NH health agency seeks $321M more in next budget

CONCORD, N.H. (AP) — New Hampshire's biggest agency asked Tuesday for $321 million more from state tax sources in the two-year state budget Gov.-elect Maggie Hassan must present to lawmakers in February.
Health and Human Services Commissioner Nicholas Toumpas testified at a hearing on the request that one of the biggest increases is due to a change in how the state pays nursing homes for Medicaid care. He said the state now must pay nursing homes based on rates, not on what lawmakers budget to spend.
Toumpas is requesting a 25 percent increase in the portion of the agency's budget that's supported by state tax sources. It would increase the funding to $1.6 billion from the current two-year appropriation of $1.3 billion.
The agency's current total budget is $3.7 billion, most of which from federal funds.
"The department — like all state agencies — is in the middle of a storm," Toumpas said.
He said people continue to seek help from the state as a result of the recession, but the numbers have leveled off in all but those needing food stamps. About 25 percent of those who apply for the federal food help are rejected, but the state must provide the staff to make the determination regardless whether they are denied, he said.
Overall, the number of caseloads has risen 15 percent since July 2009. At the same time, the number of filled jobs at his agency dropped 15 percent, he said. In addition, key members of the staff will be eligible for retirement soon, he said. That has caused stress on the staff, he said.
Toumpas said he knows the state has limited funds to provide services to everyone who is in need and promised to continue to try to find savings.
He said he included money cut from the current budget to boost payments to hospitals caring for the poorest residents. Ten hospitals sued over the budget cut in a case still pending in federal court.
Toumpas said a managed care program for Medicaid that was supposed to save $15 million in the current budget still is not operating due to slow negotiations between contractors and the health care providers needed to build a network.
On Monday, Hassan opened the budget hearings with a caution that agency requests are unrealistic. Agencies requested $3.3 billion in spending from state tax sources — a 26 percent increase over the current budget — and $11.9 billion from all funding sources or a 19 percent increase.

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First cracks in GOP resolve on tax rates

WASHINGTON (AP) — The first cracks are developing among Republicans over whether to accept a quick deal with President Barack Obama on allowing the top two income tax rates to expire, even as an administration official said the White House was stepping up behind-the-scenes negotiations.
Conservative Oklahoma GOP Rep. Tom Cole told GOP colleagues in a private meeting Tuesday that it's better to make sure that tax cuts for the 98 percent of taxpayers who make less than $200,000 or $250,000 a year are extended than to battle it out with Obama and risk increasing taxes on everyone.
Cole's remarks are noteworthy because he's a longtime GOP loyalist and a confidant of House Speaker John Boehner, R-Ohio. They were made in a meeting of the House GOP Republican whip team, which is a sounding board for GOP leaders.
"If we don't believe taxes should go up on anybody, why can't we accept a deal that takes 98 percent out and still leaves us free to fight on the other grounds," Cole said in an interview on Wednesday. "I'm not for using the American people for leverage or as a hostage."
Meanwhile, an administration official speaking on grounds of anonymity told The Associated Press that two of Obama's top negotiators on the fiscal issues will meet separately Thursday with leading lawmakers.
The sessions are seen as an important step in determining how the government will avoid a year-end package of tax increases and spending cuts that could throw the economy into recession.
Treasury Secretary Timothy Geithner and White House legislative chief Rob Nabors will meet with House Speaker John Boehner of Ohio, Senate Republican leader Mitch McConnell of Kentucky, Senate Majority Leader Harry Reid of Nevada and House Democratic leader Nancy Pelosi of California, said the official, who said he could not speak on the record because the meetings had not yet been publicly announced.
Some Republicans on the Hill have been worried that the GOP would lose a bargaining advantage by separating tax cuts for the highest earners from everyone else, but Cole said he believes the reverse is true. "I think we have the winning argument," he said. "Most Americans intuitively understand that raising taxes on small business is costing them jobs."
Cole's comments drew a rebuke from Boehner, who is standing firm against Obama's demand that tax rates go up for top earners.
"He's a wonderful friend of mine and a great supporter of mine, but raising taxes on the so-called top 2 percent — half of those taxpayers are small business owners," Boehner said. "You're not going to grow the economy if you raise the top two rates. It'll hurt small business. It'll hurt our economy."
Reaction was mixed to his idea at a Wednesday morning meeting of House Republicans, Cole said. Conservative Rep. Raul Labrador, R-Idaho, who said he opposed Cole's idea, said he believed a majority of House Republicans also opposed it.
Cole said he expects to support whatever deficit-cutting deal Boehner is eventually able to negotiate with the White House as the two sides wrangle over how to avoid the "fiscal cliff" mix of tax increases and spending cuts that will occur automatically in January unless lawmakers avert them.
"This is a tactical argument, this is not a theological argument," Cole said. "We don't disagree on what we're trying to do."
Cole's comments were first reported by Politico.
There has been little evident progress between Obama and Boehner in talks aimed at striking a deal to avoid the fiscal train wreck. Republicans are worried that Democrats seem to be taking a harder line on cutting popular benefit programs like Medicare and Medicaid.
"We have not seen any good faith effort on the part of this administration to talk about the real problem that we're trying to fix," House Majority Leader Eric Cantor, R-Va., told reporters.
But House Democratic Leader Nancy Pelosi, D-Calif., said Wednesday that the starting point for talks should be a framework discussed by Obama and Boehner in the summer of 2011. Then, Democrats were willing to consider curbing the inflation adjustment for Social Security and lifting the eligibility age for Medicare — ideas that other top Democrats have taken off the table.
"We can all be there and start with that and go from there to reach an agreement," Pelosi said.
Pelosi made her remarks as she met with prominent business executives and Erskine Bowles, the chairman of Obama's 2010 deficit commission. Bowles and the executives also met with House GOP leaders.
Asked if he sensed Democrats could be more flexible on curbing so-called entitlement programs like Medicare, Bowles said: "I think we will see give in all areas if we're going to get a deal done. If not, we're going to go over this cliff, and I think everybody realizes that would be a disaster."
Obama said Wednesday he still believes that members of both parties can reach a framework agreement on a debt-cutting deal before Christmas.
He made a public statement, joined by about a dozen middle-class Americans who have raised concerns about their taxes going up at the end of the year. He said lawmakers face important deadlines in the coming weeks but the voices of the American people need to be a part of the debate.
The president said that officials need to "approach this problem with the middle-class in mind."
Obama could be in position to blame Republicans if an impasse results in the government going over the so-called fiscal cliff, an economy-rattling set of automatic spending cuts and tax increases from the expiration of longstanding tax cuts made in 2001 and 2003 during the Bush administration.
Democrats already are portraying GOP lawmakers as hostage-takers willing to let tax rates rise on everyone if lower Bush-era tax rates are not extended for the top 2 percent to 3 percent of earners — those with incomes above $200,000 for individuals and $250,000 for joint filers.
"Right now, as we speak, Congress can pass a law that would prevent a tax hike on the first $250,000 of everybody's income. Everybody's," Obama said. "And that means that 98 percent of Americans and 97 percent of small businesses wouldn't see their income taxes go up by a single dime."

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Grocery giant Kroger wins $567 million tax fight

(Reuters) - Kroger Co said Thursday it won a tax battle with the U.S. Internal Revenue Service, which has dropped an effort to collect $567 million in disputed deductions from the grocery giant.
The U.S. Ninth Circuit Court of Appeals earlier this month dismissed the government's claims against Kroger, the Cincinnati-based company disclosed in a securities filing.
The dismissal by a three-judge panel came several weeks following a government move to drop its claims, after pursuing Kroger for nearly a decade, court papers showed.
An IRS spokesman declined to comment. A spokesman for Kroger did not immediately return calls requesting comment.
The Justice Department's tax division had appealed an IRS loss last July of two Kroger-related cases in U.S. Tax Court centered on the tax consequences of a transaction involving two grocery chains later acquired by Kroger.
In a securities filing in August, Kroger said that losing the cases would have required it to make an immediate cash payment of up to $567 million to the IRS.
The dispute between Kroger and the IRS centered on a deal involving two Kroger units: Ralphs Grocery Co. and Fred Meyer Inc. Kroger acquired Fred Meyer, a competitor that owned Ralphs, for $13 billion in 1999.
Prior to being bought by Kroger, Ralphs was owned by the Federated Group of Stores. As part of a Chapter 11 bankruptcy reorganization that involved other Federated units, Ralphs was transferred in 1992 to a group of creditors. In that transaction, the value of Ralphs for tax purposes rose.
Federated had large net losses at the time. As a result, the transfer to creditors generated generous tax deductions, in the form of depreciation, for Ralphs. But over the mid-1990s, the IRS disagreed with the tax consequences of the transfer.
The agency said it was actually a tax-free reorganization that did not allow Ralphs to take the depreciation deductions.
Kroger inherited the IRS dispute through the Fred Meyer acquisition, said Roger Jones of McDermott Will & Emery, the law firm that represented Kroger in the just-dismissed case. He declined to speculate on why the government had dropped its case, saying only that it "spent a long time pursuing it."
Kroger challenged the IRS position in Tax Court in 2006. In 2011, the IRS lost the case and filed an appeal.

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Analysis: Japan's new cabinet likely to be long on loyalty, short on reform

TOKYO (Reuters) - Incoming Japanese Prime Minister Shinzo Abe's cabinet looks likely to be heavy on close allies, with a few party rivals added to fend off criticism of cronyism, but few see signs that the line-up will produce creative reform policies.
Abe, who will be voted in as prime minister on Wednesday following his conservative Liberal Democratic Party's (LDP) sweeping election win, has made clear his top priority is to slay deflation with a huge dose of monetary easing and spending.
To assist with that task, the 58-year-old Abe, who served as premier from 2006-2007, will tap former prime minister Taro Aso as finance minister and ex-trade minister Akira Amari for a new "Economic Revival" portfolio, Japanese media reported this week.
Both are close allies who share Abe's affection for reflationary policies, including heavy pressure on the Bank of Japan to take more drastic action to beat deflation.
Bowing to such pressure, the central bank on Thursday delivered its third shot of monetary stimulus in four months and signaled it might set a higher inflation target at its January meeting [ID:nL4N09U0BL].
"It's deja vu all over again," said Brad Glosserman, executive director of the Honolulu-based Pacific Forum CSIS think tank. "He (Abe) is a real Japanese economic traditionalist - inflate the economy to try to get growth but don't try anything that will upset the proverbial apple cart."
Among the changes Abe is not expected to tackle swiftly, if at all, are deregulation of sectors such as child-care, medical care, the labor market and agriculture, and participation in a U.S.-led trade pact. Vital reform of the creaking social welfare system is likely to be put off at least until after a July election for parliament's upper house.
Loyal Abe backer Yoshihide Suga is expected to become chief cabinet secretary, a key post combining the job of top government spokesman with coordinating among ministries.
Others who share Abe's agenda to revise the pacifist constitution and rewrite Japan's wartime history with a less apologetic tone have also been floated for posts. Abe may, however, put contentious issues that could upset China and South Korea on the backburner to concentrate on the economy.
"He's not dumb. He has learned the obvious lesson that he has to pay attention to the economy first," Glosserman said. "He can't afford a crazy conservative jihad because he knows the public is not behind him."
"TEAM ABE"
Sensitive to criticism that his first administration was loaded with chums rather than competent ministers, Abe is also expected to pick rivals and some elders to season his lineup, domestic media said.
Among the names floated are former LDP leader Sadakazu Tanigaki, 67, a softspoken fiscal conservative whom Abe replaced in September; Yoshimasa Hayashi, 51, a former defense minister and economic policy expert; and Nobuteru Ishihara, 55, a former LDP No. 2. The latter two lost to Abe in the September leadership race. Though political rivals to Abe, none of the three have reputations as proponents of bold structural reforms.
Abe ended his first term as prime minister by abruptly quitting in 2007 after a troubled year plagued by scandals in his cabinet, public outrage over lost pension records and the LDP's big defeat in an election for parliament's upper house. He later cited ill health as the reason for resigning.
"Hopefully, he's learned his lesson and 'Team Abe' will be better than last time," said Jeffrey Kingston, director of Asian studies at Temple University's Japan campus. "He's got a deep hole to climb out of and the LDP is reverting to form."
Abe has also said he would revive the Council on Economic and Fiscal Policy (CEFP), a government advisory body that had lain dormant under the outgoing Democratic Party of Japan (DPJ). Maverick LDP Prime Minister Junichiro Koizumi used the body to push through a privatization and deregulation agenda during his 2001-2006 term, but so far the focus this time has been on a revived CEFP as a venue for the government to pressure the BOJ.
Under Abe, the LDP back-pedaled on Koizumi-style reform. One of Abe's early moves as premier in 2006 was to welcome back to the party defectors who had rebelled against Koizumi's pet project of postal system privatization.
Signs of appetite for deregulation and structural reform now are few. A Kyodo news agency survey showed that more than 84 percent of LDP lawmakers elected on Sunday opposed Japan joining a U.S.-led trade pact, the Trans-Pacific Partnership (TPP).
"If you look at the seats (in parliament), 40 percent are urban and 60 percent are non-urban. Are we really going forward with TPP or economic reform? That's not so easy," said Robert Feldman, chief economist at Morgan Stanley MUFG Securities in Tokyo. "The question is whether Abe will have the fortitude and guts and energy and bull-headedness to push through (reforms)."

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Analysis: Allies to lose socialist patron if Venezuela's Chavez goes

CARACAS (Reuters) - Murals adorning a Caracas slum that has given militant backing to President Hugo Chavez over the years are a virtual pantheon of international radicals.
From Colombia's FARC guerrillas to the Palestine Liberation Organization and Ernesto "Che" Guevara, the images and slogans on teeming slopes above Chavez's presidential palace hail socialist revolutionaries the world over.
Beside them are tributes to Chavez himself - testimony to the Venezuelan leader's bid to place himself at the front of global "anti-imperialism" in his ever-controversial 14-year rule.
Now, though, as Chavez battles cancer in a Cuban hospital, his role as garrulous international activist and rich godfather to fellow leftists around Latin America is under threat.
"All Venezuelan revolutionaries, and all people of good faith around the world, are praying for his recovery," said Greivis Garcia, a 26-year-old mechanic at a vigil for Chavez in the January 23 slum full of revolutionary images.
"We need him so much. And so does the world. But whatever happens, Chavez will live forever, damn it!"
GLOBAL 'PROVOCATEUR'
Should he die or be forced to stand down, faraway friends from Iran's President Mahmoud Ahmadinejad to Belarus's President Alexander Lukashenko and Syria's President Bashar al-Assad would lose a loud and highly visible supporter.
Chavez has provided some concrete help to such allies - skirting Western sanctions to send a few controversial fuel shipments to Tehran and Damascus, and doling out home-building contracts to Chinese and Belarussian companies.
Yet his international role has been mainly symbolic.
From visiting Iraq's Saddam Hussein in 2000 to cheering Libya's Muammar Gaddafi during his final days in 2011; from calling former U.S. leader George W. Bush "the devil" to hailing the veteran Marxist militant known as Carlos the Jackal, Chavez has never lost an opportunity to goad and shock the West, and the United States in particular.
"Venezuela used to be known only for two things: oil and beautiful women. Now, it is famous the world over for just one: Chavez," said a senior Western diplomat in Caracas.
"He has deliberately courted controversy from day one. It is hard to imagine that booming voice falling silent."
Chavez has influenced some election campaigns around Latin America in recent years by showing support for leftist candidates and making clear that their victory could bring economic support from his government
Unlike former Cuban leader Fidel Castro during the Cold War, however, Chavez has not committed troops to foreign wars or helped train Marxist guerrillas to fight right-wing governments in their home countries.
He does not have a nuclear weapons program and he has continued to sell oil to the United States even when fiercely criticizing its policies.
In geopolitical terms, he is much more a man of rhetoric than of action.
The quietening of Chavez's voice might be a relief to Washington and local foes who see him as an embarrassing friend of dictators. But to many, especially round the Third World, he is admired - a bit like Castro - for standing up to U.S. power and daring to say what plenty of others thought.
Chavez is due to start a new, six-year term on January 10, but he is still fighting to recover from his fourth cancer operation in just 18 months. He has named a preferred successor, Vice President and Foreign Minister Nicolas Maduro, to be the ruling party's candidate in an election should Chavez be forced out.
There is little sign that Maduro - a former bus driver, union activist and committed socialist who has faithfully echoed his boss's views around the globe for the last six years - would change Venezuela's foreign policies.
Yet without the flamboyant personality of Chavez promoting these policies, the impact would be diminished.
Under the many speculative scenarios - from death to a full recovery - one would be that Chavez takes a Castro-like role, leaving day-to-day affairs to Maduro but opining from behind the scenes as an elder statesman.
AID FOR ALLIES
In his Latin American backyard, where Chavez has led a resurgence of the left since his own rise to power in 1999, there is far more at stake from a possible end to his rule.
Around the region, smaller nations whose governments are politically allied with Chavez - from Cuba and the Dominican Republic to Nicaragua, Bolivia and Ecuador - have come to rely on Venezuela's subsidized oil supplies and other economic aid.
Communist-run Cuba, whose economy was tied to the Soviet Union for decades and then, when that nation collapsed, was perilously adrift in the 1990s before Chavez came to power, is particularly dependant.
It receives more than 100,000 barrels per day of crude from Venezuela on preferential terms, covering 60 percent of its energy needs. Last year, Venezuela accounted for $8.3 billion of its $20 billion foreign trade - most of that as payment for more than 40,000 medical staff and other Cuban workers in Venezuela.
While a post-Chavez government led by an acolyte such as Maduro would be unlikely to end such generosity, it might be tempted to roll it back at the edges given that many Venezuelans are not over-enthusiastic at the international solidarity.
Opposition politicians play on that, saying Chavez has scandalously neglected local needs with politically motivated foreign patronage. During the recent presidential election, they showed pictures of a gleaming Venezuelan-sponsored hospital in the Dominican Republic next to a rundown medical ward at home.
So there is little doubt that should the opposition win a new vote triggered by Chavez's departure, the aid would dry up. "We cannot afford these giveaways while Venezuelans still have so many problems," opposition leader Henrique Capriles has said.
Though Chavez is the undisputed head of the ALBA bloc of leftist-led nations in the Caribbean and Latin America, his leadership role has arguably waned given the general preference for Brazil's "soft left" model over his more radical brand.
"His regional and international influence shrank as the Venezuelan economy deteriorated and his seemingly endless energy and vitriol began to fade with his illness," said Peter Hakim, president emeritus of U.S.-based Inter-American Dialogue.
"Chavez's death will not change the broad dynamics of regional affairs, but some things will change. Brazil's predominant role in South America will be reinforced. It will have less reason to compromise with Venezuela or its allies on the continent — and it may even feel freer to criticize Venezuela, whoever ends up in charge."
Speculation is rife over who would inherit Chavez's mantle as the new firebrand on the block. Ecuador's President Rafael Correa seems to be the favorite - but insisted it would be teamwork.

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Factbox: Patchwork of U.S. regulations governs firearms

(Reuters) - The Second Amendment to the U.S. Constitution says Americans have the right to bear arms, but the sale, possession, transportation and use of weapons are covered by a host of local, state and federal regulations.
Gun laws have come under scrutiny after 26 people were killed in a shooting rampage at a Connecticut school on Friday. The suspected shooter, Adam Lanza, is believed to have stolen the guns from his mother.
Some U.S. politicians, including President Barack Obama, have called for tightening U.S. gun laws, including a ban on so-called assault weapons.
Guns bought from licensed dealers are subject to federal and state laws and frequently require background checks and waiting periods. Buyers purchasing firearms from private sellers can usually avoid such checks and delays.
Here is an overview of the patchwork of federal and state laws applying to firearms:
** U.S. federal law only permits a "qualified law enforcement officer" with proper agency-issued identification to carry a concealed firearm. But every state in the nation, except Illinois, now allows residents to carry concealed weapons. An appeals court earlier this month ruled the Illinois law banning most people from carrying handguns in public is unconstitutional.
** The 49 states that permit the concealed carry of firearms are broken up into two groups: "shall issue" states and "may issue" states.
In so-called "shall issue" states, officials are required to issue a permit to anyone who meets minimum requirements.
Once a permit is issued, the permit holder may carry a loaded, concealed firearm in a public place -- although a number of states prohibit concealed weapons in specified locations.
There are 35 "shall issue" states, including Florida, Indiana, Michigan, New Hampshire, Ohio, Pennsylvania, Texas and Washington.
In the so-called "may issue" states, including Alabama, Connecticut, Hawaii, Massachusetts and New York, officials have discretion to grant or deny the permit, based on various statutory factors. Most "may issue" states require applicants to show a bona fide need to carry a concealed firearm.
In addition to the "shall issue" and "may issue" states, there are four states -- Arizona, Alaska, Vermont and Wyoming -- where no permit is required to carry a concealed weapon.
Of the 49 states that allow concealed weapons, fewer than half require applicants to demonstrate basic knowledge of firearm use and safety. They are California, Connecticut, Delaware, Hawaii, Iowa, Kansas, Kentucky, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, North Carolina, Oregon, Rhode Island, South Carolina, Texas and Utah.
** Most states limit where firearms are allowed and ban them outright from school property, prisons and jails, courthouses and other government buildings, and places where liquor is served.
A smaller number of states prohibit concealed weapons in places of worship, polling places, sports arenas, hospitals and mental health facilities and casinos.
A handful of states, including Oregon, place almost no limit on where concealed weapons may be carried.
** There is no federal ban on assault weapons -- semi-automatic firearms designed with military features to allow rapid and accurate spray firing. A ban adopted in 1994 expired in 2004 when Republican George W. Bush was president, and was not renewed.

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Senator jokes that Boehner's 'Plan B' shows progress finally being made on women's issues

WASHINGTON - A Democratic senator joked Thursday that with House Speaker John Boehner embracing "Plan B," women's issues are progressing in Congress.
Washington Democrat Patty Murray told reporters that she "got really excited" when she heard Boehner talking about Plan B.
But then, she kidded, she learned it didn't signify progress for women after all.
Boehner had a backup plan for his fight over the "fiscal cliff" with President Barack Obama and dubbed it Plan B. House GOP leaders abruptly cancelled a vote on the measure Thursday night after they failed to round up enough votes for it to pass.
The "fiscal cliff" refers to huge tax increases and spending cuts that take effect in early January unless lawmakers can head them off.
Plan B is also the name of a contraceptive pill that some conservatives oppose because it can be used after unprotected intercourse.

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Congresswoman broke ethics rules, House panel says

LAS VEGAS (Reuters) - A seven-term U.S. congresswoman from Nevada, Shelley Berkley, violated ethics rules by using her office to try to help her husband's medical practice but had no "corrupt intent" in doing so, the U.S. House Ethics Committee said on Thursday.
The committee said no further action was needed against the Democratic member of the House of Representatives. It had launched a probe in July into allegations Berkley may have been improperly involved in a bid to help save a hospital program linked to her husband's business.
Berkley's husband, Larry Lehrner, is a kidney specialist who owns a string of dialysis facilities and had a contract with the transplant unit at University Medical Center in Las Vegas when it was threatened with closure.
Nevada Republicans asserted in their initial complaint to Congress that Berkley would have directly benefited financially from her involvement in the 2008 case due to her husband's links to the hospital's kidney center.
Berkley, who failed in November to unseat Nevada Republican Dean Heller from his U.S. Senate seat in a narrow race, has said her effort to help keep the center open when it was facing federal action that could have resulted in its closure was not motivated by a potential financial interest.
She said she did nothing wrong.
A House Ethics panel agreed that her work to help the transplant center did not constitute a violation, but said that it was a mistake for her office to assist her husband's dialysis business in getting payment reimbursements.
"Representative Berkley had a legitimate concern, raised at the time that these issues were ongoing, that failures on the part of government insurers to reimburse providers in a timely fashion might result in the providers opting not to see patients insured by those programs," the Ethics Committee said in a statement.
It added that Berkley testified credibly that she had not helped her husband to obtain future benefits, and that the level of assistance her office provided him was not unusual compared to that given to other doctors.
But the panel ruled that she was mistaken when she determined her course of action was proper, although her lack of "any corrupt intent" mitigates the severity of the violations.
Heller, who had been a member of the House at the time, also joined in the Nevada delegation's efforts to keep the government from closing the kidney unit.

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Retirement Savings Plan Reality: Save More

There's a buzz building in California over a state move to create a retirement savings plan for private employees with no workplace 401k. It might seem that everyone has plenty of access to a retirement savings plan, but at least a third of U.S. households get to retirement with just Social Security to back them up, reports MarketWatch.

The "pioneering" part of such a retirement savings plan would be the opt-out clause. Under the California plan, which has to get past some federal rules and IRS hurdles, eligible workers would be automatically registered with the plan at a deduction rate of 3% of pay. They would have to choose to quit the plan, although of course they could instead choose to increase the takeout.

The enforced deductions requirement of a good retirement savings plan is backed by research from Harvard and the University of Copenhagen. According to the research, giving people a tax break encourages them to save, but not much. Using data from Denmark, which is similar to the U.S. system but offers more detail, academics found that tax subsidies worth $1 raised the national savings rate by a penny.

More On Forbes: 25 Best Places For A Working Retirement

That's not much bang for a buck. Meanwhile, previous research found that an automatic retirement savings plan, such as the proposed California "opt-out" model, is very effective at raising savings rates.

The reason, the researchers conclude, is that only about 15% of people in the system are active savers, that is, people who think about retirement and how much money it will take to achieve that goal. The remainder, a whopping 85%, are totally passive savers. They will save if obligated but make no concrete plan regarding their life after work.

All of this would be quite the revelation, except that private pensions have a long and quite well-documented history, starting back in 1980 in Chile. Under reforms instituted by the military regime of the time, anyone with a formal job in the South American country is required to pay 10% beyond a minimum monthly income level. There is an income tax break, too, on retirement savings plan contributions, which can be up to 20%.

More On Forbes: Do You Have Enough Money To Retire

The Chilean system was reformed in 2008 to create a bigger safety net for the poor, essentially granting public pensions to those who did not earn enough to participate in the private system. Currently, 13 countries have either private or quasi-mandatory pension systems, reports the OECD.

All pension plans fall into two categories, defined benefit or defined contribution (DC). A defined benefit plan puts the burden on future taxpayers to meet a minimum payout, which is essentially how Social Security works in the United States. A defined contribution retirement savings plan, the basis for private pension systems such as a 401k, means it's up to savers to put enough away and to invest and manage their savings carefully over decades.
Your retirement savings plan

As the OECD notes, "the starting point for a successful DC plan is a sufficiently high contribution rate." Put another way, depending on the market to deliver miracles is a mistake, but a similarly large (and common) mistake is believing that setting aside pennies in a retirement savings plan will add up to big dollars down the line.

The agency concludes:

    In DC pension systems, one clear goal for policymakers should be to improve the design of default investment strategies so that investment risk is reduced as the worker approaches retirement. Such lifecycle investment strategies may need to be carefully regulated to ensure that workers are offered sufficient diversification and protection from market shocks in old age.

Amen and hallelujah, we say. Whatever the outcome in California, two points about a proper retirement savings plan by now should be impressively clear to everyone: You need to save more, sooner, and you absolutely must have a serious, long-term investment plan to protect and grow that nest egg over time.

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US pending home sales jump to nearly a 6-year high

WASHINGTON (AP) — An index measuring the number of Americans who signed contracts to buy homes in October jumped to nearly its highest level in almost six years. Steady job gains and record-low mortgage rates have made home buying more attractive.

The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index rose 5.2 percent to 104.8 in October. Excluding a few months when the index spiked because of a homebuyer tax credit, that is the highest level since March 2007.

The increase points to healthy sales increases of previously occupied homes in the months ahead. There's generally a one- to two-month lag between a signed contract and a completed sale.

The rise in sales adds to evidence of a steady housing recovery. Builders are more confident in sales and are starting construction on more homes. Home prices are rising on a consistent basis, which encourages more potential buyers to come off the sidelines and purchase homes. And more people may put their homes on the market if they gain confidence that they can sell at a good price.

The report is "another indicator suggesting that the recovery in housing has broadened and has sustained momentum," Michael Gapen, an economist at Barclays Capital, said in a note to clients.

Signed contracts jumped 15.6 percent in the Midwest and rose 5.5 percent in the South. But they fell 1.1 percent in the West and dipped 0.1 percent in the Northeast.

Superstorm Sandy lowered pending sales in the Northeast, the Realtors' group said. The West was hurt by low inventories of available homes.

Mortgage rates remained near record lows this week. The average rate on the 30-year loan was 3.32 percent, mortgage buyer Freddie Mac said, just above 3.31 percent last week, which was the lowest on records dating to 1971.

A big reason for the rebound in housing is that the excess supply of homes that built up before the housing crisis has finally thinned out. The number of previously occupied homes available for sale has fallen to a 10-year low. The inventory of new homes is also near the lowest level since 1963.

At the same time, more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.

Those trends are also pushing up home sales and construction. Sales of previously occupied homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when a homebuyer tax credit boosted purchases.

Builders, meanwhile, are more optimistic that the recovery will endure. A measure of their confidence rose to the highest level in six and a half years this month. And builders broke ground on new homes and apartments at the fastest pace in more than four years last month.

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