United State News Update: 5/3/09

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Saturday, May 9, 2009

Obama Makes Push for Credit Card Legislation

WASHINGTON (AP) — Putting himself on the side of fuming consumers, President Obama is pushing Congress to send him legislation by Memorial Day that would put a tighter rein on the credit card industry.

"Americans know that they have a responsibility to live within their means and pay what they owe," Obama said in his weekly radio and Internet address released Saturday. "But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties and hidden fees that have become all-too common."

Obama has prominently lobbied for a bill calling for a credit card crackdown. It already has cleared the House and awaits action in the Senate.

"I'm calling on Congress ... to pass a credit card reform bill that protects American consumers so that I can sign it into law by Memorial Day," Obama said. "There is no time for delay. We need a durable and successful flow of credit in our economy, but we can't tolerate profits that depend upon misleading working families. Those days are over."

But there's no certainty Congress will deliver by the end of the month.

The banking community is fighting back. Credit-card executives maintain that new restrictions could backfire on consumers, making it harder for banks to offer credit or put credit out of reach for many borrowers. They also contend that the sweeping rules already ordered by the Federal Reserve, beginning next year, address many of the consumer-protection concerns expressed by the president and members of Congress.

The bill's boosters are tapping into public anger over corporate excesses and the conduct of companies receiving billions of dollars in taxpayer money.

The House measure, called the Credit Card Holders' Bill of Rights, passed on a bipartisan vote of 357-70 following lobbying by the Obama administration. It would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18.

If they become law, the new House provisions won't take effect for a year, except for a requirement that customers get 45 days' notice before their interest rates are increased. That would take effect in 90 days.

Obama spoke to the public's frustration with credit cards.

"You shouldn't have to fear that any new credit card is going to come with strings attached, nor should you need a magnifying glass and a reference book to read a credit card application," Obama said. "And the abuses in our credit card industry have only multiplied in the midst of this recession, when Americans can least afford to bear an extra burden."

Thursday, May 7, 2009

Basking sharks to return to Manx waters this month

Researchers have discovered where basking sharks – the world's second largest fish – hide out for half of every year, according to a report published online on May 7th in Current Biology, a Cell Press publication. The discovery revises scientists' understanding of the iconic species and highlights just how little we still know about even the largest of marine animals, the researchers said.

"While commonly sighted in surface waters during summer and autumn months, the disappearance of basking sharks during winter has been a great source of debate ever since an article in 1954 suggested that they hibernate on the ocean floor during this time," said Gregory Skomal of Massachusetts Marine Fisheries. "Some 50 years later, we have helped to solve the mystery while completely re-defining the known distribution of this species."

Using new satellite-based tagging technology and a novel geolocation technique, the researchers found that basking sharks make ocean-scale migrations through tropical waters of the Atlantic Ocean during the winter, traveling at depths of 200 to 1,000 meters. Their data show that the sharks sometimes stay at those depths for weeks or even months at a time. "In doing so, they have completely avoided detection by humans for millennia," Skomal said, emphasizing that as one of the very largest of marine animals, the sharks grow to over 10 meters and weigh as much as seven metric tons.

Skomal said they were "absolutely surprised" when they first received a signal from the tagged sharks coming from the tropical waters of the western Atlantic, in the vicinity of the Caribbean and Bahamas. After all, basking sharks were always believed to be cool-water sharks, restricted to temperate regions.

Several factors had made basking sharks a challenge to study. On top of the fact that they disappear for long periods of time, they also feed exclusively on plankton. That means they can't readily be captured with traditional rod-and-reel methods. And even when the sharks are found closer to the ocean surface, they spend their time in the cool-temperature, plankton-rich waters that limit underwater visibility and make diving difficult.

The findings could have important implications for the conservation of basking sharks, which have shown some signs of dramatic decline in the last half century and are listed as threatened by the International Union for Conservation of Nature.

"Coupled with recent genetic data, our finding indicates that the Atlantic population – and perhaps the world population – are connected and may constitute a single population," Skomal said. "Hence, the global population of basking sharks may be even smaller than previously thought." Efforts to boost basking sharks' numbers will therefore need to be coordinated at a global scale.

Global conservation

Key questions remain: why do the northeast Atlantic sharks differ in their holiday plans from their transatlantic cousins? What are they actually doing on their trips: gorging on foreign food or indulging in a holiday romance?

One thing that is clear, say both Sims and Skomal, is that the research shows that basking sharks — which are listed as 'vulnerable' on the International Union for Conservation of Nature (IUCN) 'red list' of endangered species — travel internationally and therefore need global protection.

"It throws into sharp focus that there needs to be more international attention on the protection of these animals," says Sims.

Sarah Fowler, outgoing chair of the IUCN shark specialist group, said that these "fantastic results" reinforce the importance of the international Convention on the Conservation of Migratory Species of Wild Animals (CMS).

She says that finalizing a memorandum of understanding and action plan to conserve migratory sharks under the convention is vital.

"This instrument will enable range states [with jurisdiction over the shark's waters] to coordinate actions for the conservation of the basking shark, which is listed on the appendices of CMS," says Fowler, managing director of NatureBureau International, a UK-based ecological consultancy. "We hope that the memorandum of understanding will be completed and opened for signature at the end of this year."

References
1. Sims, D. , Southall, E. J. , Richardson, A. J. , Reid, P. C. & Metcalfe, J. D. Mar. Ecol. Prog. Ser. 248, 187– 196 (2003).
2. Skomal, G. et al. Curr. Biol. advance online publication, doi:10.1016/j.cub.2009.04.019 (2009).

Adjust withholding on W-4 to keep tax credit on track

Your next paycheck will probably be a little fatter than usual, but it's not because your boss thinks you're swell. Instead, the increase reflects the Making Work Pay credit, part of the economic stimulus package enacted this year.

Most taxpayers will receive a credit of about $400, or $800 for married couples. Unlike last year, you won't receive a check in the mail. Instead, the credit will be spread out over the year. Most taxpayers will receive an extra $10 a week.

VIDEO: Tax tips from Sandra Block

That's not exactly a windfall, but a little something extra in your paycheck sure can't hurt, right? Well, actually, it could. Some taxpayers could end up with a smaller-than-average tax refund next year or — horrors — discover they owe the IRS money. You can avoid problems down the road by adjusting the withholding allowances on your W-4. Consider reviewing the number of allowances you claim if:

•You're a dual-income couple. The IRS withholding tables are designed to provide a maximum tax credit of about $400 for single taxpayers, and about $600 if you are married and file jointly, says Bob Trinz, senior tax analyst for Thomson Reuters. That could cause some working couples to receive a larger combined credit than allowed by law.

For example, suppose you earn $75,000 a year, as does your spouse. Both of you claim two withholding allowances. You'll each get a $614 credit, for a combined credit of $1,228, according to Thomson Reuters. However, the maximum credit a married couple is eligible to claim is $800. Unless one or both of you increase the amount of taxes withheld from your paychecks, you could end up owing the IRS money when you file your taxes next year, Trinz says.

Conversely, Trinz says, if only one spouse works, the couple could end up with a smaller credit than they're entitled to. Here's an example, from Thomson Reuters: A married man earns $100,000 a year and claims four withholding allowances. His wife is a homemaker. He'll receive a credit of $614, even though the couple are entitled to an $800 credit. This couple can claim the balance of the credit when they file their taxes, or they can get the money sooner by reducing their withholding.

•You have more than one job. If you're working two jobs, both of your employers will adjust your take-home pay to reflect the new credit. The combined credit from both jobs could exceed the maximum $400 credit for individual taxpayers, says Michael O'Toole, director of government relations for the American Payroll Association.

•Your total income exceeds the thresholds for the credit. The Making Work Pay Credit phases out for single taxpayers with modified adjusted gross incomes of more than $75,000, and married couples with modified AGI of more than $150,000. Singles with modified AGI of more than $95,000 and couples with MAGI of more than $190,000 are ineligible for the credit.

Your employer will base the withholding calculation on the amount of income from your job. But if you have other sources of income — from a second job, for example — your total income could "bump you out of the range to be eligible for the full credit," says Amy McAnarney, director of H&R Block's Tax Institute.

Likewise, some dual-income couples could run into problems if one spouse receives the credit but the couple's combined income exceeds the income cutoff.

Reviewing your W-4

Even if you have no tax-credit worries, take a look at your W-4 anyway. Tax preparers recommend reviewing the number of allowances you claim on your W-4 whenever you have a major life change, such as the birth of a child, marriage or a home purchase. But a recent survey by H&R Block found that 44% of workers haven't adjusted their W-4s in at least three years.

If you had to write a big check to the IRS this year, that's a sign that you're not having enough withheld and need to reduce the number of allowances on your W-4. Likewise, taxpayers who receive a large refund should consider increasing the number of allowances they claim.

Many taxpayers resist this idea because they like receiving a check from the IRS. But in these economically challenging times, giving the government an interest-free loan makes no sense, says David Bergstein, a tax analyst for CCH CompleteTax, an online tax software program. When you file your taxes, he says, "You should break even."

There are several Internet calculators to figure out how many allowances you should claim. CCH offers one at completetax.com/calc.asp.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com.

You might qualify to extend your health benefits if you're laid off

Even if you've done everything you're supposed to do to prepare for a layoff — built up an emergency fund, paid off your credit cards, set up an account on LinkedIn — losing your employer-provided health insurance could demolish your finances. Your health could suffer, too.

While many insurers offer individual policies, they're primarily targeted at the young and healthy. Individuals who are older or have medical problems are often turned down or charged prohibitively high rates.

The economic stimulus package enacted this year seeks to address this problem by lowering the cost of continuing your former employer's health insurance. Unfortunately, many laid-off workers are discovering that they're ineligible for this subsidy. Others may need to take extra steps to demonstrate they're qualified.

Under the federal Consolidated Omnibus Budget Reconciliation Act, or COBRA, laid-off workers can continue their former employer's health coverage for up to 18 months. In the past, participants had to pay 102% of the premiums, making COBRA unaffordable for most unemployed workers.

The stimulus package subsidizes 65% of COBRA premiums for up to nine months for individuals who were laid off between Sept. 1, 2008, and the end of this year. With the subsidy, the average family will pay $377 a month or $140 for an individual, according to the Kaiser Family Foundation.

That's still more than most employees pay for insurance while they're working. But if you're eligible for the subsidy, you should try to take advantage of it, says Ron Pollack, executive director of Families USA, a health care advocacy group.

Signing up for COBRA will allow you to continue the same coverage you had when you were working, even if you or anyone in your family has medical problems. In addition, it will preserve your ability to get insurance in the future, even if you have a pre-existing medical condition.

Reasons you may be ineligible for the COBRA subsidy:

•Your former employer has gone out of business or terminated its group coverage. These companies are no longer covered by COBRA, says Michael Langan, principal at Towers Perrin, a human resources consultant.

•You lost your job because of gross misconduct or left voluntarily.

However, recently issued guidelines from the IRS "take a very liberal position" on what constitutes involuntary termination, Langan says. For example, if you're unemployed because your employer closed your branch, that counts as an involuntary termination, Langan says, even if your company offered you a job in another part of the country.

Similarly, employees who accepted a buyout because their employer said the offer would be followed by layoffs qualify for the subsidy, he says.

The Labor Department has an appeals process for unemployed workers who were denied the subsidy. For more information, go to www.dol.gov/cobra.

Mini COBRA laws

Some individuals who worked for small companies may also be ineligible for the subsidy. The federal law applies only to companies with 20 or more workers.

More than 39 states and Washington, D.C., have enacted "mini COBRA" laws that require small companies that provided health insurance to allow former employees to extend their coverage. Jobless workers who are covered by a state mini COBRA law could qualify for the subsidy.

But if you worked for a small company and are out of work, there are a couple of things you should keep in mind. First, mini COBRA laws — and the subsidy — apply only to workers who had group coverage in the first place. Most companies with fewer than 20 workers don't provide health insurance, Langan says.

In addition, not all state mini COBRA laws are as comprehensive as the federal law.

Some states require companies only to provide extended coverage for three months. Others don't give individuals who declined to enroll in COBRA when they were laid off a second chance to sign up. The federal law gives such individuals 60 days to re-enroll.

Several states are considering legislation to adopt or expand mini COBRA laws. For more information, contact your state's insurance department. The National Association of Insurance Commissioners provides links to state insurance department websites at www.naic.org.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock

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commnet:

This is a 2005 study. Obviously the 2008 figures would be much higher:

The most direct way in which the insured are affected by the lack of universal health care is illustrated by a 2005 study that surveyed people who filed for personal bankruptcy. In this study, 46.2% of those surveyed cited a medical cause for their bankruptcy. Of note, only 32.6% of those citing a medical cause of bankruptcy were uninsured at the time of filing, meaning that almost 7 out of 10 people in the survey were insured when they filed. In other words, high medical bills and lost income due to illness can lead to bankruptcy even for the insured. A society that believes that people should pay a lot of money for the privilege of having health care is a society in which only the extraordinarily rich are truly immune to the threat of medical bankruptcy. (amsa.org)

Inflation-adjusted Savings Bonds hit 0% rate for first time

For the next six months, a new inflation-adjusted Savings Bond will provide exactly the same investment return as the space beneath your mattress.

Treasury announced last week that inflation-adjusted Savings Bonds purchased from May through October will earn 0% for the first six months they're held. This is the first time I Bond returns have fallen to zero since Treasury started issuing them in 1998, says Daniel Pederson, author of Savings Bonds: When to Hold, When to Fold, and Everything In-Between.

Consider this the downside of $2 gasoline. The I Bond consists of two components: a fixed rate that stays the same for the life of the bond and an inflation rate that's adjusted every six months. The inflation component for I Bonds issued from May through October is based on the change in the consumer price index from September through March.

Primarily because of sharp declines in the cost of energy, consumer prices fell at an annual rate of 5.56% from September 2008 through March 2009. The decline in the inflation rate will vaporize the 0.10% fixed rate for I Bonds issued from May through October. The drop will also wipe out the interest on older I Bonds with much higher fixed rates, says Tom Adams, author of Savings Bond Advisor. The 0% interest rate will affect "every I Bond that's ever been issued," he says.

The only good news is that I Bond owners won't lose any money. Under the Treasury formula, the earnings rate on I Bonds will never fall below zero. If you already own I Bonds, you won't earn any money during the relevant six-month period, but you won't lose any of your principal.

FIND MORE STORIES IN:

This may come as small consolation to I Bond owners who are facing six months of oblivion. But before you ditch your I Bonds, there are a couple of factors to consider:

•When your inflation-adjusted rate will reset. The inflation component of your I Bond is adjusted every six months, depending on when you purchased your bond. If you own an I Bond that was purchased in April, for example, your rate won't drop to zero until October, Adams says. Until then, the bond will continue to earn an inflation-adjusted rate of 4.92%, plus the fixed rate that was in effect when you purchased your I Bond. Sell now, and you'll give up five months of above-average interest.

•The fixed rate for your I Bonds. If you purchased an I Bond in 1998 through 2001, you should hold on to it, even during this fallow period, Pederson says. Those bonds carry fixed rates of 3% or more for the life of the bond.

When high gas prices led to a surge in the inflation rate last spring, some of these older I Bonds earned more than 8%. Even if inflation rises to a modest rate of 2% to 3%, these bonds will earn 5% to 6%, Pederson says. But if you sell, you'll lose that fixed rate forever.

"Don't do something knee-jerk because you see a 0% rate," Pederson says. "Over the long haul, you could still have a very attractive investment."

On the other hand, if you own some I Bonds with lower fixed rates, the six-month 0% rate offers an opportunity to ditch them without paying a penalty. When you buy an I Bond, you can't redeem it for a year, and if you sell in less than five years, you'll forfeit the last three months of interest. But if your interest rate for those last three months is zero, cashing out early won't cost you anything.

While the recession has kept prices in check, many analysts believe large-scale government borrowing will eventually ignite inflation, which would increase the I Bond's return. But even if you agree that inflation is a looming threat, it's probably not a good idea to buy I Bonds now, Pederson says, because of the low fixed rate.

The 0.10% fixed rate Treasury is offering for I Bonds purchased in May through October means you'll earn only a hair above the inflation rate on any I Bond purchased from now through Oct. 31. If you believe I Bonds are a good long-term investment, Pederson says, "There's no risk to waiting until Nov. 1 and seeing if they do better with the fixed rate."

In addition to the I Bond, Treasury offers an EE Bond that pays a fixed rate for the life of the bond. Treasury said last week that EE Bonds issued from May through October will pay a rate of 0.7%, down from an already measly rate of 1.3% for EE Bonds issued from November through April. Even in this low-rate environment, Adams says, "It's just really hard to come up with an argument for investing in EE Bonds."

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