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Voice of the Voter - This Week's Stories

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This page updates every other Wednesday

A Better Way of Doing Business

For everyone paying between 25% and 35% interest on debt there needs to be a champion. Banks have made money hand over fist on what is essentially loan sharking made legal in the form of consumer debt. Credit cards have interest rates of over 30% in many cases and it is all legal because Congress has done nothing to protect the people of this nation. The same banks that charge these outrageous interest rates have taken that money, pocketed a ton, poorly invested the rest and then come crying to the federal government to bail them out. Cry me a river you thieving bastardsÖ

Congress could put a stop to it but they are too wimpy to do it. The solution comes in two parts. First, put a cap on interest rates for any form of credit or lending at 20% annually with all fees except for late fees incorporated in the interest rate. There should be no loopholes and no exceptions. Late fees should be capped at 5% of balance or $20 whichever is lower. After three months of consecutive non-payment the account is frozen and the debt locked in but without any expiration. Only by repayment of the debt can the lender unfreeze the account and begin again to accrue interest. Make it in the interests of the banks to get people to pay on time but donít let borrowers wait out debt so they can steal from the lenders. Collection agencies should be limited to 10% of existing balance in collection fees and once an account has been frozen for lack of payment no additional interest can accrue. These things would make banks less eager to lend to people that they know canít pay the bills like unemployed college students whom they have actively targeted in the past.

The second part of the plan has to be capping executive compensation not just at banks but everywhere. To do this, Congress does not have to set a dollar amount maximum but rather require that the shareholders and employees of the company vote to approve or not approve executive compensation amounts. Hold a secret ballot annually where the executives ask for a salary and then make a case that supports their level of compensation. If the shareholders and employees by a 2/3 majority respectively vote to approve the salary, the executive gets it. If not, they get a cost of living increase matching the inflation rate over their last yearís salary. They still get more but probably not as much more. To make it fair, Congress would have to set a starting point. My suggestions would be these for caps on original base pay prior to voted increases: CEO - $500,000/year, CFO - $300,000/year, President - $250,000/year, VP Ė $150,000/year, Senior Executive -$100,000/year. These are not astronomical amounts of money but are livable for people and reward the hard work needed to succeed. If the person has been with the company for a while in the position back date the base pay to the date of their first getting the position and adjust it at the rate of inflation for every year that theyíve been in the position. So a CEO that has been the CEO for ten years would be adjusted to $671,958 assuming 3% annual cost of living increases for ten years. That would be their starting point and after that they would have to convince the people impacted directly by their decisions that they were worth more money every year. It sounds fair to me. Why should they get to set their own salaries?

To make this really work, Congress would also have to require that executives not be allowed to sit on the Boards of Directors of the companies that employ them. Also it would require that caps be placed on bonuses to keep them from skirting the system and that golden parachutes be outlawed. Set an annual bonus cap of 10% of annual salary for all executive staff making over $100,000/year and set a maximum severance package level of one year of salary plus an equivalent amount of stock at the discretion of the Board at time of separation. This change of mindset would improve profitability and allow for companies to make greater investments into the growth and health of the company. This would not in fact be bad for business. It would be a serious blow to the greedy but it would actually improve the overall financial health of corporations across the country and give more back to the investors who support the companies.

With less money tied up in executive compensation across the board you will have more resources working in the economy. It would also drive competition to actually perform and provide superior results. Instead of being complacent in their salaries CEOs and other executives would be driven to succeed so they could make the case for more money and get the people that they impact to agree that they deserve more money. It then becomes not only about profitability but about performance. If employees were given a say in executive compensation the workplace would be a much less harsh place for the workers. To keep 2/3 of your workers on your side you have to keep them happy. To get the approval of 2/3 of your shareholders for more money you need to be profitable. It becomes the business model that leads to sustained success instead of short term profits with long term consequences. Executives that get poor results would not last long and not make much, which is really how it should be.

The Realist - Patriot at Large | E-mail Comments on this article. | Click icon to Digg this article

Setting Priorities in a Bad Economy

Lately on the news you cannot escape the stories about the failing economy and businesses laying off workers or going under. Other stories tell us that people are losing their homes and health care leaving them in dire straits. With all of that news bombarding you how can you decide where to set your financial priorities? The answer may lie in the common sense advice of your parents and grandparents. We as a nation need to learn to live within our means.

For many years we have lived by credit cards and borrowing. We spend money we donít have to buy things we donít need. Couples and singles living in city apartments who never drive outside of the city own vehicles like Hummers that have no practical purpose in their life. They pay tens of thousands of dollars for them and even in some cases lose them because they canít make the payments on them. Why do they buy them? They see them as some sort of status symbol that for some unknown reason they just canít live without. Other people already in debt spend tax refunds and bonuses or even use credit cards to buy things like new flat screen televisions when they already have perfectly functional televisions at home. People are increasing their debt needlessly while ignoring the reality of a future without means because of their own short-sightedness.

In this economy the issue of consumer debt and financial stability has come to the forefront and offers us an opportunity to talk about being responsible and intelligent in setting our financial priorities. Our economy does need spending to function but we as individuals also need to think about the future when we are making our financial decisions. There are simple questions we should be asking ourselves every day to make better decisions in how we spend what money we have:

  • Do I need to spend this money?
  • How will spending this money now impact me next week, month, year?
  • How can I get the most bang for my buck?
Do I need to spend this money?: This is possibly the most defining question in keeping spending under control. Recognizing the difference between needs and wants is crucial to identifying bad spending habits. We all want things and can often use that desire to convince ourselves of things being needs when in fact they are merely strong desires. We donít need a cookie, we want a cookie. We donít need to buy a new car every five years we want to do so. Some wants can be very strong and people find ways of justifying them to avoid owning up to buying things they donít need. Some even say that they need some little pleasures to preserve their sanity. While it may make you feel better for a moment to spend that money filling that mental ďneedĒ you in fact are creating more stress for yourself when the money you have spent is not available to spend on paying a bill leading to bill collectors harassing you and leaving you pulling your hair out with frustration over your debt. If you are honest with yourself when it comes to spending needs vs. spending wants you will find that many of your expenditures are unnecessary and can be cut down to help get your debt under control.

How will spending this money now impact me next week, month, year?: Weighing the long term costs of short term decisions is never easy but it is important. If you spend money today on something that does not pay you back you will not have it tomorrow. That is not a scare tactic. That is reality. You cannot count on income you do not already have in your hand. Spending your money on things that have longer term benefits will serve you in the future. Having a bunch of stuff really wonít do a lot for you if you lose your job or an emergency comes up requiring you to spend money on something you actually need. It is unquestionably a pain in the butt to think about ten years or even ten days in the future when you are deciding if you want to buy something but in these times itís kind of important that we begin to do so to avoid shooting ourselves in the foot financially.

How can I get the most bang for my buck?:How we decide which things to buy is important when money is scarce. If you need a replacement vehicle because yours is no longer functional, should you buy the flashy new car or the dependable used car? Well, the truth is that there are merits to new and used in some cases. If you can get a used car for $2,500 that needs $2,500 worth of work to make it run like new, that is a $5,000 car but it is also $5,000 up front and much harder to finance over time. What will your budget allow? If you buy an inexpensive new car for $12,000 that has a monthly payment of $400, that is $4,800 per year until it is paid off. Can you make the payments and still pay your other necessary bills? These are important questions to ask but not the only questions. With things like cars there are secondary expenses including insurance and gas consumption that come with owning vehicles and those are different for new vs. older vehicles. All these things have to be considered when deciding how to get the most for your money. Getting a bigger bang for your buck in a bad economy is vital to survival but it requires work and thought.

These may seem like pretty basic questions but if we ask them and answer them honestly we can make much better decisions. If the question comes down to rent vs. new TV the answer should be obvious. Having a place to live is of paramount importance and should always take precedence over any discretionary expenditure. If something works, donít replace it. If something breaks ask yourself if you really need it to be replaced before you buy another one. When you spend money you need to look at what you wonít be able to do by spending that money. If that money will take away from something you need to spend money on it should be a decision that weighs the benefits against the cost.

Increasing your debt simply to have something unneeded that you want is poor money management and very short sighted. Most credit cards charge more than 20% interest and take years to pay off. We as consumers need to be involved in our own financial security. While there are things that happen beyond our control that impact our finances there are also many things we can control. Decisions many times are not easy to make but they need to be made for the long term health of our finances. If you can pay bills and put money away by giving up some of your luxuries then you should. You cannot control every aspect of your financial life but you can and should control some of them.

Troy Wilson-Ripsom - Staff Writer | E-mail Comments on this article. | Click icon to Digg this article



Get Involved

Do you sit and yell at the TV when politicians come on? Do you shake your head sadly whenever you see a homeless veteran? Is that all you tend to do?

It's time to put up or shut up America. We all love to talk about how we could do things better or how we would do it if we were in charge. Well, it's time to put your money where your mouth is. If you can think of it, you can write it down. If you can write it down, you can type it. If you can type it, you can e-mail it and if you can e-mail it, you can send it here.

We at Reform America are committed to giving voice to anyone who wants to put their ideas out there to make our nation a better place. As the readership grows, we are able to take those views to a wider and wider audience. Grassroots campaigns begin with voices speaking out. You have opinions. Voice them. We aren't about conservative or liberal. We aren't about pro-this or anti-that. We're about Americans and the First Amendment. Reform America is about politics by, for and of the people. You are the people. You only need to speak up. America is listening. Send your article to: stories@reform-america.net



Have You Been Downsized Due to Outsourcing?

For several years now we have listened to some within the business community tell us that America can't compete on a global scale unless they send our jobs overseas where they can be done cheaper. The question becomes, if we don't have good paying jobs here, how can we sustain our own economy? We want to hear from you. Have you lost your job? Have you been forced into a lower wage job due to outsourcing? Has outsourcing been a success for you? Did you end up in a better job?

Tell us your story so we can make sure the politicians see how outsourcing really impacts the workers who are backbone of America. Send your story to stories@reform-america.net

 

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