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10/08/2009

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‘The Trials They Will Hurl at Me Are Real Farces’

A year after the U.S. econ-omy was brought to its knees bythe bursting of the housing bub-ble, credit for consumers is stillbeing aggressively ratchetedback.

Total consumer credit out-standing, which includes every-thing from credit-card debt toloans for recreational vehicles,fell $12 billion in August, or at a5.8% seasonally adjusted annualrate, the Federal Reserve re-portedWednesday.It wasthesev-enth straight month of declines,the longest stretch since 1991.

Thedrop isa starkdemonstra-tion of how banks and other lend-ers are scaling back, owing totheir own exposure to the strug-gling real-estate market. But italso reflects a reluctance byAmericans to hold big loads ofdebt at a time when the job mar-ket remains in bad shape and thevalue of their homes has fallen.

Revolving credit, consistingmostly of credit-card charges,fell at a 13% annual rate, the Fedsaid. Nonrevolving credit,which includes auto loans, slidby $2.1 billion, or at a 1.6% an-nual rate. That was smaller thanthe previous months’ declines,but it came in a month when the

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Offshoring Your Pregnancy

GOP Faces Multiple HurdlesAs It Aims for a 1994 Replay

’06’04’02’00 ’08

Average annual spending Toys, hobbies, etc. Clothing for children under 2

Source: Bureau of Labor Statistics

0

200

400

$600

7 7

New Math Boosts Health PlanBudget Office Says Senate Bill Will Trim Deficit; Democrats Still Split on Key Details

By Jason Gay

NANTUCKET, Mass.—Forthe first time in nearly half a cen-tury, Nantucket and Martha’sVineyard won’t play each otherin football this fall. One of thefiercest and most idiosyncratichigh-school rivalries in Americais suspended because of hardtimes, missed signals and the en-croachment of other sports,with no firm plan to resume.

“It doesn’t feel right,” said16-year-old DuVaughn Beck-ford, Nantucket’s starting run-ning back. “Regardless ofwhether we won or lost, it wasthe game we looked forward to.”

The two Massachusetts is-lands have played each other infootball at least once a seasonsince 1960. Opposing fans trav-eled to the host island on a char-tered ferry, disgorging passen-gers at the terminal like spiritedinvaders. Cheerleaders deco-

rated the route from the ferrydock to the gridiron in eitherVineyard purple or NantucketWhalers navy and white. Whenthe Vineyard won, firetruckswould loudly greet the ferry onits return, their lights swirlingand horns blazing. The contesthas been chronicled in the pagesof the New Yorker and Sports Il-lustrated.

“We don’t have a lot of tradi-tions left,” said Michael McCar-thy, a guidance counselor at theVineyard's high school andformer assistant football coachwho has played Nantucket andalso watched his sons play theWhalers. “This game wasn’t forthe tourists. It was for island

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By Janet Adamy

And Jonathan Weisman

The latest Senate health billwill cost $829 billion over a de-cade and slightly reduce the fed-eral budget deficit, congres-sional budget crunchers saidWednesday, marking a majorstep forward for Democrats’plans to overhaul Americanhealth care.

The nonpartisan Congres-sional Budget Office found thesweeping measure will cover94% of nonelderly legal U.S. resi-

dents, up from about 83% cur-rently. The bill will cut the defi-cit by $81 billion over the 10-yearperiod, owing to trims in Medi-care spending and new taxes.

The widely awaited reportpaves the way for the Senate Fi-nance Committee to approve itsbill in the next few days.

After appearing in peril in Au-gust, the health-care overhaulhas cleared a series of hurdles inrecent weeks that have givenDemocrats increased confidencethey will pass a bill. Lobbyists onboth sides of the issue have

shifted their focus to what thebill will look like rather thanquestioning whether a measurecan succeed.

But plenty of potential pit-falls remain. Democrats are stilldivided over core elements, in-cluding whether to create a pub-lic health insurance plan andhow to pay for the overhaul. Thehospital industry, a key ally, says

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Follow the news all day at WSJ.com

DJIA 9725.58 t 5.67 –0.1% NASDAQ 2110.33 s 0.3% NIKKEI 9799.60 s 1.1% DJ STOXX 50 2424.84 t 0.5% 10-YR TREAS s 20/32, yield 3.175% OIL $69.57 t $1.31 GOLD $1,043.30 s $4.70 EURO $1.4680 YEN 88.64

DEFIANT ONE: Prime Minister Silvio Berlusconi, walking to a meeting in Rome, denounced a court ruling thatwill likely require him to stand trial on corruption charges. ‘Long live Italy!’ he said. ‘Long live Berlusconi!’ A10

n Americans are stillspending on their kids.Even during the worst re-cession in decades, U.S. fam-ilies spent the sameamount of money on cloth-ing for young children lastyear, despite cutting wayback on overall apparelspending. In 2008, familiesalso shelled out $144 moreper household on extrassuch as toys and play-ground equipment, as com-pared with 2007.

7 7

What’s News–

By Gerald F. Seib

A big question hangs overAmerican politics: Could nextyear be 1994 all over again?

That was the year a bitter de-bateoverhealthcareledtoadisas-trous congressional election forDemocrats, in which they lost 54House and 10 Senate seats andceded control of both chambersto the Republicans.

Things have started to looksimilar under Democratic Presi-dent Barack Obama. His poll rat-ings slipped through the summermonths, his party was damagedby a bruising health-care debate,and the latest Wall Street Jour-nal/NBC News poll shows the job-approval rating for the Demo-cratic-controlled Congress hasslumped to 22%—almost pre-cisely where it was at this time inthe 1994 election cycle.

Combine that with the fact

that a new president’s party al-most always loses seats in thefirst election after he takes office,and leaders of both parties nowagree Democratic losses appearinevitable in the 2010 congres-sional election. Even some high-profile Democrats,such asSenateMajority Leader Harry Reid andBanking Committee ChairmanChristopher Dodd, face toughfights.

The election is still a yearaway and pressing issues such asthe health overhaul, the laggingeconomy and the future of the Af-ghan war could tip the balance.Yet, there are some little-under-stood forces that suggest a full re-peat of 1994 is unlikely.

For the moment, all but nineHouse Democrats have said theyare defending their seats, farmore than in the 1994 cycle, when29 incumbent House members inthe party vacated their seats—

and Democrats lost 22 of thosespots.Incumbentsstandafarbet-terchanceofhangingoninapolit-ical storm than do newcomers. Inaddition,Mr.Obama, forall hisre-cent troubles, hasn’t slumped inpopularity as far as President BillClinton did then, at least so far.And while Democrats’ fund-rais-ing lead has slipped in recentweeks, they have built up an ad-vantage in campaign cash.

Perhaps as important, Demo-cratic leaders have warned law-makers earlier this time to startpreparing for a tough fight; in1994, by contrast, even someprominentDemocratsdidn’t real-ize until late in the game that theywere in trouble.

No one has less room for com-placencythanthe49HouseDemo-crats who won their seats in 2008in districts carried by Republicanpresidential nominee Sen. John

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s Copyright 2009 Dow Jones & Company. All Rights Reserved

n Measuring the economic impactof health care ................................. A2

n Getting a look at your creditscore, for free .................................. D1

T he Justice Departmentis investigating allega-

tions that IBM has monopo-lized the mainframe computermarket, broadening an ag-gressive government searchfor anticompetitive behaviorin the technology industry. B1n The EU signaled that itwould accept a settlement pro-posal by Microsoft and wrapup its antitrust case againstthe company by year end. B9

n Alcoa reported a third-quarter profit, buoyed bycost-cutting efforts and glim-mers of increasing demandfor aluminum. The results re-versed a string of losses. B1

n Stocks ended little changedas investors paused after twodays of gains. The Dow Jonesindustrials slipped 5.67points, or 0.1%, to 9725.58. C1

n An outside review of Citi-group’s management teamgave strong overall marks butsaid some shuffling of seniorexecutives might be needed. C1

n Latvia’s woes promptedcurrencies to fall against theeuro, as revised GDP mea-sures indicated economic fra-gility throughout Europe. A9

n ConocoPhillips will slashspending and sell about $10billion worth of assets as itscales back operations in theface of weak demand. B4

n GM is falling short on sev-eral goals it plans to meet byyear end, including workerreductions and the sale of fail-ing brands, its CEO said. B2

n BlackRock is a contenderfor the prestigious job of help-ing state regulators size up riskin insurers’ investments. C1

n Two federal regulatorscriticized parts of Rep. Bar-ney Frank’s proposal to over-haul financial regulation. C3

n The Commerce Departmentbegan an investigation intowhether to impose antidump-ing duties on imports of somesteel pipes from China. A6n Canada launched a dispute-settlement process at theWTO over the U.S.’s country-of-origin labeling law. A9

n Gianni Versace has closedits boutiques in Japan, a signof how one big luxury marketis starting to lose its lusterwith some luxury brands. B1n U.S. retail-vacancy rateshit a multiyear high in the thirdquarter, adding to pressureon shopping-mall owners. A2

n The head of the FCC saidthe agency is looking forways to make more airwavesavailable for next-generationwireless networks. A6

n Dell is planning to intro-duce a smart phone usingGoogle software on theAT&T cellular network. B9

n Amazon trimmed $40 offthe price of its Kindle e-readerand introduced a version ofthe device with internationalwireless service. B9

CONTENTSCurrents ....................... A13Health & Family ....... D4Heard on the Street .. C10Leisure & Arts ........... D7Media & Marketing ... B5Personal Finance ...... D2

Opinion .................. A15-17Sports ............................... D8Stocks in the News .. C6Style .................................. D6Technology .................... B9Weather Watch ..... B10World News ......... A8-12

There Once Was a Football GameWith Nantucket...

i i i

Island and Rival Martha’s Vineyard Won’t Play

This Year, Putting Tradition’s Future in Doubt

Note: Seasonally adjustedSource: Federal Reserve

Cutting DebtTotal consumer credit outstanding, change from a year earlier

–1502007 ’08 ’09

–100

–50

0

50

100

$150 billion

i i i

Business&Finance

By Tom Lauricella,Jason Zweig andConor Dougherty

In the U.S., the costof conceiving achild with asurrogate can bedaunting.Increasingly,hopeful parents areheading to India. D1

Take TwoEstimates of the Senate Finance Committee health-care bill

10-year cost

$774billion

$829billion

PREVIOUS REVISED

94% 94%Percent insured*

$49Blower

$81Blower

Effecton deficit

*By 2019Source: Congressional Budget Office

Age

nce

Fran

ce-P

ress

e/G

etty

Imag

es

n Democrat leaders pressedfor stimulus extensions.Amid concern that the econ-omy isn’t creating jobs, Pelosiand Reid went to the WhiteHouse to lobby for an exten-sion of a tax credit for first-time homebuyers and for taxcredits for employers who hirenew workers. A push toward anew jobs bill could open Demo-crats to GOP charges the stimu-lus package isn’t working. A4

The CBO estimated the fiscal2009 federal deficit at $1.4 tril-lion, the largest as a percent-age of GDP since World War II.

n Gates forwarded a requestfor more troops in Afghani-stan to Obama amid increas-ing skepticism over the waron its eighth anniversary. A8

n The U.S. is asking Iran to im-mediately free two jailed for-eign nationals, even as Washing-ton pursues nuclear talks. A12n Iran accused the U.S. of arole in the disappearance ofone of its nuclear scientistsduring a Saudi pilgrimage.

n A Nobel Prize in chemistrywas awarded to two Ameri-cans and an Israeli for ribo-some research being used todevelop new antibiotics. A5

n The Senate health bill willcost $829 billion over a decadeand slightly reduce the bud-get deficit, the CBO found. A1

n An Italian court struckdown an immunity law protect-ing Berlusconi, likely restart-ing two corruption trials. A10

n The Supreme Court seemedinclined to permit a cross to re-main standing in California’sMojave National Preserve. A5

n Democrats defeated a GOPeffort to remove Rangel fromthe House tax-writing panelover alleged ethical issues. A5

n Aid workers delivered foodand water for the first time toIndonesian villages cut off byquake-triggered landslides.

n The USOC’s chief said shewill step down in the wake ofChicago’s defeat in the contestto host the 2016 Olympics. A3

n Diplomats from nationsacross the Americas told Hon-duras’s government to rein-state ousted President Zelaya.

n A Justice Department pollfound that most children inthe U.S. are exposed to vio-lence in their daily lives.

n Three earthquakes rockedthe South Pacific, generatinga small tsunami. There wereno reports of damage. A12

n The EPA is launching aprobe into whether theherbicide atrazine causescancer and birth defects. A5

n Guinea’s opposition de-manded the country’s militaryleader step down before it willhold talks with the junta. A12

n Died: Irving Penn, 92, fash-ion, celebrity and still-lifephotographer, in New York.WSJ.com/Lifestyle

Clar

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DroughtOf CreditHampersRecovery

Vital Signs

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