WASHINGTON — Walmart is the latest traditionally Republican-leaning businesses to embrace key portions of President Barack Obama’s bid to overhaul health care. It’s a trend that could complicate opponents’ efforts to build a united front when Congress ramps up its work on the issue.
Walmart, the nation’s largest private employer, Tuesday endorsed the idea of requiring large companies to offer health insurance to their workers. The proposal is central to Obama’s hopes of covering the nation’s nearly 50 million uninsured and is disliked by some business groups.
Walmart was joined by a major labor union that sometimes has criticized the company’s relatively stingy employee benefits.
Change of position
The big retailer is not the only one-time opponent of health care revisions to embrace at least some aspects of Obama’s proposals. The major group representing pharmaceutical makers recently said it would reduce senior citizens’ costs for prescription drugs by $80 billion over 10 years. And major groups representing doctors, hospitals and other providers have pledged to reduce health care costs by large amounts.
Nearly all these groups opposed efforts to overhaul the nation’s health care system during the Clinton administration in 1993-94. But with better prospects for a health care bill this time, many businesses and industries want to be part of the plan.
by the associated press
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Showing posts with label Obama. Show all posts
Showing posts with label Obama. Show all posts
Wednesday, July 1, 2009
Consumer agency might police American's credit
WASHINGTON — President Barack Obama asked Congress on Tuesday to create an agency to police the fine print on consumer products, such as credit cards and mortgages, and determine what fees, penalties and interest rates are fair.
The Consumer Financial Protection Agency would be in charge of regulating those products in the same way other government agencies regulate the safety of drugs, food and toys.
Obama said Americans are demanding it.
"Those ridiculous contracts with pages of fine print that no one can figure out — those things will be a thing of the past,” the president said in a statement accompanying the 152-page draft bill. "And enforcement will be the rule, not the exception.”
The CFPA is part of Obama’s broader plan to increase oversight of the financial industry and eliminate regulatory gaps believed to have contributed to the economic crisis.
The agency would be dedicated to protecting consumers when buying mortgages, using credit cards and taking out high-rate "payday loans.” It also would monitor terms set on savings, checking and debit card accounts, including overdraft charges.
Warning labels?
Under the plan, lenders would be required to be up front about their products and compare them to less risky, "plain vanilla” options. The agency potentially could require a kind of warning label on such financial products as mortgages with payments that balloon in size.
The agency’s reach would not extend to investment products such as mutual funds and other services already regulated by the federal government. Instead, it would focus on regulating a market that so far mostly has escaped it. Predatory lending is blamed for contributing to the housing crisis that roiled Wall Street and resulted in a $700 billion taxpayer bailout for banks.
Limiting options?
Republicans say setting strict rules on the consumer market will limit options and potentially increase the cost of financial products as banks try to make up for lost revenue.
"The proposed CFPA appears to be premised on the idea that Washington is better at making financial decisions for all Americans than leaving that choice up to individual Americans,” said Rep. Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee.
Elizabeth Warren, a Harvard University professor who long has advocated creation of a consumer-protection agency, said she envisions a system that would allow products to remain available as long as lenders are up front and concise about their terms.
"Most of the bad products were marketed by trickery,” she said.
Likewise, Treasury Department officials said legislation explicitly requires the CFPA to consider the burden any new rule would place on a financial institution and whether it would restrict consumer access to credit.
by the associated press
The Consumer Financial Protection Agency would be in charge of regulating those products in the same way other government agencies regulate the safety of drugs, food and toys.
Obama said Americans are demanding it.
"Those ridiculous contracts with pages of fine print that no one can figure out — those things will be a thing of the past,” the president said in a statement accompanying the 152-page draft bill. "And enforcement will be the rule, not the exception.”
The CFPA is part of Obama’s broader plan to increase oversight of the financial industry and eliminate regulatory gaps believed to have contributed to the economic crisis.
The agency would be dedicated to protecting consumers when buying mortgages, using credit cards and taking out high-rate "payday loans.” It also would monitor terms set on savings, checking and debit card accounts, including overdraft charges.
Warning labels?
Under the plan, lenders would be required to be up front about their products and compare them to less risky, "plain vanilla” options. The agency potentially could require a kind of warning label on such financial products as mortgages with payments that balloon in size.
The agency’s reach would not extend to investment products such as mutual funds and other services already regulated by the federal government. Instead, it would focus on regulating a market that so far mostly has escaped it. Predatory lending is blamed for contributing to the housing crisis that roiled Wall Street and resulted in a $700 billion taxpayer bailout for banks.
Limiting options?
Republicans say setting strict rules on the consumer market will limit options and potentially increase the cost of financial products as banks try to make up for lost revenue.
"The proposed CFPA appears to be premised on the idea that Washington is better at making financial decisions for all Americans than leaving that choice up to individual Americans,” said Rep. Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee.
Elizabeth Warren, a Harvard University professor who long has advocated creation of a consumer-protection agency, said she envisions a system that would allow products to remain available as long as lenders are up front and concise about their terms.
"Most of the bad products were marketed by trickery,” she said.
Likewise, Treasury Department officials said legislation explicitly requires the CFPA to consider the burden any new rule would place on a financial institution and whether it would restrict consumer access to credit.
by the associated press
Wednesday, June 17, 2009
Obama administration’s plan to revamp regulation
WASHINGTON — The Obama administration’s plan to revamp regulation and prevent any more crashes like those that felled AIG and Lehman Brothers includes a bold new idea: Empower the Federal Reserve to oversee the biggest financial players whose failure could threaten other institutions and the economy.
But some lawmakers and economists say making the Fed a "systemic risk regulator” would itself be a high-stakes risk that would distract from its core mission: reviving the economy.
They say the Fed shares blame for the financial crisis that erupted last fall. Along with other regulators, it failed to crack down on risky mortgages and lax lending standards that ignited the crisis.
Unless the Fed improved its oversight abilities, "giving the Fed more responsibility at this point is like a parent giving his son a bigger and faster car right after he crashed the family station wagon,” said Mark Williams, professor of finance and economics at Boston University and a former Fed bank examiner.
Eyes and ears
Treasury Secretary Timothy Geithner and Lawrence Summers, head of the White House’s National Economic Council, said in an opinion piece published Monday in The Washington Post that the Fed would become a "systemic risk regulator” for "large, interconnected firms whose failure could threaten the stability of the system.”
They also would create a council of regulators with "broader coordinating responsibility across the financial system,” Geithner and Summers wrote.
These regulators — which weren’t identified — would serve as extra eyes and ears to police risky financial products throughout the financial landscape.
President Barack Obama plans to unveil the regulatory plan today, with congressional hearings on Thursday.
Financial super cop
Even inside the Fed, there’s recognition that its examiners would need to improve their ability to detect risks if it was to be made a new financial supercop. Under Alan Greenspan, who led it for 18 years, the Fed and other agencies overlooked the risks of allowing exotic mortgages to go to financially shaky borrowers. And they resisted efforts to regulate risky and complex instruments such as derivatives.
"We must ensure that we continue to increase our expertise so it is properly matched with the problems and challenges we will face in both our bank supervisory role and in meeting our traditional financial stability mandate,” Fed Chairman Ben Bernanke acknowledged in a recent speech.
Some lawmakers and Wall Street analysts worry, too.
by the associated press
But some lawmakers and economists say making the Fed a "systemic risk regulator” would itself be a high-stakes risk that would distract from its core mission: reviving the economy.
They say the Fed shares blame for the financial crisis that erupted last fall. Along with other regulators, it failed to crack down on risky mortgages and lax lending standards that ignited the crisis.
Unless the Fed improved its oversight abilities, "giving the Fed more responsibility at this point is like a parent giving his son a bigger and faster car right after he crashed the family station wagon,” said Mark Williams, professor of finance and economics at Boston University and a former Fed bank examiner.
Eyes and ears
Treasury Secretary Timothy Geithner and Lawrence Summers, head of the White House’s National Economic Council, said in an opinion piece published Monday in The Washington Post that the Fed would become a "systemic risk regulator” for "large, interconnected firms whose failure could threaten the stability of the system.”
They also would create a council of regulators with "broader coordinating responsibility across the financial system,” Geithner and Summers wrote.
These regulators — which weren’t identified — would serve as extra eyes and ears to police risky financial products throughout the financial landscape.
President Barack Obama plans to unveil the regulatory plan today, with congressional hearings on Thursday.
Financial super cop
Even inside the Fed, there’s recognition that its examiners would need to improve their ability to detect risks if it was to be made a new financial supercop. Under Alan Greenspan, who led it for 18 years, the Fed and other agencies overlooked the risks of allowing exotic mortgages to go to financially shaky borrowers. And they resisted efforts to regulate risky and complex instruments such as derivatives.
"We must ensure that we continue to increase our expertise so it is properly matched with the problems and challenges we will face in both our bank supervisory role and in meeting our traditional financial stability mandate,” Fed Chairman Ben Bernanke acknowledged in a recent speech.
Some lawmakers and Wall Street analysts worry, too.
by the associated press
Monday, June 15, 2009
Obama's Administration wants a financial system make-over
WASHINGTON (AP) — Aiming for greater limits and more clarity in the nation's financial system, the Obama administration on Monday proposed adding muscle to the Federal Reserve and new restrictions on complex securities whose collapse choked lending and hit millions of American households.
At the same time, the administration gingerly sidestepped some regulatory changes, leaving aspects of the politically charged work for Congress, which must approve the proposed blueprint.
Treasury Secretary Timothy Geithner said the regulatory overhaul will eliminate "gaps" in the financial system that encouraged risky behavior leading up to the meltdown.
Under the administration's plan, all large institutions whose failure could threaten the stability of the financial system would be supervised by the Fed. That sets up a potential clash with some key lawmakers who believe the Fed is overtaxed and unaccountable to Congress.
"I just think we're heaping too much on the Federal Reserve," said Rep. Paul Kanjorski, D-Pa., a member of the House Financial Services Committee.
Obama's plan would create a council of regulators responsible for broad coordination across the financial system. Administration officials said it also would offer a stronger framework for investor protection. Industry officials expect the administration to propose a consumer protection entity to oversee products ranging from credit cards to annuities.
"We had a financial system that was fundamentally too unstable and fragile, and it did a bad job of basic protection of consumers and investors," Geithner said during an economic conference in New York hosted by Time Warner Inc. "Those are things we have to change."
The administration's regulatory proposals were previewed in an opinion piece by Geithner and Lawrence Summers, director of the president's National Economic Council, in Monday's Washington Post. Further details were obtained from Treasury and industry officials who have been discussing the regulatory overhaul with the administration. President Barack Obama will unveil the proposals in a speech Wednesday and Geithner will testify Thursday before Congress.
Obama appears to have backed away from a more extensive overhaul that would have consolidated all banking regulation into one agency. Supporters of this approach, including Sen. Charles Schumer, D-N.Y., have argued that the current system is inefficient.
Likewise, the Geithner-Summer's essay did not address regulation of the insurance sector. Insurance companies now are governed by state insurance commissions, and large insurance companies and some lawmakers have argued they need the option of a federal overseer to avoid the threat posed by insurance conglomerate American International Group Inc.
While several disputes over the proposal are likely to emerge as the legislation moves through Congress, the most high profile debate will center on the role of the Federal Reserve.
Kanjorski said the role of a risk regulator should be given to the Treasury Department. He said it would be a mistake to give the responsibility to an entity that isn't accountable to Congress or the president.
Sen. Christopher Dodd, D-Conn., has opposed giving the Fed such authority and has called for stripping some of the central bank's regulatory authority. Under Dodd's plan, the Fed would focus instead on its existing mission of setting monetary policy, establishing a payment system and being the "lender of last resort" if a bank fails.
The administration will propose tougher rules on transactions outside the banking system. Specifically targeted are mortgage- and other asset-backed securities that contributed to the credit crisis and now plague bank balance sheets.
For instance, the administration would require banks and other underwriters who sell bundled mortgages to Wall Street to retain 5 percent of a stake in the loans — an idea also contained in House-passed mortgage legislation.
Rep. Brad Miller, D-N.C., who sponsored the House proposal, said the 5 percent figure may not sound like much. But the requirement can add up quickly and become a "powerful disincentive" to lenders to issue risky loans, eliminating many of the "fly-by-night" loan operators.
Geithner said the administration would urge other countries to adopt similar financial regulatory changes. He said U.S. changes "will have little effect if we fail to raise international standards along with our own."
The concern is that without tougher international rules governing financial firms, U.S. banks with operations overseas could shift some of their riskier businesses to countries with weaker regulations, said Simon Johnson, a former chief economist at the International Monetary Fund.
by the associated press
At the same time, the administration gingerly sidestepped some regulatory changes, leaving aspects of the politically charged work for Congress, which must approve the proposed blueprint.
Treasury Secretary Timothy Geithner said the regulatory overhaul will eliminate "gaps" in the financial system that encouraged risky behavior leading up to the meltdown.
Under the administration's plan, all large institutions whose failure could threaten the stability of the financial system would be supervised by the Fed. That sets up a potential clash with some key lawmakers who believe the Fed is overtaxed and unaccountable to Congress.
"I just think we're heaping too much on the Federal Reserve," said Rep. Paul Kanjorski, D-Pa., a member of the House Financial Services Committee.
Obama's plan would create a council of regulators responsible for broad coordination across the financial system. Administration officials said it also would offer a stronger framework for investor protection. Industry officials expect the administration to propose a consumer protection entity to oversee products ranging from credit cards to annuities.
"We had a financial system that was fundamentally too unstable and fragile, and it did a bad job of basic protection of consumers and investors," Geithner said during an economic conference in New York hosted by Time Warner Inc. "Those are things we have to change."
The administration's regulatory proposals were previewed in an opinion piece by Geithner and Lawrence Summers, director of the president's National Economic Council, in Monday's Washington Post. Further details were obtained from Treasury and industry officials who have been discussing the regulatory overhaul with the administration. President Barack Obama will unveil the proposals in a speech Wednesday and Geithner will testify Thursday before Congress.
Obama appears to have backed away from a more extensive overhaul that would have consolidated all banking regulation into one agency. Supporters of this approach, including Sen. Charles Schumer, D-N.Y., have argued that the current system is inefficient.
Likewise, the Geithner-Summer's essay did not address regulation of the insurance sector. Insurance companies now are governed by state insurance commissions, and large insurance companies and some lawmakers have argued they need the option of a federal overseer to avoid the threat posed by insurance conglomerate American International Group Inc.
While several disputes over the proposal are likely to emerge as the legislation moves through Congress, the most high profile debate will center on the role of the Federal Reserve.
Kanjorski said the role of a risk regulator should be given to the Treasury Department. He said it would be a mistake to give the responsibility to an entity that isn't accountable to Congress or the president.
Sen. Christopher Dodd, D-Conn., has opposed giving the Fed such authority and has called for stripping some of the central bank's regulatory authority. Under Dodd's plan, the Fed would focus instead on its existing mission of setting monetary policy, establishing a payment system and being the "lender of last resort" if a bank fails.
The administration will propose tougher rules on transactions outside the banking system. Specifically targeted are mortgage- and other asset-backed securities that contributed to the credit crisis and now plague bank balance sheets.
For instance, the administration would require banks and other underwriters who sell bundled mortgages to Wall Street to retain 5 percent of a stake in the loans — an idea also contained in House-passed mortgage legislation.
Rep. Brad Miller, D-N.C., who sponsored the House proposal, said the 5 percent figure may not sound like much. But the requirement can add up quickly and become a "powerful disincentive" to lenders to issue risky loans, eliminating many of the "fly-by-night" loan operators.
Geithner said the administration would urge other countries to adopt similar financial regulatory changes. He said U.S. changes "will have little effect if we fail to raise international standards along with our own."
The concern is that without tougher international rules governing financial firms, U.S. banks with operations overseas could shift some of their riskier businesses to countries with weaker regulations, said Simon Johnson, a former chief economist at the International Monetary Fund.
by the associated press
Saturday, June 13, 2009
Tax Credit
WASHINGTON — The Obama administration has now put out official word: Starting soon, first-time home buyers nationwide will be able to turn their $8,000 federal tax credits into cash for use at closing if they use Federal Housing Administration mortgage financing.
But in its final guidelines to lenders and home buyers issued May 29, the Department of Housing and Urban Development clarified that purchasers obtaining FHA loans through private lenders will have to invest at least some of their own funds — whether from personal savings or gifts from relatives — in the form of a minimum 3.5-percent down payment.
In other words, you’ll need equity in the house to participate. This won’t be a zero-down plan, with one exception: If you obtain your FHA loan through one of the 10 or so state housing agency "tax credit monetization” programs, you’ll be allowed to pay for your entire down payment with the help of a bridge loan provided by the agency. Those bridge loans generally are low-interest or no-interest short-term second liens secured by the property, and convert into second mortgages if they are not paid off with the proceeds of the tax credit.
For FHA lender-supplied cash advances, you’ll be able to use the $8,000 credit — or whatever size credit you qualify to receive — for settlement fees, escrow charges, higher down payments or to "buy down” your interest rate to cut monthly payments.
How will this all work in practical terms? How do you apply? Here’s a quick guide:
To start, you’ll need to qualify as a first-time purchaser under the generous definition permitted by Congress — that is, you cannot have owned a principal residence during previous three years, and household gross income cannot exceed $95,000 for single taxpayers or $170,000 for married couples filing jointly.
To get the process rolling, you’ll have to write a contract on a house you can afford to buy and apply for a mortgage through an FHA-approved lender. That shouldn’t be difficult, since there are more than 12,000 lenders. But get moving on house shopping as soon as possible, since the tax credit program requires all eligible purchases to be closed no later than Nov. 30.
from the washington post
But in its final guidelines to lenders and home buyers issued May 29, the Department of Housing and Urban Development clarified that purchasers obtaining FHA loans through private lenders will have to invest at least some of their own funds — whether from personal savings or gifts from relatives — in the form of a minimum 3.5-percent down payment.
In other words, you’ll need equity in the house to participate. This won’t be a zero-down plan, with one exception: If you obtain your FHA loan through one of the 10 or so state housing agency "tax credit monetization” programs, you’ll be allowed to pay for your entire down payment with the help of a bridge loan provided by the agency. Those bridge loans generally are low-interest or no-interest short-term second liens secured by the property, and convert into second mortgages if they are not paid off with the proceeds of the tax credit.
For FHA lender-supplied cash advances, you’ll be able to use the $8,000 credit — or whatever size credit you qualify to receive — for settlement fees, escrow charges, higher down payments or to "buy down” your interest rate to cut monthly payments.
How will this all work in practical terms? How do you apply? Here’s a quick guide:
To start, you’ll need to qualify as a first-time purchaser under the generous definition permitted by Congress — that is, you cannot have owned a principal residence during previous three years, and household gross income cannot exceed $95,000 for single taxpayers or $170,000 for married couples filing jointly.
To get the process rolling, you’ll have to write a contract on a house you can afford to buy and apply for a mortgage through an FHA-approved lender. That shouldn’t be difficult, since there are more than 12,000 lenders. But get moving on house shopping as soon as possible, since the tax credit program requires all eligible purchases to be closed no later than Nov. 30.
from the washington post
Wednesday, June 3, 2009
Low gasoline starts United States auto sales
DETROIT — Americans bought more cars in May than in any other month this year, drawn by sale prices that pushed General Motors and Chrysler’s sales above expectations despite their forays into bankruptcy protection. Sales were still 34 percent lower than a year ago.
But low fuel prices encouraged the sale of bigger gas guzzlers while small cars stacked up on dealer lots. That could be a problem for the Obama administration, if the demand for more fuel-efficient vehicles drops just as it is forcing the U.S. auto industry to produce more of them.
"The great migration away from fuel efficiency is once again under way,” said Mike Jackson, chairman and chief executive of AutoNation Inc., the nation’s largest automotive retailer. "The price of gasoline determines the type of vehicles consumers buy. Period.”
All major automakers including Toyota and Honda posted drops from last year, with Ford Motor Co. benefiting from the financial woes of its Detroit competitors and recording the smallest decline at 24 percent.
GM and Chrysler have pegged their recoveries to fuel efficiency — Chrysler with small cars from Fiat SpA, GM with new American-built compacts and subcompacts, and both with plans for electric vehicles. It could take months of expensive gasoline for people to buy their new products.
Small-car sales drop
Almost every small-car model saw significant drops in sales compared with May of last year, which was a record month for many models as gas headed for $4 per gallon.
Honda’s Civic was off 61 percent, Ford saw Focus sales drop 54 percent, and GM’s Chevrolet Cobalt was down 52 percent. Even Toyota’s Corolla, the perennial small-car leader, saw sales drop 55 percent.
Yet sales of Ford’s midsize Fusion jumped 9 percent, with four-cylinder engines making up 70 percent of the sales. Chevrolet’s Malibu sales were down 11 percent, a far lower decline than the rest of the market.
Jackson said gasoline price instability makes it difficult for automakers to decide what models to produce and dealers to decide which ones to stock.
Early in the month, Honda had thousands of Civics stacked up in the lots of a closed Ford plant west of Cleveland, stored there from factories in Ohio and Canada. Many have since been shipped to dealers, the company said.
Fuel efficiency
Jackson said all automakers’ small cars suffered, but Honda was hit harder as a company because it is the most fuel efficient.
"Honda is perfectly positioned for $4 per gallon gasoline and is out of favor at $2 per gallon,” he said.
Jackson said he is changing his dealers’ mix to larger vehicles, from midsize cars up to sport utilities, because that’s what people want to buy.
But George Pipas, Ford’s top sales analyst, said the trend to more efficient vehicles is continuing. Premium gasoline is back to $3 per gallon in California, said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com.
"We know the downsizing of the American vehicle has been taking place for several years and is still going on,” he said. "I think the midsize segment does have some appeal, but don’t forget fuel efficiency is still key.”
"The winner is still Ford out of all automakers in terms of their May performance and the trending so far this year,” Toprak said.
by the associated press
But low fuel prices encouraged the sale of bigger gas guzzlers while small cars stacked up on dealer lots. That could be a problem for the Obama administration, if the demand for more fuel-efficient vehicles drops just as it is forcing the U.S. auto industry to produce more of them.
"The great migration away from fuel efficiency is once again under way,” said Mike Jackson, chairman and chief executive of AutoNation Inc., the nation’s largest automotive retailer. "The price of gasoline determines the type of vehicles consumers buy. Period.”
All major automakers including Toyota and Honda posted drops from last year, with Ford Motor Co. benefiting from the financial woes of its Detroit competitors and recording the smallest decline at 24 percent.
GM and Chrysler have pegged their recoveries to fuel efficiency — Chrysler with small cars from Fiat SpA, GM with new American-built compacts and subcompacts, and both with plans for electric vehicles. It could take months of expensive gasoline for people to buy their new products.
Small-car sales drop
Almost every small-car model saw significant drops in sales compared with May of last year, which was a record month for many models as gas headed for $4 per gallon.
Honda’s Civic was off 61 percent, Ford saw Focus sales drop 54 percent, and GM’s Chevrolet Cobalt was down 52 percent. Even Toyota’s Corolla, the perennial small-car leader, saw sales drop 55 percent.
Yet sales of Ford’s midsize Fusion jumped 9 percent, with four-cylinder engines making up 70 percent of the sales. Chevrolet’s Malibu sales were down 11 percent, a far lower decline than the rest of the market.
Jackson said gasoline price instability makes it difficult for automakers to decide what models to produce and dealers to decide which ones to stock.
Early in the month, Honda had thousands of Civics stacked up in the lots of a closed Ford plant west of Cleveland, stored there from factories in Ohio and Canada. Many have since been shipped to dealers, the company said.
Fuel efficiency
Jackson said all automakers’ small cars suffered, but Honda was hit harder as a company because it is the most fuel efficient.
"Honda is perfectly positioned for $4 per gallon gasoline and is out of favor at $2 per gallon,” he said.
Jackson said he is changing his dealers’ mix to larger vehicles, from midsize cars up to sport utilities, because that’s what people want to buy.
But George Pipas, Ford’s top sales analyst, said the trend to more efficient vehicles is continuing. Premium gasoline is back to $3 per gallon in California, said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com.
"We know the downsizing of the American vehicle has been taking place for several years and is still going on,” he said. "I think the midsize segment does have some appeal, but don’t forget fuel efficiency is still key.”
"The winner is still Ford out of all automakers in terms of their May performance and the trending so far this year,” Toprak said.
by the associated press
Creditor exploitation of loophole makes Federal Benefits vulnerable
WASHINGTON — Bill collectors are exploiting a legal loophole to take Social Security and veterans’ benefits even though federal law is supposed to protect the payments from creditor seizure.
The Obama administration now is promising action but has offered no timetable for developing the new rules.
Federal law has long protected Social Security and veterans’ benefits from most creditors, with a few exceptions for child support, alimony, unpaid federal taxes and debts to other federal agencies. But creditors have been seizing the payments by getting court orders to freeze and garnishee bank accounts that receive direct deposits. Over a 12-month period in 2006-2007, an estimated $178 million was garnished from bank accounts that included Social Security benefits, the administration’s inspector general said.
Sen. Herb Kohl, D-Wisc., chairman of the Senate Special Committee on Aging, and other lawmakers have introduced legislation that would stop further promotion of the direct deposit programs for Social Security and veterans’ benefits until the Treasury Department issues rules to protect the benefits from creditors.
by the associated press
The Obama administration now is promising action but has offered no timetable for developing the new rules.
Federal law has long protected Social Security and veterans’ benefits from most creditors, with a few exceptions for child support, alimony, unpaid federal taxes and debts to other federal agencies. But creditors have been seizing the payments by getting court orders to freeze and garnishee bank accounts that receive direct deposits. Over a 12-month period in 2006-2007, an estimated $178 million was garnished from bank accounts that included Social Security benefits, the administration’s inspector general said.
Sen. Herb Kohl, D-Wisc., chairman of the Senate Special Committee on Aging, and other lawmakers have introduced legislation that would stop further promotion of the direct deposit programs for Social Security and veterans’ benefits until the Treasury Department issues rules to protect the benefits from creditors.
by the associated press
Saturday, May 30, 2009
Bullet train peaks Obama and U.S. interest
MADRID — Spain showed off its bullet train system Friday, giving the U.S. transportation secretary a firsthand glimpse of the high-speed rail grid that President Barack Obama has praised as a model for America.
U.S. Transportation Secretary Ray LaHood boarded a train at Madrid’s Atocha station along with Spanish Development Minister Jose Blanco for an hour-and-a-quarter trip to Zaragoza, a stop on the line heading to Barcelona.
LaHood has been touring Europe this week, riding a TGV bullet-train in France and attending a transportation conference in Germany that also featured officials from the German railway system, Deutsche Bahn.
Obama last month unveiled an $8 billion plan to build a high-speed rail network in the U.S. and upgrade existing services. The U.S. president cited Spain, France, China and Japan as countries with systems for his nation to emulate.
LaHood also was to tour a railway control center in Zaragoza, then return to Madrid, where he meets Saturday with Spanish business leaders and Prime Minister Jose Luis Rodriguez Zapatero.
Spain has become a leader in high-speed rail travel since inaugurating its first AVE line in 1992, from Madrid to Seville. The route has been a huge success, largely replacing road and air travel to the largest city in the southern Andalusia region.
The line to Barcelona, the latest to be completed, gets travelers to Spain’s second-largest city in less than three hours compared to a drive of about six hours. By plane, the trip takes about an hour, not including time to get to the airport and go through security.
Before the high speed rail service began in February 2008, air travelers to Barcelona surpassed train passengers by more than seven to one, but as of this January, the two groups were roughly equal in number, according to government statistics.
by the associated press
U.S. Transportation Secretary Ray LaHood boarded a train at Madrid’s Atocha station along with Spanish Development Minister Jose Blanco for an hour-and-a-quarter trip to Zaragoza, a stop on the line heading to Barcelona.
LaHood has been touring Europe this week, riding a TGV bullet-train in France and attending a transportation conference in Germany that also featured officials from the German railway system, Deutsche Bahn.
Obama last month unveiled an $8 billion plan to build a high-speed rail network in the U.S. and upgrade existing services. The U.S. president cited Spain, France, China and Japan as countries with systems for his nation to emulate.
LaHood also was to tour a railway control center in Zaragoza, then return to Madrid, where he meets Saturday with Spanish business leaders and Prime Minister Jose Luis Rodriguez Zapatero.
Spain has become a leader in high-speed rail travel since inaugurating its first AVE line in 1992, from Madrid to Seville. The route has been a huge success, largely replacing road and air travel to the largest city in the southern Andalusia region.
The line to Barcelona, the latest to be completed, gets travelers to Spain’s second-largest city in less than three hours compared to a drive of about six hours. By plane, the trip takes about an hour, not including time to get to the airport and go through security.
Before the high speed rail service began in February 2008, air travelers to Barcelona surpassed train passengers by more than seven to one, but as of this January, the two groups were roughly equal in number, according to government statistics.
by the associated press
Saturday, May 23, 2009
President Obama signs credit card fee law
WASHINGTON — President Barack Obama warned overeager shoppers and greedy credit card companies alike on Friday to act responsibly as he signed into law a bill designed to protect debt-ridden consumers from surprise charges.
The White House staged a signing ceremony in the Rose Garden, an indication of the legislation’s importance to Obama. Though the bill was opposed by many financial companies, it cleared Congress with broad support.
Obama made clear that he didn’t champion the changes with the intention of helping those who buy more than they can afford through "reckless spending or wishful thinking.”
"Some get in over their heads by not using their heads,” the president said. "I want to be clear: We do not excuse or condone folks who’ve acted irresponsibly.”
And yet, he said, for many of the millions of Americans, trying to get out of debt has been made difficult and bewildering by credit card companies.
Gun amendment
Nearly 80 percent of Americans have credit cards and half of those carry a balance, according to the White House. The Federal Reserve estimates the nation is some $2.5 trillion in debt, a figure that does not include home mortgages.
Obama said many people have gotten "trapped” because of the economy. But, he said, "part of it is the practices of the credit card companies.”
He criticized such policies that allowed for confusing fine print; the sudden appearance of unexplained fees on bills; unannounced shifts in payment deadlines, interest charges or rate increases even when payments aren’t late; and payments directed to balances with the lowest interest rates rather than the highest.
One part of the bill Obama did not celebrate at the signing, a gun amendment. The measure by Sen. Tom Coburn, R-Muskogee, allows people to bring loaded guns into national parks and wildlife refuges.
The addition of the amendment to the bill — and Obama’s acceptance of it — was viewed as a bitter disappointment for gun-control advocates.
They watched gun-rights supporters gain a victory from a Democratic-controlled Congress and a Democratic president that they couldn’t achieve under a Republican Congress and president. Many blamed the National Rifle Association, which pushed hard for the gun law.
Democrats lawmakers and aides said they didn’t have enough time to send the bill to the House-Senate conference committee and still get the bill to Obama by the Memorial Day weekend as he requested.
by the associated press
The White House staged a signing ceremony in the Rose Garden, an indication of the legislation’s importance to Obama. Though the bill was opposed by many financial companies, it cleared Congress with broad support.
Obama made clear that he didn’t champion the changes with the intention of helping those who buy more than they can afford through "reckless spending or wishful thinking.”
"Some get in over their heads by not using their heads,” the president said. "I want to be clear: We do not excuse or condone folks who’ve acted irresponsibly.”
And yet, he said, for many of the millions of Americans, trying to get out of debt has been made difficult and bewildering by credit card companies.
Gun amendment
Nearly 80 percent of Americans have credit cards and half of those carry a balance, according to the White House. The Federal Reserve estimates the nation is some $2.5 trillion in debt, a figure that does not include home mortgages.
Obama said many people have gotten "trapped” because of the economy. But, he said, "part of it is the practices of the credit card companies.”
He criticized such policies that allowed for confusing fine print; the sudden appearance of unexplained fees on bills; unannounced shifts in payment deadlines, interest charges or rate increases even when payments aren’t late; and payments directed to balances with the lowest interest rates rather than the highest.
One part of the bill Obama did not celebrate at the signing, a gun amendment. The measure by Sen. Tom Coburn, R-Muskogee, allows people to bring loaded guns into national parks and wildlife refuges.
The addition of the amendment to the bill — and Obama’s acceptance of it — was viewed as a bitter disappointment for gun-control advocates.
They watched gun-rights supporters gain a victory from a Democratic-controlled Congress and a Democratic president that they couldn’t achieve under a Republican Congress and president. Many blamed the National Rifle Association, which pushed hard for the gun law.
Democrats lawmakers and aides said they didn’t have enough time to send the bill to the House-Senate conference committee and still get the bill to Obama by the Memorial Day weekend as he requested.
by the associated press
Thursday, May 21, 2009
Obama signs mortgage legislation bill
WASHINGTON — President Barack Obama has signed into law legislation that encourages banks to spare homeowners from foreclosure.
Obama signed the bill Wednesday in the White House’s East Room. He says it protects homeowners and cracks down on lenders who take advantage of them.
The law expands an existing $300 billion program that encourages lenders to adjust a mortgage if the homeowner agrees to pay an insurance premium.
The bill also extends through 2013 an increase in deposit insurance by the FDIC from $100,000 to $250,000.
The lending industry helped scuttle a tougher measure that would have forced lenders to reduce the monthly payments of owners in bankruptcy.
by the associated press
Obama signed the bill Wednesday in the White House’s East Room. He says it protects homeowners and cracks down on lenders who take advantage of them.
The law expands an existing $300 billion program that encourages lenders to adjust a mortgage if the homeowner agrees to pay an insurance premium.
The bill also extends through 2013 an increase in deposit insurance by the FDIC from $100,000 to $250,000.
The lending industry helped scuttle a tougher measure that would have forced lenders to reduce the monthly payments of owners in bankruptcy.
by the associated press
Obama’s watchdog plan may not hunt
WASHINGTON — The head of the Securities and Exchange Commission is objecting to a plan being weighed by the Obama administration to create a financial watchdog for consumers that would assume oversight of mutual funds.
The SEC chief’s split with the administration shows how hard it may be for a broad overhaul of financial rules to overcome turf wars among various regulators and for a consensus to be reached on Capitol Hill.
SEC Chairman Mary Schapiro on Wednesday said she opposed the plan discussed Tuesday night by Treasury Secretary Timothy Geithner and other administration officials that would chip away at the SEC’s own powers. She said giving any new entity authority over mutual funds would lessen the government’s protection of investors — her agency’s core mission.
Many of the SEC’s responsibilities — companies’ financial disclosures, shareholder rights, stock trading, brokerage firm practices and mutual funds — involve investor protection, Schapiro said.
"So it’s not a discrete thing that gets moved away without really damaging the fabric of the entire investor protection regime,” she said.
About the plan
The plan the administration is weighing would centralize the enforcement of laws that protect consumers of financial products like credit cards, mortgages and mutual funds. That mission is now spread across a patchwork of federal and state agencies, including the SEC, Federal Reserve and Federal Trade Commission.
Any changes to the nation’s financial oversight would require congressional action. And it’s unclear whether lawmakers will unite behind a single approach this year.
Schapiro’s comments marked her first sharp public breach with the administration over an overhaul of rules designed to prevent another financial crisis. Schapiro in recent weeks has told Congress, which is debating the changes, that she thinks the SEC must play a key role as an independent watchdog protecting investors in any new regulatory system.
By contrast, the White House leans toward recommending that the Fed alone become a new supercop for financial companies that could set off another meltdown.
Schapiro says she’s concerned about an "excessive concentration of power” over financial risk in any single agency.
Lawmakers are divided.
by the associated press
The SEC chief’s split with the administration shows how hard it may be for a broad overhaul of financial rules to overcome turf wars among various regulators and for a consensus to be reached on Capitol Hill.
SEC Chairman Mary Schapiro on Wednesday said she opposed the plan discussed Tuesday night by Treasury Secretary Timothy Geithner and other administration officials that would chip away at the SEC’s own powers. She said giving any new entity authority over mutual funds would lessen the government’s protection of investors — her agency’s core mission.
Many of the SEC’s responsibilities — companies’ financial disclosures, shareholder rights, stock trading, brokerage firm practices and mutual funds — involve investor protection, Schapiro said.
"So it’s not a discrete thing that gets moved away without really damaging the fabric of the entire investor protection regime,” she said.
About the plan
The plan the administration is weighing would centralize the enforcement of laws that protect consumers of financial products like credit cards, mortgages and mutual funds. That mission is now spread across a patchwork of federal and state agencies, including the SEC, Federal Reserve and Federal Trade Commission.
Any changes to the nation’s financial oversight would require congressional action. And it’s unclear whether lawmakers will unite behind a single approach this year.
Schapiro’s comments marked her first sharp public breach with the administration over an overhaul of rules designed to prevent another financial crisis. Schapiro in recent weeks has told Congress, which is debating the changes, that she thinks the SEC must play a key role as an independent watchdog protecting investors in any new regulatory system.
By contrast, the White House leans toward recommending that the Fed alone become a new supercop for financial companies that could set off another meltdown.
Schapiro says she’s concerned about an "excessive concentration of power” over financial risk in any single agency.
Lawmakers are divided.
by the associated press
Wednesday, May 20, 2009
Credit card's change their charges , per Obama
WASHINGTON — The Senate voted overwhelmingly Tuesday to rein in credit card rate increases and excessive fees, hoping to give voters some breathing room amid a recession that has left hundreds of thousands of Americans jobless or facing foreclosure.
The House was on track to pass the measure as early as today, paving the way for President Barack Obama to see the bill on his desk by week’s end.
"This is a victory for every American consumer who has ever suffered at the hands of a credit card company,” said Sen. Christopher Dodd, D-Conn., chairman of the Banking Committee. The bill passed the Senate 90-5.
What would happen?
If enacted into law as expected, the credit card industry would have nine months to change the way it does business: Lenders would have to post their credit card agreements on the Internet and let customers pay their bills online or by phone without an added fee. They’d also have to give consumers a chance to spare themselves from over-the-limit fees and provide 45 days notice and an explanation before interest rates are increased.
Some of these changes are already on track to take effect in July 2010, under new rules being imposed by the Federal Reserve.
For example, the Senate bill requires those under 21 to prove first that they can repay the money or that a parent or guardian is willing to pay off their debt if they default.
More flexibility
The legislation would not cap interest rates as some lawmakers had hoped. It also wouldn’t prevent lenders from finding new ways to drain customers’ bank accounts or keep consumers from spending money they don’t have.
But it would give spenders more flexibility and outlaw many of the surprise costs associated with credit cards at a time when money is tight in most households. For example, under the bill, a cardholder would have to opt to be allowed to go over a credit limit. If customers don’t agree and the bank authorizes a charge that would push them over their limit, the lender couldn’t levy an over-limit fee.
The banking industry opposed the overall measure and said it could restrict credit at a time when Americans need it most. Banking officials defended their existing interest rates and fees on grounds that their business is very risky.
‘Universal default’
Another boon for consumers in the pending credit card bill is limiting a practice known as "universal default,” when a lender sharply increases a cardholder’s interest rate on an existing balance because the customer is late paying that bill or other, unrelated bills. Under the new legislation, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance.
Even then, the credit card company would be required to restore the previous, lower rate after six months if the cardholder pays the minimum balance on time.
by the associated press
The House was on track to pass the measure as early as today, paving the way for President Barack Obama to see the bill on his desk by week’s end.
"This is a victory for every American consumer who has ever suffered at the hands of a credit card company,” said Sen. Christopher Dodd, D-Conn., chairman of the Banking Committee. The bill passed the Senate 90-5.
What would happen?
If enacted into law as expected, the credit card industry would have nine months to change the way it does business: Lenders would have to post their credit card agreements on the Internet and let customers pay their bills online or by phone without an added fee. They’d also have to give consumers a chance to spare themselves from over-the-limit fees and provide 45 days notice and an explanation before interest rates are increased.
Some of these changes are already on track to take effect in July 2010, under new rules being imposed by the Federal Reserve.
For example, the Senate bill requires those under 21 to prove first that they can repay the money or that a parent or guardian is willing to pay off their debt if they default.
More flexibility
The legislation would not cap interest rates as some lawmakers had hoped. It also wouldn’t prevent lenders from finding new ways to drain customers’ bank accounts or keep consumers from spending money they don’t have.
But it would give spenders more flexibility and outlaw many of the surprise costs associated with credit cards at a time when money is tight in most households. For example, under the bill, a cardholder would have to opt to be allowed to go over a credit limit. If customers don’t agree and the bank authorizes a charge that would push them over their limit, the lender couldn’t levy an over-limit fee.
The banking industry opposed the overall measure and said it could restrict credit at a time when Americans need it most. Banking officials defended their existing interest rates and fees on grounds that their business is very risky.
‘Universal default’
Another boon for consumers in the pending credit card bill is limiting a practice known as "universal default,” when a lender sharply increases a cardholder’s interest rate on an existing balance because the customer is late paying that bill or other, unrelated bills. Under the new legislation, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance.
Even then, the credit card company would be required to restore the previous, lower rate after six months if the cardholder pays the minimum balance on time.
by the associated press
Obama changes state of American driving
DETROIT — Some soccer moms will have to give up hulking SUVs. Carpenters still will haul materials around in pickups, but they will cost more. Nearly everybody else will drive smaller vehicles, and more of them will be powered by electricity.
The higher mileage and emissions standards set by the Obama administration Tuesday, which will begin to take effect in 2012 and are to be achieved by 2016, will transform the American car and truck fleet.
The new rules would bring new cars and trucks sold in the United States to an average of 35.5 miles per gallon, about 10 mpg more than today’s standards. Passenger cars will be required to get 39 mpg and light trucks 30 mpg.
That means cars and trucks on American roads will have to become smaller, lighter and more efficient.
Will drivers buy it?
Eric Fedewa, vice president of global powertrain forecasting for the auto consulting firm CSM Worldwide in Northville, Mich., said the changes will make pickups so much more expensive that they will be used almost exclusively for work.
And instead of a minivan or sport utility vehicle, more parents will haul their families in much smaller vehicles with three rows of seats — something more like the Mazda 5 small van, he said. The Mazda 5 gets about 28 mpg on the highway. "I think what you’ll see is a lot more creativity in interior packaging,” Fedewa said. "You’ll get more rows of seats where you traditionally had cargo space.”
Already on Tuesday, some drivers were skeptical. Dixie Bishop, who runs a plumbing business in San Antonio that uses vans, worries the new requirements will drive up her costs at a time when customers are cutting back on having repairs done.
"Are they going to take my horsepower down?” she asked. "I have to be able to carry old water heaters and toilets. It’s not beneficial for me to haul one water heater at a time. We need the power to pull these heavy items.”
What will change?
The changes will start with smaller cars and trucks and improvements to the internal combustion engine, Fedewa said. Automakers already are working on new technology, including direct fuel injection and high compression of the air-fuel mixture, that will make cars and trucks more efficient.
Car companies are rewiring vehicles so components such as air conditioners and power-steering pumps are powered by electricity rather than by the engine, saving fuel.
And they’re developing computer-controlled transmissions with six or more gears, improving efficiency, and rolling out more gas-electric hybrids — among the few vehicles sold today that meet the 2016 standards.
Of course, developing the technology will cost money — billions of dollars — and automakers probably will pass those costs on to their customers.
The Obama administration says the changes mean the average vehicle would cost about $1,300 more, although some private analysts say the increase will be much heftier. The administration says gas savings will make up the difference in.
by the associated press
The higher mileage and emissions standards set by the Obama administration Tuesday, which will begin to take effect in 2012 and are to be achieved by 2016, will transform the American car and truck fleet.
The new rules would bring new cars and trucks sold in the United States to an average of 35.5 miles per gallon, about 10 mpg more than today’s standards. Passenger cars will be required to get 39 mpg and light trucks 30 mpg.
That means cars and trucks on American roads will have to become smaller, lighter and more efficient.
Will drivers buy it?
Eric Fedewa, vice president of global powertrain forecasting for the auto consulting firm CSM Worldwide in Northville, Mich., said the changes will make pickups so much more expensive that they will be used almost exclusively for work.
And instead of a minivan or sport utility vehicle, more parents will haul their families in much smaller vehicles with three rows of seats — something more like the Mazda 5 small van, he said. The Mazda 5 gets about 28 mpg on the highway. "I think what you’ll see is a lot more creativity in interior packaging,” Fedewa said. "You’ll get more rows of seats where you traditionally had cargo space.”
Already on Tuesday, some drivers were skeptical. Dixie Bishop, who runs a plumbing business in San Antonio that uses vans, worries the new requirements will drive up her costs at a time when customers are cutting back on having repairs done.
"Are they going to take my horsepower down?” she asked. "I have to be able to carry old water heaters and toilets. It’s not beneficial for me to haul one water heater at a time. We need the power to pull these heavy items.”
What will change?
The changes will start with smaller cars and trucks and improvements to the internal combustion engine, Fedewa said. Automakers already are working on new technology, including direct fuel injection and high compression of the air-fuel mixture, that will make cars and trucks more efficient.
Car companies are rewiring vehicles so components such as air conditioners and power-steering pumps are powered by electricity rather than by the engine, saving fuel.
And they’re developing computer-controlled transmissions with six or more gears, improving efficiency, and rolling out more gas-electric hybrids — among the few vehicles sold today that meet the 2016 standards.
Of course, developing the technology will cost money — billions of dollars — and automakers probably will pass those costs on to their customers.
The Obama administration says the changes mean the average vehicle would cost about $1,300 more, although some private analysts say the increase will be much heftier. The administration says gas savings will make up the difference in.
by the associated press
Thursday, May 14, 2009
Energy pushed to explain role
HOUSTON — The U.S. oil and gas industry, facing greater regulation and heavier taxes at home, must do a better job of explaining its vital role in the global economy’s future, the chief of the nation’s third-largest oil company said Wednesday. Jim Mulva, speaking at ConocoPhillips’ annual shareholder meeting, said he understands the emphasis on renewable energy as President Barack Obama shapes his energy roadmap.
But making it more difficult for companies such as Conoco to find and produce new sources of crude and natural gas doesn’t make sense, he said. Mulva noted that fossil fuels will provide 80 percent of the world’s energy needs for years.
wire reports
But making it more difficult for companies such as Conoco to find and produce new sources of crude and natural gas doesn’t make sense, he said. Mulva noted that fossil fuels will provide 80 percent of the world’s energy needs for years.
wire reports
Tuesday, May 12, 2009
Obastands behind stimulus claim
WASHINGTON — The Obama administration is defending its claim that the $787 billion economic stimulus plan will save or create 3.5 million jobs before 2011 even while conceding that unemployment will likely continue to rise beyond its earlier predictions.
A report Monday by the White House Council of Economic Advisers said the projections were based on conservative estimates and widely accepted assumptions.
The 3.5 million job estimate remains valid, the report said, now that stimulus money is starting to pay for various projects throughout the nation.
The assessment was the same as what Obama’s economists forecast in January, when they predicted that the economic stimulus would prevent unemployment from rising above 8 percent. But unemployment reached 8.9 percent in April and the chairwoman of the Council of Economic Advisers, Christina Romer, said over the weekend that current predictions that unemployment would reach 9.5 percent were "pretty realistic".
by the associated press
A report Monday by the White House Council of Economic Advisers said the projections were based on conservative estimates and widely accepted assumptions.
The 3.5 million job estimate remains valid, the report said, now that stimulus money is starting to pay for various projects throughout the nation.
The assessment was the same as what Obama’s economists forecast in January, when they predicted that the economic stimulus would prevent unemployment from rising above 8 percent. But unemployment reached 8.9 percent in April and the chairwoman of the Council of Economic Advisers, Christina Romer, said over the weekend that current predictions that unemployment would reach 9.5 percent were "pretty realistic".
by the associated press
Sunday, May 10, 2009
Meltdown
WASHINGTON — The White House told industry officials Friday that it is leaning toward recommending that the Federal Reserve become the supercop for "too big to fail” companies capable of causing another financial meltdown.
The officials said the administration made it clear in a recent meeting that it was not inclined to divide the job among various regulators
as has been suggested by industry and some federal regulators.
by the associated press
The officials said the administration made it clear in a recent meeting that it was not inclined to divide the job among various regulators
as has been suggested by industry and some federal regulators.
by the associated press
Saturday, May 9, 2009
Changes will affect unemployment checks, education
WASHINGTON — President Barack Obama wants unemployment insurance to become a stepping stone for future work by making it easier to enroll in school or job training.
Whether he succeeds will depend on the willingness of states and colleges to change the rules.
People who have been laid off and want to go back to school often have to give up their monthly unemployment checks.
If the unemployed people decide to return to school, they often don’t qualify for federal aid because eligibility is based upon the previous year’s income.
Under rule changes Obama outlined Friday, the Labor Department will ask states to make exceptions during economic downturns so that the unemployed can keep their benefits if they go to community college or pursue other education or training.
State governments, not Washington, decide who is eligible for unemployment, and they generally require anyone collecting assistance to be actively looking for work. That can complicate plans to attend school.
The Education Department, meanwhile, will encourage colleges to factor in the financial situation of an unemployed person applying for Pell Grants or other education and job training aid. Starting in July, the maximum Pell Grant, which helps low-income students afford college, will receive a $500 boost to $5,350.
by the associated press
Whether he succeeds will depend on the willingness of states and colleges to change the rules.
People who have been laid off and want to go back to school often have to give up their monthly unemployment checks.
If the unemployed people decide to return to school, they often don’t qualify for federal aid because eligibility is based upon the previous year’s income.
Under rule changes Obama outlined Friday, the Labor Department will ask states to make exceptions during economic downturns so that the unemployed can keep their benefits if they go to community college or pursue other education or training.
State governments, not Washington, decide who is eligible for unemployment, and they generally require anyone collecting assistance to be actively looking for work. That can complicate plans to attend school.
The Education Department, meanwhile, will encourage colleges to factor in the financial situation of an unemployed person applying for Pell Grants or other education and job training aid. Starting in July, the maximum Pell Grant, which helps low-income students afford college, will receive a $500 boost to $5,350.
by the associated press
Thursday, May 7, 2009
Slow recovery
WASHINGTON (AP) -- Barack Obama's budget, unveiled with fanfare on Thursday, fails to deal with his biggest money problems.
A molasses-slow economic recovery will make it hard to find the huge sums he'll need to reach his biggest goals - fixing health care, confronting climate change and overhauling the tax system - without much deeper cuts than he's proposing in other programs.
Obama faces not only fiscal obstacles but political ones, as well.
The White House's exercise in fiscal discipline this week amounts to micro-cutting - proposals that would trim half a percent of the overall budget - and don't address the sacrosanct entitlements of Social Security and Medicare. His effort found a scant $17 billion in potential savings, suggesting that only a strong economy and its boost in government revenue can truly put a dent in the federal deficit and pay for Obama's policy goals.
Pushing an ambitious agenda during a tepid economic rebound will require money and presidential muscle that even the popular president might find in short supply.
In just two months, the recession has proven to be deeper than the White House predicted when Obama submitted his 2010 budget outline. His budget writers in February forecast that the economy, as measured by gross domestic product, would shrink by 1.2 percent this year and then grow by a relatively robust 3.2 percent in 2010. But the economy contracted by 6.1 percent in the first quarter, and economists inside and outside the government predict another, though smaller, contraction in the second quarter.
Likewise, the White House anticipated unemployment of 8.1 percent this year and slightly less next year. But unemployment is already at a 25-year high of 8.5 percent and is expected to climb when new numbers are announced Friday.
A slow recovery heading into the 2010 midterm congressional elections will probably make Democratic lawmakers especially cautious. What does that mean for the president's agenda?
"It doesn't improve chances," said Sen. Ben Nelson of Nebraska, a moderate Democrat. "It might dampen some enthusiasm about trying to find a health care solution that costs money."
Over the first 100 days of Obama's presidency, the nation has shown patience with his approach toward the economy. Over time, the public will watch three key numbers - unemployment, the stock market and the deficit.
In the short term, only the stock market might offer some relief as workers could see value return to their 401(k) accounts. But unemployment could reach 10 percent next year, according to some estimates. And the deficit, which the administration has predicted will reach nearly $1.2 trillion, will dip only to $533 billion in 2013, according to the president's own February projections. In March, the Congressional Budget Office offered a bleaker prediction - a deficit of $672 billion in 2013 under the president's policies.
The latest Associated Press-GfK poll shows that 41 percent of those surveyed disapproved of Obama's handling of the deficit, his highest disapproval rating on any subject polled. Other surveys show that the public is particularly attuned to government spending and the amount of red ink in the budget, a sign of restlessness that could pose a problem ahead.
Obama would like to couple the ideas of deficit-cutting and health care overhaul. He says the overhaul - costing more than $630 billion over 10 years - is the answer to spiraling costs in Medicare and Medicaid.
"The big ticket, that's health care," said Jared Bernstein, Vice President Joe Biden's chief economist. "That's where some of our real savings come from in the longer term."
As for the economy, Federal Reserve Chairman Ben Bernanke predicted it would begin growing again this year, citing improved home sales, increased consumer spending and signs of improved lending conditions.
But he said activity would remain below normal and "only gradually gain momentum." Unemployment, which typically lags behind a recovery, "could remain high for a time, even after economic growth resumes," he said. In a private luncheon, he told Senate Republicans that he projected 2 percent GDP growth in 2010, according to Sen. John Ensign, R-Nev.
That assessment reinforces the "glimmers of hope" with which Obama and his team have begun to promote the economy. But it also underscores the difficulties Obama will have persuading Congress, even one dominated by his party, to put new potential stresses on the economy while it is still getting back on its feet.
"The problem, the challenge for the administration, is they don't just need tolerance or slack from the public, they need sufficient support to drive very difficult policies through Congress," said Robert Shapiro, a former adviser to President Bill Clinton and now chairman of Sonecon, an economic advisory firm.
The economy may well not cooperate.
Analysts often talk about a U-shaped recovery, where the economy moves strongly upward after a bottom-dwelling period. But this recovery, as described by John Silvia, chief economist at Wachovia Corp., could look more like a Nike swoosh, with only a gradual rise back to normal.
White House budget chief Peter Orszag on Thursday said the administration saw no need to adjust its ambitions based on a changing economic picture.
"We have not changed policies," he said. "There are a whole variety of proposals that we put forward in February. The world has evolved a bit since then. We have incorporated those proposals in the new document as a matter of principle."
by the associated press
A molasses-slow economic recovery will make it hard to find the huge sums he'll need to reach his biggest goals - fixing health care, confronting climate change and overhauling the tax system - without much deeper cuts than he's proposing in other programs.
Obama faces not only fiscal obstacles but political ones, as well.
The White House's exercise in fiscal discipline this week amounts to micro-cutting - proposals that would trim half a percent of the overall budget - and don't address the sacrosanct entitlements of Social Security and Medicare. His effort found a scant $17 billion in potential savings, suggesting that only a strong economy and its boost in government revenue can truly put a dent in the federal deficit and pay for Obama's policy goals.
Pushing an ambitious agenda during a tepid economic rebound will require money and presidential muscle that even the popular president might find in short supply.
In just two months, the recession has proven to be deeper than the White House predicted when Obama submitted his 2010 budget outline. His budget writers in February forecast that the economy, as measured by gross domestic product, would shrink by 1.2 percent this year and then grow by a relatively robust 3.2 percent in 2010. But the economy contracted by 6.1 percent in the first quarter, and economists inside and outside the government predict another, though smaller, contraction in the second quarter.
Likewise, the White House anticipated unemployment of 8.1 percent this year and slightly less next year. But unemployment is already at a 25-year high of 8.5 percent and is expected to climb when new numbers are announced Friday.
A slow recovery heading into the 2010 midterm congressional elections will probably make Democratic lawmakers especially cautious. What does that mean for the president's agenda?
"It doesn't improve chances," said Sen. Ben Nelson of Nebraska, a moderate Democrat. "It might dampen some enthusiasm about trying to find a health care solution that costs money."
Over the first 100 days of Obama's presidency, the nation has shown patience with his approach toward the economy. Over time, the public will watch three key numbers - unemployment, the stock market and the deficit.
In the short term, only the stock market might offer some relief as workers could see value return to their 401(k) accounts. But unemployment could reach 10 percent next year, according to some estimates. And the deficit, which the administration has predicted will reach nearly $1.2 trillion, will dip only to $533 billion in 2013, according to the president's own February projections. In March, the Congressional Budget Office offered a bleaker prediction - a deficit of $672 billion in 2013 under the president's policies.
The latest Associated Press-GfK poll shows that 41 percent of those surveyed disapproved of Obama's handling of the deficit, his highest disapproval rating on any subject polled. Other surveys show that the public is particularly attuned to government spending and the amount of red ink in the budget, a sign of restlessness that could pose a problem ahead.
Obama would like to couple the ideas of deficit-cutting and health care overhaul. He says the overhaul - costing more than $630 billion over 10 years - is the answer to spiraling costs in Medicare and Medicaid.
"The big ticket, that's health care," said Jared Bernstein, Vice President Joe Biden's chief economist. "That's where some of our real savings come from in the longer term."
As for the economy, Federal Reserve Chairman Ben Bernanke predicted it would begin growing again this year, citing improved home sales, increased consumer spending and signs of improved lending conditions.
But he said activity would remain below normal and "only gradually gain momentum." Unemployment, which typically lags behind a recovery, "could remain high for a time, even after economic growth resumes," he said. In a private luncheon, he told Senate Republicans that he projected 2 percent GDP growth in 2010, according to Sen. John Ensign, R-Nev.
That assessment reinforces the "glimmers of hope" with which Obama and his team have begun to promote the economy. But it also underscores the difficulties Obama will have persuading Congress, even one dominated by his party, to put new potential stresses on the economy while it is still getting back on its feet.
"The problem, the challenge for the administration, is they don't just need tolerance or slack from the public, they need sufficient support to drive very difficult policies through Congress," said Robert Shapiro, a former adviser to President Bill Clinton and now chairman of Sonecon, an economic advisory firm.
The economy may well not cooperate.
Analysts often talk about a U-shaped recovery, where the economy moves strongly upward after a bottom-dwelling period. But this recovery, as described by John Silvia, chief economist at Wachovia Corp., could look more like a Nike swoosh, with only a gradual rise back to normal.
White House budget chief Peter Orszag on Thursday said the administration saw no need to adjust its ambitions based on a changing economic picture.
"We have not changed policies," he said. "There are a whole variety of proposals that we put forward in February. The world has evolved a bit since then. We have incorporated those proposals in the new document as a matter of principle."
by the associated press
Tuesday, May 5, 2009
Obama wants tax code change to keep more funds in U.S.
WASHINGTON — President Barack Obama vowed Monday to "detect and pursue” American tax evaders and go after their offshore tax shelters.
In announcing a series of steps aimed at overhauling the U.S. tax code, the president complained that existing law makes it possible to "pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York. "
The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home and called for more transparency in bank accounts that Americans hold in notorious tax havens such as the Cayman Islands.
"If financial institutions won’t cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly,” Obama said.
The president, who hammered on this issue during his campaign for the White House, said his plan would generate $210 billion in new taxes over 10 years and "make it easier” for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in a federal deficit expected to swell to $1.2 trillion in 2010.
Under the plan, companies would not be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.
He said the government also is hiring nearly 800 new IRS agents to enforce the U.S. tax code.
Congress is expected to resist significant portions of Obama’s plan.
The administration is not seeking to repeal all overseas tax benefits. Obama called his proposal "a down payment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations.”
"Nobody likes paying taxes, particularly in times of economic stress,” the president said. The current code, he said, makes it too easy for "a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all.”
by the associated press
In announcing a series of steps aimed at overhauling the U.S. tax code, the president complained that existing law makes it possible to "pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York. "
The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home and called for more transparency in bank accounts that Americans hold in notorious tax havens such as the Cayman Islands.
"If financial institutions won’t cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly,” Obama said.
The president, who hammered on this issue during his campaign for the White House, said his plan would generate $210 billion in new taxes over 10 years and "make it easier” for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in a federal deficit expected to swell to $1.2 trillion in 2010.
Under the plan, companies would not be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.
He said the government also is hiring nearly 800 new IRS agents to enforce the U.S. tax code.
Congress is expected to resist significant portions of Obama’s plan.
The administration is not seeking to repeal all overseas tax benefits. Obama called his proposal "a down payment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations.”
"Nobody likes paying taxes, particularly in times of economic stress,” the president said. The current code, he said, makes it too easy for "a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all.”
by the associated press
Sunday, May 3, 2009
Preparing Taxes next year , some might be Shocked
WASHINGTON — Millions of Americans enjoying their small windfall from President Barack Obama’s "Making Work Pay” tax credit are in for an unpleasant surprise next spring.
The government is going to want some of that money back.
The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.
But new tax withholding tables issued by the IRS could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that will have to be repaid at tax time.
At-risk taxpayers include a broad swath of the public: married couples in which both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.
The Internal Revenue Service acknowledges problems with the withholding tables but has done little to warn average taxpayers.
"They need to get the Goodyear blimp out there on this,” said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.
For many, the new tax tables will simply mean s m a l l e r - t h a n - e x p e c t e d tax refunds next year, IRS spokesman Terry Lemons said. The average refund was nearly $2,700 this year.
But taxpayers who calculate their withholding so they get only small refunds could face an unwelcome tax bill next April, said Jackie Perlman, an analyst with the Tax Institute at H&R Block.
"They are going to get a surprise,” she said.
Perlman’s advice: Check your federal withholding to make sure sufficient taxes are being taken out of your pay.
If you are married and both spouses work, you might consider having taxes withheld at the higher rate for single filers.
If you have multiple jobs, you might consider having extra taxes withheld by one of your employers.
The IRS has a calculator on its Web site to help taxpayers figure withholding. So do many private tax preparers.
by associated press
The government is going to want some of that money back.
The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.
But new tax withholding tables issued by the IRS could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that will have to be repaid at tax time.
At-risk taxpayers include a broad swath of the public: married couples in which both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.
The Internal Revenue Service acknowledges problems with the withholding tables but has done little to warn average taxpayers.
"They need to get the Goodyear blimp out there on this,” said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.
For many, the new tax tables will simply mean s m a l l e r - t h a n - e x p e c t e d tax refunds next year, IRS spokesman Terry Lemons said. The average refund was nearly $2,700 this year.
But taxpayers who calculate their withholding so they get only small refunds could face an unwelcome tax bill next April, said Jackie Perlman, an analyst with the Tax Institute at H&R Block.
"They are going to get a surprise,” she said.
Perlman’s advice: Check your federal withholding to make sure sufficient taxes are being taken out of your pay.
If you are married and both spouses work, you might consider having taxes withheld at the higher rate for single filers.
If you have multiple jobs, you might consider having extra taxes withheld by one of your employers.
The IRS has a calculator on its Web site to help taxpayers figure withholding. So do many private tax preparers.
by associated press
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