Bright Hall

U.S. Cabinet to Eliminate Dozens of Government Programs

Adam Kirchner — 2009-04-19T13:53:00+00:00

Filed under: Politics, Money , Towson University

President Barack Obama announced an initiative to reduce "wasteful" government spending in his weekly address on Saturday.

"Billions are squandered on programs that have outlived their usefulness, or exist solely because of the power of a lobbyist or interest group," Obama said.

An agenda topic at Monday's first full Cabinet meeting will be budget cut proposals from each federal department and agency.

In his Saturday address, Obama named two specific budget cuts recently made: firstly, the Department of Homeland Security is no longer spending $3 million on logo updates. The DHS was created less than 7 years ago and the reason that the logo needed a $3 million update so soon remains to be seen.

The second budget cut is the saving of an estimated "hundreds of billions of dollars in wasteful spending and cost overruns" in the Department of Defense. According to the DoD's FY 2008 Agency Financial Report, the Department's available resources were $1.1 trillion, which primarily consisted of $736.4 billion in appropriations. The net cost of operations was $676 billion. A possible budget cut is no longer appropriating $736.4 billion to tally $1.1 trillion in resources when net operating costs are only $676 billion.

Obama pledged to announce "the elimination of dozens of government programs shown to be wasteful or ineffective. In this effort, there will be no sacred cows, and no pet projects."

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How to Legally Destroy Bernie Madoff

Adam Kirchner — 2009-02-18T16:57:00+00:00

Filed under: Money , Pop Culture, Towson University

For just $99.95 plus $15 for shipping you can have your very own smashable Bernard Madoff doll! For a limited time that fee also includes a matching "Hit Bernie" hammer.

The doll, which stands roughly seven inches tall and features Madoff wearing a red suit and yielding a pitchfork, is made in the Philippines but sold to the financially ruined, worldwide.

Modelworks, the Phoenix-based company that sells the doll along with other customizable models, claims that 1,000 orders for the Mini-Me Madoff have already been placed.

For those of you keeping score at home, that's $99,950 in revenue, already, for an effigy of the man who orchestrated what has been called "the largest fraud in the history of Wall Street."

And in other financial news, the times are so dire that former Federal Reserve Chairman Alan Greenspan has declared that the recession, which has persisted since the fourth quarter of 2007, will "surely be the longest and deepest" since the Great Depression.

So maybe on second thought, paying three figures for a useless, inanimate object is a horrible idea.

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Madoff's Wife Withdrew Bail Amount Day Before His Arrest

Adam Kirchner — 2009-02-11T23:53:00+00:00

Filed under: International News, Money , Towson University

Federal prosecutors and defense counsel agreed to delay the grand jury indictment of Bernard Madoff 30 days.

Madoff, who was arrested by the FBI on December 11, 2008 and charged with securities fraud, had been scheduled for an indictment hearing in January, postponed until February 11, 2009, only to be rescheduled again. The 30-day extension until March should make the new indictment date Friday the 13th.

Jason Voorhees could not be reached for comment.

From the You Can't Be Serious file, today's bigger Madoff scandal story was that Ruth Madoff, the wife of the man who has confessed that the investment arm of his company was "all just one big lie," withdrew $10 million on December 10, 2008. On December 11, Bernard Madoff's bail was set for $10 million. Madoff's bail was posted that day.

What are the odds that the amount withdrawn on the day Madoff confessed his massive ponzi scheme exactly matches the amount set for bail the very next day is just sheer coincidence?

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Many Are Losing Faith in Bernard Madoff

Adam Kirchner — 2009-01-24T22:26:00+00:00

Filed under: Religion, International News, Money , Towson University

Since December 11, Bernard Madoff has been possibly the most infamous man on the planet, and even before he faces indictment on February 11, things just keep getting worse. Although he still enjoys the right to due process and the implicit presumption of innocence until he has been proven guilty, he has essentially waived that, both in private and in public.

On December 10, in a discussion regarding the order of a premature payment of annual bonuses to employees with his sons Mark and Andrew, Madoff admitted to them that the investment arm of Bernard L. Madoff Investment Securities LLC was "all just one big lie." The day afterward, they turned their father over to the FBI.

Before being taken into custody on December 11, Madoff told two FBI agents that "there is no innocent explanation" for his actions.

According to a Securities and Exchange Comission complaint, $50 billion in investments can not be paid because Madoff had been paying investors with, in his own words, "money that wasn't there."

While under house arrest, Madoff mailed $1 million in jewelry as gifts rather than letting them become seized as assets due to victims of his alleged decades of fraud.

Earlier this week, Reuters reported that Rabbi Joshua Hammerman of the Temple Beth El in Stamford, Connecticut sent a letter to the Conference of Presidents of Major American Jewish Organizations, seeking the excommunication of Madoff from Judaism. A direct quote from the Reuters article: "Hammerman, of Temple Beth El, said that Madoff's alleged crimes are so deep there is no other appropriate response from American Jews than to kick him out of the faith".

The New York Times maintains an updating list of worldwide BMIS investors. The charity founded by Holocaust survivor and 1986 Nobel Peace Prize winner Elie Wiesel has issued a public statement that "substantially all of the Foundation's assets," $15.2 million, were lost to Madoff.

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Simple Addition Won't Save The Pell Grant

Tony Romm — 2009-01-19T00:30:00+00:00

Filed under: Politics, National News, Money , News, The Economy, American University

Assuredly, somewhere, students rejoiced at lawmakers' announcement on Thursday that they intend to enlarge the Pell Grant, a need-based gift aid program, by $500 next academic year. House Democrats, who introduced the increase as part of their upcoming (and hotly contested) $850 billion American Recovery and Reinvestment Act, also hope to pair the bigger grant with equally sizable increases in education infrastructure funding and tax credits.

Assuming the bill passes untouched by Senate skeptics, it'll constitute a symbolic victory for the higher education community, which has historically pined for more Pell Grant funding.

Unfortunately, it will be a small, unhelpful victory at that. Long plagued by diminishing purchasing power, the Pell Grant currently covers about 33 percent of an eligible student's cost of attendance at a four-year public college or university -- less than half of what the grant initially covered when it was introduced in 1972. Predictably, an additional $500 per annum, no matter how well-intentioned, does not address the decades throughout which Congress did not increase Pell awards in tandem with inflation.

A simple calculation sufficiently illustrates why: If the National Education Association's (NEA) public school cost of attendance estimates for 2009 are correct, the proposed expanded Pell Grant -- $5,321 for those students who qualify for the maximum -- would still only account for 34 percent of state college students' yearly bills, a meager one-point increase that will cost the government $16 billion to implement. And that figure assumes tuition only rises 6 percent next academic year; for those students bracing for even larger tuition hikes, the Pell Grant might possess even less power.Then again, that's why solving the Pell Grant's shortcomings is not a matter of simple addition. Unlike Stafford Loans, which pay for themselves with fixed interest rates, the federal grant program has no auxiliary funding mechanism; the government can't reinvest graduates' payments because there is nothing to be repaid. But that, after all, is the paradox of gift-based financial assistance: Although the grant lessens the burden on low-income families (for transparency's sake, mine included), it does so at the detriment of the federal budget, usually to the tune of more than $15 billion a year. In other words, every expansion of the grant program -- in either the amount of Americans it serves or the money it provides -- deepens the debt and diminishes the government's ability to provide those funds in the future. Worse, it leaves higher education's more intractable financial crises -- the loan market and the tuition hikes, among other issues -- totally untouched.

Whether President-elect Barack Obama possesses enough political capital to address the Pell Grant's structural inadequacies remains unclear; to do so in a solvent, effective manner, he must either raise taxes or cut other programs, neither of which seems particularly appealing during a period of economic decline. Until then, however, college students can only celebrate marginal increases with lukewarm enthusiasm. Solving the Pell Grant's problems isn't a matter of simple addition, but living with its effects just might be.

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How to Make the Econ Crisis Worse? Factor in the Exchange Rate

Catherine Cullen — 2008-11-10T19:06:00+00:00

Filed under: Money , Brown University

Catherine Cullen is writing for Bright Hall from Galway, Ireland where she is completing a study abroad program and enriching herself in Anglo-European culture.

The best advice I heard before studying abroad was to bring half as many clothes and twice as much money.

I listened-- or so I thought. I pared my wardrobe down to the bare essentials, converted my savings into traveler's checks and got on a plane to cross the Atlantic. Now, two and a half months later I have three dresses and a handful of shirts I haven't worn, two pairs of jeans that are on their last legs (pun intended) and 43 euro in my checking account to get me through the next three weeks. Oops.

The clothing issue is an obvious one: my idea of the bare essentials is a little too liberal. The money issue is a more complicated one.

These days, twice as much money in Europe is just barely enough. With the exchange rates fluctuating every day, budgeting has become significantly more challenging. With a USD to euro exchange rate that has topped out 1.6 in the last two months (and that's not even factoring in the international ATM charges), twice as much money is just barely breaking even. Three or four times as much money is a more accurate figure.

Ireland in particular is one of the most expensive countries in the EU. Although cities like London, Moscow and Paris have consistently ranked at the top of the list, this is more indicative of average cost of living expenses. While property in these cities is at a premium, little things like groceries and coffee and tourist trinkets are price-adjusted. Here in Ireland, taxes are so high on these everyday items that the cost of "incidentals" adds up quickly.

So here's the revamped packing list for Americans studying abroad: bring two or three pairs of jeans, two weeks worth of assorted short and long-sleeved tshirts that you don't care about, enough underwear to bail you out if you don't feel like doing laundry (or can't afford it!), and a pair of sneakers. Fill the empty space in your luggage with as much cash as you can! I'm being sarcastic of course... you're going to want to go with traveler's checks.

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