Barbara Dreyfuss

Recent Articles

Politicians Bet the Farm

Faced with tough budget decisions, many states are turning to gambling as an answer to their economic woes. But most end up getting far more than they bargained for.

Last spring, Kansas politicians decided to take government promotion of gambling to a new level, voting to make the state the first to actually own Las Vegas-style casinos. Not content, as other states, to merely tax the revenues of commercial gambling establishments, Kansas will own the casinos' buildings and rake in much of their proceeds. But the corporate giants and investors who own casinos in other states won't be left out. Kansas will partner with them to run day-to-day operations. The state's Republican legislature and Democratic governor, Kathleen Sebelius, endorsed the law as an answer to demands from the state Supreme Court to come up with more money for education. Rather than impose higher taxes or cut budgets, they bet on an easier road to riches. Watching Kansans flock to casinos in nearby Missouri and Iowa, political leaders decided to try to keep that money at home. Kansas isn't alone. Officials in other states (over a dozen in 2007) are also scrambling to expand...

What Hedge Funds Risk

Increasingly, everyone's money -- that's what. Nobody rides herd on these unregulated investment funds, which now manage a tidy $1.5 trillion.

Brian Hunter thinks he knows something about hedge fund investing. The 33-year-old Canadian energy trader is starting his own firm and reportedly has already raised nearly $1 billion for the endeavor. No matter that Hunter was largely responsible for risky natural gas investments, which last September lost more than $6 billion for his then-employer, Amaranth Advisors, one of the largest hedge funds, causing it to collapse. No matter that the San Diego County pension fund is suing him for $150 million of the $175 million they invested with Amaranth, saying Hunter failed to deliver the diversified and risk-controlled investment strategy he had promised. No matter that a Senate committee is investigating manipulation of the natural gas futures market related to Hunter's investments. Hunter's investment strategies were already being questioned when he went to Amaranth in 2004, embroiled in lawsuits with his former employer, Deutsche Bank. But because hedge funds operate in the shadows,...

Evasive Maneuvers

The newly elected Democratic leaders in Congress are gearing up for a broad array of oversight hearings and investigations of the Bush administration. However, they are likely to butt heads with a Justice Department intent on thwarting their efforts -- as Republican Senators Charles Grassley of Iowa and Arlen Specter of Pennsylvania did recently when they tried to scrutinize administration actions. The Justice Department, which serves as legal counsel in court proceedings for other departments, has repeatedly gone beyond merely protecting its own actions from scrutiny. Even when Congress was in Republican hands, Justice Department officials advised other government departments on how to stonewall congressional review. These efforts now appear to be ramping up. The Justice Department Legal Counsel's office recently held meetings with lawyers of other departments to discuss strategy for responding to congressional requests for documents and hearing appearances. In January, Senator...

Doctoring Health Care, I

For all the hype over the Democrats retaking Congress, you'd think the reemergence of that body's liberal lions would, in short order, bring about universal health care and a host of other panaceas. Winning universal health care, alas, remains unlikely, at least in the near term. Instead, repairing the cracked foundations of Medicare and Medicaid will dominate the health agenda, and if the Democrats have any energy left, they may try to stabilize the employer-based health system, too. But if the Democrats are smart, they'll go one step further, using their control of committees and their ability to set the agenda to lay the groundwork for a major universal health-care push in 2008 -- one that may boast a surprising array of new allies. It's true that for the next two years the Democrats will be hamstrung in their legislative efforts by the threat of a presidential veto. So their first order of business will be a series of investigations and hearings showcasing how Republicans have...

A Wedge in the Door

Millions of seniors will receive a rude surprise in the next two weeks when they open a mailing from the federal government explaining how the Medicare program will work in 2007. For the first time ever, beginning in January, what a senior pays for Medicare premiums will be linked to his or her income. This change was slipped into the Republican-drafted Medicare drug bill that leaders rammed through Congress in 2003, but it has been overshadowed by the myriad problems with the prescription-drug benefit. The premium provision puts Medicare on a path to becoming a poverty program -- part of White House and Republican congressional efforts to eviscerate what has always been a universal entitlement. For many liberal defenders of the Medicare program, the idea of indexing Medicare to have the rich and more affluent pay more is tempting, and it seems in keeping with a progressive tax system. But it goes against the very reason that Medicare works well: The minute you start tying Medicare...

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