1 vs. 100 – President Obama’s First 100 Days

100 Days in the span of 1460 (the length of a president’s term) does not seem like much, but this is typically the first major checkmark in a new president’s administration. The milestone’s significance was created during Franklin Delano Roosevelt’s first term in 1933. Now, the real issue to the first 100 days is the disagreement of how effective can a president be in three months? Some say that this is when a president is most effectual because their leadership style is brand new and fresh. Others say, it is 100 days, how can we judge someone by their efficiency in office when not even close to half of their tenure has expired? Who is right? Well, I am inclined to believe…both. The answer is in the presidential timeline.

Every president within his first 100 days either passes his own legislation or overturns the previous president’s legislation. That in itself is to be praised. And considering President Obama got a 787 billion dollar bill (despite massive opposition from republicans) passed, well, I would say that deserves some applause. Just that act alone. Now, what skeptics are arguing is how is that rather large lump sum of money going to help the economy? That’s the catch. It is too early to tell. But I will say this, the extra $3.93 I receive in my payroll check may not be much, but I am loving it. And that is not all…

From shutting down Guantanamo Bay to demanding equal pay in the Lily Ledbetter Fair Pay Act [pdf], President Obama has made pertinent strides to show that the United States once again wants to be seen as a fair and diplomatic country. But that is all they are…strides. He hasn’t crossed the finish line yet. Actually, he has barely jumped one hurdle. And that is what the cynics are looking at. While the legislation that is passed denotes monumental change it is going to take just as much monumental time to enact these changes. And on top of all this, President Obama has had some flubs, like the Special Olympics comment on Jay Leno, but even the most eloquent of speakers misspeaks. Every president has had a hiccup or two (or thirty) during their term.

So as citizens, contributors and consumers of America decide to share their opinions in blogs, posts or polls we should first think of the facts that 1) being the president is not an easy job, 2) what a president does in his first 100 days does not just fall to one man but the 538 men and women in Congress, too, and 3) 76 years ago when the first 100 days was enacted FDR didn’t get it perfect either. So why are we so critical about President Obama? A man who inherited the largest national deficit ever, a country’s “sick and tired of war” wounds and numerous ongoing economic scandals? The bottom line? “We’ve got hi-i-igh hopes, we’ve got hi-i-igh hopes, we’ve high, in the sky, apple pie hopes.” And the reality is that any president whether he is black or white, Obama or Bush, was a senator or a governor is going to have a slow-going struggle when their new administration comes into town.

The positive to this cautionary tale coined “The First 100 Days” is that while our expectations and hopes may be high, at least we have them. That even though there are skeptics and cynics watching the President’s every move, the point is they’re watching. What I mean when I say this is that the American people (whether they are for or against Obama) care about the welfare of this country. This past election brought out millions of voters with billions of opinions to share with their fellow citizens. And just for doing that, Obama gets a 100 for his first 100 days.

Gotcha, punk! Part 2

The I.R.S is still at it. They are money-hungry (in a good way this time) when it comes to indicting the tax evaders who filed false tax returns with the help of UBS. The Swiss financial giant recently turned over about 285 names to the Internal Revenue Service and those seeds bore fruit (albeit rotten apples, but fruit nonetheless).

More specifically, 2 stingy gentleman, both yacht entrepreneurs (no relation), both arrested in Florida for failing to claim millions of dollars on their taxes. Moran, the newest of the two to be caught, booked and bailed on a 6 million dollar bond is accused of evading taxes on 3.7 million dollars stored away in UBS’ Swiss Bank accounts.

The irony of this? Mr. Moran hid only 3.7 million away from the I.R.S in a UBS controlled account in Panama, but flaunts his million dollar assets on his website: his yachts. From a 257-foot yacht one can charter for one week at a cool mill for the price tag, to a 166-foot yacht you can own for the slim bill of only 29.7 million. You own multiple million dollar yachts, rent out yachts for millions a week and you want to be stingy about the taxes on 3.7 million dollars?! So that’s what 3 years of prison and a $250,000 fine is worth? Well, one somewhat honorable thing can be said for Mr. Moran. He pled [pdf] guilty (unlike his counterpart Mr. Rubinstein) and to waive any indictment will cooperate with authorities to pay all back taxes, fees and penalties. What a good little boy. Now why didn’t you just do that in the first place and avoid all this embarrassment?

But I’ve saved the best for last. The true and delicious irony to all of this? Mr. Robert Moran was prosecuted on April 15th…Tax Day. Not only does the I.R.S. get their man (or woman, who knows?), they also get the last laugh.

Gotcha, punk! Part 1

What do you do if the Internal Revenue service is after you for not properly filing your assets stored in offshore accounts located in Switzerland (or any other tax haven)? One would think turn yourself in and maybe in return for such candor (well, partial candor, I mean, you were evading taxes) the I.R.S might be lenient on you. Well, some of the 52,000 Americans who stand to pay heavy taxes and penalties, and do hard time in jail thought it would be a better idea if they sued UBS.

The U.S. account holders at UBS sued the financial giant in Swiss federal court trying to hinder their names from being revealed. And no doubt also enstating their Swiss financial secrecy rights to escape censure from the United States Justice Department. I guess the American “black account” holders thought that because tax evasion isn’t a crime in Switzerland, (and that is where their accounts are located) that maybe, just maybe, they would get away with it here. And yes, you read that correctly. Tax evasion isn’t a crime in Switzerland. Tax evasion and its definition is a matter of semantics to the Swiss. They distinguish evasion from fraud to make it seem like the former is not as bad as we think it is.

But what the dozen (possibly part of the 285 naughty little boys and girls?) who filed the suit but were promptly turned in didn’t realize is, that the U.S. government holds the bigger bargaining chip. It’s called a banking license, and if the U.S. rescinds that, UBS stands to lose billions of dollars of business, fraudulent or not.

So with its bargaining chip in hand the U.S. went after its first fraudulent filcher. And who was the lucky winner? Mr. Steven Michael Rubinstein , and ironically he’s an accountant (laugh out loud) who aside from being great with numbers (but poor with taxes) helped other wealthy Americans build and sell yachts. Mr. Rubinstein was arrested in Boca Raton, FL and was released on a 12 million dollar bail (chump change compared to the taxes he’s avoided). The exorbitant amount of bail is because the wealthy accountant is considered a flight risk having both South African citizenship and a home in Israel. So now that they have their first penny pilferer, what’s (or who’s) next for the I.R.S? In the words of Rod Roddy (infamous game show announcer), “Robert Moran, come on down, you’re the next crook going down for tax evasion…”

“Come out, come out, wherever you are…” Part 2

Sacrosanct – 1) extremely sacred or inviolable; 2) not to be entered or trespassed upon; 3) above or beyond criticism, change or inteference. Hmm. The definition of sacrosanct must mean something different to the gentleman at UBS. The executives who were once claiming they could not release the names of the 52,000 Americans in violation of tax evasion due to Swiss secrecy laws have now changed their mind.

At first UBS denied any and all connections to aiding U.S. citizens in tax evasion, but after the Justice Department opened a little under 100 criminal investigations of the well-known and largest private bank they swayed under the pressure. One major development on the I.R.S. case against UBS is that after finally admitting to helping their U.S. account holders defraud the I.R.S., in February, UBS turned around and agreed to pay $780 million dollars to settle the investigation against them. Another development was the specification that under that settlement, if UBS did not turn over the names the executives themselves could and would be indicted. Well, that’s enough to make you want to rollover on your own mother.

Hans-Rudolf Merz

And had Hans-Rudolf Merz’s (Swiss president and finance minister) mother been one of the 52,000 accused of defrauding the I.R.S., he would have sent her up the river. Because low and behold, despite their vigorous effort to block the numerous U.S. governmental factions that came at them with indictments and evidence from every turn, UBS has turned over 285 names. Far from the 52,000 initially asked, but it will do for now. So…now that the I.R.S has shaken UBS’s financial tree, let’s see what 285 bad apples come loose.

“Come out, come out, wherever you are…” Part I

Amongst the AIG bonuses scandal, our president along with Tim Geithner (Treasury Secretary) and Congress are trying to recoup the 165 million dollars used to pad AIG employee pockets to help pad our economy. Well, the Internal Revenue Service, the Federal Bureau of Investigations and the Federal Courts decided they want to help out, too. It seems the government will stop at nothing to get the money it is owed, but this new strategy is ingenius. The IRS, FBI and the courts intend to get some much needed money back by going after tax evaders. And not just any old tax evaders, ones with “black accounts” (a.k.a secret accounts) with the Swiss bank UBS. According to a lawsuit filed by the U.S. Department of Justice the accounts in question have been holding about 14.8 billion dollars in assets for up to a decade. The IRS and the Feds have been going after the world’s largest private bank to cough up the names of the 52,000 U.S. account holders. And better yet? The IRS, to sweeten the deal, has offered to soften penalities for those who come forward voluntarily before the boom drops on UBS on July 13th.

“This is a chance for people to come clean on their own,” IRS Commissioner Doug Shuler told reporters.

And it seems that that is the route U.S. clients will have to take to save face (and save themselves from jailtime, another little perk for turning yourself in) because UBS is putting up quite a fight declaring its Swiss financial secrecy laws are sacrosanct. Sacrosanct is a big word for a bank that helped tens of thousands of U.S. citizens escape taxes. I guess the Swiss think they’re above the law. Well, we’ll see about that…

America’s new national bird? The Deficit Hawk.

John Steele Gordon wrote a most genius article called “A Short History of the National Debt” in which he uses a term new to my lexicon: deficit hawk. Thanks to blogging (and all of the wonderful knowledge that comes along with it) I have learned at least 12 economically-charged words. But to be sure, deficit hawk has to be the funnest I’ve come across. In Gordon’s article, he of course comments on our new president and how by becoming the 44th president he took on the largest deficit to date even before enstating the American Recovery and Reinvestment Act. Gordon also brings to light the reasons that explain why, as a country, we’re in so much debt:

There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions.

And how many wars and recessions has America had to put us at a 10.9 trillion (and counting) deficit? Well, when it comes to war, the number differs depending on who you ask. The number of declared wars by congress is 5. But as I searched, some folks included wars like the Civil War, Vietnam, Desert Storm and our more current war, The War in Iraq.  Which I think is a pretty crucial war as it pertains to our national debt. And recessions? Whoo. Reading that list will make you out of breath by the time you get to the end. From 1797 to now, almost every 10, 20 or 30 years we suffered some sort of economic crises. Gordon wasn’t lying, no wonder we’re in such economic straits. But the true genius to Gordon’s article isn’t a concept, an epiphany or a statistic…it is a person, and his name is Andrew Jackson.

I have to say that I’m angry at every history teacher I ever had for not telling me Andrew Jackson was the one and only president to get us out of debt. Wait. I don’t think you caught that. Go back and read it again. Yes folks, Andrew Jackson, the 7th president of the United States of America achieved a debt-free nation. And not just any kind of debt, post-war debt. War of 1812 and preceding debt. 125 million dollars worth of debt. Now, I know that’s chump change compared to now, but…how did he do it?! He was a grade “A” deficit hawk.

Now, what is a deficit hawk? It is a slang term for those in American politcs who place great emphasis on keeping the federal budget under control (a.k.a those who take “fiscal responsibility” very serious). Jackson was a prime example of this. He did simple things like reduced government spending (a.k.a. “internal improvements”) to reduce our debt. And it worked, by January 1st, 1835 we were debt free with a Treasury balance of $440,000. Now obviously, Jackson’s accomplishment was short-lived and while some of that was his fault (read about the Specie Circular), still, to have been debt-free for over a year? What a breath of fresh air. And just think, maybe if we had made the deficit hawk the national bird instead of the bald eagle we might not be in this mess.

There is no “pro” to Protectionism

You learn something new everyday, and I had never heard of the phrase protectionism until I delved into the topic of my last blog (“To Buy American…”). I thought it was a misprint or a sort of slang word created throughout our history. But no, it’s a real word, with real negative and positive connotations. The first con to protectionism is that it is in direct opposition of the idea of global free trade. Or the idea that different types of trade transactions are allowed between two or more countries’ without interference from the government.

When one travels to the website  of the office of the United States Trade Representative, you can actually find a list of the trade agreements we have with different countries across the globe. From APEC to NAFTA, global trade has done the United States well, and not just us, but other countries like Canada and Mexico with whom we do at least 50% of our agricultural exporting to. That’s Con number two (or a pro for anti-protectionism, if you like). Like the old saying goes, if it ain’t broke, don’t fix it. Just our NAFTA policies alone have made us hundreds of billions of dollars. On the USTR’s website they also have a pdf file (labeled NAFTA benefits) listing all the benefits of NAFTA, one of which claims our economic gain from trade more than doubled from 1993 to 2006. I don’t know about you, but doubled sounds good to me.

Now, don’t get me wrong, I understand the concept of “fight or flight”. We’re in mind-numbing debt, our economy is failing us, jobs are all but non-existent, so what do we do? We take the easy way out…what I’d like to call “flight”. We take bail out funds that are given to us and do exactly that…bail out. Let’s save ourselves, our economy, stimulate our workforce. But in doing so, we risk alienating OURselves from those we owe OUR debt to, and from those who are struggling, too. And that my friends, is con number three. Protectionism is aptly named because all it does is protect us (it should be called protection”us”m). BUT, in reading an article written by the British journalist Petrie Hosken, I think she has come up with the solution:

It is easy to see why both our leaders share this sentiment. We are facing tough economic conditions and all countries are struggling to find a clear path out of horrendous debt. But is looking inward the best way out? Is the shutting out of foreign workers and the curbing of foreign imports the best way of solving our problems? The whole world is experiencing this financial meltdown so surely only by trading with the whole world can we all come out of this mess in one piece.

Genius.

And if you’ve been following along at home, I’ve listed one pro…oh wait, that was for anti-protectionism. So that makes the score 4-0 against protectionism. Hmm. Maybe we should rethink this.

To Buy American or Not to Buy American…That is the question.

The big economic buzz for this month has been the passing of the 787 billion dollar stimulus bill by President Barack Obama and the Senate. When reading this over 1,000 page breakdown of the Stimulus Plan one comes across a “Buy American” provision. In this provision, The Senate mandates that only U.S. products be purchased and used with the money funded through the plan. Supposedly, by U.S. businesses only buying items like iron and steel from other U.S. businesses it will help stimulate the economy of our American companies. But what does this mean for our trade relations with foreign countries? Well, according to White House Press Secretary Robert Gibbs:

President Obama “wants to ensure that any legislation that passes is consistent with trade agreements and doesn’t signal a change in our overall stance on trade”

While the”Buy American” Provision may seem like a good idea, aren’t we affecting other countries’ economies by specifying where stimulus funds may be used? Not to mention the provision comes a across like protectionism. Do countries like Canada with whom we export at least 40% of our steel from feel threatened? The provision has even been somewhat softened due to concerns being voiced by leaders of different countries. But despite the revisions made to the provision, from Canada to China, high-ranking officials are not “buying” the “Buy American” provision. Some even feel that this could be a repeat of the Great Depression. And how oddly symmetrical, that once again in an economic downturn, we turn to “protecting” our own business interests instead of turning to the same countries who have contributed to our economic welfare before.  And these billions of dollars we are allocating for the “Buy American” provision, where are they coming from? And for that matter, where are the hundreds of billions of dollars funding the stimulus plan coming from? Amongst all these questions is the hope that the measures we are using to create a boom in our economy do no alienate us from allies and cause financial warfare.

Good Riddance

“Good Riddance to Bad Business”
Andrea Matthews

I’m not a fan of Circuit City…never have been, never will be. Every time I tried to drag myself into one of their stores I was reminded of why I dislike the retailer. 1) Customer service is NON-existent at Circuit City. You could essentially sit in their home theater center for an eight-hour shift without so much as a “Can I help you?” from a sales associate. And the lack of customer service explains why 2) every time I went there it was a ghost town, there were always more sales associate than customers.  And if it wasn’t the lack of customer service that made the place so barren, then 3) it was the prices…they were a steal…out of your wallet, though, not Circuit City’s.

I say all this because the news of all 500 + stores closing in the U.S. came as no surprise to me. What did come as a surprise, though, was that Alan L. Wurtzel, acting chief executive for Circuit City from 1972-1986 and board chairman from 1994-2001 openly admitted that when Best Buy, Co. came on the scene Circuit City didn’t consider them a threat. He also admitted that during the retail career of Circuit City shareholders and corporate staff cared more about profit than the longevity of the company. Well, that’s fine and good, two thumbs way up for your candor, but what about the 30,000 + employees who now have to go out into the same crappy economy that could not find you a buyer and find themselves a job? And what about all those customers with gift cards, warranties and Circuit City credit cards? Are Wurtzel and Marcum (the current acting chief executive) sad and disappointed for them, too? They say they are, but their actions since filing for bankruptcy in November and liquidating all merchandise says otherwise. A Circuit City employee (possibly disgruntled by looming unemployment in March) was more than willing to spill the beans about the store’s liquidation sale. Said employee explained that stores undergoing foreclosures will raise prices on merchandise before including the applicable discounts. So even with the impending doom and outright failure of Circuit City, they are still up to their old games. Games like taking discounts off of the full list price and not the most recent sale price. And what explanation do the liquidators offer the consumer (the most important person in the whole equation) as to why they are engaging in such wanton mis-advertisement? Their commitment to banks and creditors…Right, because they’ve treated you so well up until now. The banks and creditors are the reason you’re closing, idiots. The same people who you are “ride or die” for by protecting their financial interests, are the same people leaving you ass out in the streets. No bank came to your rescue when you needed them to save you from the miserable demise that awaits you in March. And the people’s boots you need to be licking, you choose instead to bleed dry through high-priced HDTVs.

So when are Circuit City and its liquidators going to put the consumer first and actually cut us a freakin’ deal? Once the banks and creditors (who are expecting a certain amount of return, of course,) get what they want. THEN, if there us anything left to liquidate the prices will drop more. Oh gee, thanks. I’ve always wanted a no-name brand mouse with that archaic mouse ball in it, along with a case of 300 blank CDs from Memorex, and that fuzzy display HDTV that the moment I take it home and set it up it fries because it’s been playing “Pirates of the Caribbean 1, 2 & 3” for 936 days straight. Ultimately, I feel sorry for all the employees who, after Circuit City closes, are now going to be working hard…looking for another job; because in the end, they are the ones suffering for the sins of the father. There is a silver lining to this dark and dismal cloud, though…all those empty Circuit City buildings can be turned into something more useful and profitable…like Best Buys.