SAN FRANCISCO—The Obama administration is asking a federal appeals court to reverse its ruling that foreign prisoners can sue a company accused of helping plan secret CIA torture flights. The U.S. Justice Department argues in a filing Friday with the 9th U.S. Circuit Court of Appeals in San Francisco that permitting a lawsuit over the government's extraordinary rendition program "would pose an unacceptable risk to national security." The CIA is accused of ferrying the terror suspects to other nations to be tortured. An appeals court panel ruled April 28 that the lawsuit can continue. The five plaintiffs are suing Jeppesen Dataplan, a San Jose subsidiary of the Boeing Co. Three were eventually released without charges, while the others are in custody in Egypt and Morocco.
Saturday, June 13, 2009
Obama administration attempts to block CIA suit
California Budget 101: Making sense of the state's financial meltdown
Here we go again. When it comes to the state budget, the only thing that seems to change is the number of billions by which it's out of balance. A year ago, state officials had to plug an unthinkable $15 billion. A few months later, as the economy worsened, they were faced with an insurmountable $40 billion. And now, even after Gov. Arnold Schwarzenegger and legislators passed a package of spending cuts and tax hikes that was believed to have tamed the deficit, the state faces a staggering $24 billion shortfall through the center of next year. Staples of the modern-day state - from welfare and health care for the poor to funding for our children's education - are on the chopping block. State Controller John Chiang has implored the Legislature to pass a budget by Monday to avoid a fiscal meltdown this summer. But legislators are expected to miss that deadline by at least a few weeks. Of course, California isn't alone; governments across the country are grappling with the deepest recession since the Great Depression. But in some ways, the state's woes are self-inflicted: Our fortunes rest with a system that produces huge tax windfalls when the economy flourishes, then acts as if the good times will never end. Today, we take a crack at demystifying the state budget. The goal: to help you understand how we got into the current fix and why Sacramento has become so dysfunctional when it comes to managing the state's finances.
Creating A Realistic Budget
SET YOUR FINANCIAL GOALS
As with any other area of your life, it’s pointless to start down a financial path if you don’t you have some idea of where you want to end up. What is your REASON for creating a budget? Do you want to pay off your debts? Save for your kids’ college education? Put money away for retirement? Make a list of your financial goals for the next 6 months, year, 5 years, 10, 25 – all the way through to old age. And don’t spend a lot of time worrying about feasibility – if your goal is to be debt free in a year, don’t think about all of the reasons why you won’t be able to make it by that deadline. Just remember, where there’s a will, there’s a way!
CREATE THE SHEET
Start with either a sheet of legal paper – or a spreadsheet program – and create 12 columns. Label the top of each column with a month of the year, from January to December (duh!) Each row on your sheet will represent a different living expense – groceries, gasoline, Starbucks coffee in the morning on the way to work. You’ll have better luck remembering everything that you spend money on if you think according to categories. "Automobile" would include gas, repairs, insurance, and taxes – while "grooming" might be divided into clothes, makeup, haircuts, and facials.
TRACK YOUR EXPENSES
How can you know what steps you need to take to reach your goal until you know exactly where you are right now? Most of us don’t have a clue where our money goes – credit cards and ATM’s make it easy for money to just slip through our fingers. The first step is to create a list of STATIC EXPENSES – things that cost the same amount every month, like rent and your car lease and student loan payments. Now these expenses are not completely "static" in the strictest sense of the word. You can reduce your rent or mortgage payment by finding a less expensive house – and you could increase your loan payments to get rid of the debt faster. But for now, just itemize your regular monthly costs.
Next, you want to evaluate your VARIABLE EXPENSES – those costs that fluctuate from month to month. Groceries, entertainment, utilities, and clothing all fall into this category. The great thing about variable expenses is that you control (at least to a certain extent) how much of your budget these items eat up. But some of these costs come in large and unexpected chunks – like car repairs and medical bills. So you might need to go through your last 12 months’ credit card and bank statements to get a clear idea of how much daily life costs you. And don’t forget about those expenses that are paid only intermittently – like insurance. Tally each expense and divide the total by 12, to give you a clearer idea of how your costs spread out over a year’s time.
ROOT OUT MONEY LEAKS
Now I guarantee that you will not remember every expense, no matter how hard you strain your brain! Think about all of the things that you buy throughout your week without really paying attention – snacks at work, a magazine when you stop for gas, that cup of coffee on your way in every morning. And don’t forget about the expenses you are racking up because of financial disorganization – interest charges on your credit card debt, late fees because you forgot to return that movie on time, overdraft charges because you didn’t balance your checkbook. All of these fall into the category of unconscious spending. You just do it because it’s a habit. And although you think that a dollar here or fifty cents there is insignificant, it can really add up.
So for a month, record every penny that leaves your hand, in the form of a check or cash or a credit card transaction. This may sound like a huge challenge, but you can do it! Make it convenient – my husband stuck a small pencil and piece of paper in his wallet so he would be reminded to make a note every time he made a purchase. You will be stunned when you see where your money is really going! My husband was shocked to find out that he was spending almost a hundred dollars a month on that morning coffee (am I picking on Starbucks too much?!) What’s your vice – eating out when you are feeling lazy? Buying every new CD or magazine that comes out? I’m not suggesting that you completely eliminate these habits – just that you decide how often you can reasonably afford to indulge and still reach your other financial goals.
DON’T FORGET YOUR DEBTS
It’s also important that you have some idea of your liabilities – debts that still have to be repaid. Did you figure these payments in with your monthly expenses? If you are only counting the minimum monthly payment, you will never pay your debts off. You may not be able to do it right now – but after we get your budget in order, the goal is to pay at least double the minimum amount on at least one of your liabilities each month. You should start with the credit card or loan that has the highest interest rate – then tackle the next highest after the first debt is paid off. And if you can afford to pay more than double, go for it. You aren’t really free to start working on other financial goals until you know you are debt free.
TALLY UP YOUR INCOME
Do you really know how much you make? The tendency is to quote whatever is printed on your employment contract – to say, "I make _____ a year." But after taxes and Social Security and any other items that are deducted from your check, what are you actually bringing home? Take a minute to really examine all of your sources of income and calculate an honest total – you can’t have a realistic budget without it!
WHAT’S THE VERDICT?
So, comparing income to expenses, how does it look? If you came out in the black, congratulations! How much do you have left over? Regardless of how small or large the amount is, start stashing it away into savings and investments! Your choice of how to proceed will depend on your financial goals – investing for retirement will involve less liquidity and more risk than just saving for next year’s vacation. The main thing to remember is that you should build your savings and investments into your budget just like a bill – and take care of these long-term responsibilities FIRST, before other costs. That’s the secret to good financial management.
Now, if you ended up in the red, we need to talk. The first step is to look at spending which can be reduced or even eliminated. Start by examining those "spending leaks" – if they give you pleasure and satisfaction, dandy. Certainly late fees and interest charges don’t fall into this category! But you can still overdo a good thing. Ask yourself if eating out 4 times a week gives you 4 times more pleasure than doing it just once. And could you get as much pleasure if you cooked a good homemade meal? Is the ridiculous mortgage on that 10,000 square foot house worth it? Or could you be just as happy (or even happier with less financial stress) in a place half the size? Also look for convenience expenses – things that we spend money on because we are overwhelmed, too busy, or just worn out. Perhaps by re-evaluating how you use your time, you might discover that many of these expenses are just symptoms of misplaced priorities. When you arrive at a place where all of your spending decisions are DELIBERATE ones, you will find yourself several steps and quite a few dollars closer to a balanced budget that allows you to reach all of your financial goals.
Making Money
I’ve saved the best for last. If you can master even one of these, you’ll have a head-start on your friends. Master all four, and you’ll be on the road to wealth. No kidding.
* Spend less than you earn. Don’t earn much? Then don’t spend much. If your spending and income are roughly even, you have two choices: earn more or spend less. When I was in college, I worked as many as four jobs at once. This gave me a lot of spending cash. (Unfortunately, I didn’t do a good job with the spend less part of the equation.)
* Be an outstanding employee. Good work habits can pay enormous dividends, leading to recommendations and contacts that you can use after you’re out of school. Several of my classmates turned work-study jobs into launching pads for future careers.
* Start your own business. Can you install a hard drive? Can you strip a computer of spyware? Can you perform minor car repairs? Do you have a pickup truck you could use to haul furniture? Are you a passable guitar player? Charge cheap rates and exceed expectations. Word will spread. When you’ve built up a customer base, you can raise your rates a little. This is an awesome way to make money.
* Learn to invest. Find a discount broker and begin making regular investments. Sharebuilder is a great choice for college students. It costs only $4 to make a scheduled stock purchase, and you can invest any amount of money, even $20. Don’t obsess over the details yet. You can worry about high returns and low fees later. Right now the most important thing is to develop the investment habit. (Ad: Buy Stocks for $4 at ShareBuilder.) Ten years from now, you’ll thank yourself. If you can find a way to invest $1000 a year for the next ten years, you can set yourself up for life. No joke.
ShareBuilder-Welcome page
You’re ahead of the game just by reading this list. Now do yourself a favor: subscribe to Get Rich Slowly via RSS or via email (see the sidebar). Then go visit I Will Teach You to Be Rich. Ramit’s advice is targeted directly at young adults.
Also, if you can find it, pick up a copy of Young Money, a magazine for college students. (Browse the magazine’s archive of money management articles online.) Finally, download the free PDF “40 Money Management Tips Every College Freshman Should Know” from Scholarship America.
Could Palin flap be Letterman's Hugh Grant? what do you thing
Under withering criticism in Congress, General Motors and Chrysler executives on Friday called the closings of hundreds of dealerships painful steps needed to right-size the auto giants. Down-on-their luck dealers said the moves would needlessly devastate their local economies and livelihoods.
"Many dealers and the communities they serve frankly feel blind-sided," said Rep. Greg Walden, R-Ore.
GM CEO Fritz Henderson told a House panel the dealer cuts were "quite painful" but necessary to save over 200,000 jobs at GM's remaining dealers.
"In essence, this is our last chance," Henderson told the House Energy and Commerce Committee's oversight and investigations subcommittee.
Chrysler Deputy CEO Jim Press said the cuts were part of the shared sacrifices by the United Auto Workers union, bondholders and others needed to avoid liquidation.
"Going through bankruptcy was not our choice," said Press, who along with Henderson and the other witnesses were required to raise their right hands and testify under oath.
But the committee heard from shutout dealers such as Frank Blankenbecker III of Waxahachie, Texas, whose voice cracked as he recalled the hard work of his father, a World War II veteran, to build their family business.
"I am glad that he is not alive to witness this travesty. To have risked his life for a country that would do what they are doing would destroy him," he said.
The carmakers' explanations won few converts from House members, who wagged their fingers at the executives and questioned their motivations. Many of the dealers, they argued, had been profitable and received little warning or opportunity to plead their cases.
"There's something wrong with a business model that basically says, 'In order to survive, we've got to crush our local dealers,'" said Rep. Peter Welch, D-Vt.
Rep. Mike Burgess, R-Texas, confronted Henderson about GM's decision to maintain a parts distribution center in the district of Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee. Frank had urged Henderson to keep the facility open.
"What is the number I need to call? Is it 1-800 Car Czar?" Burgess asked. "I have a nagging suspicion that there is a political calculation."
The committee released a GM document that, for the first time, provided a state-by-state list of 1,323 dealerships the automaker plans to wind down. Pennsylvania had the most with 90, followed by Ohio with 79, Illinois with 66 and California with 65. Alaska was the only state spared. GM has declined to release the name of individual dealerships.
Among Chrysler, Dodge and Jeep dealerships, Pennsylvania has lost 53, followed by Texas with 50 and Ohio with 47.
Chrysler is closing 789 dealerships and GM plans to cut about 1,350 by the end of next year. Lawmakers said the cuts would hurt many rural communities, forcing consumers to drive long distances to have their vehicles serviced.
"When it comes time to purchase a new vehicle, many of my new constituents will abandon GM or Chrysler and go to whichever brand is still locally sold by a person they trust within their community," said Rep. Bart Stupak, D-Mich., the subcommittee's chairman.
Dealers said the closings put 100,000 jobs at risk and charged the companies with failing to be transparent about how they reached their decisions. Many dealers said their stores had been performing well despite the economic downturn.
"We have been GM to our community," said Bob Thomas, owner of a Chevrolet-Cadillac dealership in Bend, Ore.
The auto executives said their companies have been slowed by too many dealers, with many representing the same company often competing against each other for sales. Many dealerships date to the 1940s and 1950s, they said, when motorists lived farther apart and Detroit automakers dominated the U.S. market.
In total, GM is expected to reduce its dealer body by 2,500 through the shuttering of dealerships, anticipated attrition and the shedding of its Saturn, Hummer, Pontiac and Saab lines.
Henderson told the committee that 856 dealers had appealed GM's decision to sever ties. As of now, GM has reversed itself on 45 of them, he said.
GM said in the document that the company judged dealerships based on their sales, customer service index, capitalization and profitability. Sales accounted for 50 percent of the score and customer service was worth 30 percent. Dealers scoring less than 70 received a wind-down agreement.
Italian automaker Fiat Group SpA closed a deal earlier this week to become the new owner of most of Chrysler's assets, saving the company from liquidation. The new company is called Chrysler Group LLC.
GM filed for Chapter 11 protection on June 1 and the company hopes to emerge from bankruptcy as a new company in 60-90 days.
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