Archive for Politics

Government Shutdown Hoedown: Answers To Your Most Pressing Questions

Pictured: The emotions of pretty much every American right now

It finally happened. Congress couldn’t agree on a budget in time, and now the government shut down is in effect. Some of you reading this may feel frightened, others may salivating at the thought of pure sweet anarchy. Either way, if you’re an American citizen you probably have a lot of questions about what a government shut down is and what it actually means. Don’t fret, ROI-Zone is here to help quell your fears and answer your biggest questions.

We’ll leave quietly Ms. Fergie

Why is the government even arguing about a budget in October? Shouldn’t this shut down have happened on January 1st or something?

The timing of the shutdown may seem strange to the majority of us, but it makes perfect sense to people who work for Uncle Sam. You see, the government’s fiscal year doesn’t follow the usual year marks we’re used to. For reasons no one really understands, the government’s fiscal year starts on October 1st and ends on September 30th. Usually the government has a yearly budget ready to go by the end of September, but that didn’t happen this year.

WUT

Wait a minute, if this is about a budget why is everybody screaming about Obamacare?

This is where it gets confusing. Essentially Republicans are very upset about certain stipulations in the Patient Protection and Affordable Care Act (the real non-partisan name for the health care law). Since the law requires that employers provide health insurance to their employees, the GOP believes that it’ll hurt small business owners and that the government shouldn’t be involved in how private businesses choose to handle insuring their employees.

The Patient Protection and Affordable Care Act pretty much has nothing to do with the budget, but because of political ideologies Republicans chose to incorporate their demands into the budgets they came up with. House Republicans insist that any new spending bill should include provisions to either make changes to the Patient Protection and Affordable Care Act, de-fund it, or take it away completely.

AUGH

How did this become such a bizarre mess?

Essentially the House of Representatives is controlled by republicans and the Senate is controlled by democrats. Republicans would pass something in the house, democrats would deny it in the senate, and the whole thing repeats over and over again. Both sides refused to budge on certain issues, and also failed to reach a compromise.

A whole lot of nothing

What happened over the past few days?

On Sunday morning the House passed two spending bills, one would delay the Patient Protection and Affordable Care Act for a year, and another would repeal the plan’s medical device tax. When the bills went to Senate on Monday they were rejected, which caused the House to approve another spending plan that would remove the individual mandate clause of the Patient Protection and Affordable Care Act. The Senate also rejected that plan. Both the House and the Senate failed to reach an agreement before the midnight deadline that day, and as a result the government shutdown went into effect at midnight on October 1st.

Luckily, the opera glasses industry is booming despite the shutdown

What happens now?

The Senate will meet again and probably decide if they want to negotiate with the House.  Senate majority leader Harry Reid said he wouldn’t consider meeting until the House strips the Patient Protection and Affordable Care Act amendments from the spending bill, so don’t expect a fast resolution.

It was a simpler, more innocent time for our nation

OMG has this ever happened before?!

In before times in the long long ago in the ancient and mystical year of 1995, the federal government experienced a shutdown. While Americans were enjoying TGIF and guzzling Fruitopia, democratic President Bill Clinton and the republican controlled Congress clashed over funding for Medicare, education, public health, and environmental programs. The government was shut down after Clinton vetoed the spending bill Congress sent him, and non-essential government workers were put on a furlough while non-essential government services were suspended. The shut down occurred from November 14 through November 19, 1995 and from December 16, 1995 to January 6, 1996, culminating to 28 days of government chaos.

We don’t even LIKE the EPA or FDA

So, who gets kicked out of their office?

Out of 3.3 million workers the government employs, only about 800,000 employees will be temporarily out of work. Most of the furloughed federal workers were supposed to be out of their offices four hours after the official start of the business day on October 1st.

Bye bye money :)

How is this going to affect the economy?

Depending on who you’re talking to, it’ll either barely have an affect or it’ll completely bring us to financial ruin. Most economists do agree that the affect it’ll have on the economy depends on how long it goes on for. Brain Kessler, an economist with Moody’s Analytics, estimates that a 3-4 week shut down could cost the economy about $55 billion.

Honestly, I just really wanted to use this gif

Is this going to affect me?

That kind of depends. National zoos, parks, and monuments will be shut down (there were a lot of confused and angry tourists at the Statue of Liberty Tuesday). Last time the shutdown occurred over 200,000 applications for passports went unprocessed, but according to the State Department that won’t happen this time. Social security recipients will still be receiving benefits, but people who are looking for federal money through loans will have to wait. The garbage men will still pick up your trash, but not if you live in DC since they currently don’t have a budget since that also must be approved by Congress. So the answer is, yes?

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Wal-Mart and DC City Council Wage Throw Down: A Story In GIFs

There was a little publicized law that DC passed that will either help raise the standard of living for the common man or doom DC citizens to a life of poverty  because they’ll lose interest from corporations.  This story can be best summarized in gifs:

The Washington DC city council has a bill called the Large Retailer Accountability Act.  The bill would require companies that make more than $1 billion in annual revenue to pay employees a raised minimum wage, $12.50 an hour instead of the regular $8.25.

Wal-Mart is the largest retailer in the world, and they’re notorious for their low wages and refusal to negotiate on wage matters.  They were planning on opening six new stores in the city (three of which are currently in construction) to bring some jobs and revenue to the area.

But when they heard about the proposed bill, they threatened to kill the deal unless the city council decided to abandon the bill.

Some economists worried that passing the bill could have negative consequences, mainly through lower property taxes, missing multiplier effects, and the abandoned sites where construction was stopped.

Others think it’ll have more positive consequences than negative ones since many people in the city will have a higher wage.

Either way, people from both sides of the issue were surprised when the council voted to pass the bill.

Some people think that DC made the best decision they could have, others think they didn’t think about the consequences of sending away big retailers.

Wal-Mart was the most vocal about the wage issue, but it’s possible that the bill won’t dissuade other box stores and lucrative retailers from coming to the city.

So now DC is all

 

And Wal-Mart is all

 

Regardless it doesn’t matter what either side thinks, since either way

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The Economics of Turkey

Unless you live under a rock (or live in Turkey and get your news from national broadcasters), you’re probably aware of the turmoil happening in Turkey right now.  What started off as a peaceful protest over a new shopping mall turned into a full blown rebellion, and now people are eagerly watching to see what’s going to happen next.

There are a lot of reasons why the Turkish people are protesting.  Their “democratic” country has been slowly shifting to a more conservative theocratic organization, and their leader has made a lot of questionable and potentially dangerous decisions.  People are talking a lot about the political reasons behind the protest, but are neglecting to talk about a big underlying reason of the current situation: the Turkish economy.

One of the reasons why Prime Minister Recep Tayyip Erdo?an has gotten more and more brazen with his political decisions has to do with the country’s somewhat recent economic expansion.  During the decade Erdogan has been in power the country has experienced an extraordinary period of economic growth.  This time period cemented Turkey’s status as the “model child” in the family of Islamic countries.  You see, Erdogan is backed by the Islamist Justice and Development Party, a powerful religious political party that came to power in 2002.  Most countries (mainly the US) were horrified when nearly a year after 9/11 there was another Islamic republic coming to power, and to their surprise absolutely nothing negative came from it.   When other countries were training terrorists and fighting over the good swing Turkey was quietly playing with legos while building up their economy.

When Erdogan was in power their out of control budget deficit and inflation problems drastically improved, their loans from the International Monetary Fund were paid off, and per capital income nearly tripled.  The older generation had never seen this much prosperity and supported Erdogan fiercely, and other countries were praising his efforts.

The flip-side of Erdogan’s rule isn’t nearly as sunny.  While some Turkish nationals praise his economic decisions, others argue that the Erdogan economy isn’t nearly as prosperous as they think it is.  Even though the purchasing power for most Turkish people has dramatically risen, many are in a lot of debt. There’s no doubt that the underlying reasons of the protest have more to do with political ideology than anything else, but the economy is one of the main things that has some Turkish people behind Erdogan

 

 

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A Watered Down Explanation of the Cyprus Financial Crisis

Up until Monday if you asked the average person what they think about the situation in Cyprus, you’d probably get a confused glance and accusations that Cyprus isn’t a real country.  Today people know that the Republic of Cyprus does indeed exist because this small island nation is about to screw up the world economy.  This all happened kind of fast, so it’s okay if you aren’t exactly sure what’s going.  That’s why you have ROIZone to give you the basics of the situation.

It’s no secret that the European Union and the euro have been pretty much screwed since 2008.  Austerity didn’t work out as well as people had hoped it would, and some countries have gone a little crazy because of the financial stress.  You got people in Spain and Bulgaria self-immolating in front of banks, and Greece seems to be slowly morphing into the Fourth Reich.  Things are bad all over, but Cyprus is going through its own special financial hell right now.

In September 2011 Cyprus’ credit rating was downgraded by every major credit rating agency, and it had a ripple effect that nobody planned for.  Island nations are great for off-shore banking, and some of the world’s ruling class had their money safely tucked away in Cyprian bank accounts to protect it from their home government’s greedy hands.  It would be a gross exaggeration to say that all of Cyprus’ money was tied up in off shore accounts, but it was enough to cause some problems.  After the downgrade the wealthy couldn’t withdraw their money fast enough, and that combined with the massive debt banks held from Cyprus’ own citizens sent their banking industry into a downward spiral.

Cyprus would have gone under if it wasn’t for the kindness of the Russian government.  In January 2012 the Russian government loaned the nation 2.5 billion euros (about $3.236 billion) because they’re just cool like that.  It has a relatively low interest rate and its good for 4 ½ years, and Cyprus expected to be able to bounce back by the first quarter of this year.    Unfortunately in June 2012 Moody’s and Fitch downgraded their credit rating to complete crap, and that rating officially disqualified them for being accepted as collateral by the European Central Bank.

daaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaamn

Actual shot of Putin rushing to save Cyprus (daaaaaaaaaaaaamn baby)

Cyprus spent the last months of 2012 and 2013 freaking the hell out, but last week it seemed like their troubles would be over.  The European Union and the International Monetary Fund agreed to a 10 billion euro deal with the country, allowing it to join the other European deadbeat countries of Portugal, Greece, Ireland, and Spain.  This hail-mary deal did come with a small stipulation.  Every bank deposit under 100,000 euros would have a levy of 6.7% imposed on them, and deposits that exceed that amount will have a 9.9% levy.

The bailout wasn’t met with much acclaim.  The Russian government isn’t happy.  EU countries aren’t happy.  The people of Cyprus aren’t happy, and since the bailout deal came to the table financial conditions have gotten worse in the country.  Businesses are refusing credit card payments, and as of today citizens haven’t had working banks in 11 days.

The powers that be in Cyprus and the EU are currently trying to hammer out a deal, and if you want to see how that’s going The Guardian has a great livestream of updates.  Until then all we can do is sit back and watch the financial explosion.

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The Economic State of the Union

It’s freedom time baby

Tonight Barack Obama will be giving his first State of the Union speech since his re-election in 2012, and people have been spending a lot of time trying to anticipate what the president will say about certain issues.  There are so many big issues that need to be addressed tonight, but it seems like the bulk of Obama’s speech will focus on the economy.

Rutgers recently did a thoroughly depressing survey on jobs, and they found that 80% of Americans (that’s a PDF file link) have either lost a job or have had a loved one lose a job in the past few years.  In just the past week three major world events occurred that could heavily affect the stock market, and right now the US is looking for some economic reassurance and TLC from the Barack-Star.

The impending address has caused a lot of people to wonder if Obama has been able to keep any of the big promises he has made since he was elected.  Obama may have utterly failed to keep his promises about the environment and prosecuting big bankers, but at least he’s been able to make things slightly less impossible for small business owners.

The Jumpstart Our Business Startups (JOBS) Act that was designed to legalize crowd funding and lift restrictions on how small businesses can raise money was passed in April, but it’s still too soon to see if it has had any major impact.  The HIRE Act has been very popular with small businesses because of the credits and social security tax breaks businesses receive for hiring employees.  And depending on whom you ask, the jury is still out on whether or not the Affordable Health Care act will cause financial problems for small business owners.

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Sandy Relief Bill Passed, Millions Still Wondering Why it Took Three Months to Do

In early January there was a lot of stuff going on for the House of Representatives.  For whatever reason they were expected to solve the fiscal problems their terrible decisions and political stubbornness caused, so they were

Actual picture of somebody being too busy

focusing on passing something to get the American people off of their backs.  Sometime around the end of December the Senate passed a $60 billion relief package for victims of Hurricane/Superstorm Sandy, but since there was a lot of stuff going on the House didn’t really have time to look it over.

On January 2nd John “The Weirdest” Boehner took time to politely explain that he totally intended to pass the relief bill in Congress, but since the House was super busy he was going to wait until the 113th Congress began.  His decision would mean that the Senate would have to draft and pass an entirely new bill for the 113th Congress, but since America is usually a pretty laid back guy he knew that he wouldn’t care.

Unfortunately Boehner wasn’t aware that America wasn’t as chill as he used to be.  America had thrown away his beer can collection, got a haircut, and was expecting the rest of his friends on the Hill to shape up and follow suit.

Come on America you used to be cool

It would be pretty unfair to claim that the Republican Party was solely responsible for the Sandy gaffe.  Even though quite a few Republicans felt pretty “meh” about helping Sandy victims, Peter “I Hate Foreigners” King (R-NY) and famously Chris “The Adonis” Christie (R-NJ) were pretty disgusted at the lack of action from the Hill.

To be fair some members of the House probably thought that their lack of action wouldn’t be noticed.  After all the country was sort of freaking out over the fiscal cliff, Obama’s re-election, and pop music loving teenage mothers, so they probably safely assumed that nobody would really care.  Unfortunately the thousands of Sandy victims who were homeless, bankrupt, and generally destroyed by the storm weren’t distracted by pop culture noise because they were more concerned with survival.  It literally took about a day for Boehner to say that he changed his mind and that they were going to vote on it soon.

After a few weeks of wondering why relief was taking so long, Barack Obama signed the Sandy relief bill into law on January 29th.  New Jersey’s   minority leader Steve “The Whiniest Liberal” Sweeney proposed a measure to appoint accountants and other officials to monitor the dispersal of the Sandy relief funds to ensure that they’re being used properly.  As you can imagine people are upset about this, but that is a blog post/rant for another day.

 

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One Coin to Rule Them All

Actual picture of proposed coin

So far January has been loaded with business news stories, and we haven’t even reached the middle of the month yet.  The US was (sorta) saved from going over the fiscal cliff, AIG nuked the 1% of respect it still had from Americans after threatening to sue to US over their bailout, and people are coming up with some very interesting solutions to the debt crisis. There are plenty of ways we could lessen our nation’s debt, but some people would rather have the government create a onetime use currency to get rid of our debt problems.

Despite what Fox News and your angry uncle who is threatened by minorities succeeding said, the trillion dollar coin plan was not thought up by White House officials.  As of right now nobody in the Obama administration has endorsed it.  Like most major news stories today, the coin speculation came from a couple of bloggers (some think the idea solely came from everybody’s favorite Anglo-Saxon monster slayer), and some have even been discussing the possibility to create a coin to wipe away national debt since 2009.

The internet deserves some credit for the potential trillion dollar plan, but the government helped give them the basis of their idea.  The plan was inspired by a little known law that was created in the 90s that allows the US Treasury to make and issue platinum coins.  This law was mainly created for the Treasury to hawk more useless collector’s coins, but since the language of the law has just the right amount of vague it also gives the Treasury the power to mint coins that are worth an insane amount of money.

Who still has their 50 state quarters collection? Who even bothered to finish the collection before they realized that collecting them was a stupid idea?

In theory the plan could work well.  The Treasury mints the coin, the trillion dollars are deposited in the Federal Reserve, and after it gets moved into the Treasury’s accounts we can all get back to some national fiscal irresponsibility.  CBS News reporter Leigh Ann Caldwell was able to sum up how the hypothetical coin could actually avoid causing any economic catastrophes:

The coin would have no economic impact; it would no cause inflation

The reason this idea is so out of left field is because the Federal Reserve is the entity responsible for printing money, and every dollar the Fed prints must be backed by Treasury bonds and counted toward the U.S. debt. But the Treasury’s printing of a trillion dollar coin would not have any connection to the debt. Because it would sit in a vault and not be part of the money supply and not backed by bonds, it would not skew the economic system and, therefore, can’t cause inflation. But because this coin is sitting in a vault and the Treasury Department determines that it’s worth $1 trillion, it is.

Determining the economic impacts of a trillion dollar coin is important, but others are more worried about the political consequences it would have.  Republicans could accuse the president of wildly overstepping his bounds by bypassing Congress’ system of economic checks and balances.  Others think that minting the coin would only worsen the divide between Republicans and Democrats.

Since the “plan” was made known to the public through the media there has actually been some support for the coin.  Regardless of how much support the idea gets it looks unlikely that the trillion dollar coin will be made.  Our elected officials will try their best to find a compromise that helps the American people.  And when that utterly fails they’ll blame each other and most likely mint a coin that’s work a few million dollars to ensure that they get a raise for all of their hard work.

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All About the Fiscal Cliff

After months of nail biting and media hype the powers that be have finally decided on a deal to avert the dreaded fiscal cliff (AKA: The simple problem that was prolonged by stubbornness that the media blew up to make it seem mildly interesting).  Crowds of people were delighted when they finally saw the puffs of white smoke bellowing from the conclave room of the white house (if you don’t understand this joke you clearly don’t know much about His Holiness) when Obama made his announcement that a deal had been reached.   Want to know the details about this Hail-Mary 11th hour miracle?  There are a few key things:

Nobody “Won”,But Republicans Lost Worse

As we all know, in politics it’s all about winning and making sure that the other side doesn’t get anything that they want.  Republicans were extremely unhappy with the way things went down.  Those famous Bush-era income tax rates that the democrats wanted to abolish will be permanently extended for all tax payers with an income up to $400,000, and any tax cuts that apply to an income above the level will expire.  The capital gains and dividend tax rates for high-income households will increase by 5%.  Limitations will be made on how much people making over $250,000 can take in itemized deductions and exemptions.  The 2 million long-term unemployed citizens can breathe easy for at least another year because of a federal extension of unemployment benefits.  The scheduled 27% cut in Medicare reimbursement was prevented.  On top of it all spending was barely cut, the ratio of revenue to spending cuts in the deal is a whopping 41-1.

Democrats Aren’t Too Happy Either

The republicans may not have gotten the deal they wanted, but democrats aren’t exactly happy either.  Important stimulus changes and measures were cut, and the lack of a payroll tax cut extension could cost our country 500,000 jobs this year alone.  Obama also broke his promise to not go above the $250,000 threshold for higher taxes, it was raised by $200,000.  The real brass ring for democrats, the estate tax, wasn’t grabbed.  The tax will only go up 40%, 5 percentage points short of their initial goal and 15 percentage points below the Clinton-era level.   When all was said and done around a quarter of the $800 billion in revenue Obama lauded was lost.

There Are Still Some Unanswered Questions

Do you want to know if lawmakers will raise the country’s debt ceiling?  Curious about what cuts will have to made in spending to avoid another “cliff” deadline?  What about actual reform over taxes and corporate entitlement?  Well that’s too bad since the lawmakers are wondering the same thing, which is pretty awful since they don’t have much time to find answers to those questions.

On a scale of 1-10, the fiscal cliff deal is a solid “meh”.  If this is a sign of things to come, you can expect more confusion and changes in the first quarter of the year when lawmakers will be debating over the issues they failed to solve during the cliff crisis.

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Oil Prices, Politicians, and the Economy

Since the OPEC crisis of the 70s American businessmen and politicians have allegedly been looking for a way to lower the price of gas.  The Koch Brothers received some criticism this week for claiming that gas prices will go up if Obama is re-elected, while carefully ignoring the fact their company lobbied to keep oil barrel prices up.  Newt Gingrich may have a had a chance to snap the GOP nomination if he didn’t start his disastrous $1 gas campaign.  Both presidential candidates have different stances on American energy, but Romney’s stance on energy and oil prices has gained a lot of media attention.

Mitt Romney has said that Obama’s energy policies have failed since the prices for electricity, gasoline, and heating oil went up during his administration.  The argument seems accurate, but in reality it’s a far too simplistic look on the energy economy.  Despite what people say or think, the markets control the cost of energy, not politicians.  In fact if we were to look back since LBJ, almost every president since then has had a failed energy policy.

Energy market economics are complex, so the solution to lowering prices won’t be simple.  Romney claimed that more oil drilling and production would lead to lower energy costs.  In theory that would make sense, after all a larger supply of oil would be able to help meet the growing demand for it, but in the economic sense that simply isn’t true.

Oil production has actually increased since Obama took office.  When he was elected the US was producing 5 million barrels of crude oil a day, and now the US is up to 6.6 million.  Crude oil isn’t the only determiner of gas prices, refinery costs account for 18% of all gasoline prices.  If you live in an area close to oil refineries, you’ll be paying a bit less for your gas than others.   There’s also the logistics of accessing all of the oil the country has, much of our oil reserves are trapped deep in shale that’s underneath heavily populated areas.  The US would also need a massive infrastructure update to handle the transportation and refining of the oil it mines.  A project like that would cost billions of dollars, something the US can’t afford.

It’s possible that oil prices could decrease one day, but that doesn’t look like it’s coming anytime soon.  So the next time one of your friends wonders aloud why the president doesn’t simply change gas prices, show them this post.

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Charlotte Businesses Prepare To Maximize ROI During Democratic National Convention

In 2008, Barack Obama turned the state of North Carolina blue by a miniscule 14,000 votes. So when the Democratic party announced that the 2012 Democratic National Convention was going to be held in Charlotte, the decision was made with a keen eye toward the electoral map. It is easy to see that Mitt Romney cannot win the White House without turning North Carolina back to red. In short, the Democrats need North Carolina. But with the high price Charlotte has paid over the last few years becoming a convention city, does North Carolina need the DNC as well.

Charlotte has spent millions getting themselves into the convention business. The Charlotte Convention Center has cost taxpayers as much as $30 million annually through construction debt and incentives paid to lure convention hosts. To pay for it, Charlotte imposes a countywide 1 percent tax on restaurant and bar bills. According to the Charlotte Observer’s report, this taxation comes for a building that spends most of the year empty. The majority of the center’s halls are in use just 35 percent of the time. The average for halls of its size is 57 percent. It would take five DNC’s a year, every year, to meet original projections.

The prognosis is not much better for hotels and restaurants either. Typically the largest beneficiaries of large-scale events coming to town, Charlotte’s convention center produced just 142,000 room nights – 2.7 percent of all rooms sold in Mecklenburg, according to an Observer analysis of hospitality industry data.

But with 35,000 people descending on the Queen City this week, a whole slew of delegate events, catered affairs and local business fundraisers, there are opportunities for entrepreneurs to capitalize on this massive event. While the government in Charlotte has spent taxpayer money to host the convention, business owners hope to recoup some of that tax investment this week.

One group especially poised to capitalize is the LGBT community. As the Democratic Party prepares to ratify the most gay-friendly party platform in history, gay-themed bars and restaurants plan to host events across the Charlotte region. Lesbian-owned Irish pub Hartigans will host the entire Maryland delegation, according to MetroWeekly.com.

Expect many things from the DNC: partisan speeches, liberal rhetoric, minority and civil rights groups in full regalia. But one thing many business owners won’t expect until they see it is worthwhile returns on their already substantial taxable investments.

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