CALIFORNIA SCREAMING - Things are going to get nasty quickly in California as the state seeks more funds from its cash-strapped cities and counties to close a $21 billion state budget deficit. Many municipalities are seeking bankruptcy protection and some state legislators are pushing a plan that would require a California municipality seeking bankruptcy protection to first obtain approval from a state commission. The cities are claiming that contracts with police and firefighters are pushing them into bankruptcy. Check out SaveYourCity.net to see how the cities are fighting back. 

CALIFORNIA DRILLING – With all due apologizes to our California readers, what is wrong with the Governator and the state legislators? The California coast is said to have gas and oil reserves in excess of the Gulf Coast, which supplies 25% of the nation's oil. Need money?  Need jobs?

NOT ALONE - According to a report, California is one of 47 states facing budget gaps, with a collective shortfall of $350 billion. 

OVERSIGHT REFORM – The Wall Street Journal reports that the administration is considering whether it bit off more than it can chew with its broad proposal of overhauling financial regulation and might scale back. Specifically, officials are looking into whether to reorganize the regulatory framework or simply implement new rules at existing regulatory agencies.

CAP AND TRADE AND JOBS – Everyone wants a cleaner environment and everyone wants a booming economy. Last week, the House Energy and Commerce Committee approved a bill that's being marketed as a way to give us a "better" environment, but the legislation is likely to inflict tremendous economic pain for no discernible environmental gain. The bill would do two things: 1) force companies to make more energy efficient (and far more expensive) products, and 2) create a cap-and-trade system that serves as a massive tax on fossil fuels. Cap-and-trade forces businesses and consumers to either use less fossil-fuel based energy or buy credits from businesses that do. It would give immense power to unelected bureaucrats who would be in charge of deciding how much carbon certain industries would be allowed to emit. Some predict a loss of over 1,000,000 jobs. We can't afford to try to cool the planet by icing our economy. 

LIFE INSURERS STRONG - Attorneys at Edwards, Angell, Palmer and Dodge believe that despite speculation to the contrary, life insurers are better poised to withstand the current economy than other financial institutions. In fact, well-capitalized insurers that have been able to withstand an economic downturn may find themselves even more appealing to consumers than in the previous decade, when consumers did more comparison shopping based on price.

LIFE INSURERS WEAK - A.M. Best reports ten life/health and annuity insurers became "financially impaired" since January 2008. At least two of the financially impaired companies (Standard Life and Shenandoah Life) were related directly to the subprime crisis. Most of the others were accident and health insurers whose reserves and capital were stressed by inadequate pricing, higher-than-expected claims and expenses.

INSURERS' CURRENT FOCUS – A survey by Insurance Asset Outsourcing Exchange found that 56% of insurers view business growth/retention as critical, 53% are trying to strengthen risk management and 35% are changing their investment policies and guidelines.

CONSUMER CONFIDENCE HIGH - The Conference Board's index of consumer attitudes soared to 54.9 in May from a revised 40.8 in April, marking the largest increase for a single month since April 2003.

BLAME GAME...MBAs? – Many are pointing toward MBAs and the business schools from which they graduated as major culprits in the current financial crisis and it is easy to see why. Many of the players in high finance are graduates of the likes of NYU Stern School of Business and Harvard Business School and other Ivy League business schools. These young executives learned in the 1970s that a fortune could be made by boosting shareholder returns in the short-term and became exceedingly rich doing so.  Unfortunately, these actions would ultimately destroy their companies and deal a body blow to the world economy. Whether, and to what extent, the nation's business schools laid the groundwork for the economic crisis is a serious topic for educators to ponder.

• Soaring Costs Raise Stakes for U.S. Healthcare Revamp - Dramatic increases in the cost of health care in the U.S. are behind an increasing urgency to revamp the system.  Without reform, the number of uninsured Americans will continue to increase, with middle income Americans joining the uninsured.  
• U.S. Workers Paying More for Healthcare - According to a Milliman report, "Healthcare costs for Americans who get medical coverage through an employer hit a record $16,771 per family this year, and they are having to pay more themselves."  
• Health-Care Costs Handcuff Entrepreneurs - "Countless workers in the United States are trapped in jobs they would like to leave because they cannot get health insurance elsewhere, calcifying innovation and mobility in the world's largest economy."  
• FACTBOX: Healthcare in the United States - Facts about the cost of health care in the U.S.  

• Limiting the income tax exclusion on employer-provided health care coverage.
• Either repealing the itemized deduction for medical expenses or raising the floor from 7.5% of adjusted gross income so fewer taxpayers can claim it.
• Curbing HSAs and FSAs.
• Requiring all state and local government employees to pay the Medicare tax.
• Clamping down on nonprofit hospitals.
• Hiking the tax on alcoholic beverages.
• Imposing a tax on sugar-sweetened beverages.