Friday, February 27, 2009

Update from Dave Ramsey on the Economy

I’m tired of hearing all the gloom and doom coming from the media about the economy and unemployment—I bet you are, too! Let’s take a minute to look at the true reality of the situation and what we can do about it.

Yes, many people have lost their jobs and houses. You may be one of them. But guess what? People have lost their jobs and houses even in a bull market. About 93% of people are still employed. That is pretty good! I was alive in the 1970s when unemployment hit double digits, and we’re nowhere near that right now! I’m not making light of the fact that some people are struggling; I’m just putting the situation in the proper perspective.

Even though you may be currently unemployed, that doesn’t mean you have to participate in the recession. People like me who have chosen to not participate acknowledge the reality of a slow economy and suffering people. However, we have decided that we’re not going to form our lives around the negativity coming out of the media and government. We’re intensifying our efforts and going to have the best year of our lives in spite of things slowing down.

Some people who find themselves unemployed will go into new careers or start their own businesses where they have the best year of their lives—professionally, financially and emotionally. Their current job losses are actually blessings in disguise. They believe this and are formulating game plans based on it. I guarantee there are men in their garages right now starting their own mechanic shops. The next Mary Kay Ash is writing up a business plan for new products she’s just created. College students are developing “the next best thing” in their dorm rooms as you are reading this. This is reality!

So think about your skills and interests. How can you leverage those passions into something you enjoy doing every day while earning money for it? If you haven’t lost your job but dread going to work, maybe it’s time to fire your employer and go in a new direction. When you have a game plan for your money and career, you will have a sense of empowerment because you aren’t a slave to the lender (or employer).

When employers start hiring because they believe their businesses will grow, recessions end. Many who have stopped hiring a healthy amount have been paralyzed by fear. They’ve lost hope. People who continue going about their lives in normal ways (without being irresponsible and buying stuff they can't afford) believe in the future. It’s called hope.

You can have fear or hope. It's your choice.

I choose hope.

Seven action steps if you’ve lost your job (or think you might)

Wednesday, February 25, 2009

My Email to Dave Ramsey concerning VistaPrint

Since Dave Ramsey receives hundreds of emails a day from listeners, I thought I would post my email to daveonair in case he doesn't use it in his radio show.


I just found myself as a victim of the VistaPrint scam and I want to make your listeners aware of.

A friend of mine gave me his business card and let me know that they had a promotional offer for 250 free business cards - you just pay the shipping. Since I am starting up an internet business, I thought it would be something to check into so I went to their site and, sure enough, a promotional offer for 250 free business cars - you just pay the shipping.

I read over the fine print to make sure that I wasn't signing up for any monthly services that I don't need and to make sure there was not a "catch," as I wanted to make sure this was an above-board operation.

Seeing no subscriptions or anything out of the ordinary, I placed the order. A week later I received my 250 business cards and let me tell you - they looked sharp. The $5.45 was deduted from my account and I got what I paid for.

While looking at my bank statement today, I noticed the following: 64059 DDA PURCH AP9*VISTAPRINTRWRD 888-243-6185 CT US 905527000093 with a deduction in the amount of $14.95.

I called the number and cancelled, but then did an internet search to see that others have the same problem.

VistaPrint might be a reputable company for their printing, but the fact that they allowed 3rd parties to harvest bank accounts and have numerous class action lawsuits (including one that I am probably going to join) tells me now to STAY AWAY.

Here is the response that I emailed them: "My account was debited the $5.45 for the order I placed in January. On 25 Feb 2009, I received a $14.95 charge for Vista Reweards which I did not authorize. Please credit my account the $14.95 or I will lodge formal complaints with the Federal Trade Commission, Better Business Bureau and my Attorney General. Furthermore, if there is one more deduction from my account I will contact my attorney."

I will probably not see the $14.95 back and will contact the bank tomorrow to make sure they don't authorize any more debits.

Dave, I just paid a stupid tax for not checking them out further. While the amount is miniscule, VistaPrint is not acting on principle and I encourage your listeners to stay away."

This day in history - the Legal Tender Act

It was 147 years ago today...

The U.S. Congress passes the Legal Tender Act, authorizing the use of paper notes to pay the government's bills. This ended the long-standing policy of using only gold or silver in transactions, and it allowed the government to finance the enormously costly war long after its gold and silver reserves were depleted. The Legal Tender Act allowed the government to print $150 million in paper money that was not backed by a similar amount of gold and silver.

Many bankers and financial experts predicted doom for the economy, as they believed that there would be little confidence in the scheme. There were also misgivings in Congress, as many legislators worried about a complete collapse of the nation's financial infrastructure. These notes, called "greenbacks," worked much better than expected. It allowed the government to pay its bills and, by increasing the money in circulation, greased the wheels of northern commerce. The greenbacks were legal tender, which meant that creditors had to accept them at face value.

The same year, Congress passed an income tax and steep excise taxes, both of which cooled the inflationary pressures created by the greenbacks. Another legal tender act passed in 1863, and by war's end nearly a half-billion dollars in greenbacks had been issued. The Legal Tender Act laid the foundation for the creation of a permanent currency in the decades after the Civil War.

Tuesday, February 24, 2009

GOP Gov. Jindal calls Obama's plan irresponsible

Associated Press Writer

WASHINGTON – Republican leaders continued their attacks on President Barack Obama's handling of the economy Tuesday, calling it irresponsible and certain to increase taxes and federal debt.

Responding in advance to Obama's televised speech to a joint session of Congress, top Republicans said the president relies too heavily on spending, and not enough on tax cuts, to try to revive the gasping economy. They said they want to work with Obama, and sometimes blamed congressional Democrats more than him. But their criticisms were sharp and plentiful.

"The way to lead is not to raise taxes and put more money and power in hands of Washington politicians," Louisiana Gov. Bobby Jindal, who gave the Republican Party's official response, said in excerpts released early. The massive economic stimulus bill recently enacted by Obama and congressional Democrats, Jindal said, will expand the government, "increase our taxes down the line, and saddle future generations with debt."

"It's irresponsible," said Jindal, who is eyeing a presidential bid in 2012.

The tone of the Republicans' response was in keeping with their nearly unanimous opposition to the $787 billion economic stimulus bill, which was backed by only three Republicans in the Senate and none in the House. Some Democrats and independents think the Republicans are blundering and misreading most Americans' sentiments about the need for massive government action to help the economy.

In the latest New York Times/CBS News poll, about three-fourths said Obama was trying to be bipartisan, and almost as many faulted the response of Republican officials, which was seen as politically motivated.

Despite such findings, GOP lawmakers say they believe they will be proven right in the long run.
House Republican leader John Boehner of Ohio said Tuesday that Republicans want to help Obama find "responsible solutions to the challenges facing our nation, but thus far congressional leaders in the president's own party have stood in the way."

Boehner, Jindal and other Republicans repeatedly accused Democrats of wanting to raise taxes, but the Obama-backed stimulus package has extensive tax cuts.

Jindal acknowledged that to some degree, Republicans deserved the drubbing they took in the last two national elections.

"Our party got away from its principles," he said. "You elected Republicans to champion limited government, fiscal discipline, and personal responsibility. Instead, Republicans went along with earmarks and big government spending in Washington." But that is changing, he said.

Taking advantage of his moment in the national spotlight, Jindal publicized a Web link Tuesday ( allowing respondents to receive early excerpts of his planned televised response, and to donate to his political organization. Jindal also collected their e-mail and postal addresses, which could prove handy in a presidential race.

Monday, February 23, 2009

After String of Quick Loans, Obama Plans to Shrink National Debt

The following was posted by Belinda Jackson at the I notice a lot of inaccuracies in it, which I will highlight below each section in red.

President says he’ll cut deficit by two-thirds
After he handed out billions of dollars in quick loans to banks, auto retailers and the nation as a whole, President Barack Obama’s next goal may surprise you. He plans to cut the annual deficit by two-thirds in the next four years.

It is going to be hard to cut the annual deficit by 2/3 in the next four years when you added tons of money to the debt and compound interest kicks in, which shrinks the available funds in the budget each year, as the interest on the National Debt is a mandatory expenditure. Unless severe spending cuts kick in, which I don't believe will happen with this administration, Obama will never be able to achieve that target.

Big plans
At the beginning of Obama’s presidency, the national debt was $1.2 trillion. That amount will rise to $1.5 trillion after initial spending from the quick loans and other programs in the economic stimulus package. However, Obama’s economic projections say that by the end of 2013, the deficit will be down to $533 billion.

At the beginning of Obama's presidency, the national debt was $10,628,881,485,510.23 according to the U.S. Treasury Department's Bureau of the Public Debt ( This is a far cry from $1.2 trillion. We haven't had a $1.2 trillion debt since the 1980s. It is unclear as to how much the debt will rise due to compound interest, recurring deficits in the ensuing years, loss of GDP due to the recession and loss of tax revenue due to high levels of unemployment and shrinkage in business output.

How to slash a deficit
The major components of Obama’s plan are Iraq troop withdrawal and higher taxes on the wealthy. Obama says he’ll release his budget outline Thursday. This outline will also make clear how he intends to deliver campaign promises on health care and energy policy, according to the New York Times.

Funding the Iraq war has accounted for a huge percentage of the nation’s spending, and Obama says his troop withdrawal plan will save about $90 billion.

Increasing taxes on the wealthy will not result in a net gain of revenue for the government. Government revenue will actually DECREASE as the "wealthy" create and use tax shelters, park their money in tax free investments (municipal bonds instead of U.S. Treasuries) or just keep it in the bank.

The Iraq War money is a lot less than the interest on the National Debt. Since the beginning of FY 2009, the taxpayers were on the hook for $138,450,208,820.69, which is much larger than the $90 billion savings in his troop withdrawal plan. In FY 2008, taxpayers paid $451,154,049,950.63 in interest on the debt, which will only go up with the Bush-Paulson bank bailout, and Obama's Automotive Bailout and Stimulus packages.

A few new taxes
Obama proposes taxing income from investments in hedge funds and private equity partners at ordinary income tax rates. Right now those types of income are taxed like capital gains, at the rate of 15 percent. His policy would consider those funds income, and thus they could be taxed up to 35 percent, which is what the most wealthy pay in income tax.

See section above regarding taxation on the wealthy.

Fewer tax cuts
During Obama’s campaign, he said he would immediately get rid of the Bush tax cuts on income, dividends and capital gains. However, because of the economy crisis, he plans to instead let them lapse, as scheduled, after 2010 for individuals who make more than $250,000 a year.

Tax cuts stimulate economic growth. Allowing the tax cuts to expire will only make the recession worse due to a further slow-down in growth. That, along with the increased borrowing and spending could help push the current recession into a depression.

Spending cuts
Obama’s proposal will also include spending cuts. One program he proposes spending less money on is Medicare Advantage, which subsidizes insurance companies that cover seniors who could acquire health coverage directly from the government.

He plans to scale back spending on on private contractors. This type of spending went up considerably during the Bush administration. Many of the cuts Obama proposes include cutting spending on private contractors used for defense purposes.

The spending cuts are a starting point but definitely don't go far enough. The pork barrel spending in the stimulus plan would have been a better starting point. Eliminating waste, fraud and abuse from ALL government agencies would go even further. I'll take the spending cuts as long as they are true cuts - not the political definition of a cut being a reduction in the increase in growth of a government program. If indeed, they are true cuts, I'll support them.

Campaign promises
During his campaign Obama said he would double the United States’ spending on foreign aid. However, given the stimulus package and the economic hardship the nation faces, Obama concedes he will have to scale back that promise.

The economy has been in a recession since shortly after he started campaigning. Why make these promises in the first place? I think foreign aid should be slashed until we get government spending under control.

Healthy promises
However, Obama will not scale back his promise to make sure the 46 million Americans who don’t have health insurance will be covered. He says he can achieve this promise without adding to the deficit thanks to cost-saving changes to health care and by raising revenues.

There are better ways that have been pointed out in the public debate, largely by the minority party. All President Obama has to do is embrace them and implement them. Government take over of health care will not solve the problem, it will make it worse. This will add billions more to the National Debt, which will not help his goal of cutting the deficit in half in four years.

Energetic promises
Obama says his energy policy will create new revenue by 2012. He plans to charge companies for permits for greenhouse gas emissions, which would be the main revenue generator. Obama assumes that companies will pass the cost of the permits on to customers, so he says the government will use most of the revenue to offset higher utility bills and related expenses. The remaining revenues would go toward developing alternative energy.

If Obama assume that companies will pass the cost of the permits on to customers, and he will use the government revenue to offset the higher utility bills, then it seems to me it is a waste of time and money. It sure doesn't solve any problems and creates more for both energy producers and consumers. He should leave well enough alone.

Closing arguments
Obama says is strategy is ”investing in what we need, cutting what we don’t, and restoring fiscal discipline.”

“We can’t generate sustained growth without getting our deficits under control,” he added.

After all the quick loans being handed out, it’s nice to see some debt management kicking in.

He's right - we cannot generate sustained growth without getting our deficits under control. That may be his rhetoric right now but his policies, starting with the $35 billion bailout package for the Big 3 automakers, $787 billion in the stimulus bill, further tax increases on the wealthy, increasing the tax on energy companies, and I'm sure he'll think of adding more to the already high 31% corporate income tax, it not getting deficits under control. Add in compound interest and we are going to have even a larger gap. Then what?

In conclusion, we only have to look at Iceland's Bankruptcy, the huge debt Spain incurred with the Spanish Armada, England's near economic collapse, the Weimar Republic in Germany after World War I and Japan's "missing decade" among others to see that these policies will not solve anything but make matters worse. It truly is time for some fiscal sanity.

Obama pledges to slash deficit — after increase

(So just how EXACTLY does this rationale work? You increase borrowing to slash the deficit? I think Congressional Republicans need to hold him at his word if he wants to half the deficit in four years - except they need to go a step further by using CBO pre-inauguration projections which King Banian of SCSU Scholars denotes would have been only 147 billion instead of 555 billion.)

Associated Press

WASHINGTON – Urging strict future restraint even as current spending soars, President Barack Obama pledged on Monday to dramatically slash the skyrocketing annual budget deficit as he started to dole out the record $787 billion economic stimulus package he signed last week.

"If we confront this crisis without also confronting the deficits that helped cause it, we risk sinking into another crisis down the road," the president warned, promising to cut the yearly deficit in half by the end of his four-year term. "We cannot simply spend as we please and defer the consequences."

He said he would reinstitute a pay-as-you-go rule that calls for spending reductions to match increases and would shun what he said were the past few years' "casual dishonesty of hiding irresponsible spending with clever accounting tricks." He called the long-term solvency of Social Security "the single most pressing fiscal challenge we face by far" and said reforming health care, including burgeoning entitlement programs, was a huge priority.

Wall Street seemed unimpressed by all the talk. The Dow Jones industrials dropped 251 points for the day.

Obama goes before Congress and the nation Tuesday night to make the case for his agenda and his budget plans, which the White House is to release in more detail on Thursday.

On Monday, he sought to prepare people for tough choices ahead.

He summoned allies, adversaries and outside experts to what the White House characterized as a summit on the nation's future financial health one week after triumphantly putting his signature on the gargantuan spending-and-tax-cut measure designed to stop the country's economic free fall and, ultimately, reverse the recession now months into its second year.

At the same time, federal regulators announced a revamped program to shore up the nation's banks that could give the government increasing ownership. It was the administration's latest attempt to bolster the severely weakened banking system without nationalizing any institutions, which the White House has said it does not intend to do.

Obama said there would be another summit next week on health care reform. "It's not that I've got summititis here," he added wryly.

By the president's account, the administration inherited a $1.3 trillion deficit for the current fiscal year from the Bush administration — that's the figure Obama says he'll cut in half — and the stimulus law, coupled with rescue efforts for ailing automakers, the financial industry and beleaguered homeowners will raise this year's red ink to $1.5 trillion.

The administration hopes to trim the deficit by scaling back Iraq war spending, raising taxes on the wealthiest and streamlining government.

"We are paying the price for these deficits right now," Obama said, estimating the country spends $250 billion — one in every ten dollars of taxpayer money — in interest on the national debt. "I refuse to leave our children with a debt that they cannot repay."

As an example of a purchasing process "gone amok," the president said he had ordered a thorough review of his new fleet of Marine One helicopters, now far over budget. He was asked about the fleet by former presidential rival John McCain at the end of the White House meeting.

"The helicopter I have now seems perfectly adequate to me," Obama said, to laughter. "Of course, I've never had a helicopter before. So, you know, maybe I've been deprived and I didn't know it."

Earlier, Obama met with Republican and Democratic governors who are poised to benefit from his unprecedented emergency economic package. He told the chief executives, attending a three-day National Governors Association meeting in Washington, that he would begin distributing $15 billion to their states within two days to help them with Medicaid payments to the poor.

The recession has strapped state budgets, in particular in regard to the Medicaid program that is jointly underwritten by states and the federal government. In total, states will eventually receive $90 billion for Medicaid from the new law.

One month into office as the economy continues its downward spiral, Obama is seeking to balance twin priorities: turning around dismal conditions with a huge injection of spending while lowering huge budget deficits. With his re-election race just a few years away, he also has an interest in avoiding being labeled as a big-government, big-spending Democrat.

The White House meetings opened a jam-packed White House week that includes a State-of-the-Union-style address to Congress Tuesday night and the president's first budget proposal on Thursday. A common thread: addressing current economic turmoil while controlling the country's long-term costs.

"This will not be easy," Obama told his White House audience, which included congressional leaders, 2008 GOP presidential nominee McCain, and Republican Sen. Judd Gregg of New Hampshire, who recently backed out as Obama's commerce secretary.

After Obama spoke, attendees broke into five groups to brainstorm how to address costly areas including military weapons, Social Security, health care and tax reform.

During one, Rep. Henry Waxman, D-Calif., said, "Our deficit really cannot be controlled until we figure out how to deal with health care costs." At another, House Republican leader John Boehner of Ohio proposed raising the Social Security retirement age to 70 over a number of years.

Afterward, Obama emphasized areas where he said there was agreement and consensus on moving forward in a bipartisan way, including that the country must ensure people have retirement security, that the tax process must be simplified and that the existing budgeting process isn't working. He also directed his team to pull together a final report from the sessions in 30 days.

National Debt Clock