Taking Away Benefits

Taking Away Benefits

I never believed I would say it, but the Republican majority in the House has not served the new President well.  They have produced a pathetic and wholly inadequate replacement for Obamacare.  If it goes through, their hastiness and their stupidity will come to haunt them down the road.

So, why are they so eager to pass this dumb bill?  Is it only the pressure they are getting from Trump who wants the bill for his own purposes, the people be damned?

Or, does their eagerness have more to do with a fire in their belly to kill Obamacare, regardless of what the replacement may look like, than worry about the details of a new healthcare bill, ostensibly designed to serve the people?

Indeed, they have been intensely committed to killing Obamacare for almost a decade.   The speed they are applying now has far less to do with delivering on a commitment they made to their constituents than accomplishing something very very personal and about which they are passionate.

And, that passion has nothing to do with the good of the people.  In this instance, certainly, they care not a whit about the people.  They care about, and only about, themselves. And this obsessive drive to get rid of Obamacare for them trumps the possibility of turning off constituents. 

And the reason dates back precisely to the passage of Obamacare itself.  Republicans were in the minority at the time.  And, their colleagues on the other side were playing to their constituents by insisting that all those in Congress should join the same healthcare program as the people.  Thus, it was written into Obamacare that all federal employees, including those in Congress, would move immediately from the healthcare program they enjoyed to the new Obamacare. 

And so, the Republicans and Democrats alike were forced to give up the expansive, cadillac program they enjoyed under the Federal Employees Health Benefits Program and to come under the far less attractive people’s program – Obamacare.

Thus, the Republicans' passionate desire to kill Obamacare has far more to do with recovering fat benefits they enjoyed in the past than delivering a better and new healthcare program for the country.

Message to all Congresspeople: Don’t take away important benefits from your colleagues.  It will haunt you later.


Reading the Federal Reserve's Tea Leaves

Reading the Federal Reserve's Tea Leaves

Rate information contained on this page may have changed. Please find latest savings rates.

BestCashCow provides the most comprehensive list of US savings accounts and CDs from online banks as well as from branch-based banks and credit unions.  As such, we tend to get a lot of queries when the Fed raises interest rates, as it did yesterday for only the third time in the last decade.  These queries usually end with something like “why did my bank not raise my rate?”

My response is as follows: Your rate was not raised yesterday, last night or this morning because the rates that banks offer depositors on certificates of deposit, savings accounts and checking accounts are more a function of what the banks are willing to pay.  As the Fed funds rate increase was well projected for months by Janet Yellen – and therefore highly anticipated - the most competitive savings, CD, and checking rates had already risen.  In fact, the best savings and CD rates have actually gone up by more than 25 basis points since the Fed’s last action early last year. 

See the best savings rates here and the best CD rates here.

The Fed funds target rate, set by Janet Yellen and the rest of the Fed’s board of governors is now 0.75% to 1.00%.  Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, dissented on the Fed’s decision to raise the Fed funds rate by 25 basis points, which leads us to believe that there will be only three quarter-point hikes this year, instead of 4.  The pace of rate hikes will be especially slow for retirees, those who are averse to investments in the stock market, and those who otherwise depend on a risk-free rate of return in order to maintain a certain standard of living.

Nevertheless, it is clear that rates will continue to rise significantly, albeit gradually over the next two years.  The Fed is now indicating that the Fed funds rate will be over 3% by 2019, in which case savings and short term CD rates will be at or over that level by then.  The Fed is also projecting that US GDP will flatline at 1.90% in 2018 and 2019; should it move at the 4% pace that Wilbur Ross, the U.S. Secretary of Commerce, desires, the Fed funds rate may actually be much higher.   It will therefore be important over the next two years to track your savings accounts carefully to make sure that you are earning one of the most competitive savings rates.

We should also note that where you will see change right away when the Fed raises short-term interest rates, as it did Wednesday, is in banks' prime lending rates.  Most major banks yesterday evening responded by increasing their prime lending rates to 4.00%, which has an immediate flow-through to credit card rates and auto loan rates.   If you have been considering locking into a HELOC or a new mortgage, you may want to consider doing so before the Fed’s next raise in the summer or fall.

See HELOC rates where you live here.

Compare the best mortgage rates here.


A Moment in Time - Kumbaya

A Moment in Time - Kumbaya

America is in a moment unlike any before.  And it is fueling a strange, albeit fleeting period of emphatically enthusiastic sentiments, simultaneously, in two major and almost always opposing segments of society.

It is hard to think back to a time when most successful white collar and a majority of employed and unemployed blue collar folk were equally excited about the direction of the country.  But, that is exactly what is happening now.

The stock market and the investor class are ecstatic over promised slashing of tax, corporate and market constraints and blue collar workers are mesmerized by promises to bring back 20th century manufacturing jobs and, generally, the good life.  

Both groups are singing Kumbaya in tune.

There is one sector, however, that is not, a combination of government and non-profit workers.  They are traditionally the manpower fueling political and social fabric infrastructure.  But these folks are both powerless and without the volume of white and blue collar Americans.

The singing cannot last. The interests of white and blue are too different.  Much more likely is that neither group will be singing much longer, both shattered by the impossibility that America’s much weakened social fabric – social, political and economic, can sustain current, clashing directions.   As one group begins to see more clearly through the heavy mist of promises, the other will wobble and both will come tumbling down.

Rather than bask in the moment, we all need to come to terms with reality, possibilities and solutions for the larger good.