 percent of the vote among those 65 and older in 2008, and lost to Obama with 46 percent of the overall vote.

"This is certainly a bit of a game changer," Ipsos pollster Julia Clark said of the increasing support for Obama among older Americans. "Older individuals vote. They're the ones who turn up on Election Day, for sure."

Romney and Ryan are likely to need a clear victory among older voters to win the election, given Obama's advantages among other important voting groups such as women, minorities and young adults, analysts said.

"For Romney to win the election, he has to have the majority of the vote from people over 50," said Robert Blendon, a political analyst at the Harvard School of Public Health. "If they share voters over 50, Romney's really going to take a loss here."

(Editing by David Lindsey and Eric Beech)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Analysis: For Romney, some troubling signs among older voters

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney greets supporters at a campaign rally in Sarasota, Florida, September 20, 2012.

Credit: Reuters/Jim Young

By David Morgan

WASHINGTON | Mon Sep 24, 2012 1:36am EDT

WASHINGTON (Reuters) - Even before his running mate was booed by a lobbying group for older Americans on Friday, Republican presidential nominee Mitt Romney was losing support among such voters, whose backing is crucial to his hopes of winning the November 6 election.

New polling by Reuters/Ipsos indicates that during the past two weeks - since just after the Democratic National Convention - support for Romney among Americans age 60 and older has crumbled, from a 20-point lead over Democratic President Barack Obama to less than 4 points.

Romney's double-digit advantages among older voters on the issues of healthcare and Medicare - the nation's health insurance program for those over 65 and the disabled - also have evaporated, and Obama has begun to build an advantage in both areas.

Voting preferences among seniors could change in the final six weeks of the campaign, but the polling suggests that a series of recent episodes favoring Obama and the Democrats could be chipping away at Romney's support among older Americans.

Romney's selection of Wisconsin congressman Paul Ryan as his vice presidential running mate put the federal budget and Medicare at center stage in the campaign. But the debate over spending and entitlement programs that Romney seemed to be seeking has not unfolded the way Republicans wanted.

At the Democratic convention in Charlotte, North Carolina, on September 5, former President Bill Clinton gave a folksy but blistering critique of Ryan's plan to revamp Medicare, warning that it could leave seniors unprotected from escalating healthcare costs.

Meanwhile, Democrats' efforts to portray Romney as a wealthy former private equity executive with little sympathy for the less fortunate got a boost last week, from Romney himself.

On a secretly recorded video released by the liberal magazine Mother Jones, Romney was shown telling supporters at a $50,000-a-person fundraiser that 47 percent of Americans would never vote for him because they do not pay federal income taxes, feel they are "victims," and depend on government benefits.

Democrats accused Romney of dismissing a range of Americans, including elderly people who depend on government programs such as Medicare and Social Security.

Romney's campaign rejected that, but the recent polls suggest that such claims may be resonating with Americans aged 60 and older, who for months had been the only age group to consistently support Romney over Obama.

Analysts say that if Romney cannot reverse the trend among older voters, he won't win on November 6.

"If Romney loses seniors, he loses this election, period," said Jonathan Oberlander, a health policy specialist at the University of North Carolina. "A bad showing nationally (among older voters) does not bode well for Florida and other states with big senior populations."

THE RYAN PLAN

Ryan's plan for Medicare would limit the program's costs by converting it from a provider of popular benefits to a system that would give future beneficiaries a financial stipend to help pay for private insurance or traditional Medicare.

Obama and fellow Democrats say Ryan's approach, which largely has been embraced by Republicans including Romney, would further expose seniors to rising healthcare costs and hasten Medicare's financial instability.

Republicans argue that their plan would preserve Medicare for future generations.

Medicare serves nearly 50 million retired and disabled Americans, and polls show stiff public resistance to the Ryan plan, with older voters opposing it by a 2-to-1 ratio.

Until now, however, there have been few tangible signs that opposition to Ryan's plan would translate into a preference for president.

A TURNAROUND FOR DEMOCRATS?

Pollsters say Obama's recent rise in popularity among older Americans could signal that Democrats are winning the advertising battle over Medicare.

That would be something of a turnaround for Democrats.

For much of the past two years, Republicans have helped to sway public opinion against Obama's signature legislative achievement, his overhaul of the healthcare system, by casting it as a government overreach that will kill jobs by raising costs for employers.

Republicans also said Obama would cut $716 billion from Medicare, an allegation rejected by Democrats and independent analysts. Even so, the Republican claims of Medicare cuts drew large numbers of seniors to the polls in the 2010 elections, when Republicans won control of the U.S. House of Representatives.

AARP, a grass-roots lobbying group with 37 million members aged 50 and up, backed Obama's healthcare plan against Republican critics. So it wasn't too surprising last week when Ryan, speaking at an AARP convention in New Orleans, faced a tough audience.

Less than five minutes into Ryan's speech, there were boos and cries of "No!" as he laid out the Republican message on Medicare and vowed to repeal "Obamacare."

But the data from Reuters/Ipsos polling - along with similar results from survey data of older voters by the Pew Research Center - indicate that the crowd's response in New Orleans could symbolize more than just one large group's discomfort with the Romney-Ryan ticket.

A Pew poll, conducted September 12-16 and released last week, showed Romney with only a 47 to 46 percent lead among registered voters aged 65-plus. He also trailed Obama by 7 points among people aged 45 to 64 - a huge potential voting bloc that analysts say is increasingly concerned about retirement security.

To illustrate the challenge that Romney could face in November, analysts note that Republican John McCain won 53 percent of the vote among those 65 and older in 2008, and lost to Obama with 46 percent of the overall vote.

"This is certainly a bit of a game changer," Ipsos pollster Julia Clark said of the increasing support for Obama among older Americans. "Older individuals vote. They're the ones who turn up on Election Day, for sure."

Romney and Ryan are likely to need a clear victory among older voters to win the election, given Obama's advantages among other important voting groups such as women, minorities and young adults, analysts said.

"For Romney to win the election, he has to have the majority of the vote from people over 50," said Robert Blendon, a political analyst at the Harvard School of Public Health. "If they share voters over 50, Romney's really going to take a loss here."

(Editing by David Lindsey and Eric Beech)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Analysis: For Romney, some troubling signs among older voters

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney greets supporters at a campaign rally in Sarasota, Florida, September 20, 2012.

Credit: Reuters/Jim Young

By David Morgan

WASHINGTON | Mon Sep 24, 2012 1:36am EDT

WASHINGTON (Reuters) - Even before his running mate was booed by a lobbying group for older Americans on Friday, Republican presidential nominee Mitt Romney was losing support among such voters, whose backing is crucial to his hopes of winning the November 6 election.

New polling by Reuters/Ipsos indicates that during the past two weeks - since just after the Democratic National Convention - support for Romney among Americans age 60 and older has crumbled, from a 20-point lead over Democratic President Barack Obama to less than 4 points.

Romney's double-digit advantages among older voters on the issues of healthcare and Medicare - the nation's health insurance program for those over 65 and the disabled - also have evaporated, and Obama has begun to build an advantage in both areas.

Voting preferences among seniors could change in the final six weeks of the campaign, but the polling suggests that a series of recent episodes favoring Obama and the Democrats could be chipping away at Romney's support among older Americans.

Romney's selection of Wisconsin congressman Paul Ryan as his vice presidential running mate put the federal budget and Medicare at center stage in the campaign. But the debate over spending and entitlement programs that Romney seemed to be seeking has not unfolded the way Republicans wanted.

At the Democratic convention in Charlotte, North Carolina, on September 5, former President Bill Clinton gave a folksy but blistering critique of Ryan's plan to revamp Medicare, warning that it could leave seniors unprotected from escalating healthcare costs.

Meanwhile, Democrats' efforts to portray Romney as a wealthy former private equity executive with little sympathy for the less fortunate got a boost last week, from Romney himself.

On a secretly recorded video released by the liberal magazine Mother Jones, Romney was shown telling supporters at a $50,000-a-person fundraiser that 47 percent of Americans would never vote for him because they do not pay federal income taxes, feel they are "victims," and depend on government benefits.

Democrats accused Romney of dismissing a range of Americans, including elderly people who depend on government programs such as Medicare and Social Security.

Romney's campaign rejected that, but the recent polls suggest that such claims may be resonating with Americans aged 60 and older, who for months had been the only age group to consistently support Romney over Obama.

Analysts say that if Romney cannot reverse the trend among older voters, he won't win on November 6.

"If Romney loses seniors, he loses this election, period," said Jonathan Oberlander, a health policy specialist at the University of North Carolina. "A bad showing nationally (among older voters) does not bode well for Florida and other states with big senior populations."

THE RYAN PLAN

Ryan's plan for Medicare would limit the program's costs by converting it from a provider of popular benefits to a system that would give future beneficiaries a financial stipend to help pay for private insurance or traditional Medicare.

Obama and fellow Democrats say Ryan's approach, which largely has been embraced by Republicans including Romney, would further expose seniors to rising healthcare costs and hasten Medicare's financial instability.

Republicans argue that their plan would preserve Medicare for future generations.

Medicare serves nearly 50 million retired and disabled Americans, and polls show stiff public resistance to the Ryan plan, with older voters opposing it by a 2-to-1 ratio.

Until now, however, there have been few tangible signs that opposition to Ryan's plan would translate into a preference for president.

A TURNAROUND FOR DEMOCRATS?

Pollsters say Obama's recent rise in popularity among older Americans could signal that Democrats are winning the advertising battle over Medicare.

That would be something of a turnaround for Democrats.

For much of the past two years, Republicans have helped to sway public opinion against Obama's signature legislative achievement, his overhaul of the healthcare system, by casting it as a government overreach that will kill jobs by raising costs for employers.

Republicans also said Obama would cut $716 billion from Medicare, an allegation rejected by Democrats and independent analysts. Even so, the Republican claims of Medicare cuts drew large numbers of seniors to the polls in the 2010 elections, when Republicans won control of the U.S. House of Representatives.

AARP, a grass-roots lobbying group with 37 million members aged 50 and up, backed Obama's healthcare plan against Republican critics. So it wasn't too surprising last week when Ryan, speaking at an AARP convention in New Orleans, faced a tough audience.

Less than five minutes into Ryan's speech, there were boos and cries of "No!" as he laid out the Republican message on Medicare and vowed to repeal "Obamacare."

But the data from Reuters/Ipsos polling - along with similar results from survey data of older voters by the Pew Research Center - indicate that the crowd's response in New Orleans could symbolize more than just one large group's discomfort with the Romney-Ryan ticket.

A Pew poll, conducted September 12-16 and released last week, showed Romney with only a 47 to 46 percent lead among registered voters aged 65-plus. He also trailed Obama by 7 points among people aged 45 to 64 - a huge potential voting bloc that analysts say is increasingly concerned about retirement security.

To illustrate the challenge that Romney could face in November, analysts note that Republican John McCain won 53 percent of the vote among those 65 and older in 2008, and lost to Obama with 46 percent of the overall vote.

"This is certainly a bit of a game changer," Ipsos pollster Julia Clark said of the increasing support for Obama among older Americans. "Older individuals vote. They're the ones who turn up on Election Day, for sure."

Romney and Ryan are likely to need a clear victory among older voters to win the election, given Obama's advantages among other important voting groups such as women, minorities and young adults, analysts said.

"For Romney to win the election, he has to have the majority of the vote from people over 50," said Robert Blendon, a political analyst at the Harvard School of Public Health. "If they share voters over 50, Romney's really going to take a loss here."

(Editing by David Lindsey and Eric Beech)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Analysis: For Romney, some troubling signs among older voters

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney greets supporters at a campaign rally in Sarasota, Florida, September 20, 2012.

Credit: Reuters/Jim Young

By David Morgan

WASHINGTON | Mon Sep 24, 2012 1:36am EDT

WASHINGTON (Reuters) - Even before his running mate was booed by a lobbying group for older Americans on Friday, Republican presidential nominee Mitt Romney was losing support among such voters, whose backing is crucial to his hopes of winning the November 6 election.

New polling by Reuters/Ipsos indicates that during the past two weeks - since just after the Democratic National Convention - support for Romney among Americans age 60 and older has crumbled, from a 20-point lead over Democratic President Barack Obama to less than 4 points.

Romney's double-digit advantages among older voters on the issues of healthcare and Medicare - the nation's health insurance program for those over 65 and the disabled - also have evaporated, and Obama has begun to build an advantage in both areas.

Voting preferences among seniors could change in the final six weeks of the campaign, but the polling suggests that a series of recent episodes favoring Obama and the Democrats could be chipping away at Romney's support among older Americans.

Romney's selection of Wisconsin congressman Paul Ryan as his vice presidential running mate put the federal budget and Medicare at center stage in the campaign. But the debate over spending and entitlement programs that Romney seemed to be seeking has not unfolded the way Republicans wanted.

At the Democratic convention in Charlotte, North Carolina, on September 5, former President Bill Clinton gave a folksy but blistering critique of Ryan's plan to revamp Medicare, warning that it could leave seniors unprotected from escalating healthcare costs.

Meanwhile, Democrats' efforts to portray Romney as a wealthy former private equity executive with little sympathy for the less fortunate got a boost last week, from Romney himself.

On a secretly recorded video released by the liberal magazine Mother Jones, Romney was shown telling supporters at a $50,000-a-person fundraiser that 47 percent of Americans would never vote for him because they do not pay federal income taxes, feel they are "victims," and depend on government benefits.

Democrats accused Romney of dismissing a range of Americans, including elderly people who depend on government programs such as Medicare and Social Security.

Romney's campaign rejected that, but the recent polls suggest that such claims may be resonating with Americans aged 60 and older, who for months had been the only age group to consistently support Romney over Obama.

Analysts say that if Romney cannot reverse the trend among older voters, he won't win on November 6.

"If Romney loses seniors, he loses this election, period," said Jonathan Oberlander, a health policy specialist at the University of North Carolina. "A bad showing nationally (among older voters) does not bode well for Florida and other states with big senior populations."

THE RYAN PLAN

Ryan's plan for Medicare would limit the program's costs by converting it from a provider of popular benefits to a system that would give future beneficiaries a financial stipend to help pay for private insurance or traditional Medicare.

Obama and fellow Democrats say Ryan's approach, which largely has been embraced by Republicans including Romney, would further expose seniors to rising healthcare costs and hasten Medicare's financial instability.

Republicans argue that their plan would preserve Medicare for future generations.

Medicare serves nearly 50 million retired and disabled Americans, and polls show stiff public resistance to the Ryan plan, with older voters opposing it by a 2-to-1 ratio.

Until now, however, there have been few tangible signs that opposition to Ryan's plan would translate into a preference for president.

A TURNAROUND FOR DEMOCRATS?

Pollsters say Obama's recent rise in popularity among older Americans could signal that Democrats are winning the advertising battle over Medicare.

That would be something of a turnaround for Democrats.

For much of the past two years, Republicans have helped to sway public opinion against Obama's signature legislative achievement, his overhaul of the healthcare system, by casting it as a government overreach that will kill jobs by raising costs for employers.

Republicans also said Obama would cut $716 billion from Medicare, an allegation rejected by Democrats and independent analysts. Even so, the Republican claims of Medicare cuts drew large numbers of seniors to the polls in the 2010 elections, when Republicans won control of the U.S. House of Representatives.

AARP, a grass-roots lobbying group with 37 million members aged 50 and up, backed Obama's healthcare plan against Republican critics. So it wasn't too surprising last week when Ryan, speaking at an AARP convention in New Orleans, faced a tough audience.

Less than five minutes into Ryan's speech, there were boos and cries of "No!" as he laid out the Republican message on Medicare and vowed to repeal "Obamacare."

But the data from Reuters/Ipsos polling - along with similar results from survey data of older voters by the Pew Research Center - indicate that the crowd's response in New Orleans could symbolize more than just one large group's discomfort with the Romney-Ryan ticket.

A Pew poll, conducted September 12-16 and released last week, showed Romney with only a 47 to 46 percent lead among registered voters aged 65-plus. He also trailed Obama by 7 points among people aged 45 to 64 - a huge potential voting bloc that analysts say is increasingly concerned about retirement security.

To illustrate the challenge that Romney could face in November, analysts note that Republican John McCain won 53 percent of the vote among those 65 and older in 2008, and lost to Obama with 46 percent of the overall vote.

"This is certainly a bit of a game changer," Ipsos pollster Julia Clark said of the increasing support for Obama among older Americans. "Older individuals vote. They're the ones who turn up on Election Day, for sure."

Romney and Ryan are likely to need a clear victory among older voters to win the election, given Obama's advantages among other important voting groups such as women, minorities and young adults, analysts said.

"For Romney to win the election, he has to have the majority of the vote from people over 50," said Robert Blendon, a political analyst at the Harvard School of Public Health. "If they share voters over 50, Romney's really going to take a loss here."

(Editing by David Lindsey and Eric Beech)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Analysis: For Romney, some troubling signs among older voters

U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney greets supporters at a campaign rally in Sarasota, Florida, September 20, 2012.

Credit: Reuters/Jim Young

By David Morgan

WASHINGTON | Mon Sep 24, 2012 1:36am EDT

WASHINGTON (Reuters) - Even before his running mate was booed by a lobbying group for older Americans on Friday, Republican presidential nominee Mitt Romney was losing support among such voters, whose backing is crucial to his hopes of winning the November 6 election.

New polling by Reuters/Ipsos indicates that during the past two weeks - since just after the Democratic National Convention - support for Romney among Americans age 60 and older has crumbled, from a 20-point lead over Democratic President Barack Obama to less than 4 points.

Romney's double-digit advantages among older voters on the issues of healthcare and Medicare - the nation's health insurance program for those over 65 and the disabled - also have evaporated, and Obama has begun to build an advantage in both areas.

Voting preferences among seniors could change in the final six weeks of the campaign, but the polling suggests that a series of recent episodes favoring Obama and the Democrats could be chipping away at Romney's support among older Americans.

Romney's selection of Wisconsin congressman Paul Ryan as his vice presidential running mate put the federal budget and Medicare at center stage in the campaign. But the debate over spending and entitlement programs that Romney seemed to be seeking has not unfolded the way Republicans wanted.

At the Democratic convention in Charlotte, North Carolina, on September 5, former President Bill Clinton gave a folksy but blistering critique of Ryan's plan to revamp Medicare, warning that it could leave seniors unprotected from escalating healthcare costs.

Meanwhile, Democrats' efforts to portray Romney as a wealthy former private equity executive with little sympathy for the less fortunate got a boost last week, from Romney himself.

On a secretly recorded video released by the liberal magazine Mother Jones, Romney was shown telling supporters at a $50,000-a-person fundraiser that 47 percent of Americans would never vote for him because they do not pay federal income taxes, feel they are "victims," and depend on government benefits.

Democrats accused Romney of dismissing a range of Americans, including elderly people who depend on government programs such as Medicare and Social Security.

Romney's campaign rejected that, but the recent polls suggest that such claims may be resonating with Americans aged 60 and older, who for months had been the only age group to consistently support Romney over Obama.

Analysts say that if Romney cannot reverse the trend among older voters, he won't win on November 6.

"If Romney loses seniors, he loses this election, period," said Jonathan Oberlander, a health policy specialist at the University of North Carolina. "A bad showing nationally (among older voters) does not bode well for Florida and other states with big senior populations."

THE RYAN PLAN

Ryan's plan for Medicare would limit the program's costs by converting it from a provider of popular benefits to a system that would give future beneficiaries a financial stipend to help pay for private insurance or traditional Medicare.

Obama and fellow Democrats say Ryan's approach, which largely has been embraced by Republicans including Romney, would further expose seniors to rising healthcare costs and hasten Medicare's financial instability.

Republicans argue that their plan would preserve Medicare for future generations.

Medicare serves nearly 50 million retired and disabled Americans, and polls show stiff public resistance to the Ryan plan, with older voters opposing it by a 2-to-1 ratio.

Until now, however, there have been few tangible signs that opposition to Ryan's plan would translate into a preference for president.

A TURNAROUND FOR DEMOCRATS?

Pollsters say Obama's recent rise in popularity among older Americans could signal that Democrats are winning the advertising battle over Medicare.

That would be something of a turnaround for Democrats.

For much of the past two years, Republicans have helped to sway public opinion against Obama's signature legislative achievement, his overhaul of the healthcare system, by casting it as a government overreach that will kill jobs by raising costs for employers.

Republicans also said Obama would cut $716 billion from Medicare, an allegation rejected by Democrats and independent analysts. Even so, the Republican claims of Medicare cuts drew large numbers of seniors to the polls in the 2010 elections, when Republicans won control of the U.S. House of Representatives.

AARP, a grass-roots lobbying group with 37 million members aged 50 and up, backed Obama's healthcare plan against Republican critics. So it wasn't too surprising last week when Ryan, speaking at an AARP convention in New Orleans, faced a tough audience.

Less than five minutes into Ryan's speech, there were boos and cries of "No!" as he laid out the Republican message on Medicare and vowed to repeal "Obamacare."

But the data from Reuters/Ipsos polling - along with similar results from survey data of older voters by the Pew Research Center - indicate that the crowd's response in New Orleans could symbolize more than just one large group's discomfort with the Romney-Ryan ticket.

A Pew poll, conducted September 12-16 and released last week, showed Romney with only a 47 to 46 percent lead among registered voters aged 65-plus. He also trailed Obama by 7 points among people aged 45 to 64 - a huge potential voting bloc that analysts say is increasingly concerned about retirement security.

To illustrate the challenge that Romney could face in November, analysts note that Republican John McCain won 53 percent of the vote among those 65 and older in 2008, and lost to Obama with 46 percent of the overall vote.

"This is certainly a bit of a game changer," Ipsos pollster Julia Clark said of the increasing support for Obama among older Americans. "Older individuals vote. They're the ones who turn up on Election Day, for sure."

Romney and Ryan are likely to need a clear victory among older voters to win the election, given Obama's advantages among other important voting groups such as women, minorities and young adults, analysts said.

"For Romney to win the election, he has to have the majority of the vote from people over 50," said Robert Blendon, a political analyst at the Harvard School of Public Health. "If they share voters over 50, Romney's really going to take a loss here."

(Editing by David Lindsey and Eric Beech)

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Analysis: Can Zynga break free from Facebook?

Zynga General Manager Lo Toney introduces Zynga Casino during the Zynga Unleashed event at the company's headquarters in San Francisco, California October 11, 2011.

Credit: Reuters/Stephen Lam

By Liana B. Baker

NEW YORK | Wed Dec 14, 2011 7:08pm EST

NEW YORK (Reuters) - "We generate substantially all of our revenue and players through the Facebook platform and expect to continue to do so for the foreseeable future," Zynga wrote in its IPO prospectus.

Technically, the admission is called a risk factor. But since Zynga, the wildly popular maker of mobile and social games such as "Mafia Wars" and "FarmVille," generates about 95 percent of its revenue through Facebook, the worry for investors is that its relationship with Mark Zuckerberg's social network is less a risk factor than a business model.

And how Zynga ultimately performs as a public company -- it is aiming to raise $925 million at a $9 billion valuation when it begins trading on the Nasdaq on Friday -- will depend in large part on its ability to break free from Facebook. Or at least its ability to convince investors that it can do so.

So far, however, the skeptics remain unconvinced. At Zynga's IPO roadshow luncheon in San Francisco on Monday, investors spent most of the question and answer time with Zynga executives asking about Facebook.

"Any time you have such a large reliance on a single company, you have to be concerned," said Dan Niles, chief investment officer of AlphaOne Capital Partners, who didn't attend the luncheon but watched one of Zynga's presentations over the Internet.

From an investment perspective, ignoring the fact that all but 5 percent of Zynga's $828 million in revenue in the first nine months of this year came from Facebook could be detrimental.

Zynga conceded that point in its IPO prospectus, noting that, "any deterioration in our relationship with Facebook would harm our business and adversely affect the value of our Class A common stock."

Facebook takes a 30 percent cut of the revenue Zynga derives from the social network, which features more than 222 million monthly active Zynga users, according to the data tracking website AppData. Zynga itself makes most of its money from less than 3 percent of its players who buy virtual items like trucks and poker chips.

Being so dependent on one company clearly poses risks to Zynga's growth potential. If Facebook's user growth slows, for instance, Zynga's growth is likely to slow as well. Or, in an extreme case, if Facebook suddenly decided to banish games, it could harm Zynga's entire business.

Zynga is also beholden to Facebook in other ways. According to a regulatory filing on July 18, the company has to publish some of its games exclusively on Facebook before other platforms.

What's worse, Zynga may have botched one main attempt it has thus far made at trying to break away from Facebook.

When the company unveiled its new online platform "Zynga Direct" during a rare media event at its San Francisco headquarters in October, it was billed as a way for Zynga to deal directly with its consumers without an intermediary.

But when players visited Zynga's website to sign up for a user name, called a "Z Tag," they were told to first install the Zynga app on Facebook, giving the impression that it was being more closely integrated with the world's largest social network instead of being weaned off of it.

FACEBOOK FLIPSIDE

The counter argument is that Zynga's reliance on the platform may attract investors looking to bet on Facebook's growth. With Facebook's IPO at least several months away, there currently are not many ways to gain exposure to Facebook on the stock market.

"Ahead of Facebook's IPO, Zynga is the closest proxy investors have," said Robert W. Baird & Co analyst Colin Sebastian. "As of today, Zynga is highly dependent on Facebook and could bring in investors who are looking to find ways to gain exposure to social media."

Akram Yosri, managing partner of 3i Capital Group, attended Zynga's roadshow presentation in New York and said he was satisfied with how management responded to questions about Facebook and how Zynga can grow in partnership with the social network.

"They didn't dodge the question," said Yosri, whose firm has $1.4 billion in assets under management. "As long as it's a working relationship, it's a plus for Zynga because Facebook is going to be there a long time and has a proven business model. "

Zynga also gathers lots of data on its millions of users, more than half of whom are female, which marketers could find attractive.

CHINA AND BEYOND

Still, Zynga faces a long road to a less Facebook-dependent future. According to regulatory filings, Zynga's contract with Facebook doesn't come up for review until 2015. This gives it three years to find new revenue sources outside the social network such as moving into new markets like Asia and making more games for mobile devices.

In July, Zynga entered mainland China's games market for the first time, partnering with Chinese platform Tencent for a local version of the game "CityVille."

"Zynga has at least until that time to expand its presence in Asia and it is trying to do that aggressively in mobile," said Steve Sorrano, an equity analyst at Calvert Investment Management, which has $12 billion of assets under management.

Sorrano added, however, that investors might find Zynga too risky to bet on while it is building out its business in these new areas since it is unclear whether the company can deliver a high enough or sustainable return on capital investment.

"That's a relative unknown for a young company in an industry that is developing this rapidly. This raises risks for going in(to the stock) that early," Sorrano said.

Zynga's total expenses rose 115 percent to $747.9 million in the first nine months of the year, a sign that its international ambitions are adding to costs.

With regard to mobile, while games such as "Words With Friends" have become hits, its roughly 13 million mobile users are dwarfed by the hundreds of millions of users who play it on Facebook.

While Zynga was one of the earliest game makers on the Facebook platform, it lacks that first mover advantage on mobile. For instance, Disney released a mobile game in September called "Where's my Water" that is ranked ahead of some Zynga titles in Apple's App store.

And investors said that Zynga may already be losing market share on Facebook itself, as video game companies such as Electronic Arts make large acquisitions to compete with it. Indeed, AlphaOne's Niles pointed to EA's "The Sims Social" game, which has 28 million monthly active users, as a successful example of encroachment by another video game company on Zynga's turf.

Over time, however, there is hope the Zynga can break free from Facebook with services like "Zynga Direct." Though that service still has no date for when it will launch or which games will be available, Sterne Agee analyst Arvind Bhatia said that it "should help reduce Zynga's platform risk somewhat."

(Reporting By Liana B. Baker in New York, additional reporting by Alistair Barr; Editing by Peter Lauria and Steve Orlofsky)

(Corrects dateline to Dec. 14)

View the original article here

Analysis: Can Zynga break free from Facebook?

Zynga General Manager Lo Toney introduces Zynga Casino during the Zynga Unleashed event at the company's headquarters in San Francisco, California October 11, 2011.

Credit: Reuters/Stephen Lam

By Liana B. Baker

NEW YORK | Wed Dec 14, 2011 7:08pm EST

NEW YORK (Reuters) - "We generate substantially all of our revenue and players through the Facebook platform and expect to continue to do so for the foreseeable future," Zynga wrote in its IPO prospectus.

Technically, the admission is called a risk factor. But since Zynga, the wildly popular maker of mobile and social games such as "Mafia Wars" and "FarmVille," generates about 95 percent of its revenue through Facebook, the worry for investors is that its relationship with Mark Zuckerberg's social network is less a risk factor than a business model.

And how Zynga ultimately performs as a public company -- it is aiming to raise $925 million at a $9 billion valuation when it begins trading on the Nasdaq on Friday -- will depend in large part on its ability to break free from Facebook. Or at least its ability to convince investors that it can do so.

So far, however, the skeptics remain unconvinced. At Zynga's IPO roadshow luncheon in San Francisco on Monday, investors spent most of the question and answer time with Zynga executives asking about Facebook.

"Any time you have such a large reliance on a single company, you have to be concerned," said Dan Niles, chief investment officer of AlphaOne Capital Partners, who didn't attend the luncheon but watched one of Zynga's presentations over the Internet.

From an investment perspective, ignoring the fact that all but 5 percent of Zynga's $828 million in revenue in the first nine months of this year came from Facebook could be detrimental.

Zynga conceded that point in its IPO prospectus, noting that, "any deterioration in our relationship with Facebook would harm our business and adversely affect the value of our Class A common stock."

Facebook takes a 30 percent cut of the revenue Zynga derives from the social network, which features more than 222 million monthly active Zynga users, according to the data tracking website AppData. Zynga itself makes most of its money from less than 3 percent of its players who buy virtual items like trucks and poker chips.

Being so dependent on one company clearly poses risks to Zynga's growth potential. If Facebook's user growth slows, for instance, Zynga's growth is likely to slow as well. Or, in an extreme case, if Facebook suddenly decided to banish games, it could harm Zynga's entire business.

Zynga is also beholden to Facebook in other ways. According to a regulatory filing on July 18, the company has to publish some of its games exclusively on Facebook before other platforms.

What's worse, Zynga may have botched one main attempt it has thus far made at trying to break away from Facebook.

When the company unveiled its new online platform "Zynga Direct" during a rare media event at its San Francisco headquarters in October, it was billed as a way for Zynga to deal directly with its consumers without an intermediary.

But when players visited Zynga's website to sign up for a user name, called a "Z Tag," they were told to first install the Zynga app on Facebook, giving the impression that it was being more closely integrated with the world's largest social network instead of being weaned off of it.

FACEBOOK FLIPSIDE

The counter argument is that Zynga's reliance on the platform may attract investors looking to bet on Facebook's growth. With Facebook's IPO at least several months away, there currently are not many ways to gain exposure to Facebook on the stock market.

"Ahead of Facebook's IPO, Zynga is the closest proxy investors have," said Robert W. Baird & Co analyst Colin Sebastian. "As of today, Zynga is highly dependent on Facebook and could bring in investors who are looking to find ways to gain exposure to social media."

Akram Yosri, managing partner of 3i Capital Group, attended Zynga's roadshow presentation in New York and said he was satisfied with how management responded to questions about Facebook and how Zynga can grow in partnership with the social network.

"They didn't dodge the question," said Yosri, whose firm has $1.4 billion in assets under management. "As long as it's a working relationship, it's a plus for Zynga because Facebook is going to be there a long time and has a proven business model. "

Zynga also gathers lots of data on its millions of users, more than half of whom are female, which marketers could find attractive.

CHINA AND BEYOND

Still, Zynga faces a long road to a less Facebook-dependent future. According to regulatory filings, Zynga's contract with Facebook doesn't come up for review until 2015. This gives it three years to find new revenue sources outside the social network such as moving into new markets like Asia and making more games for mobile devices.

In July, Zynga entered mainland China's games market for the first time, partnering with Chinese platform Tencent for a local version of the game "CityVille."

"Zynga has at least until that time to expand its presence in Asia and it is trying to do that aggressively in mobile," said Steve Sorrano, an equity analyst at Calvert Investment Management, which has $12 billion of assets under management.

Sorrano added, however, that investors might find Zynga too risky to bet on while it is building out its business in these new areas since it is unclear whether the company can deliver a high enough or sustainable return on capital investment.

"That's a relative unknown for a young company in an industry that is developing this rapidly. This raises risks for going in(to the stock) that early," Sorrano said.

Zynga's total expenses rose 115 percent to $747.9 million in the first nine months of the year, a sign that its international ambitions are adding to costs.

With regard to mobile, while games such as "Words With Friends" have become hits, its roughly 13 million mobile users are dwarfed by the hundreds of millions of users who play it on Facebook.

While Zynga was one of the earliest game makers on the Facebook platform, it lacks that first mover advantage on mobile. For instance, Disney released a mobile game in September called "Where's my Water" that is ranked ahead of some Zynga titles in Apple's App store.

And investors said that Zynga may already be losing market share on Facebook itself, as video game companies such as Electronic Arts make large acquisitions to compete with it. Indeed, AlphaOne's Niles pointed to EA's "The Sims Social" game, which has 28 million monthly active users, as a successful example of encroachment by another video game company on Zynga's turf.

Over time, however, there is hope the Zynga can break free from Facebook with services like "Zynga Direct." Though that service still has no date for when it will launch or which games will be available, Sterne Agee analyst Arvind Bhatia said that it "should help reduce Zynga's platform risk somewhat."

(Reporting By Liana B. Baker in New York, additional reporting by Alistair Barr; Editing by Peter Lauria and Steve Orlofsky)

(Corrects dateline to Dec. 14)

View the original article here

Analysis: Sprint network upgrade may curb unlimited data

A woman talks on her phone as she walks past T-mobile and Sprint wireless stores in New York July 30, 2009.

Credit: Reuters/Brendan McDermid

By Sinead Carew

NEW YORK | Fri Nov 25, 2011 4:40pm EST

NEW YORK (Reuters) - Sprint Nextel may be forced to abandon the biggest advantage it has over its rivals - unlimited data services for a flat fee - because of heavy data users and a shortage of wireless airwaves.

Moreover, the increasing likelihood that AT&T's plan to buy T-Mobile USA, the nation's fourth-largest mobile operator, will fail may have the paradoxical result of making Sprint's position even more untenable, according to analysts who follow all three companies.

Sprint, the nation's third-largest mobile service provider, is planning to upgrade its network with the latest mobile standard, Long Term Evolution. But it is launching that service with only half the wireless airwaves bigger rivals Verizon Wireless and AT&T Inc have assigned, leading experts to suggest that the popularity of Sprint's unlimited data plan could put a strain on the network or slow down Web surfing speeds.

Sprint has assigned just 10 megahertz of spectrum for the launch compared with its rivals' 20 megahertz, analysts say. It will have to reassign airwaves being used for other services in order to expand its capacity for LTE.

Unlike AT&T and Verizon, which cap data use to stem overcapacity issues brought on by heavy users, Sprint is the only big U.S. carrier still selling unlimited data for a flat fee to users of smartphones, including the Apple Inc iPhone, on its current network.

"It's a very bare-bones implementation of LTE," said Tolaga Research analyst Phil Marshall. "The risk is, if you don't have headroom as your LTE subscriber base grows, then the speeds will go down."

In that situation, Marshall does not see Sprint being able to continue to offer unlimited services.

"Unlimited is going to kill them," he said. "I think they're going to have to back off from the all-you-can-eat plan."

Unlimited data is a strong selling point for Sprint, which has been struggling for years to retain customers. For Sprint to keep the marketing advantage it has over rivals, one option could be for it to institute usage caps that are considerably higher than those of its competitors.

"That's a lever they can play if they run into being constrained," said an industry source who asked not to be named due to a lack of authorization to speak publicly. "It's inevitable that they will eventually have to put caps (on their data use)."

SPRINT: NO HEADACHE

Sprint, which is spending $7 billion to upgrade its network to LTE by the end of 2013, says concerns about its capacity are overblown, arguing that advanced technology allows it to make the most of its spectrum resources. Bob Azzi, a Sprint executive in charge of the company's network, said the company's plans assume that it will keep its unlimited data service during the LTE rollout.

"I don't consider it a headache," he told Reuters, "We have a good understanding of the nature of those plans and what they do."

Azzi added that the section of the 1,900 megahertz spectrum band Sprint has set aside for LTE is currently unused. He also plans to reallocate spectrum in its 800 megahertz band to use for the high-speed service by early 2014, provided it can secure regulatory approval to do so. That spectrum is currently being used by the aging iDen service Sprint hopes to shut down in mid-2013.

Sprint is also in talks with Clearwire Corp, its majority-owned venture, about expanding their partnership to cover LTE. Sprint currently depends on Clearwire's network for its fastest service based on WiMax technology, and the latest talks are aimed at allowing it to piggyback on Clearwire's LTE to help it boost capacity in the "hottest of hotspots" by 2014 when Azzi says Sprint will need more capacity.

But the future of Sprint's tempestuous relationship with Clearwire is murky since it is not yet certain if Clearwire will raise the roughly $1 billion in new funding it needs to upgrade its network to LTE.

Clearwire lost one-third of its value after Sprint said on October 7 that a bankruptcy filing by the company could be "constructive." Clearwire shareholders again fled on November 18 after the company said it may skip a debt interest payment due December 1. Many analysts saw that pronouncement as a negotiating tactic to try to force Sprint's hand into an agreement with favorable terms for Clearwire.

SOAP OPERA

One investment manager described the Clearwire/Sprint relationship as a "soap opera" that will end with an agreement because they are both heavily dependent on each other.

"In the short term Sprint doesn't need them beyond (WiMax) but they do need them later," said the manager, who asked not to be named.

Even if Sprint and Clearwire reach an agreement, however, Bernstein analyst Craig Moffett is skeptical about how much it would help because of the frequency Clearwire's spectrum is on, which he said causes signal problems within buildings.

"Now that the person next to you at the conference table is surfing away on Verizon ... the shortcomings of Clearwire become painfully apparent," Moffett said.

Moffett also noted that even if Clearwire upgrades its network, it will still have coverage for only about one-third of the U.S. population because it would need to raise a lot more funding than it is currently seeking to extend its network into new markets.

Since Sprint has already had to tap capital markets for $4 billion in debt and needs up to $3 billion more in funding for its own network upgrade, analysts are skeptical it can come up with the money to help Clearwire expand further.

"What are you going to do with the (rest) of the United States? You can't just limp around on one leg," said Moffett, who has a "hold" rating on Sprint due to the uncertainty around its strategy.

The uncertainty around AT&T's deal for T-Mobile USA is another big wrinkle in the Sprint story. On Thursday, AT&T withdrew its application for deal approval with the Federal Communications Commission, saying that it would focus on its legal battle with the Department of Justice. If that deal is approved, it leaves Sprint as a distant No. 4. But if it is blocked, as many analysts now expect, T-Mobile USA may look for another partner, according to the investment manager.

Instead of forging a deal with Clearwire or Sprint, Moffett suggested that T-Mobile USA would instead turn to U.S. cable operators such as Comcast Corp and Time Warner Cable. Some investors had hoped these companies would come to Sprint's aid as they are part-owners in Clearwire. But since the cable operators have unused spectrum in the same band as T-Mobile USA, Moffett suggested that the cable providers would instead create a partnership with that company if it has to abandon the AT&T deal.

Sprint has loudly opposed the AT&T/T-Mobile USA deal, a position that Moffett said was against its best interests.

"Now Sprint loses its logical partners in the cable operators," said Moffett, who described a potential cable/T-Mobile deal as a "match made in heaven."

Moreover, some analysts said that the $6 billion breakup package AT&T will have to pay T-Mobile if the deal fails would make T-Mobile into a more formidable rival to Sprint in the market for cost-conscious mobile consumers.

The uncertainty means that Sprint does not "know exactly how desperate they are at any given point in time," said the investment manager, noting that Sprint's $2.38 share price speaks volumes about investor confidence in the operator's strategy.

"It shows there's not a whole lot of faith out there that they'll be able to successfully execute on these things,' this person said.

(Reporting by Sinead Carew; editing by Peter Lauria and Matthew Lewis)

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Analysis: Whistleblower-law passage stalls in some states

By Andrew Longstreth

NEW YORK | Wed Nov 23, 2011 4:10pm EST

NEW YORK (Reuters) - For many states, a law intended to root out corruption also has been good for the bottom line.

Over the last decade, more than 20 states have passed a version of the federal anti-corruption law known as the False Claims Act (FCA). The local laws, like the federal one, allow governments to join lawsuits filed by whistle-blowers who spot fraud involving taxpayers dollars.

They have been a lucrative proposition, helping states collect millions of dollars in fines. In May, California announced a $241 million settlement of an FCA lawsuit against Quest Diagnostics Inc that alleged overcharges to the state's medical program for the poor. California's share of the settlement, $171 million, flowed to the state's general fund.

Yet at least nine states have tried and failed to pass local versions of the False Claims Act. In Ohio, there have been attempts to pass a bill since at least 2007. Republican state Attorney General Mike DeWine threw his support behind a bill in April, but so far nothing has come of it. Kentucky and Pennsylvania have also been unable to beat back opponents.

Some of the most vocal criticism of the False Claims Act has come from the pharmaceutical and medical industries, which claim that the law encourages meritless lawsuits and creates a hostile business environment.

They also question the cost-effectiveness of such statutes, which require significant government resources to investigate the claims and oblige the government to share recoveries with whistle-blowers.

Samuel Denisco of the Pennsylvania Chamber of Business and Industry, said that a state False Claims Act would be duplicative of the federal law, adding that policy makers have a responsibility to avoid "protractive litigation that is not beneficial to the state."

States that have been unable to counter those objections are starting to pay the price, according to proponents of the law.

In August, for example, Kentucky sought to join a sweeping lawsuit accusing Education Management Corp, a for-profit educational company, of fraud. The state said that EMC made false statements to the Kentucky Higher Education Assistance Authority and the U.S. Department of Education.

California, Florida and Illinois -- all of which have False Claims statutes -- had already joined the case, first filed by a whistleblower in 2007 alleging that EDMC wrongfully received more than $11 billion in federal and state funds.

But on October 24, Federal District Judge Terrence McVerry in Pittsburgh ruled that Kentucky could not intervene, citing its lack of a False Claims Act. A spokeswoman for the Kentucky attorney general's office said it "respectfully disagrees" with the judge's decision and is considering an appeal.

"It's a shame that Kentucky didn't have all the tools that other states have to go after fraud against taxpayers," said Harry Litman, an attorney for the whistle-blowers in the case.

False Claims legislation has run into similar obstacles in Pennsylvania. A coalition of Pennsylvania business groups, mainly in the medical professions, urged the legislature to oppose a version of a False Claims Act bill that was introduced last year. It argued that the bill would duplicate the federal statute and would hurt the state's efforts to recruit and retain physicians.

Opposition to the False Claims Act hardly is hardly ever about politics or ideology, said Patrick Burns of Taxpayers Against Fraud, who notes that states with the law are both blue and red.

"It's really about how state legislators will sell themselves out for a few thousand dollars apiece," said Burns. "Even in a state like Ohio or Pennsylvania where the economy is in shatters and unemployment is through the roof, a few thousand dollars will prevent the state legislature from passing a bill that will stop the hemorrhaging of fraud and recover hundreds of millions of dollars."

DATING TO LINCOLN'S ERA

The federal False Claims Act has a long history. It was first passed in 1863 in an effort championed by President Abraham Lincoln to combat unscrupulous defense contractors defrauding the Union Army.

But the act really got its teeth in 1987 when it was amended to allow whistle-blowers who discover fraud against the government to bring a lawsuit and to receive 15 percent to 30 percent of any recovery. The changes also increased potential recoveries available to plaintiffs to three times the amount of actual damages.

As states began passing their own version of the False Claims Act, they tended to use the statutes to target healthcare fraud. Recoveries were initially relatively modest, according to findings published in a 2005 Tulane Law Review article. In Hawaii, for example, recoveries obtained between 2000 and the fall of 2004 were $4 million.

But more recently, some states have reached eight and nine-figure settlements in whistleblower cases and begun to amend their False Claims Act laws to tackle other types of corruption.

New York, with one of the most powerful state FCAs in the country, put the statute to novel use in October when Attorney General Eric Schneiderman intervened in a whistleblower case brought against Bank of New York Mellon for bilking investors in foreign exchange transactions. He is seeking nearly $2 billion on behalf of public pension funds and other investors.

And False Claims Act boosters whose efforts have been unsuccessful are going back to the drawing board. Kentucky's House speaker, Greg Stumbo, has been trying to push a False Claims Act since he was attorney general of the state from 2003 to 2007. Though an effort to pass a version of the law failed earlier this year, Stumbo says he plans to reintroduce the legislation in January. "There's no reason for states not to have it," he said.

(Reporting by Andrew Longstreth; Editing by Eileen Daspin and Steve Orlofsky)

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