Postal Service About to Default Again

     As you know, the United States Postal Service (USPS) is a national business that delivers mail throughout the country for millions of citizens. It is also well documented that the USPS has been losing a lot of money in recent years due to the recent economic downturn and resulting slowdown in the amount of mail actually being sent throughout the country. If the Postal Service can not pay their $5.6 billion fee in order to pay for health care benefits for retirees, it will be the second time that the business has defaulted on a payment (the first taking place on August 1st of this year).

     As of right now, the defaulting on a payment doesn't mean much as there will be no effect on the delivery of mail, but if Congress doesn't step in by next spring, the Postal Service will actually begin to start running out of cash. No cash means that they can't pay subcontractors and mail carriers, which in turn could lead to major cuts to the mail delivery system. The article references the potential situation as the postal service "Armageddon," a highly accurate reference in my opinion. The standard mail delivery has always been six days a week, and in my opinion, maybe reducing deliveries by one or two days won't make a dramatic difference, but anything worse than that will definitely have a negative impact on our economy. 

     This whole situation was created due to a law passed by Congress in 2006 that ordered the prefunding of retiree benefits as a way of easing federal deficits a bit. Various unions are blaming Congress for this entire situation since it was their mandate that has led to the multiple defaults. During this time, Congress has made it clear that it won't help the Postal Service until after this year's elections at the earliest, and even then, it will be unlikely that they will do anything until the new members of Congress enter in January. In my opinion, Congress really needs to get their act together and settle this situation out. It feels like the longer they end up waiting for events to unfold, the worse the outcome will be for everyone.

     Currently, the Postal Service will be hoping to pull through until November for the holiday delivery rush. Until then, they may end up running out of money by mid-October, which could be disastrous for the business. In my opinion, either Congress needs to step their game up and get something done to help them out, or they better act quickly come the new year in order to settle this mess out. Until then, all we can really do is hope for the best that the Postal Service can get through all of this without too many consequences resulting.

Articles Referenced 

http://money.cnn.com/2012/09/25/news/economy/postal-service/index.html

Chapter 5 Post

     One of the more controversial and opinionated sections of the U.S. Constitution and the Bill of Rights is the right to privacy. According to the textbook, the right to privacy is a "judicially created principle" that encompasses a variety of individual actions protected by the penumbras created by a number of constitutional amendments. These amendments include the first, third, fourth, ninth, and fourteenth amendments. The right to privacy wasn't exactly enumerated specifically in the Constitution, but the Bill of Rights contained numerous indications that the Framers expected that some aspects of human life were to be kept off limits from any regulations from the government.

     There are three topics that have been very controversial over the years that deal with the right to privacy; birth control, abortion, and homosexuality. Through the course of U.S. History, the amount of people that had access to contraceptives has greatly increased. At first, many states barred the sale of contraceptives to minors, prohibited the display of contraceptives, or even banned the sale altogether. Over the years, the U.S. Supreme Court expanded the access to contraceptives through a variety of  court cases, such as Griswold v. Connecticut. This court case allowed for zones of privacy to be created for married couples who wanted to plan a family. The years following this decision allowed for the Court to expand the privacy rights to include all unmarried individuals to have full access to contraceptives. In my opinion, I think it was the right decision for the government to expand access to allow anyone to have access to contraceptives. It is up to the individual whether or not they want to use contraceptives, and the government really shouldn't have any say in influencing that individual.

     Abortion has been an extremely controversial issue since the 1960s. This issue has been fueled by a number of Supreme Court decisions that has allowed abortion to be legalized. The major Supreme Court decision in favor of allowing citizens to go through an abortion was Roe v. Wade. In this court case, the Supreme Court decided that a woman's right to an abortion was protected by the right to privacy that could be implied from various guarantees found in the Bill of Rights. In my opinion, I completely disagree with the ruling. I honestly believe that abortion should be illegal for all cases except for rape. Taking an innocent person's life just because the individual carrying the child doesn't "want" the child anymore is a completely irresponsible and cruel action to take. I know there is so much controversy surrounding the whole situation, but that is just how I feel about it. Hopefully the government can do something to reverse the decisions of the Court, or at least make it much harder for citizens to get an abortion (which has been happening in recent years).

     The last major issue discussed in the textbook involving the right to privacy involves homosexuality.  The right to privacy of personal/private sexual behavior was not enforced until recently (2003). In my opinion, everyone's sexual preferences is their own business, and that preference shouldn't be used to discriminate against an individual. I think the government is doing a decent job of enacting various acts and laws in order to protect citizens' rights to privacy on this sensitive issue.

     The right to privacy among these three major issues has definitely been a point of contention in recent years. I honestly don't see an end to the controversy as there are so many differing opinions on each of the issues. Hopefully, something can be done though to at least maintain the current stances on each issue and make sure that we as a government/society don't move backwards.

America's Workplace A Lot Less Deadly

     Over the last ten to twenty years, the government has been trying to figure out more ways to get involved in helping to reduce the number of work-related deaths in the workplace. In the Bureau of Labor Statistics' annual report, it seems that the government's efforts have been successful as the number of work-related deaths have steadily fallen each year since 1994.

     In 1994, the total number of workplace fatalities totaled 6,632. As of the 2011 report, the number of fatalities has dropped to 4,609 people. The decline in numbers is a testament to business' increased efforts to enhance safety regulations in order to create the highest quality, safest workplace possible for their employees. Employees have become increasingly valuable to their employers over the years so it is crucial that they are protected as much as they can be protected. According to Brian O'Donel, an industrial safety expert, he believes that it's a very important thing making sure that the safety regulations are always up to date and that replacing employees is "extremely expensive."

     Workplaces throughout the country are working with the Occupational Safety and Health Administration (OSHA) in order to uphold the rules and regulations that have been developed to make workplaces safer for everyone. In fact, the OSHA has been working in recent years to make the rules clearer and more concise to make sure there are no misunderstandings. In addition, the government has been working to reduce the number of deaths in some of America's most dangerous jobs. For example, according to a report from the Department of Labor, the most common dangerous workplace activity is driving. So, in order to try and reduce accidents on the road, the Department of Transportation issued a few new rules within the last year to improve trucker safety. One of the new rules is that drivers must rest thirty minutes after driving for a maximum of eight hours at one time. In addition, drivers can't drive for more than seventy hours in one week. It may seem like little things here and there, but these rules have been extremely effective in helping to reduce workplace fatalities.

     There are a couple of silver linings when it comes to this news. First off, it is estimated that the overall death toll will rise as the Labor Department's numbers are only preliminary, and as more investigations are completed, the number will eventually rise a bit. In addition, as the economy recovers and more people are entered back into the workforce, it is predicted that the number will rise as the new employees will lack experience and in turn, be more vulnerable to injuries. However, through all of this, I believe that the government has done a great job trying to make the workplace as a whole, safer. Overall, it can't be denied that the workplace is much safer than it was twenty years ago, and I hope that  the workplace continues to get safer as we move into the future where the technology that continues to evolve can be utilized to further protect the American workers.

Articles Referenced

http://money.cnn.com/2012/09/21/real_estate/work-deaths/index.html?iid=H_PF_News

Chapter 3 Post

     Through the course of the history of the United States, finding an equilibrium between the powers and responsibilities of national and state governments has been one of the greatest challenges of a federal system. Over time, the roles of the state and national government have changed as society evolves to adapt to new issues and problems. This post will be centered around how the balance is as of today and how this balance is affecting policy making throughout the country.

     The textbook talks about Paul E. Peterson and his written work, The Price of Federalism. Throughout the book, Peterson talks about how the government should  divide policy-making responsibility into two broad areas: developmental and redistributive policies. In redistributive policies, the government collects money from one group of citizens in order to finance a service, such as health care, for another group of citizens. On the other hand, developmental policies are designed to strengthen a government's economic standing, such as building roads and other infrastructure. Peterson argued that the national government's financial resources and ability to assure a uniform standard made it overall better suited to handle redistributive programs. However, he felt that state governments should be given the task of handling developmental programs. In my opinion, I completely agree with Peterson's theories. Issues such as welfare and health care should be left in the hands of the national government so that the policies created for those issues can be effectively enforced throughout the country. In addition, I think redistributive programs should be delegated to state governments so that each unique region of our country can address the needs of its citizens in an efficient manner.

     What's a bit disappointing about this set up is that it hasn't been this simple over the years since the division of labor has not followed this pattern. Within the national government, there have been reelection incentives that are used in order to develop and fund developmental programs that have a direct impact on the citizens. Because of this process. the enforcement of redistributive policies has been left in the hands of the states, which goes against Peterson's beliefs.

     In recent years, the balance between national and state government has gotten a bit more shaky. First off, the national government has begun to try and take a bigger role in redistributive policies. A prime example would be the enforcement of the Patient Protection and Affordable Care Act. This action has shown consistency with Peterson's theories since the national government is trying to take control of redistributive programs. However, the state governments aren't too happy about the recent actions of the national government. Under the 10th amendment, issues such as health care and education have usually been reserved for the states, but the federal intervention has gotten some policymakers upset. In an effort to "counter-attack" the national government, states have been trying to find ways to repel the national government's actions. For example, in the case of the Patient Protection and Affordable Care Act, there have been quite a few states who have filed lawsuits against the government in order to try and block the implementation of the controversial health care bill.

     As of today, the balance between national and state government is still a constant battle for equality. Currently, it is considered that Obama's administration is functioning under the progressive federalism movement. Under this type of federalism, state officials are given more leeway when it comes to acting on issues that are normally a national concern. I think that if our government can move more towards this type of federalism, it could really benefit everyone since the national government can enforce the redistributive programs that need to be worked on while giving the state governments the power to handle these programs the way that they want to as long as it's effective. Of course, only everything is perfect in my idealized world and in reality, it will probably continue to be a constant struggle to find the exact balance between governments. Overall, it will be interesting to see how the states interact with future national government actions because I'm sure that no matter what, some controversy is bound to ensue.

What's The Deal With The Fiscal Cliff?

     Hey everyone! I just wanted to give a quick update regarding the Federal Reserve before I jump into my actual post. Last week, I discussed Ben Bernanke and his Federal Reserve speech. Following his speech, it was mentioned that the Federal Reserve Board will be meeting up this week to decide whether or not to take any action in order to stimulate the economy. Well, on Thursday, the Fed decided that they will buy $40 billion in mortgage-backed bonds each month for as many months needed in order to try and stimulate the economy. This move, in my opinion, is a great one and I applaud the Federal Reserve Board for coming to this decision. Stocks have also responded very well to the news, with the Dow Jones and S&P 500 ending at their highest points since 2007.

     This week's topic that I want to discuss involves the "fiscal cliff" that are slated to take place in January of next year if Congress is unable to come to a decision on how to address the situation. This whole situation started last year when Congress failed to reach a bipartisan debt-reduction deal. Because of that, about $7 trillion worth of tax increases and spending cuts will go into effect on January 1st. There are quite a few pros and cons (mostly cons) that this will have on the U.S. economy. The major pro this will have is that deficits will be reduced by nearly $1 trillion over the next 10 years.

     There are numerous cons to this fiscal cliff however. First off, there will be billions of dollars in cuts from a variety of activities. For example, approximately $55 billion in defense spending and an additional $55 billion in non-defense spending (such as education and air travel safety) will be automatically cut from the federal budget. These cuts could potentially have a huge negative effect on all the programs affected. In addition, income tax rates will rise substantially for citizens once next year rolls around. Another huge con from this situation is that if all this money is taken out of the economy, the risk of falling into another recession greatly increases, which in turn will lead to more job layoffs and a rising unemployment rate (estimated to be at 9% in the second half of 2013).

     If Congress can find a way to come to a solution and avoid this whole situation, the economy in the short term will continue to grow as more jobs will be maintained and created for citizens. However, this will cause the U.S. deficit outlook to worsen over the next few years as money continues to be spent. In a perfect world, I wish both sides could just come together and compromise some of the cuts so it wouldn't be as negative as it will be if nothing is done. It's too bad that politics today can't be that easy since neither side will budge one bit. I guess the most we can do for now is hope that a miracle happens and something gets accomplished from this situation. I honestly don't want our economy to have to deal with another potential recession, especially when things aren't even completely back to normal as of today. As we get closer towards the new year, I'm sure more news regarding this fiscal cliff will come up, and I'll be extremely interested to see what happens.

Second Chapter 2 Post

     For today's post regarding Chapter 2, I want to discuss the significance of the U.S. Constitution and how it has evolved over the course of 200+ years to the document it is today. The U.S. Constitution was originally formed to create a strong national government that had separation of powers in order to replace the ineffective and weak Articles of Confederation. The Constitution had seven major articles that together helped greatly improve what the Articles tried to originally accomplish. For example, the first three articles established the three branches of government that are still fully functioning today, while the other four articles were created in an attempt to avoid any problems that may arise over the years. For example, Article IV talks about the full faith and credit clause, which mandates that states honor the laws and judicial proceedings of the other states. The Constitution from the beginning was such an improvement over the Articles of Confederation, even with the amount of opposition it received from the onset.

     Over the course of U.S. History, the Constitution has been amended multiple times in order to deal with various problems that came up that needed to be dealt with. For example, in order to get the Anti-Federalists to approve the Constitution wholeheartedly, the Bill of Rights was created that protected a variety of personal liberties such as freedom of speech and religion. This major addition to the Constitution is still in place today as one of the most notable features of the overall document. As of today, there have been twenty-seven amendments that have been added to the Constitution. These amendments have helped shaped and change our government as the nation evolved and grew.

     The main point I wanted to talk about regarding the Constitution is how the document evolved due to changes in culture and society. For example, the textbook talks about how in the past, people were uncomfortable towards the Three-Fifths Compromise but they would never have thought that an African American would ever become President of the United States. In addition, not many of the Framers considered women to play diverse roles in American society, but here we are today with women proudly representing all aspects of the workforce. These changing views showcase how as our society changes over time, the Constitution evolves to accomodate these changes. Basically, the Constitution will never stay completely the same. While the fundamental principles will always be there, the Constitution will continue to evolve in order to accurately represent our growing society.

The Meaning & Significance of Ben Bernanke's Speech

     On August 31st, the chairman of the Federal Reserve, Ben Bernanke, delivered a highly anticipated speech at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming. The purpose of this speech was to give economists and central bankers from around the world who came to attend the conference the current state of the economy from the view of the Federal Reserve as well as any future plans, if any, that the Fed will take in order to help stimulate the economy. 

     The speech Bernanke gives at this event has become an annual event in recent years while he has been the chairman of the Federal Reserve. Bernanke's speech has become extremely significant in the last two years as the stock market greatly reacts to what he says during these speeches. For example, based on researched gathered by USA Today, in 2010, leading up to Bernake's speech on August 26th, the S&P 500 stock market index was down 6.1% for the year, but after his speech, the index rose 20.1% for the rest of the year. A less "drastic" but significant change took place last year in 2011. Up until his speech on August 25th, the S&P 500 was down 7.8% for the year, but after the speech, the index rose 8.5% overall for the rest of the year. These statistics highlight how important Bernanke's speech is to the investors not only within the United States, but also around the world who look to the U.S. to lead the way during these difficult times. 

     Now, onto the meaning behind the words in Bernanke's speech. The key statement Bernanke gave during his speech was that "the stagnation of the labor market in particular a grave concern." This statement resonated throughout the speech as he proceeded to let the world know that the Federal Reserve is prepared to step in and do whatever it takes to stimulate the economy. However, he did not say exactly what the Fed is going to do or when they are going to step in. I think Bernanke and the Federal Reserve is going to wait it out a bit longer and see if things start to drastically improve over the next few months.

     As of right now, stocks have responded well to Bernanke's speech. However, the latest economic data have still been pretty mixed as the job growth has been pretty slow and consumer confidence shifting month to month. This coming week will be a major week for stocks as the Federal Reserve Board meets to decide whether or not to take action based on the various economic reports that have been released since Bernanke's speech. Based on everything that has happened so far, I strongly believe that whatever the Federal Reserve decides to do, it will have a huge impact on the stock market. I hope that the Fed does decide to step in to try and stimulate the economy because the recovery effort so far has been painfully slow and somewhat inconsistent. If the Federal Reserve does indeed step in, I think that could be a major step towards getting the economy back on track. Let's hope for the best!

Articles Referenced:

http://www.usatoday.com/money/economy/story/2012-08-30/ben-bernanke-speech-jackson-hole/57470268/1

http://money.cnn.com/2012/09/09/investing/stocks-lookahead/index.html?iid=Lead

Chapter 2 Post

     Chapter 2 talks about the events leading up to the development of the U.S. Constitution, such as the formation of the Articles of Confederation and the resulting conflicts, as well as went in depth in describing these important documents and getting them ratified by the states in order solidify the foundations of the government we know today. 

     One of the more interesting topics discussed in the chapter involved the underlying principles of the U.S. Constitution, and how these principles affect the government today. The Framers decided to utilize a federal system that allows power to be shared between the state and national governments. This system was chosen in favor of the unitary system modeled by Great Britain. There were many people against having a strong national government (known as Anti-Federalists), but the Framers introduced the concept of "separation of powers" that makes use of the "checks and balances" in order to try and ease the concerns of the Anti-Federalists.

     Separation of powers is the way our government spreads out the powers and duties among the three branches of government. Without this, whoever would be leading the country would have the possibility of turning into a tyrant with nothing it their way to stop them. According to our textbook, there are three major features of this method:

1. Separate the U.S. Government into three unique branches; the executive, the judicial, and the legislative.
2. Three separately staffed branches of government to execute these functions.
3. Constitutional equality and independence of each branch.     

     There are numerous powers each branch possess that are unique to only that branch. For example, the executive branch can propose legislation to Congress or create foreign treaties, while the legislative branch can pass all federal laws proposed. Meanwhile, the judicial branch can interpret the federal laws and determine if they are constitutional or not. In addition to these distinct powers, each branch has a number of checks that they can utilize in order to limit the other branches' powers. For example, the legislative branch can pass a controversial bill into law, but the executive branch can overturning the ruling by vetoing the bill. Or, the judicial branch can rule that the bill or law in question is overall unconstitutional in nature. The Framers of our government wanted to have a pure system of separation of powers, but instead, what evolved was a symbiotic relationship between the three branches that has allowed our government to be pretty successful for over 200 years.

     The system of checks and balances can be seen pretty much everyday in the political world. Over the course of U.S. history, there have been 44 presidents that have to deal with this system in order to be able to enforce the policies they want to support. For example, the textbook uses the example of George W. Bush. As the commander in chief, Bush had the power to deploy troops to Iraq for war in 2003. However, in order to keep troops overseas for more than 90 days, he needed to get the authorization from Congress. Numerous examples of the checks and balances system can be observed just in the past two to three years under Barack Obama's administration. In order to get the Patient Protection and Affordable Care Act (aka "Obamacare") passed, he needed to get the approval from Congress in order to make the bill become a law. The same can be said about the American Recovery and Reinvestment Act of 2009, which was the major stimulus package Obama wanted to get passed in order to try and help the economy recover from the recession. As you can see, everything needs to be approved and revised by all branches in order to pass the best "product" into law.

     Things can get very difficult for the President at times dealing with this system, especially when the House of Representatives and the Senate are not in the majority towards the political party of the President. However, I believe that this overall system is a solid system that has proven to be successful over the years even with the times of disagreement between the executive and legislative branches. Through the separation of powers in our government, we can ensure that no single person possesses too much power. The balance that exists within our government is what I think makes it one of the top governmental forms in the world.

The Current State of Facebook's Stock Debacle

     Hey everyone! In addition to my blog posts regarding the chapter readings, I will also be posting various posts that deal with business topics and their connection to the government. These topics will range from stocks, to mergers, and everything in between. By focusing on a business theme, I will be able to discuss current events involving major companies throughout the country and the world as well as the ramifications, politically and legally, that evolve from those companies' actions. Hopefully all of you will find some interest in the topics that I talk about. That being said, let's begin!

     For this post, I wanted to talk about Facebook and the whole situation that has developed over the last few months over their new stock. To begin, Facebook started this process by filing for an initial public offering (IPO) in early February of this year. An IPO is what is needed to happen in order to transition from a privately held company into a publicly held company. To achieve this, Facebook had to submit a S-1 form to the Securities and Exchange Commission (SEC), which is basically the "watchdog" that oversees the stock market. Once this was completed, the next couple of months consisted of promoting the stock and obtaining a solid target price to sell the stock on opening day. During this time, the hype surrounding Facebook grew as it drew comparisons to Google, among other various technology stocks. 

     Once May 18th, 2012 came around, everything was set for a great opening for Facebook. Their initial offering price was set for $38. The company had 421 million shares on hand to sell to the public. The future seemed bright for Facebook until everything started to go wrong. Due to various technical problems and glitches, the opening day was filled with confusion as orders to buy the stock were prevented, leaving many investors wondering whether or not they actually were successful in getting the stock. At the end of opening day, the stock ended up only gaining 23 cents, which was very disappointing to many business analysts. As the following days and month passed, Facebook's stock steadily declined, and as of August 31st, the stock stood at 18.06 points, down over 52% from its original price.

     Now that I have talked about the "general" background regarding Facebook's stock, I want to touch on the legal aftermath resulting from the botched opening as well as the overall situation. As of today, over 40 lawsuits have been filed against Facebook and the NASDAQ (the stock exchange where Facebook's stocks are being sold on) due to the opening day debacle. Facebook in turn has asked to consolidate these lawsuits into one major suit since the complaints overlap. In addition, there have been reports and accusations that there have been some information only passed around to preferred clients that gave them an advantage against the everyday investor. This type of action, if proven to be true, is a huge no-no as an even playing field needs to be provided to everyone publicly. On top of all of this, the Securities and Exchange Commission has begun an investigation into whether or not Facebook took part in a "pump and dump" scheme. The pump and dump scheme is basically where the company tries to inflate the price of their stock through untrue positive statements in an effort to sell the stock at a higher price than it is supposed to be (Ex - Enron). All of these allegations and legal battles with the government over the next through months and maybe years will takes its toll on Facebook in my opinion. After everything that has gone wrong, I honestly can't see them bouncing back, especially with the overall popularity on the decline and rival social networking sites such as Twitter on the rise.

     Overall, Facebook is in a pretty bad situation as of right now, and it'll be months before any sense of stability, if any, comes for the company. As a closing note, I want to link to this interesting article that I read while researching all of the specifics behind Facebook's IPO. Basically, from my interpretation, if people researched a bit more in depth and read the prospectus, instead of immediately getting sucked into the hype, they could have realized that the stock wouldn't have done so well from the beginning  anyway. It just goes to show that it is always better to make an informed decision rather than a decision based on impulse! Until next week... thanks for reading!

     

Articles Used to Research:

http://www.businessinsider.com/facebook-stock-letter-shareholders

http://buzz.money.cnn.com/2012/08/31/facebook-stock-2/?iid=HP_River

http://www.washingtonpost.com/business/technology/facebook-moves-to-consolidate-cases/2012/06/15/gJQAry7SfV_story.html