Obama Seeks to Channel Reagan as Democrats Prepare for Election

President Barack Obama’s politics may be drawing inspiration from an unlikely source: Ronald Reagan.

The late Republican president may become Democrat Obama’s most relevant role model as the U.S. economic and political climate mirrors Reagan’s first term, which began in 1981.

While Republicans suffered losses in the congressional elections of 1982, the economy began to improve by 1983. That allowed Reagan to argue that things were moving in the right direction. By 1984, he won re-election on a “It’s Morning Again in America” theme.

With the unemployment rate now at 10 percent and prospects dimming that the number will markedly improve by November, Obama and Democratic lawmakers are highlighting what they say are positive trends and warning against a return to the policies of President George W. Bush.

“Ronald Reagan made these points,” said Representative Chris Van Hollen of Maryland, who’s running Democratic candidate-recruitment efforts. “What was good for the Gipper can be good for Obama.”

Psychology was paramount, said Charles Franklin, a voting- behavior expert at the University of Wisconsin in Madison. “It was the rise in optimism that allowed Reagan to run a campaign based on these wonderful commercials,” he said.

Echoing Reagan

Obama recently has echoed Reagan’s themes in his Jan. 27 State of the Union speech, during a visit to Florida, and in a trip to a House Republican conference.

“This turnaround is the biggest in nearly three decades, and it didn’t happen by accident,” he told the Republicans on Jan. 29 in Baltimore. It happened “because of some of the steps that we took.”

Earlier that day, the government reported the economy grew 5.7 percent in the last three months of 2009, giving Democrats an opening, like Reagan, to ask voters to focus on the trend.

Republicans charge that Democratic policies have been ineffective, said Franklin. “With significant robust growth in the fourth quarter, that story starts to fall apart.”

“It’s a wonderful parallel” to Reagan’s first term, said Franklin, cautioning that the Democrats will still need more positive news.

To be sure, the economy took off well into Reagan’s first term, growing by 5.1 percent in the first quarter of 1983. Growth reached 9.3 percent in the second quarter of that year and averaged 7.9 percent in the following 12 months.

By contrast, the median forecast of economists surveyed by Bloomberg News is for the U.S. economy to expand 2.7 percent this year and 2.9 percent next year.

Still, the public may be responding. Obama’s approval ratings jumped more than the historical average in the days after his State of the Union speech, Gallup data shows. “He was more in tune with public opinion than not,” said Frank Newport, Gallup editor-in-chief.

Facing Losses

Franklin said Democrats may lose more than 20 House seats this year. In November 1982, with unemployment at 10.8 percent, Republicans lost 26 House seats. In November 1984, with the jobless rate down to 7.2 percent, Reagan’s party netted 14 House seats and retained control of the Senate.

Representative Kevin McCarthy, a California Republican leading his party’s 2010 recruitment, doubts Democrats can co- opt Reagan’s strategy.

“Maybe their message will change, but will their actions change?” he said. “We have not seen the jobs created” through spending programs.

In November, the Congressional Budget Office said last year’s stimulus package created 600,000 to 1.6 million jobs. At the same time, nonfarm payrolls have dropped every month since January 2008 except for an increase of 4,000 in November.

Approval Rating

Like Obama, Reagan entered office with an approval rating of about 68 percent and on a message of change.

While the Standard & Poor’s 500 Index rose about 20 percent in Obama’s first year in office, it fell 10 percent during Reagan’s inaugural year.

In his address to the 1984 Republican National Convention, Reagan stressed his problems were inherited.

He offered to take his opponents “on a little stroll down memory lane,” citing the worst inflation since World War I, declining industrial output and high taxes under predecessor Jimmy Carter.

On Jan. 28, Obama said at the University of Tampa that he took office “in the middle of this raging storm,” an argument he repeated the next day in Baltimore.

Key Differences

There are important differences, said Stephen Hess, a presidential scholar at the Brookings Institution in Washington.

Reagan had a simple message of small government and low taxes, while Obama’s agenda is soaring and “cloudy,” said Hess. “As a politician, you should be able to put it on a bumper sticker,” he said.

Obama doesn’t exude the “happy optimism” that Reagan did, said Hess.

He may also have deeper economic concerns: Obama’s 2011 budget proposal projects unemployment will average 8.2 percent in 2012, higher than when he took office.

Still, vulnerable Democrats are using Obama’s arguments. Ohio Representative Steve Driehaus, who holds one of the Rothenberg Political Report’s “dangerous dozen” House seats, said voters need to understand how the country got here.

“There was a critical juncture at the end of the Clinton administration when the budget was in the black,” before Republicans began running up deficits, he said. “We’re still picking up the pieces.”

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FutureGen timeline

FutureGen timeline

February 2003 — President George W. Bush announces initiative to develop coal-fueled power plant with near-zero emissions.

April 2003 — Utilities and mining companies, including St. Louis-based Peabody Energy, organize to help build plant, dubbed FutureGen.

December 2005 — Department of Energy, companies sign agreement to develop plant.

April 2006 — Four Illinois cities chosen as state’s nominees to host FutureGen; at least six states compete for project.

July 2006 — Mattoon and Tuscola in Illinois and two Texas cities chosen as FutureGen finalists.

July 2007 — Illinois Gov. Rod Blagojevich signs bill approving $80 million of incentives to lure FutureGen.

December 2007 — Mattoon is chosen as FutureGen site. DOE officials are not present and cite cost concerns.

January 2008 — Bush administration pulls FutureGen support.

March 2009 — Government auditors report DOE made a $500 million error in calculating FutureGen costs.

June 2009 — Obama administration revives FutureGen with $1 billion in funding.

September 2009 — DOE and FutureGen Alliance sign $17.3 million agreement to temporarily continue plant design.

February 2010 — Energy Secretary Stephen Chu expected to make final decision whether to go forward with FutureGen.

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Laclede reports lower first quarter profit

Laclede Group Inc., the owner of Missouri’s largest natural gas utility, said fiscal first-quarter profit fell 27 percent on lower margins and sales from its wholesale gas marketing unit.

Net income for the quarter ended Dec. 31 was $22.9 million, or $1.03 per share, compared with $31.3 million, or $1.41, a year earlier.

The wholesale gas unit, Laclede Energy Resources, "was impacted by pricing dynamics resulting from additional pipeline infrastructure brought online over the past year," Laclede CEO Douglas H. Yaeger said in a statement.

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Dillinger’s getaway car sells for $165,000

A 1930 Ford Model A used by bank robber John Dillinger to evade federal agents sold at auction Saturday for $165,000.

The car, sold at the Barrett-Jackson collector car auction in Scottsdale, Ariz., had a cameo role in the 2009 movie "Public Enemies" starring Johnny Depp.

This car was used in Dillinger’s 1934 escape from the Little Bohemia Lodge in Manitowish Waters, Wis. Dillinger and his gang had been staying at the lakeside resort when the proprietor tipped off the FBI.

A team of agents attempted to surround the house, but Dillinger and his partners Homer Van Meter and John "Red" Hamilton escaped to a nearby house where they found the Model A and forced its owner to drive them to safety.

Later, the car caught the attention of police and Hamilton was fatally wounded in a gun fight. The car still bears a bullet hole and the stains of Hamilton’s blood.

Dillinger later ditched the car in Chicago, stealing a 1934 Ford V8 in its place. (Dillinger was known to prefer Ford’s then-new V8 cars for their speed.)

The car was eventually returned to its original owner, who left it parked in his garage, figuring it wasn’t worth repairing payday loans in one hour. A subsequent owner, who purchased the car 30 years later for $1,400, also left it untouched.

Temporary cosmetic repairs were done to the car in 2007 for the movie. The identity of the winning bidder was not immediately known. The price paid for the car includes a 10% "buyer’s premium" added on to the $150,000 final bid price.

In general, Model A Fords are not particularly rare or valuable, even today. The ordinary market value of a 1930 Model A coupe with a rumble seat is about $13,000, according to appraisal Web site Nadaguides.com.

"I have to admit, this is a surprising price for a model A, regardless of ownership," said McKeel Hagerty, president of the collector car insurance company Hagerty Insurance. Hagerty Insurance is a sponsor of Speed TV’s live broadcast of the Barrett-Jackson event. 

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A-B InBev OKs freeze on job cuts in Belgium

The world’s biggest brewer, Anheuser-Busch InBev SA, said Thursday that it has agreed to freeze planned job cuts in Belgium to get workers to drop a two-week brewery blockade causing beer shortages at supermarkets and bars.

The company and Belgian trade unions said they struck a deal that postpones the brewer’s plans to reduce 303 jobs in Belgium — some 10 percent of its work force there.

It says it will also create 40 call center sales positions, bringing net job losses to 263.

"We have found agreement," said LBC union spokeswoman Annemie Plessers. She said that would lift the blockade and allow such beers as Stella Artois, Leffe and Jupiler to be distributed again starting today.

Instead of imposing the job reductions, A-B InBev said in a statement that there would be "an analysis of the problems and a coordinated search for solutions with the different parties involved."

The beer drought saw the Belgian government drafted to help mediate the crisis.

Supplies of Stella Artois and Jupiler ran out at the central depot of the Delhaize supermarket, one of the biggest in Belgium. Other supermarkets shelves where the suds would be stacked high were increasingly empty cash advance.

It was no better in bars across the country, where owners increasingly had to turn to other beers to keep taps running.

"The distribution of Jupiler, Hoegaarden and Stella Artois on tap has totally stopped," said Luc De Bauw, the head of the HoReCa organization of bar and restaurant owners.

The unions now need to call for meetings with their rank and file early today, and expect the blockades to be lifted later that day.

Union activists have set up walls of beer crates at the company’s three main plants in Belgium since Jan. 7, preventing the company from bringing beer out or taking raw materials, empty bottles and packaging goods in.

Unions say AB InBev’s worldwide operations yield hefty profits that made layoffs unnecessary. Overall though, Belgium is a shrinking market where consumers drink less and less mass market beer.

Last November, AB InBev reported $1.55 billion net profit in the third quarter, saying cost savings from the 2008 merger of St. Louis-based Anheuser-Busch and InBev ran ahead of plan.

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You can’t file for your $8,000 homebuyer tax credit

Did you purchase a home after Nov. 6? Don’t expect your $8,000 homebuyer tax credit any time soon.

UPDATED: IRS releases new form, begins accepting claims again

Since Congress passed the tax credit last February as part of the stimulus program, more than 1.4 million buyers have scrambled to take advantage of it, according to the IRS.

All they had to do was file an amendment to their 2008 tax returns (the ones they filed last spring) and claim the promised refund of 10% of the purchase price — up to $8,000.

"I closed on a Friday and I filed an amendment to my taxes on Monday," said Valatisha Jacinto, who purchased her Waco, Texas, home last March.

But that all changed on Nov. 6.

One CNNMoney.com reader wrote: "I bought a new home to get the $8,000 tax credit like many others. However the IRS has NOT ALLOWED ANYONE TO FILE since November 6th!! It has been over 2 MONTHS!!"

He’s right. Nov. 6 marked the date that the rules changed because an extended — and expanded — version of the homebuyer tax credit went into effect. And that put filing for the credit on hold.

Originally, the credit was just good for first-time buyers and was slated to end on Nov. 30. But Congress extended the credit to include contracts signed by April 30 and closed by June 30. It also made a refund of up to $6,500 available to existing homeowners looking to buy something new.

And that marked the start of a new IRS paperwork wrangle.

Those homeowners who closed their sale before Nov. 6 use Form 5405 to claim the credit right away. But those closing after that date are in limbo because no form yet exists for them to file.

The IRS had been expected to come out with a revised form by early January, but it has yet to release anything.

Robert Dietz, an economist with the National Association of Home Builders who has been monitoring the situation, said the delay may be caused because numerous parties, including the Treasury Department, have to agree on how to process all the new documentation that the expanded tax credit requires. Whereas before, all you did was file a form saying you’d bought a house — no proof required.

Now, for example, existing homeowners buying new places must provide proof that they owned and resided in their previous homes for at least five of the past eight years.

"They may just be making sure all their i’s are dotted and their t’s are crossed before they release it," Dietz said.

No e-filing for homebuyers

Even after the new form is ready, new filers will still face delays. Anyone who wants to claim their first-time homebuyer tax on their 2009 taxes (the ones being filed now through April 15) can’t do it it electronically. That’s right: Back to paper filing.

Part of that change is because the IRS has become more concerned about fraud as it discovers more people claimed the tax credit without actually purchasing property.

In October, a tax preparer, James Otto Price III, was the first person convicted of this crime. He falsely claimed the credit for 15 clients.

"Because of the scams, the IRS started sending back the amended returns and asking for proof," said Mary Mellem of David & Mary Mellem, EAs & Ashwaubenon Tax Professionals.

The IRS, she said, now requires a signed copy of the settlement statement ( HUD-1), plus a signed mortgage statement with the new address and a copy of either the taxpayer’s drivers license, bank statement or pay stub, showing the new address. That paperwork slows the process.

"The system has no way of sending along the documents they’re requiring," said Mellem. "Taxpayers must file a paper return instead."

The IRS points out that taxpayers can still use the electronic forms available on its Web site; they just have to print them out, attach the proof and mail everything in. And that can take quite a while.

"Taxpayers are looking at another three months before they get their returns," said Mellem. 

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Yahoo sides with Google over China cyber attack

Yahoo Inc. gave its support to rival Google Inc. Wednesday, denouncing an alleged cyber attack originating in China against Google’s network infrastructure.

"We condemn any attempts to infiltrate company networks to obtain user information," a Yahoo representative said in an e-mail statement. "We stand aligned with Google that these kinds of attacks are deeply disturbing and strongly believe that the violation of user privacy is something that we as Internet pioneers must all oppose."

Google said late Tuesday that the attack’s primary goal was to access Gmail accounts of Chinese human rights activists. The company said that the incident, as well as Chinese censorship rules, could force it to shut down its operations in China, which includes Google.cn.

The search giant’s ongoing investigation suggests the attack targeted at least twenty other large companies from a variety of industries. Neither Yahoo (YHOO, Fortune 500) nor Google (GOOG, Fortune 500) revealed whether Yahoo was among the victims need a personal loan with bad credit.

"Yahoo does not generally disclose that type of information, but we take security very seriously and we take appropriate action in the event of any kind of breach," Yahoo said.

Microsoft (MSFT, Fortune 500), which launched a Chinese version of its search engine Bing in June, said that the company has "no indication that any of our mail properties have been compromised."

In 2005, Yahoo sold its business in China to Alibaba.com, China’s largest e-commerce company. Yahoo maintains a 39% financial stake in the company but Yahoo no longer has "operational control or day-to-day management over the Yahoo! China business," according to a Yahoo spokeswoman.

Google did not have any response to Yahoo’s statement. 

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Kan Appointment Raises Fiscal Discipline Concern, Moody’s Says

The replacement of Japan’s finance minister four months into the government’s term increases concern about the commitment to rein in budget deficits, Moody’s Investors Service said.

“Japan’s fiscal strategy unknowns deepen” with the appointment of Naoto Kan last week, Thomas Byrne, senior vice president of Moody’s in Singapore, wrote in a note today.

Byrne’s stance contrasts with analysts at Goldman Sachs Group Inc. and Morgan Stanley, who said Kan has indicated a willingness to repair Japan’s finances. The 63-year-old deputy prime minister last week replaced Hirohisa Fujii to become the country’s sixth finance chief in 18 months, tasked with preventing a relapse into a recession while curtailing expansion of the world’s largest public debt.

“The revolving door for leadership at the Ministry of Finance does not engender confidence that Japan will put together a credible fiscal strategy to reduce deficits and stabilize the massive government debt overhang in the medium term,” Byrne said.

Kan said on Jan. 7 that it will be a “challenge” to maintain fiscal discipline this year and he will try to secure funds to fulfill the ruling Democratic Party of Japan’s pledges without exacerbating the debt burden.

The leadership change also “raises doubts” over the administration’s commitment to a 44 trillion yen ($480 billion) cap on new Japanese government bond sales for next fiscal year, Byrne said. Kan may “seek to further boost fiscal stimulus to an economy hamstrung by renewed and stubborn deflationary pressures,” he said.

Debt Rating

Moody’s rates Japan’s debt at Aa2, the third-highest investment grade, with a stable outlook. Byrne said the nation’s sovereign outlook in the medium term depends on “stronger economic growth and a return to a gradual course of deficit reduction and debt containment.”

“While we believe the domestic market will readily absorb even the record level of JGB issuance this year, strains on JGB yields could emerge in outlying years,” Byrne said. Local residents held 94 percent of Japanese government bonds as of June, Finance Ministry data show.

Yields on the benchmark 10-year note fell 1 basis point to 1.35 percent in Tokyo today. They reached a two-month high of 1.365 percent on Jan. 8, the day after Kan was appointed.

Kan ‘Misunderstood’

Morgan Stanley strategist Atsushi Ito said investors have “misunderstood” Kan’s remarks since his appointment and his policy isn’t based on increasing spending to spur the economy.

“He’s not a fiscal expansionist,” said Tokyo-based Ito. “He wants to achieve a policy mix of fiscal austerity, monetary accommodation and a weaker yen.”

Kan will try to get parliament’s approval for the government’s record 92.3 trillion yen budget for the year starting April 1.

The finance minister also indicated last week that he’s open to discussing an increase in the country’s 5 percent sales tax once wasteful spending has been eliminated. His remarks indicate the government may start “seriously debating” an increase in the levy as early as next year, even while it risks suppressing consumer spending, said Tetsufumi Yamakawa, chief Japan economist at Goldman Sachs.

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Horizon Bank fails; bought by Washington Federal

State regulators seized Horizon Bank on Friday evening, making it Washington’s first bank failure of 2010 and the fourth community bank to be seized in the state in the last 13 months.

Washington Federal Inc., of Seattle, quickly snapped up the failed Bellingham bank from regulators, according to information released by the state Department of Financial Institutions no teletrack payday loans.

Regulators closed Horizon because of “inadequate capital and severe loan losses,” the department said in a press release.

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TSX higher on commodities

The Toronto stock market built on the solid gains of the previous session Tuesday morning thanks to a small upswing among mining stocks.

The S&P/TSX composite index was up 36.3 points to 11,903.2 after strong manufacturing data from the U.S. and China raised commodity prices and lifted the main index 121 points.

The Canadian dollar climbed 0.53 of a cent to 96.55 cents US, its highest level since mid-October, as the U.S. currency weakened for a second day. The loonie ran ahead 0.87 of a cent on Monday after comments by U.S. Federal Reserve chairman Ben Bernanke pushed the expectations for interest rate hikes further out into 2010.

The base metals sector ahead 1.49 per cent with the March copper contract in New York up two cents at US$3.42 a pound. Teck Resources (TSX: TCK.B) gained 77 cents to $39.78.

The gold sector climbed one per cent as the February bullion contract in New York rose $8 to US$1,126.30 an ounce. Barrick Gold Corp. (TSX: ABX) gained 43 cents to $42.51.

The market also found strong support from potash producers after Credit Suisse raised Potash Corp. (TSX: POT) to outperform. It said the company along with Uralkali of Russia will lead a rebound among suppliers of the crop nutrient and believes sales volumes in the industry could double this year. Potash shares ran up $5.92 to $122.61 while shares in rival Agrium Inc. (TSX: AGU) advanced $2.11 to $67.65.

The consumer discretionary sector was the biggest percentage decliner, down 0.47 per cent with Shaw Communications (TSX: SJR.B) down 32 cents to $21.18.

Oil prices were slightly higher after the weak American currency helped push oil past the US$80 a barrel level for the first time since early November.

The February crude contract on the New York Mercantile Exchange was 10 cents higher to US$81.61 after surging more than $2 on Monday and the energy sector was ahead 0.14 per cent. EnCana (TSX: ECA) gained 36 cents to $36.07.

In the oilpatch, Noble Energy, Inc. (NYSE: NBL) will pay US$494 million to acquire the Rockies upstream assets of Petro-Canada Resources (USA) Inc. and Suncor Energy (Natural Gas) America Inc. (TSX: SU). The transaction is expected to close in the first quarter and Suncor shares rose 45 cents to $38.75.

The financial sector was also weak as Scotiabank (TSX: BNS) lost 47 cents to $48.46.

In Canadian economic news Tuesday, the industrial product price index increased one per cent in November, while the raw materials price index rose 2.2, mainly due to higher prices for petroleum and metals. Statistics Canada reported that the rebound in the industrial index was the strongest since June 2008.

The TSX Venture Exchange moved ahead 8.31 points to 1,552.24.

New York markets were weak following solid gains on Monday as investors took in some mixed economic data business