Author: Crystal Fontaine

The signs of economic recession are everywhere. Recently, a small town in mid-Missouri with a population of approximately 5,000 people experienced the distressing effects of the economic slump as a local factory laid off 400 workers – a whopping eight percent of the town’s population. Economies of every size are all realizing the effects of the economic downturn.

According to the United States Small Business Administration, there were 27.2 million businesses in the United States in the year of 2007. Of those, small firms with fewer than 500 employees represent 99.9%. These small firms pay nearly 45% of the total U.S payroll and employee about half of all the private sector. Over the last decade, small businesses alone have generated 60-80% of net new jobs annually. Although big business, such as GM, shows the more “noticeable” effects of the recession, we cannot forget the little guys, who may be struggling just as much.

In November, Senator Olympia Snowe (R-Maine), purposed the small business-focused Senate Bill 3699, which seeks to improve the HUBZone program. Snowe’s efforts may very well go a long way to providing one of the cornerstones of America’s future.

HUBZone Background

HUBZone is a program created under the Small Business Reauthorization Act of 97’that falls under the sponsorship of the U.S Small Business Administration, promoting economic development in historically underutilized business zones. The program attempts to do this by enhancing employment and capital investment by providing Federal contracting preferences to small business in economically distraught areas. The HUBZone areas are defined as a qualified census tract, a qualified “non-metropolitan” with a median income of less than 80% of the state median, or property within the margins of federally recognized Indian Reservations. In order to be eligible, a business must be positioned in a HUBZone, the business must be owned and controlled by one or more U.S citizens, and no less than 35% of the employees must reside in the HUBZone.

Under Snowe’s legislation, numerous concerns with the program are given light. For instance, there is no real assurance that only qualified firms are apart of the program. This is attributable to not acquiring certain documentation and conducting site visits more regularly during certification process. The legislation provides a list of improvement suggestions, including the development and implementation of direction for establishing if an application is qualified, establishing a time period for completing recertification, building measures to measure efficiency that take into account contracts being calculated under several socioeconomic subcategories, economic characteristics, et cetera. In addition, the Comptroller General must present a report to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business in the House no later than two years after the implementation of the bill.

As quoted by Warren Buffett, “In the business world, the rearview mirror is always clearer than the windshield”. Over a year ago, many of us did not anticipate that we would be facing an economic crisis with the scope we are working through. Today, we are facing an economic crisis of which the likes have never been seen. As we work through the urgent, macro reforms currently on the table, we, as Snowe suggests, must improve on what we currently have and find ways to help our small business communities. 

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” – Alexis de Tocqueville 

The above quote by de Tocqueville is so frighteningly insightful that it’s hard to believe it was written in 1805.  De Tocqueville’s warning to America is more relevant today than ever before.

Congressman Cazayoux’s new bill, H.R. 7196, is proof that de Tocqueville’s wisdom continues to fall on deaf ears. In this bill, Cazayoux asks Congress to provide financial relief to farmers who have suffered a financial loss due to a natural disaster.  In other words, any farmer who suffers a loss because of flooding, hurricane, a tornado or any combination thereof will be compensated with taxpayer dollars.

Now before we tie in the problems of this bill with de Tocqueville’s quote, I think a basic civics lesson is required.  There is a question all Americans should be able to answer hands down.  That question is simply “where does the government get its money?”  If you couldn’t enthusiastically answer, “From me, the taxpayer,” then quickly go apply for a job and track the amount of hours you put in just to pay the U.S. government.  If you answered the question correctly, then please, continue reading.

In this bill, Congressman Cazayoux wants you and me to underwrite what should be the private enterprise of farming.  Granted, farming is a tough business which, more than just about any other enterprise, is tied at the hip to the weather.  However, farmers know this (or at least they should).  Like any business venture there are risks and although I wish no farmer ill, I also don’t want to be his insurance company.  By the way, speaking of insurance any prudent farmer will purchase his own crop insurance to mitigate possible losses due to weather.  There are plenty of companies which provide this sort of coverage without government involvement.  Do the premiums come from the farmer’s profits?  Of course but it is a cost of doing business in a free market.

The bill also begs the question, “Why just help the farmers?”  Aren’t other people affected by natural disasters?  The Midwest floods every spring, and numerous businesses suffer the damages. Why doesn’t Congress bail them out too?  While we’re at it, why don’t we toss a little cash to everyone whose basement floods in a big storm?  Come to think about it why doesn’t Congress just start providing all the citizens of the US with a guaranteed paycheck so that no one has to worry about the weather or anything else?  Oh, wait a minute . . . that would be Socialism!   

But that’s the point.  As a nation, we’ve accepted that a large portion of the money we earn will go to the government.  Now, to be fair, there are some good reasons for taxes.  For example, we have roads to drive on and the most powerful military in the world.  Both of those are a result of tax dollars and a healthy reason to take a small percentage of each citizen’s paycheck.  However, Congress has grown to think that your hard earned dollars are theirs to redistribute as they see fit.

So why is Casayoux proposing this legislation?  Call me a cynic but bills like H.R.7196, are nothing more than attempts at gaining the support of farmers by dangling in front of them a sum of money to compensate them for their struggles.  This is what makes de Tocqueville’s quote all the more sobering.  Congress is gaining power by promising voter groups the public’s money.  To be perfectly crass, they are buying votes and you and I are paying the bill.

Author: Sarah Riordan

Ladies and gentlemen, Congress has a new bill proposing a bailout plan for their…well…bailout plan. According to a recent CBS poll, nearly 70 percent of Americans disapprove of the way the financial crisis was handled. Perhaps this is because unlike our trusted legislators, the American people foresaw a future where Congress would be suffering the consequences of a hasty decision.

Diane Feinstein’s new bill, S.3698, is one of many of these types of bills we can expect to see in the near future. In S.3698, Feinstein is clearly attempting to reform the bailout plan. To give the senator some credit, the bill she is proposing is unfortunately necessary. The 5-page proposal simply states that the money given as a result of the bailout should not be used for frivolous expenses. Examples of such expenses listed in the bill are lobbying, donating to political parties, renovating offices, and the purchasing of corporate jets.

The issue with this bill isn’t the content, but the reason that it’s necessary. Decisions regarding the law should never be made in haste. Though an economic crisis is cause for a hard decision, it’s certainly not cause for a rushed one. In the long run, Congress simply created for themselves a situation in which they’re continually backtracking. The sad truth is, the first bailout plan was made in haste, and not well thought out. Therefore, Feinstein has to go back and fill in what’s missing. To think that the original plan didn’t spell out how this money can be used is incredibly disturbing. To state the obvious, all Americans are taxpayers. As a result, 700 billion of your money was given away. As taxpayers, we should all question Congress’s decision, and the apparent lack of regulation placed on the money. Imagine a business buying a luxury jet for their employees with the money from thousands of college students working and paying taxes just to get an education. Why didn’t the original bailout plan include these spending restrictions? Why didn’t Congress think about these possible scenarios before giving out hundreds of billions of your dollars?

If a business fails to meet the restrictions listed in the bill, Feinstein proposes some possible consequences. The primary punishment is a hefty fine of up to $100,000. This is rather humorous, because it begs the question “can the bailout money be used to pay the fine?” If so, what’s the point of the fine? Nowhere in the bill did it state what money should be used to pay the $100,000. So essentially, the government is just getting a refund check. Perhaps they should refund the actual people this money belongs to; us!

Feinstein’s bill should be passed. Passing bills of this type is worthwhile and tragically necessary. I’m certain Senator Diane Feinstein won’t be the only member of Congress proposing restrictions on bailout funds. In the future, Congress should be more careful before spending our money. Every citizen can agree that Congress’ main duty is to protect the American people and their assets. This duty does not include making hasty and potentially harmful decisions.

Author: Crystal Fontaine

I remember that day, the fateful day of September 11, 2001. It has become a day that no single American will ever forget. I was sitting, ironically, in a history class at the time, watching as history was being made right in front of my eyes on that television. There were feelings of outrage, disbelief, and even fear all across the nation. Suddenly, the security once felt had vanished within just a few hours.

History books will soon enough see the affects of such drastic acts.

Seven years have sped by since the attacks on the World Trade Center. Lives have changed. Times have changed. The United States is currently fighting two wars that seem to have no clear end in the near future. Security has tightened at the airports. Sometimes, it is almost worth driving now days to avoid the hassle of going through security. Although gas prices are lower than what the average American has become accustomed to, they still remain higher than what they were just a few years ago. Furthermore, the United States is currently navigating its way through a mortgage crisis paired with the financial crisis – both of which have made significant effects around the globe. Many people are altering the way they live (including myself) just to survive the high prices and live comfortably at the same time. The world certainly has become a different place.

Recently, General David Petraeus was promoted to the new Chief of the United State’s military’s Central Command, with the responsibility of overseeing the current wars in Afghanistan and Iraq. With this new title, General Petraeus made the important step of visiting Pakistan on Monday, November 3 – a nation extremely vital to coordinated efforts against terrorism. Shortly after his arrival, jihad militants carried out a rocket attack(s) on the airport in the city of Peshawar, which demonstrates a deterioration of security that needs to be addressed. General Petraeus met with several important officials during his visit, including Defense Minister Ahmad Mukhlar and army Chief General Ashfaq Parvez Kayani. Pakistani officials warned him on Monday that the numerous missile strikes the American military have made on militant targets in Pakistan is creating anti-American sentiment. As of August 2008, Washington is suspected in at least seventeen missile strikes to counter insurgents.

The situation in the Middle East is an ugly one. Will there ever be peace? The United States has become entangled in a web that it cannot seem to release itself from. Where do we go from now? This web is now being handed down to a new Presidential administration. One that many believe will bring about the change we are seeking and desperately need. The United States has made it a mission to spread freedom and democracy throughout the world. However, we have also had our own faults.  Nevertheless, with this historical moment in time and as many across the world celebrate its significance, perhaps we can now truly exemplify the freedoms we have been trying to spread. Jimmy Carter said it best: “The best way to enhance freedom in other lands is to demonstrate here that our democratic system is worthy of emulation”.

Author: Crystal Fontaine

With the prices of gasoline at the pumps, one would almost assume that many people would be excited. One would think that the way people drive would revert back to the familiar ways of yesteryear. Finally, I can afford to fill up my tank again! Well, we are all probably relieved by the prices at the pump; however, people are still playing cautious. Many of us have changed the way we drive and the way we live our lives in order to save a few bucks here and there. I know I have and I probably won’t be changing my cautious ways anytime soon. With the very close upcoming presidential election, the weight of the current financial crisis is currently on every voters mind.

Throughout the campaigning, especially within the recent months, it has become a major concern and focal point. Both John McCain and Barack Obama backed President Bush’s $700 billion rescue package for the financial industry. Both believe in more tax relief for the middle and working classes; however, McCain and Obama differ in the taxation of high income earners. Obama would like to revoke the tax cuts that Bush made for those higher incomes, while McCain believes that is not necessary. Either way, the financial problems are definitely not going away any time soon.

America is not alone. The financial crisis has clearly become a global concern, with its impacts leaving no corner of the world untouched. Over the previous weekend of October 25, there was the annual Asia-Europe meeting, or ASEM. The ASEM is an informal process of dialogue and cooperation that brings together the member nations of the European Union and the EU Commission as well as sixteen Asian nations and the ASEAN Secretariat. The ASEM allows for these nations to debate informally over a variety of issues. At the ASEM, Premier Wen Jiabo of China called for new rules to guide the international financial system, following a call by Asian and European leaders for the International Monetary Fund to intervene and deal with the ongoing global financial situation.

According to Premier Wen Jiabo, “[w]e need to draw lessons from the crisis…We need financial innovation to serve the economy better. However, we need even more financial regulation to ensure financial safety”. No one denies that something should be done to help fix the world’s struggling economy. Current French President Sarkozy said that the ASEM summit was “helpful” for the promotion of efforts to tackle the problem. China appears ready on all counts to step up to the plate and take a lead role in fixing the credit crisis. If China does indeed decide to intervene it will be interesting to see if they honor their word or not, granted if other nations allow the proposal at hand. China has been a huge exporter of cheap consumer goods to the United States and other nations, beating nearly all other manufacturers around the world. With the economies of these nations on the fritz, China needs to begin turning its spending ambitions internally. An editorial in the New York Times claims that, “ To get China’s consumers to spend, the government will need to spend more at home, investing in public work projects and providing more social benefits—including health insurance and pensions…This is clearly Beijing’s interest, though China’s leaders are still clinging to the old export strategy”.

Author: Jared Fallon

Once again the Bush Administration’s bull-headed, hegemonic principles are driving our country further and further to a foundational precedence for hard knocks. H.R.7081, proposed by sponsor Howard L. Berman, (D-CA), will prove to be one of the United State’s largest historical blunders when it comes to its nuclear policies and agreements. The bills’ title states the notion to “approve the United States-India Agreement for Cooperation on Peaceful Uses of Nuclear Energy” – an extremely rosily painted picture for a bill that slaps both signers and non-sponsors of the Non-Proliferation Treaty directly in the face. To date only four nations have not signed the treaty, including India, Israel, Pakistan, and North Korea. The implications of the approval of the bill should make one nervous.

In terms of internal implications, the timing of the bill is extremely unique for a period where Americans are most concerned by the looming financial crisis, failing stocks, and largest bailout packages ever issued by the US Government. The bill was initially proposed on September 25, 2008 and signed by President Bush less than 2 weeks later, on October 8, 2008 – amidst worsening conditions that rival only the Great Depression. Second, the bill received only 8 cosponsors – a relatively low number of supporters for such a major trade policy. Even more shocking is the total number of recorded minutes of debate, totaling a whopping 40 minutes. Lastly, the timing of the bill seems nothing but rushed. With the United State’s Election Day less than one month away and India’s coming in a few short months it appears that the current administrations were determined to get such a bill passed – (coincidentally, of course) at a time where Americans would pay little attention to the bill even if it were not undergoing a financial meltdown.

The international implications for such a bill are a bit more troubling. The United States has held a thirty year ban on all nuclear trade with India – an internationally justifiable run considering that it makes it very clear that the US will not reward non-participants of the Nuclear Proliferation Treaty. But yet as India has recently announced plans to build a minimum of 30 nuclear-powered energy plants President Bush makes no hesitation in allowing the world’s largest democracy to move onward – a move enough bold to allow US companies to take advantage of emerging contracts similar to accusations of Head Oil Company and Halliburton’s oil contract sprees with the Iraqi Government. The bill explicitly outlines allowances for India to purchase US nuclear technology – a benefit that the Confederation of Indian Industry estimates could produce roughly $27 billion in US investment for only 18-20 new plants; while independent estimations hover right around $80 billion. Why would we expect other Non-Proliferation signers (such as Russia) to not act in the same direction with other nations with nuclear energy interests (Pakistan)?

For just as much interest that United States citizens are not taking one can find an equal proportion of criticism on the international stage. The new trade policy has set fire to a series of controversy within India, most notably in regards to national sovereignty. There is no doubt that China has silently observed the recent actions of the US to take part in nuclear investments so close to its border, while Putin is plotting the possible courses of action this new nuclear trade agreement could mean for his own efforts. This opportunity will most certainly give Russia an easy conversation topic at the next UN Security Council meeting, most likely leaving the US with more wise words from President Bush trying to avoid the parallels that can be drawn from this bill to Texas oil company contract engagements with the Iraqi Government (see the “Oil for Iraq Liberation Act of 2008”). Another page has been written in the international book of nuclear developments. Ensure that you can stay on top of the newest US legislation proposals and help keep government transparency about the latest US nuclear agreement actions.

Author: Jared Fallon

The new and (improved?) proposed bailout package aiming to help prevent the US from a complete financial crisis is not only shallow in its creation but contains no mystery as to why it received little criticism from either presidential candidates. The bill, H.R.1424, has been wildly criticized for allowing companies to have a soft landing on the backs of US taxpayers. Many people waited in anticipation for both McCain and Obama’s reaction of the proposal but most should have been left disappointed. The central reason for the lack of debate? Both candidates received major financial contributions from the ever-generous Freddie Mac and Fannie Mae.

There are many different figures available to find the exact amount each candidate has received, but it appears that the most accurate data shows that for the current election John McCain received $169,000 between both companies and their affiliates. Obama received $122,850 directly from various PACs and Mac/Mae employees. Both senators voted for the bill, while pointing towards the future for true accountability for the companies’ actions. Obama stated “There will be time to punish those that set this fire, but now is not the time to argue about how it got set…Let’s do what’s right for the country at this time, because the time to act is now.” This statement was a part of Obama’s speech to beg colleagues to help pass the reform. With Election Day coming and closer and closer it is unlikely that either senator will increase any measure of criticism for the two monoliths. Fortunately, two legislatures are stepping up to bat as we speak.

Both Peter Welch (D-VT) and Benjamin Nelson (D-NE) have proposed 2 plans for accountability – one to prevent golden parachute payments for Mac and Mae execs (H.R.6907) and one resolution to express to the Senate “that the former chief executive officers of Fannie Mae should not receive lavish severance packages at taxpayers’ expense.” (S.RES.658)  Will either of the proposals pass? It is highly unlikely, but the Chief Sponsors’ efforts shouldn’t go unnoticed – trying to a push accountability and criticism in a system that has too much money to receive it from the next President of the United States.