Monthly Archives: November 2011

CBO Calls Stimulus Resounding Success… I Mean Failure (I Don’t Understand Things)

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Categories: Government

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As a mushy moderate, I’m in the unfortunate position of actually trying to seek out facts when it comes to economic policy — so contrived sound bites from people who are paid to BS me for a living don’t really do it for me (my apologies to Fox News and MSNBC). So, if you will, please take this brief journey with me as I try to sift through analysis on the impact of the federal stimulus package — all based on from what I can glean is the exact same report from the Congressional Budget Office, mind you.

Jay Bookman of The Atlanta Journal-Constitution contends… the CBO says it was a "major success":

The Congressional Budget Office has released its latest assessment of the 2009 stimulus package and the economic impact of its various components.

According to the CBO analysis of stimulus provisions:

They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.3 percent and 1.9 percent,

  • They lowered the unemployment rate by between 0.2 percentage points and 1.3 percentage points,
  • They increased the number of people employed by between 0.4 million and 2.4 million, and
  • They increased the number of full-time-equivalent jobs by 0.5 million to 3.3 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)

 Two other points:

  •  The CBO estimates that the impact of the stimulus will continue to be felt over the next year, increasing GDP by up to 0.8 percent next year and creating up to 1.1 million jobs over what it would have been.
  • The longterm economic impacts of increased borrowing to fund the stimulus will be minimal or nonexistent. “In contrast to its positive near-term macroeconomic effects, ARRA will reduce output slightly in the long run, CBO estimates—by between zero and 0.2 percent after 2016,” its economists predict.

The Washington Times relays… Nay, the CBO says it was but a short-term fix, but will cause negative long-term consequences, sucka!:

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two-tenths of a percent is actually deeper than the agency predicted back then.

All told, the stimulus did boost jobs and the economy in the short run, according to CBO’s models. At the peak of spending from July through September 2010, it sustained anywhere from 700,000 to 3.6 million, which lowered the unemployment rate by between four-tenths of a percent to 2 percent.

The Obama administration had promised 3.5 million jobs would be produced at the peak of spending.

For this current quarter CBO said the stimulus is sustaining between 600,000 and 1.8 million jobs, which has improved the unemployment rate by as much as 1 percent versus what it otherwise would have been.

The White House did not return a message seeking comment Tuesday afternoon, but officials there previously have said the Recovery Act stopped the economy from falling into another Great Depression…

CBO has re-evaluated the stimulus every three months, and its estimates for the total cost have varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and is now projected to be $825 billion once all the money is paid out.

The nonpartisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

CBO said it has concluded there is less of an indirect multiplier effect of federal spending.

Those changes caused it to drop its estimates for total employment sustained by the spending in 2011 from between 1.2 million and 3.7 million down to between 600,000 and 3.6 million.

As for the long-term situation, CBO said its basic assumption is that each dollar of additional federal debt crowds out about a third of a dollar’s worth of private domestic capital.

CBO said there is no crowding out in the short term, which is why the Recovery Act boosts the economy in the near term.

So, in closing, the federal stimulus package was clearly a wonderful/dreadful initiative.

Finding a Way Around the Obvious

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Categories: Tax/Finance

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Ah, the wonderful world of press releases. They come in a variety of formats with varying messages.

One of my recent favorites is the National Society of Accountants offering that "tax preparation fees are a strong value." I’m not arguing with the assertion (my days of trying to decipher to complicated tax rules and regulations ended years ago), but my first thought was: "Duh! What else would this group say?"

I don’t have an immediate answer, but there must be a way to share the information without the Mr. Obvious approach. Again, no problem with the premise; just not sure how effective it will be for the group. Anyway, here’s a few of the numbers they provided:

A biennial survey of nearly 8,000 tax preparers conducted by the National Society of Accountants (NSA) showed the average tax preparation fee for an itemized Form 1040 with Schedule A and a state tax return is only $233. Rates for non-itemized returns are also low – the average cost to prepare a Form 1040 and state return without itemized deductions is only $128.
 
Both average fees are nearly the same as they were two years ago ($229 and $129 respectively), showing that tax preparers and accountants understand the financial challenges that Americans face.
 
"This is one of the best values out there for any type of professional service," says NSA Executive Vice President John Ams, "especially when you consider the complexity of the tax code. If a professional finds even one additional deduction or tax credit, it will probably more than cover the fee."
 
The survey also reported the average fees for preparing other Internal Revenue Service (IRS) tax forms, including:

• $236 for a Form 1040 Schedule C (profit or loss from business)
• $524 for a Form 1065 (partnership)
• $695 for a Form 1120 (corporation)
• $660 for a Form 1120S (S corporation)
• $396 for a Form 1041 (fiduciary)
• $566 for a Form 990 (tax exempt)
• $61 for a Form 940 (Federal unemployment)
 

 

Interactive Intelligence Gets National Recognition from Forbes

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Categories: Business News, Technology

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Those in the Indianapolis area have likely heard of Interactive Intelligence by now. Founded in 1994, the company has emerged to become one of the world’s leaders in business communication systems. And now, behold this prestigious honor, as Forbes has ranked the company eighth among America’s best small companies:

Interactive Intelligence Group Inc. (Nasdaq: ININ), a global provider of unified IP business communications solutions, has been ranked No. 8 by Forbes Magazine among America’s Best Small Companies.
 
This is the second year in a row Interactive Intelligence has made the Forbes list, which is composed of the 100 best-performing American public companies with under $1 billion in revenue. Last year Forbes ranked Interactive Intelligence 26th on its list.
 
The Forbes America’s Best Small Companies ranking features firms with remarkable sales and earnings growth in a host of industries, according to an article in the magazine titled “The Top 20 Small Public Companies In America.”
 
Interactive Intelligence had sales of $192 million for the 12-month evaluation period ending June 30, 2011, with 20 percent sales growth and a 31 percent return on equity.
 
Interactive Intelligence was also included on Forbes list of 15 Small Company Stocks You Should Own Now.
 
“Our inclusion for the second year running among Forbes Top 20 Small Public Companies in America affirms our continued customer-focused approach with an emphasis on long-term value,” said Interactive Intelligence founder and CEO, Dr. Donald E. Brown. “This approach has spurred significant demand for our cloud-based contact center offering and it’s fueling an ever-increasing number of sales to the very largest global enterprises.”
 
Interactive Intelligence develops business communications software that provides contact center automation and unified communications functionality for mid-size to large organizations. The company’s software can be deployed on-premise or in the cloud, and is ideal for all verticals, including financial services, insurance, teleservices, and credit and collections.
 
“With exciting new development efforts underway that marry social media with mobile technologies to yet again transform customer service, we look forward to another opportunity next year to make Forbes most worthy list of best American companies,” Brown concluded.
 
Candidates for Forbes Magazine’s America’s Best Small Companies ranking must have been publicly traded for at least a year, generate annual revenue between $5 million and $1 billion, and boast a stock price no lower than $5 a share. The rankings are based on earnings growth, sales growth, and return on equity in the past 12 months and over five years. Stock performance versus each company’s peer group counted as well. Shares of last year’s members outpaced the Russell 2000 small-company index by an average of 10 percentage points.
 
More information about America’s Best Small Companies can be found in the November issue of Forbes Magazine, or on its website at: http://www.forbes.com/sites/kurtbadenhausen/2011/10/19/the-top-20-small-public-companies-in-america/.

A Major Flaw in the Education System

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Categories: Education

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A New Jersey teacher was caught on camera mocking and threatening violence toward a 15-year-old special needs student. But the teacher is unlikely to lose his job due to rules and regulations that make it very difficult — and expensive — to terminate someone.

Difficult as in a 15-step process that could take between two and five years to complete. Expensive as in from $300,000 to $500,000.

The Education Action Group recently reported:

It only takes three years in New Jersey to become a tenured teacher. The Garden State’s teacher tenure laws are so deeply flawed that 77 percent of state residents support tenure reform. Gov. Chris Christie, as well as legislative Democrats and Republicans, have offered reform plans.

The current process begins by formally bringing tenure charges against a teacher. Then the real work begins.
 
After months of gathering evidence, the investigator shares his findings with the district superintendent and the state commissioner of education. If both officials certify the charges, the case is sent to the New Jersey Office of Administrative Law and a trial is scheduled.
 
The trial itself can last up to four years. The accused teacher doesn’t mind, because after 120 calendar days, he or she collects full pay for the remainder of the process. School districts not only have to pay that salary, but must hire substitutes to fill in for the suspended teacher and pay lawyers to pursue the termination case.
 
During the trial, witnesses are called to testify and a judge typically asks the attorneys to file legal briefs. All of that can take 30 to 90 days. Then the judge will make a decision in the case, which typically takes another three or four months.
 
The state commissioner of education then reviews the judge’s decision and issues a final decision. That often takes another two or three months.
 
But in many cases, those days, weeks and months can stretch into years. Judges typically hear these cases on days they have available – perhaps one day one week, then two days a few weeks later.
 
When the entire process is finally complete and the teacher is found guilty, he or she has the option of appealing the decision, if another court will agree to hear it.
 
     

Exercise: Maybe Even More Valuable Than We Thought

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Categories: Human Resources, Wellness

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If you’re one of those wellness-oriented people who annoys your coworkers with your mountain of weekly activity (thus making them feel terrible about themselves), then you’ll love this post on the New York Times blog. Seriously though, this is great info and HR and wellness professionals should take note:

Is physical frailty inevitable as we grow older? That question preoccupies scientists and the middle-aged, particularly when they become the same people. Until recently, the evidence was disheartening. A large number of studies in the past few years showed that after age 40, people typically lose 8 percent or more of their muscle mass each decade, a process that accelerates significantly after age 70. Less muscle mass generally means less strength, mobility and among the elderly, independence. It also has been linked with premature mortality.

But a growing body of newer science suggests that such decline may not be inexorable. Exercise, the thinking goes, and you might be able to rewrite the future for your muscles.

Consider the results of a stirring study published last month in the journal The Physician and Sportsmedicine. For it, researchers at the University of Pittsburgh recruited 40 competitive runners, cyclists and swimmers. They ranged in age from 40 to 81, with five men and five women representing each of four age groups: 40 to 49, 50 to 59, 60 to 69, and 70-plus. All were enviably fit, training four or five times a week and competing frequently. Several had won their age groups in recent races.

They completed questionnaires detailing their health and weekly physical activities. Then the researchers measured their muscle mass, leg strength and body composition, determining how much of their body and, more specifically, their muscle tissue was composed of fat. Other studies have found that as people age, they not only lose muscle, but the tissue that remains can become infiltrated with fat, degrading its quality and reducing its strength.

There was little evidence of deterioration in the older athletes’ musculature, however. The athletes in their 70s and 80s had almost as much thigh muscle mass as the athletes in their 40s, with minor if any fat infiltration. The athletes also remained strong. There was, as scientists noted, a drop-off in leg muscle strength around age 60 in both men and women. They weren’t as strong as the 50-year-olds, but the differential was not huge, and little additional decline followed. The 70- and 80-year-old athletes were about as strong as those in their 60s.

Canada to Misleading Marketers: Get That Junk Ote-a Here!

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Categories: Business News

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I like Canada, and not just because of the walleye fishing. The people are really dang nice. Turns out, they may also have higher standards of decorum than us, too. (Considering the popularity of "Jersey Shore" in America, this shouldn’t exactly blow you away.) PR Daily comments on a Vancouver Sun/PostMedia article:

Note to companies operating in Canada or thinking of expanding north of the 49 parallel: Do like momma told you, and tell the truth.

A whopping 89 percent of Canucks are “very likely” or “somewhat likely” to stop buying a product if advertising around it is untruthful, according to a new poll by the Gandalf Group on behalf of the Canadian Advertising Standards Council.

The study noted that 57 percent of Canadians report having followed through on this promise. Conversely, according to the survey, only 36 percent of Americans claim to have stopped buying a product because of untruthful advertising.

Canadians are also a moderately cynical bunch regarding advertising, only 50 percent said they found most ads to be truthful, a figure that drops dramatically when it comes to political ads.

Holiday Shopping: How to be Nice — Not Naughty — this Season

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With Black Friday quickly approaching, gift giving is on my mind. As visions of loved ones opening their presents dance in my head, a less heartwarming thought creeps in: how to deal with poor customer service.

I’m not talking about retailers’ professionalism – I’m referring to impolite (and often downright rude) – customers.

I’ll never forget the year that a new employee was working the day after Thanksgiving at one of my favorite stores. As I stood in a long line for what felt like an eternity, I enviously watched shoppers in the other lines pay for their items and leave. Was I frustrated? Yes. Was I envisioning cookies from the food court as lunchtime approached and my stomach started growling? Of course. But some of my fellow shoppers were acting like they wanted to take a bite out of the rookie!

I’ve never seen so many people angrily rolling their eyes or folding their arms at once. I wanted to shout, “’Bah humbug!” at the top of my lungs. Fortunately, I refrained.

As the holiday season gets underway, the following tips on how to be a good customer may enhance your shopping experience and make an employee’s workday a bit more merry:

  • Do your homework and ask questions. Check out consumer recalls before purchasing toys and gifts for children. Know what the warranty covers, learn the store’s return policy, make sure you will be able to pay off a cartful of merchandise you put on layaway and check out online reviews.
  • Practice patience. Holidays and resulting crowds can put even the most patient on edge. Rather than attack a store employee because a product is not in stock or because the checkout line is a mile long, remember what your mother taught you about always being polite. "Please," "thank you" and "have a nice day" are words that can never be said too much.
  • Be courteous. Those long checkout lines often arise because customers are not prepared to present items for check out or have their credit card or check ready when it’s time to make payment. Do not get mad if the store will not honor competitors’ coupons; check before you go to the store.
  • Do your part: Standing at the cash register is not the time to suddenly realize you have neither wallet nor checkbook. It is definitely not the time for a conversation on your cell phone.

Brinegar on Today’s Right-to-Work Announcement by Statehouse Leaders

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Comments from Indiana Chamber of Commerce President Kevin Brinegar on the announcement today by House Speaker Brian Bosma and Senate President Pro Tem David Long that right-to-work legislation will take priority in the 2012 session:

“Passing a right-to-work law is the single most important action our lawmakers can take to put more Hoosiers back to work. Currently, we have more than 200,000 people unemployed in Indiana and many more at risk as employers deal with a still unstable economy. A right-to-work law would open the door to attracting new and expanding companies and the numerous jobs they bring.

“Site selection experts from across the country will tell anyone who will listen that between one third and nearly half of the companies that hire them to find a good location won’t even consider non right-to-work states for their business growth and expansion plans. So Indiana is automatically out of the running in far too many instances.

“Other Midwestern states such a Michigan and Kentucky are now looking at passing right-to-work to gain a dramatic competitive advantage for jobs. We cannot afford to fall behind the competition.

“Right-to-work is about creating jobs, economic growth and fairness. Arguments to the contrary are smoke and mirrors. Right-to-work laws do not prohibit labor unions or collective bargaining, but simply protect workers from being forced to join or pay dues and fees to a labor union.  Workers would still have the right to join or support a labor union, only now it would be his or her decision to make. That’s simply fair.

“Case in point, right-to-work legislation was passed more than 15 years ago for Hoosier teachers. It certainly didn’t destroy their unions or collective bargaining rights, and it didn’t result in lower wages for teachers.

“Going forward, the Indiana Chamber will work to help citizens and lawmakers realize that a vote for right-to-work is a vote for job creation and worker freedom. A person shouldn’t have to be forced to join a union in order to get or keep a job. Today was an important step and I applaud legislative leadership for displaying determination with this issue.”

Insiders Say Pipeline Not Dead Yet

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Categories: Energy, Environment

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We’ve told you more than a few times in recent months that the proposed Keystone XL pipeline is an important project for Indiana and our country. Check out this two-minute video. After all, the $7 billion project will bring 700,000 barrels of oil a day from Canada to the U.S.

When the Obama administration recently delayed a final ruling (citing the need to reroute in Nebraska, but realistically putting off a politically tricky decision until after the 2012 election), many considered it a death knell for the proposal. But a group of energy and environmental insiders put together by the National Journal team in Washington differs with that assumption. Check out the latest.

“As long as there is substantial money to be made from developing the tar sands, they will be developed,” one Insider said.

Insiders predict (64% to 36%) that the economic and political reasons for the pipeline will eventually win out, arguing that the oil industry may hold out hope for a future Republican administration and GOP majorities in both chambers of Congress—under which the project would likely win swift approval.

Canadian pipeline developer TransCanada said that it will move the route out of Nebraska’s environmentally sensitive Sandhills area. The State Department last week proposed the rerouting to protect a massive aquifer there. Company officials, who had claimed that such a reroute wasn’t possible, said that the move will likely require adding 30 to 40 more miles of pipe to its 1,700-mile proposal.

President Obama was accused last week for making a political play with the pipeline, because the reroute would delay the decision past the 2012 election. For that same reason, though, most Energy Insiders believe the project will ultimately be approved. “Eventually, politics will be set aside,” said one.

In terms of politics, Insiders were split on whether the reroute decision and the consequent delay would benefit Obama. Just over half – 51 percent – said that the delay would help the president; 49 percent said it would not.

The delay until after the 2012 election “is a significant indicator of just how bad the Obama insiders think their election prospects are right now,“ one Insider said. In appeasing environmentalists but sacrificing some independent votes, the administration wanted to ensure it held onto its political base and contributions, Insiders said.