Talking Shop Blog

Memorial Day is a day of remembrance for those who have died in our nation’s service.

Enjoy the picnics, parades and outdoor barbeques. 

The Changing of the Guard at the Tomb of the Unknowns - Arlington National Cemetery

And take some time to remember and honor the men and women who have made the supreme sacrifice in the service of our country.

The current National Debt is about $12.9 trillion.

Actually, it’s $12,987,274,122,710.70 to the penny as I write this.

The other day we noted that the Budget Deficit through April stands at $799 billion and change.

So what’s the difference between the “Deficit” and the “Debt”?

Let’s go back to our pretend family with their out of control spending.

Their spending for the year might look like this:

Revenues:     $200,000  

Expenses:      $350,000

Shortfall       ($150,000)

That $150,000 shortfall is the deficit for the year.

And the family had to borrow $150,000 from the bank to pay that shortfall.

That’s now debt that they owe.

Let’s say they continue their deficit spending for 5 years in a row, borrowing each year to ‘fund” each year’s shortfall.

Their debt has now grown to $750,000.

Put it all together:

Family Deficit -  $150,000    Budget Deficit – $799 billion (7 months)

Family Debt -      $750,000    National Debt – $12.9 trillion

You can find “The Debt to the Penny” at

http://www.treasurydirect.gov/NP/BPDLogin?application=np

We all make mistakes.

Politicians and others often give “conditional” apologies when they make mistakes.

“I apologize if anyone was offended by my actions, comments, (fill in the blanks)”.

Well that means if you were offended, then I apologize.

It also implies that if you weren’t offended, then I don’t apologize.

Sorry, that’s not a real apology.

Then there’s the Ann Curry story.

Last Saturday NBC News Today Show anchor Ann Curry gave the commencement address to the graduates at Wheaton College.

Not the Wheaton College in Illinois, but the Wheaton College in Massachusetts.

No relation between the two.

During her speech she named several notable alumni of Wheaton College, including Reverend Billy Graham and former House Speaker Denny Hastert.

Problem is they’re both alumni of the Wheaton College in Illinois, not the one in Massachusetts.

She made a mistake.

And then she did the right thing.

Curry apologized afterwards to the President of the College and the graduates, saying she was “mortified by my mistake”.

That’s a real apology.

Kudos to Curry for the way she handled her mistake.

The federal budget deficit hit an all-time high for the month of April.

The Treasury Department noted that the April deficit soared to $82.7 billion. And the year-to-date deficit now stands at $799 billion and change.

Treasury issues a monthly report called the Monthly Treasury Statement (MTS).

They leave out the zeros, but we won’t.

A billion is a thousand million and looks like this: 1,000,000,000.

Add nine zeros to that $799 billion and you get $799,000,000,000.

So the year to date deficit actually looks like this:

Revenues:    $1,199,168,000,000

Expenses:       1,998,847,000,000

Deficit:     $ 799,679,000,000

Let’s take back out the zeros, add cents and pretend we’re a family.

Our family budget would look like this:

Revenues:    $119,916.80

Expenses:     $199,884.70

Deficit:      $ 79,967.90

Yikes, we’ve made $120,000 and already spent $200,000 – with 5 months still to go.

Kids, I don’t think we can keep spending like this unless we get a printing press.

Hmmm.

You can find the April MTS at http://www.fms.treas.gov/mts/index.html .

Don’t forget to add the zeros.

Last week the FDIC issued its first quarter report on FDIC-insured financial institutions.

The good news is that more than half of the banks and savings institutions reported year over year improvement in their quarterly net income. Less than 20% reported net losses for the quarter.

FDIC Chairman Sheila C. Bair notes “there are encouraging signs in the first-quarter numbers. Industry earnings are up. More banks reported higher earnings, and fewer lost money.”

And the $18 billion in net income during the quarter “is more than three times as much as banks earned a year ago, and it is the best quarterly earnings for the industry in two years.”

The bad news is the number of institutions on the FDIC “Problem List” rose to 775, up from 702 at the end of 2009.

That represents about 10% of all U. S. banks and is the highest level it’s been since 1993.

You can find the full report at http://www.fdic.gov/news/news/press/2010/pr10117.html

The FDIC does not release the names of individual “problem” banks.

However, the Federal Financial Institutions Examination Council (FFIEC) provides so-called UBPR Reports for individual banks.

The Uniform Bank Performance Report (UBPR) is used by the Agency to analyze a bank’s financial condition, including adequacy of earnings, liquidity and capital, as well as other key indicators.

You can obtain a UBPR for any bank from   http://www.ffiec.gov/UBPR.htm .

The IRS has released a newly revised Form 941, Employer’s QUARTERLY Federal Tax Return, which employers can use to claim the new payroll tax exemption for qualifying new hires under the HIRE Act.

The HIRE Act exempts qualifying employers from the 6.2% Social Security payroll tax, for certain new employees hired after February 3, 2010 on wage paid after March 18, 2010 and on or before December 31, 2010.

Employers may not claim the exemption for wages paid in the first quarter, however, and must instead claim a credit for those taxes in the second quarter.

The form, therefore, may be used to claim the exemption beginning with the second quarter of 2010.

You can find the revised Form 941 at on the IRS website at http://www.irs.gov/pub/irs-pdf/f941.pdf .

The IRS has also released additional guidance and information on the new payroll tax exemption which you can find at http://www.irs.gov/newsroom/article/0,,id=223606,00.html .

Memo to Investors:

We’re still trying to figure out whether it’s time to buy or sell gold.

Yesterday CNBC posted an article by JIM CRAMER!

He says it’s time to get in.

CRAMER! gives “six reasons why you should buy gold right now”.

Got that? Right Now!

But CNBC also had an article quoting Dennis Gartman, who says it’s time to get out.

Gartman is a hedge fund manager and author of The Gartman Letter.

He says gold investors should “rush to the exits”.

You can read CRAMERS! six reasons to buy now at

http://www.cnbc.com/id/37192473 .

And you can find out why Gartman says it time to rush to the exits at

http://www.cnbc.com/id/37209570/ .

From: Still Confused in Wheaton, Illinois

Lobbyists are advocates for the organizations they represent.

Lobbyists and special interest groups also support political candidates who are most aligned with the positions they advocate for.

As we noted yesterday, the AICPA has many ”special interests” including tax legislation, financial reporting, business and regulatory issues, to name a few.

And the AICPA has spent over $13 million in lobbying efforts from 1989-2010 according to the Center for Responsive Politics, a non partisan research group that tracks political contributions and the effects on elections and public policy.

AT & T spent nearly$45 million over the same time period.

Other “heavy hitters” include unions, financial firms, the Big Four accounting firms, associations and Fortune 1000 companies. 

You can find the Center’s Top All-Time Donors list at http://www.opensecrets.org/orgs/list.php .

The Center also provides a wealth of useful information, analysis and reports, which you can access from their home page at  http://www.opensecrets.org/index.php .

As we said yesterday, there is nothing inherently wrong with lobbying and special interest groups.

It’s the lobbyists and politicians who engage in unethical or illegal activities that are the real problem.

We hear a lot from politicians about lobbyists and “special interest” groups. 

But what’s wrong with lobbying and special interest groups?

The AICPA is a fine upstanding organization that I’m a member of.

And the AICPA engages in lobbying, just like other professional, trade and industry organizations.

They all also have special interests that they lobby for.

The AICPA has a “special interest” in tax, financial reporting, business and regulatory issues, to name a few.

I did a Google search for “Is Lobbying Bad?” and got “nearly 4,000,000 results (0.35 seconds)”.

A January, 2009 article from The Hill  had this observation:

“By and large, lobbyists are a rather unremarkable group of law-abiding professionals. The majority of lobbyists work in-house, representing corporations, trade associations, labor unions, nonprofit and religious organizations and academic institutions. And while they represent the interests of management, they also represent workers.”

Well said.

It’s the lobbyists and politicians who engage in unethical or illegal activities that are the real problem.

More on that tomorrow.

You can read the The Hill article at

http://thehill.com/business-a-lobbying/k-street-insiders/k-street-insiders/20174-whats-so-bad-about-lobbyists-anyway .

The Department of Labor’s Employee Benefits Security Administration has just posted information on the extension of health insurance coverage for adult children under the Affordable Care Act.

You can find a comprehensive Fact Sheet at http://www.dol.gov/ebsa/newsroom/fsdependentcoverage.html .

The Department has also has posted a useful FAQ at

http://www.dol.gov/ebsa/faqs/faq-dependentcoverage.html .