With hundreds of wildfires still burning in Canada, a large swath of the U.S. Northeast continues to suffer under hazy skies and compromised air into Wednesday. In fact, according to an international gauge, New York City had the second-worst air in the world early Wednesday.
As of late Tuesday, Quebec’s forest fire prevention agency reported that more than 150 blazes were active, including more than 110 deemed out of control, the Associated Press reported. A hot, dry summer is expected for the province and beyond.
The U.S. Environmental Protection Agency said its Air Quality Index registers above 151 in some areas of the northeastern U.S., spreading down into the Mid-Atlantic region. The upper Midwest reported concerning issues to start the week as well. Once an Air Quality Index reading clears 100, it’s typically a warning to people who have respiratory conditions, including asthma, to take precautions.
What is the Air Quality Index?
The EPA established an AQI for five major air pollutants regulated by the 50-year-old Clean Air Act. The agency takes readings at more than 1,000 air-quality stations around the country and includes special sensors activated by smoke in particular, for real-time readings.
Each of these pollutants measured by the EPA requires a standard deemed important to public health:
ground-level ozone
particle pollution (also known as particulate matter, including PM2.5 and PM10)
carbon monoxide
sulfur dioxide
nitrogen dioxide
Especially during wildfire season, fine particles in soot, ash and dust can fill the air. And because it’s nearly summer, the combination of smoke and hotter temperatures can generate more ozone pollution, which can aggravate respiratory issues.
The EPA says to think of the AQI as a yardstick that runs from 0 to 500. The higher the AQI value, the greater the level of air pollution and the greater the health concern.
For example, an AQI value of 50 or below represents good air quality for essentially all the population. A reading above 100 typically means that the outdoor air remains safe for most, but seniors, pregnant people and children are at increased risk. Those with heart and lung disease may also be at greater risk. And an AQI value over 300 represents hazardous air quality that will impact to some degree nearly everyone exposed to the air, even healthy people.
Because remembering the severity of number ranges may be challenging, EPA has assigned a color to each range, with green and yellow representing the most favorable conditions, and orange, red, purple and maroon reflective of levels that are progressively worse, topping out at maroon or readings between 301 to 500.
For comparison, the record-setting wildfire years of 2020 and 2021 meant that outdoor air near Portland, Ore., on select days produced an AQI above 400.
What are the health concerns from poor air quality?
The EPA and public health officials warn citizens against regular exposure to fire-impacted air, especially for outdoor workers, even if local readings aren’t especially dangerous.
The effects of air pollution can be mild, like eye and throat irritation. But, for some, those effects turn serious, including heart and respiratory issues. And pollutants might linger longer than hazy, discolored skies persist, causing inflammation of the lung tissue and increasing vulnerability to infections.
Lingering particle measurements are picked up when the AQI tracks PM 2.5, which quantifies the concentration of particles smaller than 2.5 micrometers. When inhaled, these nearly undetectable particles can increase the risk of heart attack, select cancers and acute respiratory infections, especially in children and older adults.
Smokers, including those using vape pens, can invite added health risk with wildfire smoke exposure, say public health officials.
What precautions can be taken when there’s dangerous air outdoors? Do masks help?
Stay indoors if you can, with the windows and doors closed.
The EPA recommends eliminating outdoor exercise such as walking, jogging or cycling, once an AQI moves above 150. That includes gardening and mowing the lawn.
If you have to work outside, additional breaks out of the smoke may be necessary.
If you have air conditioning, run it continuously, not on the auto cycle. It’s also recommended to close the fresh air intake so that smoke doesn’t get inside the house.
But if you’re still worried about the outdoor air entering your home, air purifiers, often the size of table fans or smaller, can reduce indoor particulate matter in smaller spaces.
Avoid stove-top cooking that could increase indoor smoke, even if you plan to run the overhead fan.
Do masks help? An N95 respirator mask can filter out some of the particles. If fitted and worn correctly, the N95 mask filters out 95% of particles larger than 0.3 microns, so they’re very efficient with keeping out the 2.5-micron particles in wildfire smoke, say health officials. Notably, even an N95 does little to protect against harmful gases in wildfire smoke, including carbon monoxide.
If there were no tax cheats in America, there would be no Social Security crisis. Benefits could be paid, and payroll taxes kept the same, for the next 75 years.
That’s not me talking. That’s math. It comes from the number crunchers at the Social Security Administration and the Internal Revenue Service.
And it explains why those of us who support Social Security should be pounding the table in outrage over one clause of the Biden-McCarthy debt ceiling deal: The part where the president has to retreat from his crackdown on tax cheats just so McCarthy and the House Republicans would agree to prevent America defaulting on its debts.
It’s just two years since the administration got into law an extra $80 billion for the IRS to beef up enforcement. That was supposed to include hiring an estimated 87,000 IRS agents.
OK, so nobody likes paying taxes and nobody likes the IRS. Cue the inevitable critiques of an IRS tax “army,” and so on. But this isn’t about whether taxes should be higher or lower. It’s about whether everyone should pay the taxes that they owe.
After all, if we’re going to cut taxes, shouldn’t they apply to those of us who obey the laws as well as those who don’t? Or do we just support the “Tax Cuts for Criminals” Act?
Why would any voter rally around a platform of “I stand with tax cheats?”
If this seems abstract, consider the context and how it affects you and your retirement — and the retirements of everyone you know.
Social Security is now running at an $80 billion annual deficit. That’s the amount benefits are expected to exceed payroll taxes this year. (So say the Social Security Administration’s trustees.)
Next year, that deficit is expected to top $150 billion. By 2026, we’re looking at $200 billion and rising. The trust fund will run out of cash by 2034, and without extra payroll taxes will have to slash benefits by a fifth or more.
Over the next 75 years, says the Congressional Budget Office, the entire funding gap for the program will average about 1.7% of gross domestic product per year.
Meanwhile, how much are tax cheats stealing from the rest of us? A multiple of that.
But it still worked out at around 12% of all the taxes people were supposed to pay (including payroll taxes). And around 2.3% of GDP.
Over the next 10 years, based on similar ratios to GDP, that would come to another $3.3 billion.
Sure, Social Security’s trust fund is theoretically separate from the rest of Uncle Sam’s finances. But that’s an accounting issue: A distinction without a difference.
Some people want to cut benefits. Others want to raise the retirement age, which also means cutting benefits. Others want to raise taxes on benefits — which also means cutting benefits. Others want to hike payroll taxes, either on all of us or (initially) only on very high earners.
But if investing some of the trust fund in stocks is a no-brainer, so, too, is insisting everyone obey the law and pay the taxes they actually owe each year. I mean, shouldn’t we do that before we think about raising taxes even further on those who abide by the law?
How could anyone object? Any party that believes in law and order would support enforcing, er, law and order on tax evasion. And any party of fiscal conservatism would support measures, like tax enforcement, to narrow the deficit.
And, actually, any party that truly supported lower taxes for all would be tough on tax evasion: It is precisely this $500 billion in evasion by a small, scofflaw minority that forces the rest of us to pay more. We have, quite literally, a tax on obeying the law.
Bud Light’s recent troubles should worsen in the summer, to the benefit of its competition’s brands, enough to turn Roth MKM analyst Bill Kirk bullish on the stocks of Constellation Brands Inc. and Boston Beer Co. Inc.
Kirk raised on Tuesday his rating on Modelo, Corona, Pacifico beer parent Constellation Brands to buy, after being at neutral since January 2021, while boosting his stock price target to $270 from $216.
Kirk said a lot of the market share Anheuser-Busch InBev SA’s Bud Light lost, amid backlash from the beer brand’s partnership with trans influencer Dylan Mulvaney, went to other premium light products, but he expects that to shift to Constellation’s favor.
“As the weather warms, we expect the share gains for Modelo Especial and Corona to accelerate,” Kirk wrote in a note to clients.
Constellation Brands’ stock STZ, +1.79%
rose 1.5% in afternoon trading Tuesday toward the highest close since Dec. 12, 2022, while Anheuser-Busch shares BUD, -4.71%
slumped 4.5% toward the lowest close since Nov. 10.
He noted that weekly scanner data has shown that Constellation’s beer portfolio outperformed the broader beer market by seven percentage points in early 2023, and that outperformance improved to 10 percentage points at the beginning of Bud Light’s market-share losses in April.
“With temperatures warming and substitutability with Bud Light increasing, recent weeks have seen 13 [percentage points] of outperformance,” Kirk wrote. “This trend should continue as Bud Light [declines/peak] over summer holidays.”
For Samuel Adams, Truly, Twisted Tea parent Boston Beer, Kirk raised his rating to buy, after being at neutral for at least the past three years. He raised his stock price target to $386 from $274.
Boston Beer’s stock SAM, +5.37%
jumped 6.8% toward the highest close since Feb. 15.
Earlier this year, Kirk was concerned that Truly hard seltzer’s weakness continued, offsetting Twisted Tea’s success, and that gross margins weren’t improving even after moving more production in-house.
“Now, we believe seltzer and Truly will benefit in the summer from Bud Light share losses (occasion overlap increases with warmer weather) and gross margin lift from production shift will be realized in 2Q (given inventory days timing),” Kirk wrote.
He believes that will shift investor focus away from Truly’s weakness and toward Boston Beer’s brands that are growing.
And while Wall Street expects the trends Boston Beer saw in the first quarter to continue throughout 2023, Kirk now believes the company will beat expectations for shipments and depletions, and sees opportunities for margins to also beat forecasts.
“While we had written at 1Q that the ‘timing of upside surprises remains unclear,’ we now believe the timing is Summer 2023,” Kirk wrote.
Constellation Brands’ stock has gained 5.7% over the past three months and Boston Beer shares have advanced 4.8%, while Anheuser-Busch’s stock has dropped 10.1% and the S&P 500 index SPX, +0.00%
has gained 5.9%.
The Democratic president and Republican speaker spoke with each other Sunday evening as negotiators rushed to draft the bill text so lawmakers can review compromises that neither the hard-right or left flank is likely to support. Instead, the leaders are working to gather backing from the political middle as Congress hurries toward votes before a June 5 deadline to avert a damaging federal default.
“Good news,” Biden declared Sunday evening at the White House.
“The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history,” he said. “Takes the threat of a catastrophic default off the table.”
The president urged both parties in Congress to come together for swift passage. “The speaker and I made clear from the start that the only way forward was a bipartisan agreement,” he said.
The compromise announced late Saturday includes spending cuts but risks angering some lawmakers as they take a closer look at the concessions. Biden told reporters at the White House upon his return from Delaware that he was confident the plan will make it to his desk.
McCarthy, too, was confident in remarks at the Capitol: “At the end of the day, people can look together to be able to pass this.”
The days ahead will determine whether Washington is again able to narrowly avoid a default on U.S. debt, as it has done many times before, or whether the global economy enters a potential crisis.
In the United States, a default could cause financial markets to freeze up and spark an international financial crisis. Analysts say millions of jobs would vanish, borrowing and unemployment rates would jump, and a stock-market plunge could erase trillions of dollars in household wealth. It would all but shatter the $24 trillion market for Treasury debt.
Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due soon as the world watches American leadership at stake.
McCarthy and his negotiators portrayed the deal as delivering for Republicans though it fell well short of the sweeping spending cuts they sought. Top White House officials were briefing Democratic lawmakers and phoning some directly to try to shore up support.
As Sunday dragged on, negotiators labored to write the bill text and lawmakers raised questions.
McCarthy told reporters at the Capitol on Sunday that the agreement “doesn’t get everything everybody wanted,” but that was to be expected in a divided government. Privately, he told lawmakers on a conference call that Democrats “got nothing” they wanted.
A White House statement from the president, issued after Biden and McCarthy spoke by phone Saturday evening and an agreement in principle followed, said the deal “prevents what could have been a catastrophic default.”
Support from both parties will be needed to win congressional approval before a projected June 5 government default on U.S. debts. Lawmakers are not expected to return to work from the Memorial Day weekend before Tuesday, at the earliest, and McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting.
With the outlines of an agreement in place, the legislative package could be drafted and shared with lawmakers in time for House votes as soon as Wednesday, and later in the coming week in the Senate.
Central to the compromise is a two-year budget deal that would essentially hold spending flat for 2024, while boosting it for defense and veterans, and capping increases at 1% for 2025. That’s alongside raising the debt limit for two years, pushing the volatile political issue past the next presidential election.
Driving hard to impose tougher work requirements on government aid recipients, Republicans achieved some of what they wanted. It ensures people ages 49 to 54 with food stamp aid would have to meet work requirements if they are able-bodied and without dependents. Biden was able to secure waivers for veterans and homeless people.
The deal puts in place changes in the landmark National Environmental Policy Act designating “a single lead agency” to develop environmental reviews, in hopes of streamlining the process.
It halts some funds to hire new Internal Revenue Service agents as Republicans demanded, and rescinds some $30 billion for coronavirus relief, keeping $5 billion for developing the next generation of COVID-19 vaccines.
The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time. Lifting the nation’s debt limit, now at $31 trillion, allows more borrowing to pay bills already insurred.
McCarthy commands only a slim Republican majority in the House, where hard-right conservatives may resist any deal as insufficient as they try to slash spending. By compromising with Democrats, he risks losing support from his own members, setting up a career-challenging moment for the new speaker.
“I think you’re going to get a majority of Republicans voting for this bill,” McCarthy said on “Fox News Sunday,” adding that because Biden backed it, “I think there’s going to be a lot of Democrats that will vote for it, too.”
House Democratic leader Hakeem Jeffries of New York said on CBS’ “Face the Nation” that he expected there will be Democratic support but he declined to provide a number. Asked whether he could guarantee there would not be a default, he said, “Yes.”
A 100-strong group of moderates in the New Democratic Coalition gave a crucial nod of support on Sunday, saying in a statement it was confident that Biden and his team “delivered a viable, bipartisan solution to end this crisis” and were working to ensure the agreement would receive support from both parties.
The coalition could provide enough support for McCarthy to make up for members in the right flank of his party who have expressed opposition before the bill’s wording was even released.
It also takes pressure off Biden, facing criticism from progressives for giving into what they call hostage-taking by Republicans.
Democratic Rep. Pramila Jayapal of Washington state, who leads the Congressional Progressive Caucus, told CBS that the White House and Jeffries should worry about whether caucus members will support the agreement.
WASHINGTON — President Joe Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling late Saturday as they raced to strike a deal to limit federal spending and avert a potentially disastrous U.S. default.
However, the agreement risks angering both Democratic and Republican sides with the concessions made to reach it. Negotiators agreed to some Republican demands for increased work requirements for recipients of food stamps that had sparked an uproar from House Democrats as a nonstarter.
Support from both parties will be needed to win congressional approval next week before a June 5 deadline.
The Democratic president and Republican speaker reached the agreement after the two spoke earlier Saturday evening by phone, said McCarthy. The country and the world have been watching and waiting for a resolution to a political standoff that threatened the U.S. and global economies.
“The agreement represents a compromise, which means not everyone gets what they want,” Biden said in a statement late Saturday night. “That’s the responsibility of governing,” he said.
Biden called the agreement “good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.”
McCarthy in brief remarks at the Capitol, said that “we still have a lot of work to do.”
But the Republican speaker said: “I believe this is an agreement in principle that’s worthy of the American people.”
With the outlines of a deal in place, the legislative package could be drafted and shared with lawmakers in time for votes early next week in the House and later in the Senate.
Central to the package is a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.
The agreement would limit food stamp eligibility for able-bodied adults up to age 54, but Biden was able to secure waivers for veterans and the homeless.
The two sides had also reached for an ambitious overhaul of federal permitting to ease development of energy projects and transmission lines. Instead, the agreement puts in place changes in the the National Environmental Policy Act that will designate “a single lead agency” to develop economic reviews, in hopes of streamlining the process.
The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time to raise the federal debt ceiling. The extended “X-date” gave the two sides a bit of extra time as they scrambled for a deal.
Biden also spoke earlier in the day with Democratic leaders in Congress to discuss the status of the talks.
The Republican House speaker had gathered top allies behind closed doors at the Capitol as negotiators pushed for a deal that would avoid a first-ever government default while also making spending cuts that House Republicans are demanding.
But as another day dragged on with financial disaster looming closer, it had appeared some of the problems over policy issues that dogged talks all week remained unresolved.
Both sides have suggested one of the main holdups was a GOP effort to expand work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have strenuously opposed. The White House said the Republican proposals were “cruel and senseless.”
Biden has said the work requirements for Medicaid would be a nonstarter. He seemed potentially open to negotiating minor changes on food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP, despite objections from rank-and-file Democrats.
McCarthy, who dashed out before the lunch hour Saturday and arrived back at the Capitol with a big box of takeout, declined to elaborate on those discussions. One of his negotiators, Louisiana Rep. Garret Graves, said there was “not a chance” that Republicans might relent on the work requirements issue.
Americans and the world were uneasily watching the negotiating brinkmanship that could throw the U.S. economy into chaos and sap world confidence in the nation’s leadership.
Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.
Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”
The president, spending part of the weekend at Camp David, continued to talk with his negotiating team multiple times a day, signing off on offers and counteroffers.
Any deal would need to be a political compromise in a divided Congress. Many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of the Treasury’s projections, and they are pressing McCarthy to hold out.
Lawmakers are not expected to return to work from the Memorial Day weekend before Tuesday, at the earliest, and McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting.
The Democratic-held Senate has largely stayed out of the negotiations, leaving the talks to Biden and McCarthy. Senate Majority Leader Chuck Schumer of New York has pledged to move quickly to send a compromise package to Biden’s desk.
Weeks of talks have failed to produce a deal in part because the Biden administration resisted for months on negotiating with McCarthy, arguing that the country’s full faith and credit should not be used as leverage to extract other partisan priorities.
But House Republicans united behind a plan to cut spending, narrowly passing legislation in late April that would raise the debt ceiling in exchange for the spending reductions.
With the outlines of a deal in place, the legislative package could be drafted and shared with lawmakers in time for votes early next week in the House and later in the Senate.
Central to the package is a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.
Negotiators agreed to some Republican demands for enhanced work requirements on recipients of food stamps that had sparked an uproar from House Democrats as a nonstarter.
Biden also spoke earlier in the day with Democratic leaders in Congress to discuss the status of the talks, according to three people familiar with the situation, who spoke on condition of anonymity because they were not authorized to discuss the matter publicly.
The Republican House speaker had gathered top allies behind closed doors at the Capitol as negotiators pushed for a deal that would raise the nation’s borrowing limit and avoid a first-ever default on the federal debt, while also making spending cuts that House Republicans are demanding.
As he arrived at the Capitol early in the day, McCarthy said that Republican negotiators were “closer to an agreement.”
McCarthy’s comments had echoed the latest public assessment from Biden, who said Friday evening that bargainers were “very close.” Biden and McCarthy last met face-to-face on the matter Monday.
Their new discussion Saturday by phone came after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers do not act in time to raise the federal debt ceiling. The extended “X-date” gives the two sides a bit of extra time as they scramble for a deal.
Americans and the world were uneasily watching the negotiating brinkmanship that could throw the U.S. economy into chaos and sap world confidence in the nation’s leadership. House negotiators left the Capitol at 2 a.m. the night before, only to return hours later.
Failure to lift the borrowing limit, now $31 trillion, to pay the nation’s incurred bills, would send shockwaves through the U.S. and global economy. Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”
Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.
A national obsession with a new class of weight-loss drugs is turning dangerous, doctors and researchers say, as many patients are inappropriately prescribed Wegovy, Ozempic and similar medications and supply shortages generate a market for unauthorized, potentially risky copycat versions of these drugs.
Social media buzz about the drugs has promoted the mistaken perception that the medications are appropriate for a broad swath of people who may want to shed a few pounds–with disastrous consequences for some patients, doctors say. Patients who previously recovered from eating disorders, for example, are coming in for treatment because they “have had their eating disorder reactivated by use of these medications,” said Dr. Elizabeth Wassenaar, a regional medical director at the Eating Recovery Center, which specializes in treating the disorders. Some patients have wound up in the hospital, she said, and in some cases the providers who prescribed the drugs were unaware of the patients’ eating-disorder history. “It’s a real warning to people who prescribe these medications that it’s not without risk,” she said.
Some doctors also question whether the safety of the drugs has been adequately studied in older adults, who may have an undesirable loss of lean muscle mass when taking the medications. That complicates an ongoing debate about whether Medicare should cover these drugs for weight loss.
And patients of all types are put at risk, experts say, by the illegal production of knock-off versions of the medications. The Food and Drug Administration and several state pharmacy boards in recent weeks have warned that some compounding pharmacies are producing unauthorized versions of the drugs–which poses particular safety concerns for injectable drugs such as Wegovy, said David Margraf, a pharmaceutical research scientist with the Resilient Drug Supply Project at the University of Minnesota’s Center for Infectious Disease Research and Policy. “It’s not just a victimless crime,” he said. “People can be severely injured.”
Novo Nordisk NVO, +0.33%,
the maker of Wegovy and Ozempic, itself sought to tap the brakes on the craze around these drugs in a statement posted on its website this month, saying it’s concerned about reports of the drugs being used “for purely cosmetic or aesthetic weight loss,” unauthorized versions of the drugs hitting the market, and “insufficient clinical evaluations by some telehealth providers” promoting the drugs.
Drugs such as Novo Nordisk’s Wegovy, Ozempic and Rybelsus and Eli Lilly’s LLY, -0.36%
Mounjaro mimic the effects of a gut hormone known as GLP-1, which can help control blood-sugar levels and reduce appetite. (Mounjaro also affects another hormone called GIP.) Ozempic, Rybelsus and Mounjaro are FDA-approved for treatment of type 2 diabetes, while Wegovy is approved for people with obesity and certain people with excess weight combined with weight-related medical problems.
Billions of dollars in drug sales hinge on the breadth of the patient population prescribed these medications. Last year, more than 5 million prescriptions for Ozempic, Mounjaro, Rybelsus or Wegovy were written for weight management, up from just 230,000 in 2019, according to data and analytics firm Komodo Health. Obesity drugs could be a $54 billion market by 2030, up from $2.4 billion in 2022, Morgan Stanley said in a report last year. Reports of GLP-1 drug users seeing improvements in addictive behaviors such as smoking and drinking have lately amplified interest in the medications.
The drugs have become such a cultural phenomenon that Walmart during its quarterly earnings call last week blamed the medications for a shift in consumer-spending patterns that pressured its margins. In the first quarter, the company saw “a shift to health and wellness,” John Rainey, Walmart Inc.’s WMT, +0.18%
executive vice president and chief financial officer, said on the call with analysts. “And part of that is related to these GLP-1 drugs that are to treat diabetes,” he said, adding that the shift “comes at a lower margin, and so that has some impact on our business as well.”
Noom, a digital health company that for years has emphasized a behavioral approach to weight management, this week announced a new program that will make Ozempic, Wegovy, Mounjaro and other medications available to eligible patients. “Prescriptions are not the goal of our program. They’re very much an adjunct,” Dr. Linda Anegawa, Noom’s chief of medicine, told MarketWatch. Medical professionals will review patients’ entire health history, order labs to assess their metabolic health, and engage in video visits with patients as they determine what treatments might be appropriate, she said.
Telling your brain you’re not hungry
The reason GLP-1 drugs help control weight is pretty straightforward, said Dr. Daniel Drucker, who helped discover GLP-1 and is senior scientist at Lunenfeld-Tanenbaum Research Institute in Toronto. When people take these drugs, he said, they simply eat less because they feel more full. “GLP-1 will tell your brain that you’re not hungry,” he said, and people taking these medications may feel less stressed about food or find themselves thinking less about food. And the effects may go beyond eating, he said, as some people also see improvements in smoking, drinking, and other addictive or compulsive behaviors. “These are really interesting areas for further investigation,” he said. Drucker has been a consultant or speaker for Novo Nordisk, Pfizer PFE, -0.61%
and other pharmaceutical companies.
Novo Nordisk said in a statement to MarketWatch that it is not conducting any dedicated clinical studies to evaluate Ozempic, Rybelsus or Wegovy in patients with substance-use disorders or addiction-related illnesses, and Eli Lilly said it does not have any studies planned for investigating tirzepatide–the active ingredient in Mounjaro–for treatment of addiction.
Adolescents’ use of the drugs for weight loss is a particular concern for some doctors. Wegovy is approved for treatment of obesity in children 12 and older. “The adolescent mental health crisis is unprecedented,” said Wassenaar, with many teens suffering severe mood disorders, eating disorders, and suicidality, and teens struggling with depression may think, “if I lose weight, I’ll feel better and people will like me. There’s this magic drug, and all I have to do is inject it.” And if patients can start taking these drugs as early as 12 years of age, “we just don’t know what that’s going to do to them in 10 or 20 years,” she said, because there’s not enough long-term data.
Novo Nordisk said in a statement to MarketWatch that “teenage obesity is linked to weight-related health problems such as high blood pressure, high cholesterol and type 2 diabetes,” and that cutting calories and increasing physical activity may not be enough for some patients. “The decision to prescribe an anti-obesity medication is at the discretion of the physician and the patient/parents,” the company said.
Eli Lilly said that tirzepatide is not currently being studied for chronic weight management in children or adolescents.
Many patients may have trouble filling lower-dose Wegovy prescriptions through September, according to drugmaker Novo Nordisk.
Novo Nordisk via AP
Some doctors are also concerned about broad use of the drugs among older adults. Many older adults have sarcopenia, an age-related loss of muscle mass and strength that can contribute to frailty and fall risk later in life–and losing weight can mean an additional loss of muscle mass that may not be advisable for some patients, doctors and researchers say.
While “there’s a huge push to get Medicare to cover these drugs, it’s not really certain whether they would be helpful in this population or actually more harmful,” said Judy Butler, a research fellow at PharmedOut, a research and education project at Georgetown University Medical Center. Noom is not enrolling patients over age 60 in its new program, Anegawa said, partly because “we really don’t have enough data yet with many of these drugs in the geriatric population.”
In the pivotal clinical trials for Wegovy, 9% of the Wegovy-treated patients were between 65 and 75 years of age, and 1% were 75 and older, Novo Nordisk said in a statement. “No overall differences in safety or effectiveness have been observed between patients 65 years of age and older and younger adult patients,” the company said. In an ongoing cardiovascular outcomes trial, about 38% of patients are 65 or older, the company said.
By law, Medicare generally does not cover drugs prescribed for weight loss–although some drugmakers and industry groups are pushing to change that. Some of the drugs now generating intense demand also come with a hefty sticker price: Wegovy, for example, has an estimated annual net cost of about $13,600, according to the Institute for Clinical and Economic Review. If Medicare coverage rules changed and 10% of beneficiaries with obesity used Wegovy, total annual Medicare Part D spending on the drug could be as much as $26.8 billion, according to a recent study published in the New England Journal of Medicine. That’s more than 18% of the net total Part D spending by beneficiaries and the Medicare program in 2019.
Dangerous copycats
There are potential physical as well as financial costs. Side effects of the drugs can range from nausea and vomiting to gallbladder problems, inflammation of the pancreas, and thyroid cancer.
More broadly, some doctors question the prescribing of drugs solely based on obesity, absent other risk factors. “If somebody is obese and has diabetes, high blood pressure, and high cholesterol, losing weight may improve those parameters, but obesity on its own does not need to be treated,” said Dr. Adriane Fugh-Berman, a professor at Georgetown University Medical Center and director of PharmedOut. “It’s cardiovascular fitness that is important, no matter what weight you are,” she said. “We should stop focusing on the weight itself as a risk factor.”
Dr. Robert Gabbay, chief science and medical officer at the American Diabetes Association, counters that “obesity is a disease, and therefore needs to be treated as such.” Although there are people with obesity who don’t have other serious conditions, he said, “that’s relatively uncommon.”
Despite the concerns, shortages of the drugs persist. Novo Nordisk says it anticipates that many patients will have trouble filling lower-dose Wegovy prescriptions through September.
For patients who are relying on GLP-1 drugs for treatment of diabetes, even a short-term interruption in access to the drugs can cause blood-glucose levels to rise and result in serious complications, Gabbay said. Patients also tend to gradually ramp up dosage of these drugs to get to the effective dose, he said, and if they lose access to the medication “they might have to start back at the beginning again,” putting them several months behind on their treatment.
The shortages can also create risks for a broader set of patients, experts say, as they spur demand for copycat versions of the drugs. The approved active ingredient in Wegovy and Ozempic is semaglutide in its base form, but some compounding pharmacies may be using salt forms of semaglutide, the FDA said in a late April letter to the National Association of Boards of Pharmacy. “We are not aware of any basis for compounding a drug using these semaglutide salts that would meet federal law requirements” restricting the types of active ingredients used in compounding, the FDA said in the letter. Boards of pharmacy in several states, including West Virginia, North Carolina and Mississippi, have also recently issued warnings about compounded semaglutide.
Novo Nordisk said in the statement posted on its website this month that it is “actively monitoring and taking action against” entities unlawfully selling compounded semaglutide, adding that no FDA-approved generic versions of semaglutide currently exist.
Unauthorized compounded versions of the drugs could raise serious concerns about sterility and other quality-control issues, the Resilient Drug Supply Project’s Margraf said. “If this drug is in high demand and there isn’t enough supply, people will find a way to get it from a gray-market source,” he said. “People are going to find ways around the laws and potentially harm patients.”
Traveling this Memorial Day Weekend? Put some deep breaths on your checklist.
Americans should brace for jammed highways and long airport lines with more people projected to drive and fly this holiday weekend compared to last year, experts say.
Gas is $1 cheaper than it was at the same point last year and airline passengers aren’t flinching from pricey tickets, still powered by the pent-up demand to see family and friends as the pandemic recedes.
“The roads are going to be pretty packed,” said AAA spokeswoman Aixa Diaz. “The bottom line is, the later you wait in the day, the worse it is — unless you drive at night.”
“If there ever was a time you wanted to get to the airport early, it’s this one,” she added.
“Whether driving or flying, pack your patience and prepare for heavy traffic on the road and at the airport,” said Erika Richter, spokeswoman for the American Society of Travel Advisors.
“AAA is projecting that 37.1 million people will be driving at least 50 miles this upcoming weekend. That’s 2 million more people traveling by automobile compared to last year.”
AAA is projecting that 37.1 million people will be driving at least 50 miles this upcoming weekend. That’s 2 million more people traveling by automobile compared to last year.
They’ll be driving on cheaper gas. Nationally, a gallon of gas averaged $3.57 on Thursday, down from $4.59 one year ago, AAA said.
Meanwhile, nearly 3.4 million airline passengers are projected to fly this weekend, according to AAA. That would surpass pre-pandemic levels, when 3.2 million people flew over the Memorial Day Weekend in 2019.
All together, 42.3 million people are expected to travel this weekend via cars, planes, buses, trains, according to AAA estimates. That’s higher than the 39.6 million who traveled last Memorial Day Weekend, and just under 2019 levels.
Three major airlines, American Airlines AAL, +4.20%,
United UAL, +1.76%
and Delta Air Lines DAL, +2.35%,
are expected to handle nearly 60% of the flights, according to a Thursday note from TD Cowen.
Like others, analysts at TD Cowen, a division of TD Securities, say it’s going to be a brisk summer travel season.
“We continue to see strong demand for air travel, with this summer’s focus on international [travel]. Remember, the U.S. government did not eliminate testing until mid-June last year, after most people planned their vacations,” they wrote.
Friday is the day when roads and airports are going to be the busiest.
On the roads, congestion is going to peak that day from 3:00 p.m. to 6:00 p.m., according to INRIX, a traffic-data analytics firm.
Inside airports, approximately 2.6 million people will pass through Transportation Security Administration checkpoints that day, the agency said.
During last year’s Memorial Day Weekend, 2.38 million people passed through TSA checkpoints, the agency’s data showed.
Teens, aged 13-17, can now go with TSA PreCheck-enrolled parents and guardians, when they are on the same reservation and when the TSA PreCheck indicator shows on the child’s pass. Children ages 12 and under can still walk through checkpoints with their enrolled parents or guardians.
Once getting on the plane, don’t count on having a nearby spare seat. Seating capacity is currently slated to be 17% higher than last Memorial Day Weekend, according to the travel app Hopper.com.
This weekend, last-minute tickets are averaging $273, and that’s around $100 less than ticket-price averages at the same point last year and slightly cheaper than 2019 levels, Hopper.com’s data said. International travel is a different story. Fares to Europe, for example, are more than 50% higher than last year, according to Hopper.com.
What happens after Friday?
On the roads, there’s little extra traffic expected on Saturday and Sunday, according to projections from INRIX, a transportation analytics company. On Monday, the worst traveling time is 12 p.m. to 3 p.m. The window for less traffic that day is before 10 a.m., INRIX noted.
As for flights, Richter said airlines and operators “are obligated to share the latest information if it impacts your travel.”
Downloading smartphone apps for your airline, activating the notifications and opting for text and email alerts will also help keep you abreast of any last-minute changes, she said.
Through March, less than 2% of scheduled domestic flights have been canceled, the U.S. Department of Transportation said Tuesday. That’s below last year’s 2.7% cancellation average and the 4.1% rate for the first three months of 2022, the department noted.
A Transportation Department dashboard shows which airline carriers have committed to passenger-friendly accommodations when delays and cancellations occur. For example, some — but not all — airlines will rebook your flight with a partner airline at no additional cost.
But Richter said the volume and potentials for travel snags this Memorial Day Weekend could be a preview for the months to come. “Travel delays will be inevitable this summer, so make sure you are planning ahead,” she said.
If the U.S. government cannot pay all its bills because of a debt-ceiling impasse, household borrowing costs could soar, the job market could shed millions of jobs and stock-market valuations could shrink, according to forecasts.
The consequences of a prolonged default could be grim, according to Moody’s Analytics. The projected fallout from a brief default is less severe but still enough to push an “already fragile” economy into a mild recession, Moody’s says.
On Wednesday, Treasury Secretary Janet Yellen said it’s “almost certain” that the Treasury will run out of resources in early June. She also said she would provide a new update on the debt-limit deadline “pretty soon.”
For all the uncertainties, financial experts say there are ways individuals can prepare. Start by making sure your deposits are in accounts backed by the Federal Deposit Insurance Corp., and think hard about rate-sensitive purchases like a car or a house.
It’s important for people to have a plan in case there is a default, said Rob Williams, managing director of financial planning, retirement income and wealth management at the Schwab Center for Financial Research, a division of Charles Schwab Corp. SCHW, -1.34%.
“On Wednesday, Treasury Secretary Janet Yellen said it’s ‘almost certain’ that the Treasury will run out of resources in early June.”
“Having a financial plan in place that looks at the long and short term is the best way to prepare for the debt ceiling or any other crisis,” he said.
There is still widespread expectation that Congress will strike a political deal that lifts the federal government’s $31 trillion borrowing limit. President Joe Biden and House Speaker Kevin McCarthy met again on Monday, and more talks are planned.
McCarthy on Wednesday said he “firmly believe[d]” the sides would reach a deal avoiding default.
But the window of time in which to act is getting smaller. It’s “highly likely” that the government will get to the point where it cannot pay all its bills and debt obligations in early June — possibly as early as June 1, Yellen said this week.
Meanwhile, new Federal Reserve figures offer a reminder that Americans’ personal finances over the last year have been under pressure, even as inflation rates retreat slowly.
More than one-third of people in the U.S. (35%) said they were worse off in 2022 than in 2021, according to the Fed’s annual look at economic well-being, released Monday.
That’s the largest percentage of people saying they were worse off since central bank researchers started asking the question nearly a decade ago.
“If there ever was a time for a rainy-day fund, this is it. But it’s not going to be able to help a lot of consumers,” said Rachel Gittleman, financial services outreach manager for the Consumer Federation of America.
For example, Social Security payments and payments to veterans could be delayed in the event of a default, she said. “There will be a lot of consumers who will be in an impossible financial situation,” Gittleman said.
If the government does not raise the debt ceiling, household borrowing costs could soar, the job market could shed millions of jobs and stock-market valuations could shrink, according to forecasts.
Getty Images/iStockphoto
Make sure your money is safe
The FDIC guarantees deposits up to $250,000 on accounts including checking, savings and certificates of deposit. That won’t change in the case of any default, an FDIC spokesperson told MarketWatch.
Deposit-insurance coverage came into hard focus in early spring when Silicon Valley Bank and Signature Bank failed, putting other regional banks under pressure as many customers moved their money into bigger banks.
If economic conditions deteriorate after a default, Gittleman said, people will want assurance their money is safe. If you haven’t taken any of the recent bank failures as a sign to put money in an FDIC-insured account, “this would be the time,” she said.
Start cutting costs quickly
During the early days of the pandemic when there were millions of job losses, many people had to quickly cut back on or delay regular expenses.
If a default puts people in an economic vise, Gittleman said they may need to be ready to shut down nonessential recurring payments and talk with their lenders and credit-card companies. “It’s thinking holistically about all of your financial expectations and where you can possibly either get forbearance or some leniency and ask for some help,” she said.
Credit-card debt reached $986 billion in the first quarter, according to the Federal Reserve Bank of New York, and delinquencies on credit cards and car loans continued to move higher after pandemic lows.
Rate-sensitive purchases
After more than a year of rising interest rates, it’s already a tough time to finance a major purchase. On Tuesday, the 30-year fixed mortgage rate climbed higher than 7% for the third time this year.
Any default lasting at least a month would push the 30-year mortgage up to 8.4% in September and price out hundreds of thousands of buyers, according to Zillow Z, -0.83%.
But that is no reason to speed up a home purchase, said Daniel Milan, founder and managing partner of Cornerstone Financial Services.
“Any default lasting at least a month would push the 30-year mortgage up to 8.4% in September and price out hundreds of thousands of buyers, according to Zillow.”
The Federal Reserve doesn’t set mortgage rates, but its policies influence their direction. The big questions are when the central bank will stop increasing its benchmark rate and when it will begin to reduce the rate.
“The odds of a rate cut outweigh the fear or the rush into buying a home now because of the debt-ceiling crisis,” Milan said.
But the Schwab Center’s Williams noted that trying to time a major financial decision around market and political events is a difficult task.
Financial decisions are a mix of math and emotions, even though many people tend to focus more on the math, he said. That’s why it’s important to figure out a financial plan. Often the best course is to stick to your plan and say, “I’m not going to make major changes in the face of market news,” Williams said.
Tuesday marked the Dow’s third straight trading-day loss. By Wednesday afternoon, the index had shed more than 200 points.
The yields on short-term Treasury debt TMUBMUSD01M, 5.666%
maturing in early June are pushing toward 6% amid continued uncertainty about whether a debt-ceiling resolution can come together fast enough to avoid a government default. Bond prices and yields move in opposite directions, reflecting less investor appetite for debt.
There’s no one rule for preparing an investment portfolio for a debt default, financial advisers said. But older retired investors are in a trickier spot — especially in relation to the prospect of delayed Social Security checks — compared with younger investors who have more time to bounce back from adverse events.
“‘We continue to urge clients to make sure we know about any short-term cash needs so that those funds are not at risk.’”
— Lisa A.K. Kirchenbauer, founder and president of Omega Wealth Management
Cash investments have proven attractive in rocky times. But the risk of a debt default could make a heftier cash allocation even more important for older investors, financial advisers said.
“We continue to urge clients to make sure we know about any short-term cash needs so that those funds are not at risk,” said Lisa A.K. Kirchenbauer, founder and president of Omega Wealth Management.
Kirchenbauer said she’s starting to hear from clients about debt-ceiling concerns. “I am making sure that larger [required minimum distributions] are in cash for 2023 now, before anything bad happens in the markets.”
Required minimum distributions are the minimum yearly amounts that have to be pulled out of qualified retirement accounts once the owner reaches a certain age, currently 73.
Preparing for any default is a mental exercise as much as asset allocation, said Amy Hubble, principal investment adviser with Radix Financial. If there’s been no change in a person’s personal circumstances, like job status, income needs or retirement timeline, they should avoid getting sidetracked by short-term issues, she said.
“There are only a small handful of things we can actually control when investing,” Hubble added. “So my advice is always to focus on that: keeping costs low, staying diversified, managing tax-recognition timing and avoiding stupid emotion-driven actions.”
Ron DeSantis signs the Parental Rights in Education bill, known as the “Don’t say gay” bill, in March at Classical Preparatory School in Shady Hills, Fla.
Douglas R. Clifford/Tampa Bay Times/AP/file
ORLANDO, Fla. (AP) — The NAACP over the weekend issued a travel advisory for Florida, joining two other civil rights groups in warning potential tourists that recent laws and policies championed by Gov. Ron DeSantis and Florida lawmakers are “openly hostile toward African Americans, people of color and LGBTQ+ individuals.”
The NAACP, long an advocate for Black Americans, joined the League of United Latin American Citizens (LULAC), a Latino civil-rights organization, and Equality Florida, a gay-rights advocacy group, in issuing travel advisories for the Sunshine State, where tourism is one of the state’s largest job sectors.
The warning approved Saturday by the NAACP’s board of directors tells tourists that, before traveling to Florida, they should understand the state of Florida “devalues and marginalizes the contributions of, and the challenges faced by African Americans and other communities of color.”
Florida is one of the most popular states in the U.S. for tourists, and tourism is one of its biggest industries. More than 137.5 million tourists visited Florida last year, marking a return to pre-pandemic levels, according to Visit Florida, the state’s tourism promotion agency. Tourism supports 1.6 million full-time and part-time jobs, and visitors spent $98.8 billion in Florida in 2019, the last year figures are available.
The NAACP’s decision comes after the DeSantis’s administration in January rejected the College Board’s Advanced Placement African American Studies course. DeSantis and Republican lawmakers also have pressed forward with measures that ban state colleges from having programs on diversity, equity and inclusion, as well as critical race theory, and also passed the Stop WOKE Act that restricts certain race-based conversations and analysis in schools and businesses.
In its warning for Hispanic travelers considering a visit to Florida, LULAC cited a new law that prohibits local governments from providing money to organizations that issue identification cards to people illegally in the country and invalidates out-of-state driver’s licenses held by undocumented immigrants, among other things.
The law also requires hospitals that accept Medicaid to include a citizenship question on intake forms, which critics have said is intended to dissuade immigrants living in the U.S. illegally from seeking medical care.
“The actions taken by Gov. DeSantis have created a shadow of fear within communities across the state,” said Lydia Medrano, a LULAC vice president for the Southeast region.
Recent efforts to limit discussion on LGBTQ topics in schools, the removal of books with gay characters from school libraries, a recent ban on gender-affirming care for minors, new restrictions on abortion access and a law allowing Floridians to carry concealed guns without a permit contributed to Equality Florida’s warning.
“Taken in their totality, Florida’s slate of laws and policies targeting basic freedoms and rights pose a serious risk to the health and safety of those traveling to the state,” Equality Florida’s advisory said.
Americans’ discontent with the size of their federal income-tax bill is at a two-decade high, according to a new poll — even though Congress hasn’t passed any direct income-tax increases in recent years.
One month after the 2023 tax season’s conclusion, 51% of respondents in a newly released Gallup poll said their income taxes were not fair. That’s up from 44% last year and marks a record high since 1997, when Gallup’s pollsters started asking how people felt about their income-tax bills.
Meanwhile, 46% of people said they were paying a fair amount of income tax. That basically matched the dim mood over two decades ago, in in 1999, when 45% said that they were paying a fair amount.
Six in 10 poll participants said their federal income taxes were “too high,” pollsters said. 2001 was the last time that share of people felt the same way, Gallup said.
Gallup pollsters spoke with more than 1,000 people, doing their field work through most of April.
The poll comes during a fierce debate about whether the wealthiest taxpayers, as well as corporations, are paying enough in taxes. The Biden administration has been pressing for higher tax rates on high earners. A Democratic-controlled Congress last year passed a law with an $80 billion funding infusion for the IRS over a 10-year span in part to launch more audits of rich individuals and corporations.
Many Americans walked away from tax season with income-tax refunds that were smaller than a year ago. That’s due, at least in part, to the end of pandemic-era boosts to certain credits, tax experts have previously told MarketWatch.
Both backdrops might be at play in the public mood on taxes, observers noted, and political affiliation could have something to do with these changes, Gallup said. Only one-third of Republicans said their income taxes this year were fair, for example — that’s down from 63% in 2020, the last full year of the Trump administration.
The change in Republican sentiment could be why there was a heavy swing since 2020, when 59% said their taxes represented a fair number. In 2020, 56% of political independents said their taxes were fair, and that percentage fell to 45% a few years later. Among Democrats, meanwhile, the 63% saying their taxes were fair was virtually unchanged over that span.
Republicans “are certainly more frustrated now with Biden in office,” said Jeff Jones, senior editor of the Gallup poll. “But they are even more frustrated than they were when Obama was in office.”
Democrat Joe Biden campaigned in 2020 on pledges to raise taxes on corporations and households earning over $400,000 a year and not on those making less than that. So far, the president has not been able to turn proposals like a billionaire’s minimum tax or a higher top tax rate into law.
The real tax-policy fight brewing in the background is the 2025 expiration of Trump-era tax cuts, experts have said.
In the sweeping 2017 tax-code overhaul, Congress reduced five of seven income-tax brackets and boosted commonly used features of the tax code, including payouts for the child tax credit and the standard deduction. But some of those tax cuts were scheduled to sunset, while others were permanent.
Another potential shaping the mood on taxes is the broader economy and recent tax season, Jones said. One possibility, he noted, is that some people are getting pushed to higher tax brackets with pay raises meant to keep up with inflation. (Tax brackets are adjusted annually to account for inflation.)
While inflation is still pinching wallets, tax refunds are lower than they were a year ago.
Refunds averaged just over $2,800, and that’s down more than 7% from a year earlier, according to IRS data through May 12.
For his part, Lawrence Zelenak, who teaches tax law at Duke University, thinks the current darkening public mood “is largely a response to the disappearance of all the temporary pandemic-related tax relief,” he said.
In 2020 an estimated 60% of households ended up with no federal income-tax liability because they were making less and bringing in more through direct cash assistance from the federal government, according to Tax Policy Center estimates.
By 2022, an estimated 40% of households wouldn’t face any federal income tax, according to the nonpartisan think tank — which is more in line with levels seen before the pandemic.
Refunds during 2022 got a kick from extragenerous payouts including the child tax credit, the child- and dependent-care credit and the earned-income tax credit.
Most taxpayers also got a chance to shave their tax bill with a temporary change that let them take the standard deduction and also write off a portion of their charitable donations. But the credits reverted to their prepandemic size, and the deduction on cash donations subsequently went away.
“With the end of the pandemic tax relief, many people have seen their income-tax liabilities go up, and it’s not surprising they see that as unfair,” Zelenak said. “So it may be the change more than the absolute level of tax.”
Social Security has been a vital safety net for retirees, disabled individuals, and surviving family members for decades. However, the program is facing financial challenges that may necessitate changes in the coming years. Let’s explore three potential ways Social Security benefits could change in the future.
Adjustments to the full retirement age
One possible change could involve adjusting the full retirement age (FRA), which is the age at which individuals can receive full Social Security benefits. Currently set at 67 for those born in 1960 or later, some experts argue that increasing the full retirement age could help address the program’s funding shortfall. However, this change could mean longer working lives for future retirees and careful consideration of how it impacts individuals with physically demanding jobs or limited job opportunities later in life.
This change would also result in a smaller benefit for the earliest filers at age 62, since the reductions are based on the amount of time between your filing age and the Full Retirement Age. If the FRA is increased to 68, for example, filing at age 62 would result in a benefit that is only 65% of your Full Retirement Age benefit amount.
In addition, unless the maximum filing age is adjusted, Delayed Retirement Credits (DRCs) would also be limited under such a scenario. Currently when your FRA is 67 you have the opportunity to increase your benefit by 24% (8% per year for DRCs), but if the FRA is 68, the increase would only be 16% at maximum.
Means-testing benefits
Another potential change is means-testing Social Security benefits. Means-testing would involve adjusting benefit amounts based on an individual’s income or assets. Supporters argue that this would ensure benefits are targeted to those who need them most, potentially reducing the strain on the program’s finances. However, critics express concerns about the potential impact on middle-income earners who have paid into the system throughout their working lives and rely on Social Security as a significant part of their retirement income.
An interesting concept I’ve recently seen bandied about involves a trade-off between Social Security benefits and Required Minimum Distributions (RMDs) from retirement plans. Essentially an individual could forgo Social Security benefits (at least partially if not fully) in exchange for looser restrictions on RMDs – allowing for further deferral of taxation on retirement accounts.
Benefit reductions
In order to sustain the Social Security program, benefit reductions might be considered. This could involve various approaches such as adjusting the formula used to calculate benefits or implementing a scaling factor to reduce benefit amounts. While benefit reductions would aim to preserve the long-term viability of Social Security, they could pose challenges for retirees who rely heavily on those benefits to cover essential living expenses.
Most benefit reduction proposals in the pipeline are in concert with expanding the tax base, while at the same time limiting benefits to the upper echelons of earnings levels. In these cases the taxable wage base is either expanded or removed altogether, and the amounts above the current wage base are credited for benefits at a minuscule rate.
It’s important to note that any changes to Social Security benefits would likely be accompanied by broader discussions and careful consideration from policy makers. The goal would be to strike a balance between ensuring the program’s financial stability and protecting the well-being of current and future retirees.
As an individual planning for retirement, it’s crucial to stay informed about potential changes to Social Security benefits. Keeping track of legislative proposals and staying engaged in the conversation can help you adapt your retirement plans accordingly. Consider consulting with a financial adviser who specializes in retirement planning to assess the potential impact on your retirement income and explore other strategies to supplement your savings.
Social Security benefits may undergo changes in the future as policy makers grapple with the program’s financial challenges. Adjustments to the full retirement age, means-testing benefits, and benefit reductions are among the potential changes that could be considered. By staying informed and seeking professional guidance, you can navigate these potential changes and make informed decisions to secure your financial well-being during retirement.
Deutsche Bank AG will pay $75 million to settle a proposed class-action lawsuit claiming it aided Jeffrey Epstein’s sex-trafficking ring, the Wall Street Journal reported Wednesday night.
The suit was filed by lawyers on behalf of an anonymous victim and others who accused the financier, who died by suicide in federal lockup in 2019, of sexual abuse and trafficking. The suit claimed Deutsche Bank DB, +1.92%
ignored red flags and did business with Epstein for five years despite knowing he was using the money from his accounts to further his sex trafficking.
NEW YORK (AP) — Prince Harry and his wife Meghan were involved in a car chase while being followed by photographers following a charity event in New York, the couple’s office said Wednesday.
The pair, together with Meghan’s mother, were followed for more than two hours by a half-dozen vehicles with blacked out windows after leaving the event.
Their office said in a statement that the chase “resulted in multiple near collisions involving other drivers on the road, pedestrians and two NYPD officers.” It called the incident “near catastrophic.”
“While being a public figure comes with a level of interest from the public, it should never come at the cost of anyone’s safety,” the statement from the couple said.
The head of the Internal Revenue Service acknowledged Monday that Black taxpayers appear to be audited at outsized rates, months after a study pointed at disparities and the prospect that audit-selection algorithms could be at fault.
“While there is a need for further research, our initial findings support the conclusion that Black taxpayers may be audited at higher rates than would be expected given their share of the population,” IRS Commissioner Danny Werfel said in a letter.
As an IRS review continues, Werfel said he’s “laser-focused” on making changes before the start of the 2024 tax-filing season.
The IRS doesn’t collect information about race on tax forms — and it doesn’t consider race as a factor on which cases it picks for audits, Werfel emphasized Monday.
But researchers turned their focus on the algorithms helping the IRS pick cases for review when tax returns claim the Earned Income Tax Credit. The credit is a long-standing provision aimed at low- and moderate-income working households.
The IRS has come into $80 billion in funding over a decade due to the Inflation Reduction Act, and more than half the money is dedicated to more tax enforcement for rich taxpayers and corporations. Audits for households making under $400,000 will increase compared to recent levels, Werfel and other Biden administration officials have said.
“The ongoing evaluation of our EITC audit selection algorithms is the topmost priority” in a review to spot uneven treatment in how the IRS administers the tax code, Werfel said in his letter to Sen. Ron Wyden, D-Ore., who chairs the Senate Finance Committee.
Werfel said he’s “committed to transparency” as the research continues.
Certain conclusions were already clear for Wyden.
“The racial discrimination that has plagued American society for centuries routinely shows up in algorithms that governments and private organizations put in place, even when those algorithms are intended to be race-neutral,” he said in a statement.
Wyden said he’ll be re-introducing legislation that would require reviews of private-sector algorithms to spot racial bias. “And I’m interested in requiring similar protections against bias in government systems,” he added.
Werfel’s letter was “an important step,” according to a statement from Chye-Ching Huang, executive director of New York University Law School’s Tax Law Center. But there are other questions that still have to be answered, she said.
“The IRS should shed more light on these issues in future updates, and Congress should continue pressing it to do so,” Huang said.
Hello and welcome to Financial Face-off, a MarketWatch column where we help you weigh a financial decision. Our columnist will give her verdict. Tell us whether you think she’s right in the comments. And please share your suggestions for future Financial Face-off columns by emailing our columnist at lalbrecht@marketwatch.com.
Wedding season is upon us. Couples across the land are probably obsessing right now over wedding-day details like the seating chart and first-dance song. Unfortunately, many couples don’t pay nearly as much attention to their finances prior to marriage: Almost half (49%) don’t discuss how they’ll handle their money before they tie the knot, according to one survey. Only 41% tell their salaries to each other and just 36% say how much debt they have.
Not being open and honest about money can be a sign that you don’t trust your partner, a relationship killer if there ever was one. It can also mean unpleasant shocks — surprise, your soulmate has a 530 credit score — that stand in the way of those dreams you cooked up together when you were just two crazy kids in love.
One big decision couples face when they form a household: Should they merge their money into joint accounts, or keep separate accounts?
Why it matters
How couples manage their money isn’t just about making sure the water bill gets paid on time. Discussions about money can get fraught fast and sometimes become proxy battles for bigger issues in the relationship, like who wields more power, whose career is more important, and who does more domestic labor. Money and how we spend it is also an expression of our values. And if you’re not on the same page about your values, then why are you in this relationship?
The verdict
Share the wealth. Use a joint account.
My reasons
The No. 1 reason to share your money is that joint accounts appear to lead to a happier marriage. That lessens your chances of divorce, which can be financially devastating.
There’s been research suggesting that couples who share their accounts are happier than those who don’t, but the link was only correlational, so it wasn’t clear whether “joint accounts make you happy or if happiness makes you open a joint account,” said Scott Rick, a University of Michigan associate professor of marketing. He co-authored a new study that is the first to find a causal relationship between joint accounts and happier marriages.
Rick and his co-authors tracked 230 newlywed couples for two years. One group of couples had to open a joint account, one had to keep their accounts separate, and a third could do whatever they wanted. Researchers checked in with the couples every few months to ask them how their relationships were going. The couples who kept separate accounts or did whatever they wanted (most of whom kept separate accounts) saw the “typical decline” in relationship satisfaction, where they were happiest at the start of their marriage and satisfaction dropped after that honeymoon phase, Rick said.
But the joint couples stayed at the initial level of happiness, and if anything, their relationship satisfaction “seemed to increase a tiny, tiny bit over time,” he told MarketWatch. “By the end of two years, the joint couples looked a lot better than the ‘separate’ couples and the ‘do what you want’ couples,” Rick said. “Part of that is because the joint couples got on the same page in terms of money matters, it prompted some discussions. They started to see things more eye to eye.”
“You want to get away from score-keeping, which couples can fall into: ‘I did this yesterday, so it’s your turn today,’” he added. “With separate accounts, you really get into score-keeping: ‘Well I paid this, and you paid that.’ You want to get away from ‘his’ money and ‘her’ money and you want to get into ‘our money.’”
The couples with merged accounts “reported higher levels of communality within their marriage compared to people with separate accounts, or even those who partially merged their finances,” said study co-author Jenny Olson, an assistant professor of marketing at Indiana University’s Kelley School of Business. “They frequently told us they felt more like they were ‘in this together.’”
If that’s not enough to convince you, consider the fact that there can be financial benefits to having joint accounts. Keeping all of your money at one bank could help you avoid minimum-account-balance fees, or make you eligible for a higher tier of customer rewards. “Combining assets provides greater ease of management for bills, for planning for the future, and for emergencies,” said Woody Derricks, a certified financial planner with Partnership Wealth Management in Towson, Md., who specializes in same-sex couples. If one person suddenly lands in the hospital, it’s harder for the other to act on their behalf financially if money is in separate accounts, Derricks said.
There’s also the estate-planning aspect, said Kelley Long, a certified financial planner with Financial Bliss in Oro Valley, Ariz. “When you have joint accounts, if something happens to your spouse, your life is so much easier financially. Everything automatically is yours. You don’t have to walk around with a death certificate and go everywhere to claim everything. They always say joint accounts are the poor man’s estate plan.”
Another point in favor of joint accounts is that sharing money can help control spending. “You might restrain yourself a bit if you know you’re being watched, so it might tamp down some more extravagant spending,” Rick said.
Is my verdict best for you?
On the other hand, keeping separate accounts just works better for some couples. Long’s parents have been married 51 years and have never shared money, she said. They’re both financially responsible, but they have opposing money personalities. One loves to spend and the other hates it, and they also have a disparity in their incomes. Keeping separate accounts was “a loving decision” that let them “maintain maximum happiness in their marriage without having to change their personalities,” Long said.
It can also be helpful to keep separate accounts if you meet later in life and have long-established financial habits, or have children from a previous marriage, financial planners said.
Another reason for later-in-life couples to keep finances separate is to preserve a step-up in basis for highly appreciated assets, Derricks said. “If someone owns an investment for decades that has appreciated nicely, they may want to keep that in their own name so that if they’re first to pass away, their spouse or partner receives it with a full step-up in basis and can liquidate it after death and not have to pay capital-gains taxes,” he said.
Couples can also try a happy medium between joint and separate, with one shared account for household expenses, and separate accounts for individual spending on things like expensive hobbies, Rick said. “Everyone needs a room of their own, so to speak, and space,” he said. “Joint is definitely better than pure separates, but if you have the time and energy, I would say attach some separates to the joint.”
Tell us in the comments which option should win in this Financial Face-off. If you have ideas for future Financial Face-off columns, send me an email at lalbrecht@marketwatch.com.
There’s a lot of numbers to weigh when it comes to retirement—but what’s your number?
Working Americans think they need $1.1 million to retire, according to the Schroders 2023 U.S. Retirement Survey, but how does each individual really figure out what they will need in a retirement that could last decades?
“It is very difficult for someone at 35 to have any comprehension about what life at 65 will cost,” said Robert Gilliland, managing director and senior wealth adviser with Concenture Wealth Management. “You have no comprehension what $100 will buy in 30 years. It gets easier to imagine as you get closer to retirement but you need to start planning.”
“We have people call us on a weekly basis to ask ‘do we have enough to retire?’ Yes, but it depends on what lifestyle you want,” Gilliland said. “We sit down with them, talk about the lifestyle they’re living now and the lifestyle they want to live if working was optional.”
Start with a budget
In the information gathering phase, you want to start with a budget. Look at your current expenses for everything from housing, food, utilities and transportation to extras like travel, gifts, and entertainment. You can keep a simple log or use more sophisticated budgeting software, but the key to the process is honesty, said John Leonard, vice president, client adviser with Spinnaker Trust.
“Be honest with yourself on what you really spend. It may surprise you,” Leonard said. “And think about your goals or what lifestyle do you want to live? Do you want to travel, move to a different state? What do you want your retirement to look like?”
By retirement, you’ve likely paid down all or most of your debt and you’re no longer saving for retirement. So that will free up those funds. There will be some reduction in expenses, such as commuting costs or clothes costs associated with work, and you’ll likely be in a different tax situation with lower earnings, said Matt Fleming, wealth adviser executive with Vanguard.
Plan for the long haul
Plan for retirement to last several decades and base your budget around living to age 100.
“You don’t want to plan for the average life expectancy. You want to plan conservatively and plan for expenses through age 100,” Fleming said.
Next, look at what potential sources of income you might have in retirement. That includes your 401(k), IRAs, pensions, savings and Social Security, plus any additional income streams such as rental properties, annuities or inheritance. Also, this is a good time to check on your insurance policies. To figure out your Social Security benefits, use the Social Security website at SSA.gov.
“Get to know your inflows and outflows,” said Fleming said.
Vanguard estimates people should expect to have 75% to 85% of their preretirement income for retirement years, Fleming said.
Another rule of thumb is the 4% rule, but that has evolved over time and may be lower now—as low as 2.5% to 3%, according to Gilliland. The original 4% benchmark suggested that a $1 million in savings and investments would allow you to spend an inflation-adjusted $40,000 each year in retirement with minimal odds of outliving your money.
As far as whether to include Social Security in your planning, it depends on your age, experts said.
“For those close to retirement, Social Security confidence is higher. For early accumulators just starting out in their retirement savings, we have little confidence Social Security will exist in a meaningful way,” Fleming said. “It’s better to overfund your plan than underfund.”
Social Security’s combined trust funds will become depleted in 2034, with 80% of benefits payable at that time. The issue of how to “fix” Social Security has grabbed headlines in recent months with President Biden vowing to protect Social Security and Medicare and some politicians suggesting changes to the system.
“For those 45 and older, they will likely have Social Security. Generally, for those 35 and younger, we don’t talk about Social Security,” Gilliland said. “There will always be some form of Social Security. Politicians will want to be re-elected. Some form of Social Security will always be there—but how meaningful it will be, I don’t know.”
Other factors to consider in budgeting include healthcare costs, travel expenses or helping with college tuition for grandchildren.
“People end up spending more in the first five to 10 years of retirement than they though they would—they’re active, traveling, involved with grandkids. They have an active lifestyle. Then spending goes down a bit until healthcare costs kick in,” Gilliland said
“People need to be aware and conscious of spending in this time,” Leonard said. “Put your expenses in buckets in terms of needs, wants and wishes.”
Healthcare costs
Weigh factors such as getting Medicare at 65, and the impact of long-term care costs and the estimated $315,000 the average couple is expected to spend on healthcare alone in retirement, according to Fidelity Investment’s 2022 report.
Gilliland said to plan for healthcare costs to grow at about 7% a year. Family history and your own health should also shape how you budget for healthcare, he said.
For those who haven’t started saving for retirement—don’t wait. Start now, no matter how small. Eventually, work toward a goal of putting 12% to 15% of your pay toward retirement, said Fleming.
“The earlier you start, the better. Stick to a plan and revisit it on an annual basis. Keep checking in and rein in your spending if you’re not on track,” Leonard said. “Be conservative and lean on the side of caution.”
The World Health Organization on Friday declared an end to the COVID-19 global health emergency.
Speaking at a press conference at the agency’s headquarters in Geneva, WHO Director-General Dr. Tedros Adhanom Ghebreyesus said he had accepted the advice of an expert committee, which met on Thursday, regarding the pandemic’s status. “It is therefore with great hope that I declare COVID-19 over as a global health emergency,” he said.
Loneliness is more than a bad feeling. It’s as deadly as smoking up to 15 cigarettes a day and is associated with a greater risk of cardiovascular disease, dementia, stroke, depression, anxiety, and premature death, according to an advisory by the U.S. Surgeon General.
The mortality impact of being socially disconnected is greater than that of obesity and physical inactivity, U.S. Surgeon General Vivek Murthy said in an 81-page report called “Our Epidemic of Loneliness and Isolation.”
Social isolation among older adults alone accounts for about $6.7 billion in excess Medicare spending a year, largely due to increased hospital and nursing facility spending, the report said.
Loneliness and isolation also are connected with lower academic achievement and worse performance at work. In the U.S., stress-related absenteeism attributed to loneliness costs employers an estimated $154 billion annually, according to the report.
“Given the profound consequences of loneliness and isolation, we have an opportunity, and an obligation, to make the same investments in addressing social connection that we have made in addressing tobacco use, obesity, and the addiction crisis,” the report said. Still, no federal funding or programming will be provided to combat the issue.
Essentially, social connection is a significant predictor of longevity and better physical, cognitive, and mental health, while social isolation and loneliness are significant predictors of premature death and poor health, the report said.
The Surgeon General’s advisory is intended as a public statement that calls the people’s attention to an urgent public health issue and provides recommendations for how it should be addressed. Advisories are reserved for significant public health challenges that require the nation’s immediate awareness and action, the report said.
“Each of us can start now, in our own lives, by strengthening our connections and relationships. Our individual relationships are an untapped resource—a source of healing hiding in plain sight. They can help us live healthier, more productive, and more fulfilled lives,” the report said. “Answer that phone call from a friend. Make time to share a meal. Listen without the distraction of your phone. Perform an act of service. Express yourself authentically. The keys to human connection are simple, but extraordinarily powerful.”
Americans have become less connected to houses of worship, community organizations and their own families and have reported an increase in feelings of loneliness. The number of single households has also doubled over the last 60 years.
About half of U.S. adults report experiencing loneliness, with some of the highest rates among young adults. People cut their circles of friends during the Covid-19 pandemic and reduced time spent with those friends, according to the report.
Americans spent about 20 minutes a day in person with friends in 2020, down from 60 minutes daily nearly two decades earlier. Among young people, ages 15 to 24, time spent in-person with friends has reduced by nearly 70% over almost two decades, from roughly 150 minutes per day in 2003 to 40 minutes per day in 2020, the report said.
Technology has made loneliness worse. People who used social media for two hours or more daily were more than twice as likely to report feeling socially isolated than those who used such technology for less than 30 minutes a day, according to the report.
Murthy called on technology companies, employers, community-based organizations, parents and individuals to tackle the problem.
“We are called to build a movement to mend the social fabric of our nation. It will take all of us…working together to destigmatize loneliness and change our cultural and policy response to it.
It will require reimagining the structures, policies, and programs that shape a community to best support the development of healthy relationships,” Murthy said.
The Federal Reserve’s interest-rate increases have been propping open a window for people to get tempting yields in turbulent times from savings accounts, certificates of deposit and other low-risk cash investments.
Now the Fed increased its benchmark rate again Wednesday. The 25-basis point increase is the central bank’s tenth straight rate hike since March 2022. The increase, which brings the rate to a range of 5%-5.25%, could also be the final increase too, some Fed watchers say.
So if the window for high yields on low-risk cash investments is at its highest point for now, there’s likely only one direction they’ll go next, observers say.
“In our view, we are now at the peak or very near the peak in the federal funds rate. If you look at the market signals, they indicate exactly that,” said Angelo Kourkafas, investment strategist at Edward Jones.
What that means for rate-sensitive cash investments — like bank accounts, CDs, money-market funds and short-term Treasury debt maturing within one year — “is an opportunity to take advantage of these high yields that are not going to last forever,” he said.
The largest money-market funds currently offer an average 4.64% seven-day yield as of Monday, according to Crane Data. Meanwhile, the yields on Treasury bills are also ranging around 4% to 5%, according to data.
The annual percentage yields on high-yield savings accounts and one-year online bank CDs can now reach 4% and 5%, according to DepostAccounts.com.
But some of the longest maturity CDs “may have already peaked,” according to Ken Tumin, the site’s founder and senior industry analyst at LendingTree.
Long-term CD rates are less influenced by the federal funds rate moves and “are the first ones to react,” he said. The APY on a five-year CD averaged 3.95% in April, down from 4.04% in January, he noted.
Rate retreats show elsewhere. I-bonds, the fixed-income investments pegged to inflation that caught wide attention, now offer a 4.3% rate. That’s down from 6.89% in the previous six months, and off their recent peak of 9.62%.
“It’s not imminent that we see lower [Federal Reserve] rates down the road, but we could potentially by the end of the year,” said Kourkafas. “From an investor standpoint, locking in some of these high yields makes sense,” he later added.
“This could be ‘last call’ for savers,” said Greg McBride, Bankrate chief financial analyst. “CD yields on maturities of one year and longer have peaked, and now is the time to lock in. A slowing economy coupled with the Fed moving to the sidelines mean CD yields will start pulling back soon.”
Are we at the top?
It’s tough to say for sure whether the Fed has reached the top of this particular interest-rate cycle, but it’s a key question for Wednesday’s Fed meeting. Another question is when the central bank starts considering rate decreases.
With its latest rate increase Wednesday, the central bank said, looking ahead, it will weigh a range of factors to decide the extent that “additional policy firming may be appropriate.”
There’s been no decision on a pause, Federal Reserve Chair Jerome Powell told reporters Wednesday. But the central bank had a tone shift in its latest statement, discarding a line that said “some” extra increases “may” be necessary.
It was “a meaningful change that we’re no longer saying we anticipate. So we’ll be driven by incoming data meeting by meeting, and we’ll approach that question at the June meeting,” Powell said.
For around a year, “retail investors — as they do in every tightening cycle — they’ve been gradually moving their deposits into higher yielding places, such as CDs and other things, including money market funds,” Powell noted.
“That’s a gradual process that is quite natural and happens during a tightening cycle,” he said.
If the Fed keeps its rate higher for longer, the window for higher yields will likely stay at its peak for a while, said Tumin. “Deposit rates might not fall quickly, so people might have time to take advantage of higher deposit rates.”
Federal Deposit Insurance Corporation data showed banks paying $78.7 billion in interest on domestic deposit accounts last year, according to DepositAccounts.com research. That’s more than triple the $24.3 billion that banks paid for deposit interest in 2021.
“If things turn for the worse,” Tumin said, “deposit rates could fall quickly, before the first Fed rate cut.” If banks tone down their personal and business lending portfolios, they wouldn’t need to entice as many depositors with higher rates, he explained.
Economists say credit is already tightening as banks mull their next move after the failures of Silicon Valley Bank and Signature Bank last month. This week, JPMorgan Chase & Co. JPM, -2.12% acquired First Republic Bank after the troubled lender closed its doors.
Ever since the Fed started tightening, consumers have become “increasingly rate-conscious,” said Jennifer White, senior director of banking and payments intelligence at JD Power.
“What goes along with rate chasing is all the other behavior that consumers learned during this process,” she said. That includes a heightened focus on the customer services a bank offers, and the costs it charges for those services, she said.
If and/or when interest rates decline, “I don’t think that’s going to be lost on customers,” White said.
Don’t get carried away
“With cash rates where they are right now, you can get meaningful yield,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley’s MS, -1.78%
Global Investment Office. “It can make sense to hold a larger portion of cash, and cash-like investments.”
Just how much cash you decide to hold onto depends on your own risk tolerance, and the amount of time before you need to tap your portfolio, he said. Just don’t go overboard, he said.
There are many convenient trade-offs, like the lock-up period for money in a CD, or the fact that returns on cash ultimately cannot outrun inflation. “If you’re holding excess cash in your portfolio, you run the risk of not maintaining purchasing power over time,” Loewengart added.
Suppose investors pulled all their money from stocks and bonds, and put it all into Treasury bills that matured in three months’ time?
That cash-focused investor would have a 74% chance of underperforming a 60/40 portfolio, according to Vanguard’s number crunch on four decades of data. The person’s returns would be around 4% lower, researchers said.
If the investor stayed in three-month Treasury bills for a year, Vanguard’s analysts said they faced an 87% chance of underperforming a 60/40 portfolio. Here, the T-bill investor underperformed the 60/40 portfolio by an average 13.5% underperformance, Vanguard said.
Joe Davis, Vanguard’s chief global economist, said does not expect a rate cut this year.
Vanguard sees inflation cooling, but it also predicts a recession in the second half of the year that entails less bank lending, more job losses, and more bankruptcy cases, he said.
Financial advisers always emphasize the importance of keeping the long view, and avoiding knee-jerk investment decisions that attempt to time the market.
Markets and investors have experienced “the most aggressive Fed rate-hiking campaign” in decades, said Kourkafas. “It’s a big milestone, but now we have to think about what’s next.”
It’s been “painful for everything — except cash — last year,” Kourkafas said. “But now, as we make that turning point, there’s an opportunity with cash, but also investors shouldn’t forgo other parts of their portfolio.”
