advice from a fake consultant

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On Doing Better Than 50%, Or, Could More “Made In USA” Mean More Jobs? August 16, 2011

We gotta grow some jobs, and that’s a fact, and we probably aren’t going to be able to do it with big ol’ jobs programs funded by the Federal Government, what with today’s politics and all, and that means if this Administration wants to stay in the jobs game they’re going to have to find some smaller and more creative ways to do it.

They are also going to have to come up with ideas that are pretty much “bulletproof”, meaning that they are so hard to object to that even Allen West and Louie Gohmert will not want to be on record saying “no no no!”; alternatively, solutions that work around the legislative process entirely could represent the other form of “bulletproof-ery”.

Well, I have one of those “maybe bulletproof” ideas for you today, and it has to do with how “Made in USA” the things are that our Government buys.

The archer sees the mark along the path of the infinite, and He bends you with His might that His arrows might go swift and far.

Let your bending in the archer’s hand be for gladness;

For even as he loves the arrow that flies, so he loves also the bow that is stable.

–From The Prophet, by Kahlil Gibran

For the rest of the story to make sense, we’ll have to define a term; specifically, “Made in USA”.

Most manufacturers in the US have to meet a very stringent standard before they can refer to a product as “Made in USA”; here’s how the standard is described by the Federal Trade Commission:

Traditionally, the Commission has required that a product advertised as Made in USA be “all or virtually all” made in the U.S.

There are special rules, most notably for automobiles (also textiles, wool, and fur), but for the most part everyone else goes by the “all or virtually all” standard when they claim something is “Made in USA”.

With one giant exception.

When the Federal Government “Buys American”, anything with over 50% US content is considered “Made in USA”; this according to the provisions of, naturally enough, the Buy American Act, 41 USC 10a – c. (Beyond the law, there are also certain Federal Regulations and Executive Orders involved; for now we’ll just call it all “the law” and let it go at that.)

Now there doesn’t seem to be anything immediately evident in the law that would prevent the Federal Government from purchasing more than 50% US content if we wanted to, and the Big Idea here today is that if government at all levels began to purchase more than 50% US content, we could create more US jobs, now and in the future, and we could do it with a minimum of muss and fuss.

Obviously, there are practical limits as to how far you could take such an approach (for example, good luck buying a Made in USA laptop), and the current law has exceptions that reflect that reality.

But consider this: there are about 450.000 vehicles in the Federal inventory (that does not include military combat vehicles), with roughly half of those belonging to the Postal Service; the General Services Administration buys about 65.000 vehicles a year (they run the Federal motor pool, and that’s the other half of the inventory).

Beyond that, think of all the billions upon billions of dollars of more mundane things the government buys every year: janitorial supplies, paper and toner, desks and chairs…well, you get the idea; now imagine if more of all of that was made right here.

One example of how we can do better can be found in Celina, Tennessee, where a garment factory that was doing work for the Air Force found itself unable to compete for a subcontract on $100 million worth of uniforms being made for the TSA; that’s because the uniforms were being made in Mexico instead.

If the work was being done here, it could mean about 300 jobs in a town that could really use ‘em. (By law, military uniforms are supposed to be made in USA; that’s an imperfect process.)

Some things already are restricted: if we don’t have a reciprocal trade agreement with a country, they generally can’t sell to the US government; China and Taiwan fall into that group.

I’m often guilty of running stories too long, so we’re going to cut this short today with a summary…followed by a cliffhanger that should keep you looking forward to Part Two:

Government buys a whole lot of stuff, and we could be buying more of it in the USA, and if we did, it could translate into jobs in places like Celina, Tennessee.

But it’s not as simple a picture as you might think, and when we get together next time, we’ll talk about the impact of free trade agreements on “Made in USA” purchasing, we’ll get the AFL-CIO’s reaction to all of this, and, if all goes well, we’ll see if we can provide official reaction from the Obama Administration.

And even though you’ll be sitting in your seat…you’re only gonna need the edge…

 

Social Security: Are You Ready For A Congressional “Video Staycation”? April 4, 2011

Diligent reporter that I am, I got up Thursday morning to do a bit of fishing for a story, and as so often happens, I’ve caught something a bit unexpected.

Now what I have for you today starts out as a bit of insider information that came to me on background—but it turns into a chance for those of us who support Social Security to very much get in the faces of our members of Congress, for two whole weeks.

And to make it even better, I’m going to throw out a few direct action ideas “for your consideration” (as they say in Hollywood during Awards Season) that would absolutely make good street actions and YouTube videos, both at the same time…and even more importantly, we’ll absolutely make some great Spring Break fun.

“I mean, just from the very notion that it said that 50 percent of beneficiaries under the Social Security program use those moneys as their sole source of income. So we’ve got to protect today’s seniors. But for the rest of us? For – you know, listen. We’re going to have to come to grips with the fact that these programs cannot exist if we want America to be what we want America to be…

…We’re going to have to accept some changes as far as the rest of us. And what we’re saying is for those 55 and older do not have to worry about changes in benefits. But for the rest of us we will. We will have to do that.”

–House Majority Leader Eric Cantor, speaking at the Hoover Institution, March 21, 2011

OK, so like I said, I have bit of “inside baseball” that sets this whole thing up.

I got a piece of information “on background” yesterday from An Actual Well-Informed Source who seems to be about two or three “degrees of separation” away from actually being in the room while this news is occurring; because of that I’m willing to ascribe to it a reasonably good chance of proving to be entirely accurate.

What I was told was that Paul Ryan, who is the “manager” of the House Republicans’ budget-cutting effort, has decided not to push to include cuts in Social Security as part of the current fight over a Continuing Resolution…because Spring Break is coming up.

Check this out: according to the House Schedule, April 18-29 is Spring Recess, and I was told there’s a lot of concern on the Republican side about what would happen if anyone made any crazy Social Security proposals right now…when they have to go home and face you and me and the rest of the Angry Nation in just about two weeks.

(There’s some evidence to back this up: it is now possible that Cantor “misspoke” in that quote a couple of paragraphs up the page; as of this moment I can’t confirm if a “full backpedal” is officially underway or not.)

We can discern two things from that little nugget: for starters, we are having an impact on this fight—but beyond that, we also now know that we have two weeks to publicly torment those Members of Congress who are looking to cut Social Security…and we have two weeks to get ready.

Since hunger strikes are already underway, here are a few other ideas you’re welcome to steal to make your statement:

Is your Member going to be appearing at a community center or a friendly church?

Well how about arriving a few hours early and setting up a cardboard “Social Security Tahrir Square”?

You could have a box that’s the local “Catfood Grocery”, you could paint one of the boxes to look like “Grandma’s Gingerbread Box”, and you could even have a “Long-Term Care Facility” and hand out fliers of your own—and make sure you catch the reaction of the Congressional Staff on video to set up the bigger video of you interacting with the crowd…or y’all being ejected by the suddenly fearful Representative…or y’all “making happy” with a supportive Member.

Now you’re going to love this one, and there are two ways you can make it work.

What we’ll be playing on are the proposals to increase the retirement age and how we’ll be asking old people to do jobs that, obviously, they just can’t; what I basically want you to do is either go to an event…or outside one of the Members’ District Offices…and create a “job training center” for senior citizens.

Get a wheelbarrow and load it with a nice load of bricks, maybe fill some oval trays with a mess of plates and beverageware (safety first on this one; beware of glass and ceramic—and don’t forget the jackstands), and then rustle up a transfer belt and a heavy volunteer and simulate what nurses and their aides do all day long, and all night, too: lifting and transferring those who can’t do it for themselves.

Take it all to the venue, and you can either “train” your own 70+ year-old students…who might not be old enough to retire, under the new proposals…on how to do these types of jobs while the crowd watches—or you can invite older members of the crowd to try their hand at moving the bricks, or lifting the tray. Bring a medical worker and you can show them what lifting looks like, too—although I would be unlikely to invite the crowd to do that one without some kind of training.

(Do I have to warn you that this could get someone hurt, and you’ll have to use a reasonable amount of caution when you do this? I didn’t think so.)

Again, get it all on video—and then get that video right up on the Web.

Our final idea for today might be my favorite—but that might be because I used to be a caterer, and this really fits my sense of humor.

You know those “Top Chef” and “Iron Chef” shows?

And you know how we refer to that Deficit Commission as the Catfood Commission?

Well…why not sponsor a “Catfood Contest” at your Congresscritter’s event?

Again, you could go two ways: invite “contestants” in chef’s whites to create delightful dishes with the Commission’s Catfood, or you could judge competing sculptures; they do both at the Spam Jam in Waikiki, and if it was me I’d steal the ambiance of this kind of an event from Hawai’i, especially since it’s Spring Break season anyway.

An alternative way to do this: performance art of an elderly couple having a Catfood Commission BBQ, cooking Catfood patties on portable grills to make a point.

So there you go:

We have two weeks to get ready to have two great weeks of fun just really tightening the screws on those Members of Congress who are looking to jack America out of Social Security, and we have ideas on the table that you are entirely welcome to borrow, or adapt, or outright steal—and with any luck, other readers will toss in some ideas of their own—so get your art on, gather your props, and bring extra video batteries and a blank tape to give the police…just in case.

And here’s one last thing to remember: this isn’t just about turning back a disastrous plan to break the backs of Americans for decades to come—it’s also about having a good time.

Well-executed comedy makes people agree with you, and to like your message, and that’s a powerful thing; the more fun you’re having, the better the whole thing is going to work.

Now go forth, make some mischief, and watch the magic happen.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

 

Social Security: Get On The Phone Tuesday And Wednesday And Help Fight Cuts March 27, 2011

So it’s been about three weeks since we last had this conversation, but once again we have to take action to try to keep Social Security from being the victim of “deficit fever”.

I know that doesn’t make a lot of sense, considering the disconnect between Social Security and the deficit—but once again it’s “Continuing Resolution” time on Capitol Hill, where some use the threat of an impending shutdown of the Federal Government to extract concessions from the other side…and some on the other side try to make points with the voters by out-conceding their opponents.

So Tuesday and Wednesday of next week, there’s a national push on to get voters to call their Senators and remind them to vote for an Amendment that is a big ol’ “I’m not willing to cut Social Security just because other people philosophically want to cut Government any way they can” kind of reassurance to the voters, and I’m here to encourage you, once again, to make a couple phone calls and do some pushing of your own.

I’ve also been storing up a couple somewhat facetious random thoughts which will be the “garnish” for today’s dish; you’ll see them pop up as we go along.

First, the I’m A Bit Confused Dept.: There’s an ad currently running on TV for a drug called Intuniv. The drug is for children who are suffering from ADHD, and the visual image features a mother coming out the doors of the school with her “now-perfectly-behaved” 11- or 12-year-old child.

What comes next is the warning that the drug might—well, I’ll just quote the Intuniv website…

“Patients should not drive or operate heavy equipment until understanding how INTUNIV affects them”

…and every time I see the ad I think that if my 11-year-old could drive and operate heavy machinery I might suggest giving the other kids ADHD so they, too, could grow up and have a valuable skill of their own one day.

As we discussed “above the fold”, the Strengthen Social Security folks are doing a nationwide Senate call-in Tuesday and Wednesday to drum up support for passage of S.AMDT.207, the Sanders-Reid Social Security Protection Amendment, and they’ve created a process to painlessly put you directly in touch with both of your Senators, even if you have no idea who they might be.

I tried it out myself, just to see what would happen, and here’s how it works:

You call the phone number (1-866-251-4044) and the friendly automated phone voice automatically determines your location and then informs you that you “are represented by Senators [insert names here]”—and all of this without your having to navigate a menu or push a button.

The friendly phone voice then tells you to choose a Senator (“…push one or two…”), and you’re then directly connected to that office. Before you go, you’re encouraged to call back and leave a message with your other Senator as well…and you’re also offered “the commercial”: a fairly precise (roughly) 10-second script for a message that you might choose to leave, suggesting that your Senator vote for that Sanders-Reid Amendment.

I have a plan to make nuclear reactors in this country safer, and to do it fast: every Member of the Nuclear Regulatory Commission, everyone who votes on granting or renewing plant licenses, every nuclear power plant inspector, and the top executives of any nuclear licensee…should all be required to move into on-site housing at the nuclear power plants they’re in charge of within one year.

(This idea might also be adapted to improve the lives of nursing home residents, and it’s the same kind of “enforced safety” thinking that led to the old rule that Army paratroopers had to pack their own parachutes.)

We’ve made other calls like this recently, and just like before, the goal here is to keep the pressure on, and to remind all 100 Senators that they all have voters who absolutely do not want cuts in Social Security, and that this is not the time to be trying to sneak something in under cover of “Continuing Resolution” darkness.

So there you go: on Tuesday and Wednesday call the handy number (1-866-251-4044), let the automated voice guide you to your Senators, tell them you want them to vote for the Sanders-Reid Amendment…and while you have them on the phone, don’t be afraid to suggest that nuclear power plant on-site housing idea either.

Fighting for want you want is a process, not something that happens all in one day, and you should expect more messages like this one as we go along, asking you to make your voice heard—but you should also keep in mind that we’ve been doing pretty well so far, and when we speak, we’re being heard.

So make those calls, apply that pressure…and let’s win this thing.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

 

On Monday Morning Philosophy, Or, Founders Tell America: “You Figure It Out” March 22, 2011

In our efforts to form a more perfect Union we look to the Constitution for guidance for how we might shape the form and function of Government; many who seek to interpret that document try to do so by following what they believe is The Original Intent Of The Founders.

Some among us have managed to turn their certainty into something that approaches a reverential calling, and you need look no further than the Supreme Court to find such notables as Cardinals Samuel Alito and Antonin Scalia providing “liturgical foundation” to the adherents of the point of view that the Constitution is like The Bible: that it’s somehow immutable, set in stone, and, if we would only listen to the right experts, easily interpreted.

But what if that absolutist point of view is absolutely wrong?

What if the Original Intent Of The Founders, that summer in Philadelphia…was simply to get something passed out of the Constitutional Convention, and the only way that could happen was to leave a lot of the really tough decisions to the future?

What if The Real Original Intent…was that we work it out for ourselves as we go along?

“…you see, all the majesty of worship that once adorned these fatal halls / was just a target for the angry as they blew up the Taj Mahal…”

–From the song Gasoline, by Sheryl Crow

The reason this is coming up today is because I’ve been writing a lot about Social Security lately, and I keep getting comments from folks who see no Constitutional foundation for such a program.

To sum up what I often hear, if there is nothing in the Constitution that specifically provides for Social Security, then, if it’s to be done at all, it’s something that should be left to the States. (The 10th Amendment is used to reinforce this point.)

A lot of these folks, from what I can see, hearken for a simpler time, a time when America had no “foreign entanglements” or National Banks…a time when men of the soil worked their farms with no fear of Debt or The Taxman….a time when government worked best by using local wisdom to deal with local problems.

In other words, we’re basically having the same arguments over the shape of this Government that Thomas Jefferson and Alexander Hamilton were having in 1787—and for those who don’t recall, Hamilton won, which reflects the reality that we don’t all live on farms and hunt turkeys and Indians, and that State Governments are just as capable of ignorance and foolishness and greed and blind hate as any Federal Government.

To reinforce their arguments “fundamentalists” fall back on some version of the Original Intent theory, which basically assumes the Constitution was written by men who miraculously created a perfect document, and that all the answers to today’s problems would be found by simply allowing the Original Intent to shine through.

I’m here to tell you that couldn’t be more wrong—and to prove my point you need only consider the Civil War.

Despite what you might have heard in Virginia, the Civil War really was about slavery, and the reason we had that fight in the 1860s was because there was no way the question could be settled at the Constitutional Convention.

Those Founders who supported ending that “peculiar institution” were never going to convince slaveowning Founders to give up their property, and as a result of the desire to get a Constitution drafted that could be ratified by “the various States” there were compromises made, including the 3/5ths Compromise and Article Four’s requirement to deliver fugitive slaves to their owners upon demand, which resulted in the Fugitive Slave Acts of 1793 and 1850.

The Intent Of The Founders, on the question of slavery, was to let time work it out.

The same kind of “let time work it out” thinking led us to Article 1, Section 8, and the “general welfare” clause.

Congress is empowered to enact legislation that provides for the “common defense and general welfare of the United States”…but there is no specific interpretation of what the phrase means (in fact, there is no glossary at all for the Constitution, which means there are plenty of other examples of, shall we say, “unclear phrasing”).

Since there is no specific reference as to how Article 1, Section 8 and the 10th Amendment are supposed to interact or what the Founders’ Intent might be, we are again forced to apply our own interpretations, over time, to figure out how to resolve the inevitable conflicts.

We had to do that because, even as there were proponents of a Federal system, there were plenty of Delegates at the Convention who wanted nothing to do with a strong central government. They wanted to keep a system in place that resembled what we had under the Articles of Confederation, where the Federal Government had no ability to compel the payment of taxes and States had the choice of whether to “accept” Federal laws…or not.

Over time, of course, we’ve come to realize that having one air traffic control system, and not 50, was a good idea, and that funding things like disaster response on a national level makes sense, even if Texas wants to go it alone or something, and we probably all agree today that if States are willing to allow 12-year-old factory workers to work 16-hour days, then Federal child labor laws are a reasonable thing to make that stop—and all of this progression of history is happening because the Original Intent was to let the future figure out where the 10th and Article 1, Section 8 would “find their center”.

The Original Intent Of The Founders, apparently, was that white men who did not own property, women, and those not pale and fair and of European descent had no reason to be involving themselves in the affairs of government, as that was the list of who was not allowed to vote at the time we began our experiment in democracy; over time we’ve seen fit to change that—and at every step along the way there have been Cardinals of Interpretation ready to tell us that with each change we were doing violence to the letter and the spirit of the Constitution as they knew the Founders would have intended it to be.

Am I entitled to create or possess any form of pornography because the First Amendment prevents Congress from abridging free speech, or is the general welfare furthered by allowing society to protect itself from the exploitative effects of pornography by limiting or banning completely the production or possession of certain materials that are considered unacceptable?

The Founders seem to have offered no obvious intent when they created this conflict, which makes sense, because the possession of child pornography didn’t really exist as an issue in 1789.

I’m guessing that today we are not anxious to have each of the 50 States adopt their own rules (after all, who knows what some crazy State might do?)—but they did put that “general welfare” clause in Article 1, Section 8, and over time, our view of Constitutional law has come to accept the compromise that the Founders could not have foreseen.

The fact that the Supreme Court resolves these kinds of conflicts at all was not laid out in the Constitution, nor was the fact that the Federal Government’s powers are superior to those of the States; it took the 1803 Marbury v Madison and 1819 McCulloch v Maryland rulings to figure out, when there are multiple claims of liberty, which were to be put ahead of the others.

Can you guess why?

That’s right, folks: it was because they had Delegates at the Constitutional Convention (and States who had to ratify the finished product) who did not want to give the Court or a Federal Government that kind of power, and the only way to get something passed was to sort of “leave things open” and let time work it out.

Here’s an example of how one of the Founders tried to tried to kill the “Original Intent” argument before it even got off the ground: James Madison, who kept the only known complete set of notes during the Constitutional Convention never released those notes during his lifetime (he’s also credited with being the principal author of the document, possibly because his were the best notes).

Why did he do that? It appears to be because that Founder’s Intent was to make the Constitution’s words stand on their own, without his notes to frame the debate—and in fact the document had been in force for almost 50 years before those notes saw the light of day.

The Cardinals of the Supreme Court, some of whom claim they can divine Original Intent for any and all situations, are hoping that you’ll forget that they really serve to resolve disputes where the intent of the Founders seems to collide with the intent of the Founders—and all of that brings us right back to Social Security.

It is true that the Constitution, as it was written in 1789, does not contain the words “you may establish Social Security”—but it is also true that there were no words that would allow anyone who is not a white male to vote, or to prohibit the ownership of slaves.

Congress, acting with the authority to provide for the general welfare, took Roosevelt’s proposal and enacted it into law. The Supreme Court, in 1937, took up the question of whether the 10th Amendment prevented Congress from enacting Social Security with a series of three rulings, and here’s part of what they had to say:

Counsel for respondent has recalled to us the virtues of self-reliance and frugality. There is a possibility, he says, that aid from a paternal government may sap those sturdy virtues and breed a race of weaklings. If Massachusetts so believes and shapes her laws in that conviction, must her breed of sons be changed, he asks, because some other philosophy of government finds favor in the halls of Congress? But the answer is not doubtful. One might ask with equal reason whether the system of protective tariffs is to be set aside at will in one state or another whenever local policy prefers the rule of laissez faire. The issue is a closed one. It was fought out long ago. When money is spent to promote the general welfare, the concept of welfare or the opposite is shaped by Congress, not the states. So the concept be not arbitrary, the locality must yield. Constitution, Art. VI, Par. 2.

So there you go: the next time someone tells you that a program like Social Security is unconstitutional because of Original Intent, be very, very, suspicious, and keep in mind that the Constitution was written, intentionally, with the idea that a lot of problems were simply going to be kicked down the road to future generations of Americans.

Constitutional Delegates, after all, were politicians, and if there is one thing that politicians love to do it’s to kick a problem down the road so that something can get done today.

The history of the last 225 or so years has been a long journey down a long road that took us past slavery and Reconstruction and suffrage and Jim Crow, and to assert, as the Cardinals of the Court do, that all those questions were answered that summer in Independence Hall is to be either amazingly blind or deliberately untruthful—and the fact that they get to dress in robes and sit behind something that looks quite a bit like an altar doesn’t change that even one little bit.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

 

On Taking It Back, Or, Wisconsin Recalls, Explained March 14, 2011

News is suddenly moving so fast that it’s becoming hard for me to keep up; that’s why we’re not finishing the story today that we just began Tuesday. You know, the one about Titan Cement suing two North Carolina residents who appear to be doing nothing more than speaking the truth.

Unfortunately, other important news has forced itself to the front of the line, and it’s going to demand that we break schedule, whether we like it or not.

That’s why today we’re going to be talking about Wisconsin, and how workers there are fighting back against the State’s Republican legislators and Governor, who seem to have gone out of their way this past three weeks to govern without the consent of the governed.

It’s kind of chilly today in Wisconsin…but I can assure you, things are heating up fast—and it ain’t because of spring.

“I will tell you this: Any business where two partners don’t trust each other, any business where one party says, ‘You need to do X, Y and Z because I told you,’ is a business that is not only not run well, it is a business that can never be as successful as it can be,”

–Former National Football League Players’ Association executive director DeMaurice Smith

As so often happens, we need a bit of background:

In Wisconsin, a recall involves first, the collection of signatures, then, if you get enough, a recall election.

Once the proper papers have been filed, those who want to recall an elected official have 60 days to gather signatures for a recall petition that equal 25% of the number of votes cast in the prior gubernatorial election in that “political subdivision”.

What that means in English is that if you’re looking to recall a State Senator and the last time a Governor ran, 50,000 votes were cast in that Senator’s District, you need to gather 12,500 signatures in 60 days to force a recall election in that District.

The election is not to ask the question: “Should this officeholder be recalled?”

Instead, the incumbent will run against other candidates, and whoever has the most votes either keeps or takes over the office.

It is possible that multiple candidates will emerge from within the same Party; if that happens a “recall primary” election is held.

A primary would take place four weeks after the signatures are turned in, the recall election itself would be six weeks after, and both elections would be held on a Tuesday; all of this according to Article XIII, Section 12 of the Wisconsin Constitution.

You can’t recall someone until after they’ve been in office for a year, so the Governor can’t be recalled…today…but because the Senate elects half of its Members every two years there are a group of State Senators who can be recalled; they were elected in 2008.

If three Republicans were to be recalled and replaced by Democrats, the State Senate would change from majority Republican to majority Democratic.

If you’ve ever been to Embarrass, Wisconsin (home of The Chair That Grew), you’ve visited Robert Cowles’ 2nd District. (For the record, it’s more or less 100 miles due north of Milwaukee, and there’s some football team that plays in Green Bay that’s also in his District.) He’s been a Senator since 1987, and in ’08 he ran unopposed. His District voted 52-46 for Obama over McCain in ‘08, and chose Bush over Kerry by almost exactly the same margin in ‘04.

I do not have a feel for who might run against him, but I have some calls out to try to get an answer; if I learn more, we’ll add it to the story.

One Senator who might be in trouble is Alberta Darling (so far as I know, she’s unrelated to cricket great Joe Darling), who represents District 8, which is basically Milwaukee’s northern suburbs.

In ‘08 she only won by 1007 votes (of about 100,000 cast).

It’s worth noting, however, that her District cast the most votes for Governor in 2010; as a result her opponents will be required to gather more valid signatures than in any other District (20,343, by one reckoning).

Her opponent last time was Sheldon Wasserman; he’s a former State Representative, an OB/GYN from Milwaukee, and a member of the State’s Medical Examining Board.

(On a side note, it looks as though the Governor might be messing with the Board as well; he refused to allow two recent physician nominees selected by the Board to be seated, and he’s apparently looking to nominate his own people.)

Just as in District 2, this District voted for Obama in ’08, and Bush in ’04.

Sheila Harsdorf, who currently chairs the Senate Committee on State and Federal Relations and Information Technology, was sent to Madison to look after the interests of the State’s westernmost District, “The Fightin’ 10th”, as Sir Rev. Dr. Stephen T. Colbert, DFA, would say.

Even though she thinks State workers are taking too much from the public Treasury…her relationships with the Federal Government are so good that she had no problem taking in $195,000 in Federal farm subsidies over a ten-year period for Beldenville’s Trim-Bel Valley Farms, of which she just happened to be a 50% owner as recently as 2008 (for all I know, she may still be an owner, more current information was unavailable).

This is another one of those Districts that went for Obama in ’08 by about just the same margin as it went for Bush in ’04.

Luther Olsen of the 14th (located about 40 miles or so due north of Madison) is another farm owner; he owns 20% of Waushara’s Riverview Farm; they also happily accepted at least $58,502 of your money and mine, because Olsen, like Sheila Harsdorf, apparently believes that’s a better use of our money than, you know, paying a public school teacher or something.

(Fun Fact: did you know Golda Meir, the former Prime Minister of Israel, used to be a Milwaukee public school teacher?)

Olsen did not face an opponent in ’08…and once again, this District went Obama in ’08, Bush in ’04—although it went about 4 points farther for Bush than for Obama.

And that brings us to Randy Hopper.

This District (the 18th, which most notably includes Oshkosh and Fond Du Lac) is another one of those Republican seats that are considered among the most “gettable”; that’s because just 163 votes separated Hopper and his ’08 opponent, Jessica King.

There’s also this:

“I have a lot of correctional facilities, a couple universities, and a couple of tech schools [in my district]. I have the second largest population of state employees in the state.”

Hopper also chairs the Senate Education Committee…and there’s also a story going around that his wife is telling people that he’s been providing some “private lessons” to his 25-year-old mistress down in Madison; this according to the MAL Contends… blog—and that’s not going to help a family-values candidate.

He owns two radio stations, one an AM-talk Ag Report and Hannity broadcaster, the other an FM station that caters to the “music at work” market; this may allow him to mitigate some of the potentially-about-to-occur bad publicity, and certainly can’t hurt at election time.

Perhaps the most unrepentant Republican during this process has been Glen Grothman of the 20th (which actually, literally, includes Fredonia, and that has to have some deeper meaning…), and he can afford to take a strong stand.

This guy might well be a mortal lock in this District: the Sheboygan area is one of the most reliably Republican-voting regions of the State over the past 30 years, and of all the Senate candidates who faced opposition in ’08, he won with a larger margin of victory than any of ‘em. (He didn’t get 61% of the vote in ‘08…he won by 61% of the vote.)

(Fun Fact #2: Our friends at the Milwaukee Journal Sentinel created these two most excellent voting trend maps for your dining and dancing pleasure; they illustrates how Wisconsin can swing wildly back and forth between Republican and Democratic “electoral domination”.)

Moving on: Mary Lazich, of the 28th, occupies another seat that is going to be tough to get—her District encompasses Milwaukee’s western suburbs (a reliably Republican voting region; in both ’04 and ’08 Republican Presidential candidates won with over 60% of the vote), she did not face an opponent in ’08, and this is another District that will require more than 20,000 signatures to force an election.

“…Fate has been hounding me like a Mormon missionary with an Amway franchise…”

–A. Whitney Brown, appearing on the television show Almost Live!

We’re going to complete today’s “Recall Roundup” with one of the most vulnerable of all the Senators: Dan Kapanke, the Senate Majority Caucus Chair (and a pretty good ”get” if you’re running a recall campaign). He’s from the 32nd, which is all the way across the State from Milwaukee, on the Minnesota border, pretty much in Wisconsin’s southwest corner.

He won by less than 3 points in ’08, his District voted 61%-38% for Obama over McCain…and 53%-46% for Kerry over Bush in ’04, which is the largest margin of any of the 8 Republican Senators currently under recall threat. (Go back and have another look at those voting trend maps, and look at what’s happened to this corner of the State.)

He’s hard right on social issues, but the Farm Bureau loves him.

He is quoted as saying that he expects the signature gathering effort in his District to be successful (only about 15,400 signatures are needed) …and he’s also quoted as having the belief that there is such a thing as a Wisconsin State Senate arrest, despite the presence of an “immunity from arrest” clause in the Wisconsin Constitution.

As of March 8th, 57% of voters in the 32nd would rather have “generic” than Kapanke in a recall election, and they had to close the road outside his house on Friday to keep the hundreds of peaceful protesters gathered there safe.

Now before we close today…we need to offer “big ups” to DavidNYC, who posted a fantastic interactive results spreadsheet at the Swing State Project site; we’ve been referring to it a bunch in this story and you should have a look at it yourself.

And with all that said, that’s today’s “scorecard”, folks, and you can keep track of all the races—or volunteer to help—from one handy location: WisconsinRecall.net…so bookmark the spot, help out any way you can, and let’s start with Wisconsin…and then move on to Ohio and Indiana and Michigan next.

 

On Being A Titan, Part One, Or, See It, Say It, Sue It March 9, 2011

Got a simple little story for you today of a multinational corporation that wants to build a great big cement plant in North Carolina really, really, bad, and the local opposition to what appears to be a corrupt and distorted decision process.

Two local activists in particular have drawn the ire of Titan Cement, the Grecian corporation who seeks to build the plant—and because the Company doesn’t like what the activists have been saying about what the impact of that plant will likely be or how the deal’s going down…they’re suing Kayne Darrell and Dr. David Hill, residents of North Carolina’s New Hanover County, and the two folks who are doing the complaining the Company dislikes the most.

The Company further claims that they were slandered and defamed by the damaging statements that were uttered by the two at a county commissioners’ meeting and that they have lost goodwill and the chance to do business with certain parties as a result of these statements.

But what if everything the Defendants said was not only true…but provably so—and the Company was, maybe…just looking to shut people up by sending teams of lawyers after them?

As I said, it’s a simple story today—but it’s a good one.

We have tomorrow
Bright before us
Like a flame.

Yesterday, a night-gone thing
A sun-down name.

And dawn today
Broad arch above the road we came.
We march!

–From The New Negro, by Alain Locke

So here’s the deal, as it sits today: for a number of years now Titan Cement has been looking to build this great big cement plant near the environmentally sensitive North Carolina coast (part of the site includes 600 acres of “pristine wetlands”), and part of running a cement plant is running cement kilns.

Ya gotta cook limestone, sand, and clay, along with some other ingredients, at very high temperatures (above 2700 degrees F), which sort of fuses everything together; that makes “clinker”, which eventually becomes cement, and that’s why you need giant kilns and, often, pre-heater towers.

You need fuel for those really hot kilns and towers, and our friends at the Army Corps of Engineers advise that, in the kiln fuel game, you can actually kill two birds with one limestone by burning hazardous waste as a substitute for anywhere from 20% to 50% of your original “fuel of choice” (which is often coal).

According to the Corps, you can burn 12 tons of fuel an hour in one kiln, and that means up to six tons of…

byproducts of pharmaceutical, cosmetic, and electronics manufacturers;
solvents and inks used to print newspaper and other publications;
solvents used to recycle paper;
dry-cleaning solvents;
paint thinners and paint residues;
sludge from the petroleum industry;
used motor oil;
agricultural wastes;
and scrap tires.

…might be going into the mix every hour—and as it turns out, that stuff might contain:

…arsenic, cadmium, chromium, lead, nickel, thallium, and zinc.

Now if you’re burning that stuff, it’s either going up the smokestack or out the door as a component of the clinker you just made, and if you live anywhere near this plant, you’re going to be at least a little concerned…and if you have the impression that the people who are trying to get the permits are running a big ol’ hustle to get those permits, you’re going to be even more concerned…and it looks like that’s what’s been going on…and if you put all this together, and you lived in the neighborhood, you might show up at a local County Commissioners’ meeting and say something like this

“From lawsuits for price fixing and court-ordered mine closures of Titan’s Florida plant, to allegations of corruption coming from Raleigh, to emails raising suspicion whether Titan was ever even considering any other location, which would make incentives completely unnecessary, the clouds of corruption grow dark as new controversies emerge almost daily.”

…or this…

“The bottom line is we know from numerous studies that if we build this thing, more children will get sick, a handful of them will die. We also know from the adult studies that more adults will get sick and quite a few more of them are going to die as well. Which ones? Can’t tell you. That makes it difficult, but there will be some.”

…which are the two utterances which are today at legal issue. (Ms Darrell is being sued for the first statement, Dr. Hill, the second.)

The reason we are all gathered here today is to figure out whether either of those statements are truthful or not…because if the statements are truthful, they cannot be either slanderous or defamatory.

So let’s break it all down, one clause at a time:

Ms. Darrell talked about lawsuits for price fixing, and sure enough, CemWeek (“Global Cement Industry. Knowledge”) ran a story in October of ’09 entitled “Nine US cement companies accused of price fixing”, describing a lawsuit filed for price fixing in which Titan was one of the Defendants.

Court-ordered mine closures? Coffey Burlington, attorneys at law, recount their success with a certain case on their website (Sierra Club v. Army Corps of Engineers, Rinker Group, Tarmac America, Florida Rock Industries, APAC-Florida and Miami-Dade Limestone Products Association), which did in fact result in a court-ordered mine closure of Florida facilities operated by Tarmac America, which is a Titan subsidiary.

Allegations of corruption? How about this, reported in January of 2010 by the Wilmington, NC, StarNews:

A corporation that shares an address and president with a Titan America subsidiary bought a Wilmington office building for more than twice its tax value from Democratic fund-raisers under scrutiny by state and federal prosecutors.

To add to this element of the story, the current Governor, Bev Perdue, has asked the State Bureau of Investigation (SBI) to look into Titan’s permitting process, which is something that usually follows allegations, if I recall correctly.

Let’s move on: the folks in the Wilmington, NC, area have a private economic development committee that has negotiated secretly with Titan for some time; the result of that effort was the decision to provide $4.2 million in local government incentives to Titan.

But here’s the thing: if Titan never meant to build anywhere but on that one site, and they still hustled the community for the incentives by using the threat of building somewhere else…well, that’s why Ms. Darrell was talking about:

“…emails raising suspicion whether Titan was ever even considering any other location, which would make incentives completely unnecessary…”

In 2008, Keith Barber, he of Wrightsville Beach Magazine, documented Titan’s multi-decade interest in this particular location:

Titan has made very little effort to conceal the fact it plans to move forward with construction of a cement plant and limestone mining operation on the banks of the Northeast Cape Fear River. In a 2005 interview with Titan CEO Aris Papadopoulos in Cement Americas magazine, Papadopoulos confirmed the Greece-based company had been considering building a plant in Castle Hayne for nearly two decades…

… In addition, even though the permitting process is 18 months to 2 years out, the North Carolina Department of Transportation (NCDOT) Web site reveals that CSX Railroad is already constructing a new spur track at the site of the proposed Carolinas Cement Company.

The Charlotte News & Observer documents the existence of those pesky emails in a January 2010 editorial:

…[Titan lobbyist John] Merritt said he would talk to then-Commerce Secretary Jim Fain. Earlier, he had advised a company spokeswoman on how to respond to questions without raising suspicions that Titan might not qualify for a state grant.

“It is very important that the company not do anything that suggests that this is the only site you are looking at,” Merritt e-mailed. And sure enough, in its application for incentives Titan asserted that it was considering sites elsewhere.

Let’s jump in for just a second and take a look at where we are:

Ms. Darrell made this statement…

“From lawsuits for price fixing and court-ordered mine closures of Titan’s Florida plant, to allegations of corruption coming from Raleigh, to emails raising suspicion whether Titan was ever even considering any other location, which would make incentives completely unnecessary, the clouds of corruption grow dark as new controversies emerge almost daily.”

…and based on what we’ve seen so far, every single word of that statement turns out to be absolutely, provably true:

–There was a price-fixing lawsuit.
–There was a court-ordered mine closure of Titan’s Florida plant.
–It’s alleged that something funny was going on with that office building, and North Carolina’s SBI is investigating.
–We did in fact discover that emails exist raising suspicions as to whether Titan was considering any other location.
–And here we are, talking about one of the new controversies that emerge almost daily.

Today’s tale of legal bullying is running pretty long already, and we still have half of the story to go…so let’s take a break for today, and we’ll pick this up by looking at the statement made by Dr. Hill when we get together next time.

In the meantime, if you’re keeping score…I’m thinking that after Round One, it’s Defendants, 1, Titan, 0.

 

Campaign Manifesto #3: On The Road, Defending Social Security February 28, 2011

So it’s Day 3 of my fake campaign for Congress, and we’ve run into our first obstacle

The Fake Campaign, as you may recall, is fake headed for Wisconsin, to show solidarity, and we’ve fake hitched a ride on a delivery truck headed for Rush Limbaugh’s Florida broadcasting studios—but we fake found ourselves caught up in the all-too-real Giant Grip Of Winter that has seized the Midwest over the past week.

We’re back on the road now, but we were stuck for darn near a half-day there at Wall…and if you know anything about South Dakota, you know there are really only two things to do in the City of Wall: you can shuffle back and forth between Gold Diggers and the Badlands Bar, partaking of numerous intoxicating liquors along the way…or you can head on into Wall Drug (the same one that’s on all those bumper stickers and signs) and partake of the finest display of Giant Jackalopia on the planet.

The Campaign, naturally, chose Jackalopia—and that’s why today’s Manifesto is all about the fake impromptu 5-cent-coffee-fueled Social Security Town Hall that we held in the Wall Drug Mall for several hours while we waited for I-90 to reopen.

Sitting quietly, doing nothing,
Spring comes, grass grows by Itself.

–From the Zenrin Kushu, attributed to Toyo Eicho

I-90, the main route from West to East (if your fake trip begins in Seattle, as ours did), was closed at Wall, South Dakota for about 24 hours this week, but this particular delivery truck just absolutely has to be in Florida by Monday…and the delivery is so important that to get us back on the road we now have a special escort of two South Dakota Department of Transportation snowplows and two 2011 “new and improved” South Dakota Highway Patrol Dodge Charger Pursuits (now with longer lasting brakes!) to make sure we get to the Wisconsin line in the shortest time possible.

With the weather being what it is, Jenna and Tendei, our driving team, have been earning their money, in a big way, this trip, and for the moment Tendei is asleep, while Jenna and I mull over the conversations we had tonight, me and the caravan of Wall Drug customers who gathered, first by the snake-oil salesman (that’s not hyperbole, either: they actually have an anamatronic snake-oil salesman), then out in front of the Western bookstore, and finally over by one of the 5-cent coffee stations.

It was my fault: standing next to the snake-oil salesman got me thinking about all the lies we hear every day about Social Security…which I mentioned to the 30-something couple standing next to me, young son in tow.

“If I didn’t know better, I’d guess the next words out of his mouth are going to be: ‘I’ll never see a dollar of my Social Security anyway, so who cares how they fix it?’.”

He looked back at me, all surprised: “We’re not ever going to see any; they tell us that all the time.”

“Yeah, I know…but it’s a big ol’ load of hooey, and I’ll tell you why: Social Security is funded by payroll taxes that are, for the most part, paid out as they’re collected, that means there’ll always be money that we will use to pay benefits, unless we just quit collecting that money altogether, which is not likely.”

We were beginning to gather a few others around us (hey, we were all stuck there—nothing else to do…); that means my gestures were getting a bit bigger—but there’s a nice echo in there, and you can be heard.

“The way things work now, if nothing changes, there will be enough money to pay out all the benefits we expect to pay until 2037. After that, if the ‘pessimistic projection’ plays out, even if nothing else changes, we can still pay 75% of what we expect to pay for about 50 years after that. We only look out 75 years at a time, so we don’t have a projection that goes out past 2084…but, pretty much, as long as we keep collecting the money, we’ll still be able to pay the benefits.”

I looked over at a 40-ish couple that had come over to listen: “What about you two? Right now there’s a lot of talk about ‘fixing’ Social Security by making you wait longer to retire or by making sure cost-of-living increases don’t really keep up with inflation. Don’t y’all feel like if they do that, you’re just getting screwed?”

It was almost like Parliament and “Question Time” in there for a second (which is not a George Clinton reference) as the 15 or so folks listening began to “harrumph” in agreement.

“Well how about if I were to tell you that I could fix this problem, and that I could do it without raising the retirement age or messing with your cost-of-living…and that I could do this in a way that gives every person in this room a tax cut at the same time…and that, even though I’m running for Congress, I’m not a snake-oil salesman?”

About two lives ago I used to be a failed stand-up comic (true!), and it is possible to know when the crowd is turning—and this was one of those moments.

The 40-ish husband looked at me and said, basically, that I did sound like a Congressman—and not in a good way.

“I know you don’t believe me, but listen to this: if you turn a wrench or carry a tray or do anything that makes under, basically, $105,000 a year in wages, all your income is taxed for Social Security…but if you make a million a year, you don’t pay any tax at all on the last $890,000…and if that income was taxed, we wouldn’t have a Social Security problem.

Now you don’t hear much about this back in Washington, and there’s a couple of reasons why: right off the bat, this President and this Congress don’t want to be accused of ‘raising anyone’s taxes’; beyond that, 2012 is coming fast, and both the President and the Grim Weeper are trying to be the one who can look at the voters and say: ‘I’m The Slasher, and I will cut the deficit and balance the budget faster than the other guy’.

Lots of people think cutting Social Security will somehow cut the deficit and reduce the debt, even though it has nothing to do with it at all, and some of them figure that if they campaign around cutting everything that government does it’s gonna help their political future, and that includes cutting benefits for people just like you, instead of just funding Social Security with a flat tax for everyone…even the rich.”

This argument, I might add, was starting to gain traction.

“Look at where we are right this very second: standing in front of a Western bookstore…and if you go in there you’ll see stories of how people died of starvation and how land barons ruled counties with an iron fist and how we fought range wars with imported hired guns and shootouts in the streets.

Is that what we want to go back to?

It’s not what they wanted. The pioneers didn’t just build isolated ranches, they built towns, and towns with a schoolhouse, so that the kids on those ranches didn’t have to rely on a home school education. They had a Sheriff or a Marshal and a Town Council and a Judge, because they knew that they had to create some rules and establish some government.

Some towns in the Wild West, and you know I’m telling the truth about this, didn’t even allow guns inside the town limits…just like when Wyatt Earp was the Marshal in Dodge City and you had to check your guns if you were going north of the railroad tracks.”

You know what? This was working: the crowd began to nod with me, and I figured while I had the advantage I’d press the thing home:

“Now a lot of people probably think the fix is in, and what’s the point…but I don’t agree. There was an effort at the beginning of this Congress to force these cuts by threatening to stop providing any money for the Government at the beginning of March if the ‘Wrecking Crew” didn’t get their way, and the Tea Party folks came in here with a big ol’ war cry about ‘shut it all down’ and all that…but now that March 4th is actually drawing close, and the public is starting to figure out what’s up, the message is suddenly all about ‘maybe we can extend the funding after all’.

That tells me that the people who think cutting everything in sight because it looks good are finding out it doesn’t always look good to just go around cutting everything in sight.

Tell ya something else. A lot of the people who want to change Social Security want to change it into a system that rewards people who manage Social Security accounts, not the people who own the accounts, and if you look at what ‘privatizing’ the system is all about, that’s what it is: it’s just a plan to get more money out of you in the form of fees and charges, which is going to be a great big reward to great big political donors who have been trying to make this happen since the 1980s.

So here’s the reality: there is enough money in the system to pay for you and your kids to have benefits, even if no changes are made, and if you just make Social Security a flat tax, even for the rich, we are pretty much guaranteed to have every dollar we need until at least 2084, and we don’t have to cut benefits or raise the retirement age, or do any of that crazy stuff…and we don’t have to give up our hard-earned money to big banks and Wall Street in the form of new fees and charges on your Social Security accounts.

So I came here in a truck, and it has to be in Florida in a couple days, and my driver friend is walking over here, and that means I gotta go, but I hope I told you something about Social Security you didn’t know a while ago…and if any of you are fake voting for a fake Congressional candidate in 2012, I hope you’ll keep me in mind.”

And with that, I fake shook a few hands, jumped in our fake truck, and headed off to Wisconsin.

 

Social Security: They Want To Cut, We Plan To Fight November 10, 2010

So if you’ve been following my work lately, you know that there is a renewed effort underway to change Social Security, and that the fight officially began just this very morning.

Now what’s supposed to happen is that a television ad buy sponsored by a Wall Street billionaire is supposed to get you enthused about cutting your own Social Security benefits in the future; this is the tip of a “disinformation iceberg” that is trying to get you to act, right now, because if you don’t you will never, ever, ever, ever, see a single dime of Social Security when you get older.

I was on a “let’s talk strategy” conference call today that laid out some ideas for the “next steps”; we’ll be talking about that call over the next couple of stories…but for today, we’re going to talk about something you can do that will bring the message right to your favorite Member of Congress.

He is always plotting and carrying out great enterprises, which have always kept his subjects bewildered and astonished, waiting to see what their outcome would be. And his deeds have followed one another so closely that he has never left space between one and the next for people to plot uninterruptedly against him.

–Niccolò Machiavelli, describing King Ferdinand of Aragon, in The Prince

With the election a week behind us, the fight is on to get you to believe that you will never see a dime of Social Security, that the danger is so profound that we must act today, and that maybe a healthy cut in your future benefits isn’t really so bad after all.

To help convince you all this is true, a series of TV ads have been produced that imply that the only other solution, short of those benefit cuts, is more deficit spending and endless borrowing. (They have a catchy name for the effort as well: “OweNo”.)

As it turns out, that’s patently untrue, but as I said, that’s a topic for another day.

The idea behind the ads, of course, is to create a space for Members of Congress to vote for these kinds of proposals—but we’re going to strike first, before the ads can really gain a lot of traction.

So here’s the idea: we all have Members who are constantly having to “come home and face the District”; what we want to do is ask those Members, right now, on camera, if they are willing to vote for cutting Social Security benefits or not.

Myself, I like the question: “Are there any circumstances that would get you to vote for cutting Social Security benefits?”

If they say yes, try this: “Why do you like cutting benefits for middle-class people and not taxing 90% of the income of someone who makes a million a year?”

(If you make about $110,000 a year or less, 100% of your income is taxed for Social Security purposes. However, no income above that is taxed—so if you make a million a year, only 10% of your income is taxed, which seems a lot like “trickle up economics” to me…but what do I know?

As it turns out, removing that “income cap”, all by itself, would fix our financing problem for the next 75 years, without cutting benefits at all—again, a topic we’ll flesh out more completely another day.)

Now once we start gathering all these videos, we need a place to put them. Based on the call today, it looks like we’ll be going to the Owe No You Don’t! website, which, by a happy coincidence, is full of helpful resources for those looking to win this fight. The site is not ready to receive the videos today, however, but I will either update here or do a new story to let you know when it is, or if some new plans have emerged.

(Of course, if you get a good video, don’t be afraid to post it to this story as a comment as well.)

I also have available a big ol’ list of who in Congress has publicly said and done what regarding changes to these programs—and if you’re wondering exactly who in Congress supports privatizing Social Security, this is the list you’ve been looking for.

The next step is to put all this video to work: so how about starting right in your own home town? Send a copy of the video to the local newspaper, or the local TV station’s “tip line”. In the other direction, I’m going to try to encourage the folks operating Owe No You Don’t! (with whom I’m currently working) to use that video to get the attention of national media—which means video of Members “ducking and dodging” will be particularly valuable.

You might even get lucky and get a “Sharron Angle”—you know, the one where the person being asked just runs off without even acknowledging that they’re being asked questions, even though you’re right there next to them the whole time, following them and still asking the question, as they hop in the car and run away in fear.

So that’s today’s homework: charge up the camera batteries, go find your local Member of Congress, either pay a friendly visit at the office or catch ‘em at a local appearance, and make them either answer questions or run away.

As we gather the videos, they become a media attraction, and we put even more pressure on these folks…and if we get really, really, really, lucky, we’ll find someone who “autotunes” the Members who run away into a viral video we’ll all be proud of.

Good hunting to you all, and in a couple days we’ll all meet back here and talk about the Social Security “tax cap” and financing stability.

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

 

Social Security: The War Begins Tuesday, And You Better Say…Oh, No! November 7, 2010

It is my job to bring to you not just the news that took place, but the news that has yet to happen.

Today, that’s exactly what we have.

There is a war coming to try to change Social Security from a social safety net to a “revenue stream” for certain corporate interests, and that war is set to begin Tuesday morning, according to information that was provided to me yesterday afternoon.

Follow along, and you’ll be both forewarned and forearmed.

BIG MISTAKE
MANY MAKE
RELY ON HORN
INSTEAD OF
BRAKE

BURMA SHAVE

–Actual “Burma Shave” Message, 1945, from Verse By The Side of the Road, Frank Rowsome, Jr.

So here’s the dish: a limited partnership corporation called The Blackstone Group, through years of trading in real estate, operating hedge funds, giving financial advice to other companies and governments, and buying and selling companies (Hilton Hotels is one of theirs, the company that makes Corexit, the oil dispersant, is another), made its co-founder and former Chairman Peter G. Peterson a more-than-billionaire; a billion of that went to endow a Foundation that bears his name.

The Foundation has a particular interest in things budgetary and governmental, and they are seen as one of the groups most looking to change the way Social Security works today.

(Change, you say? Indeed, and if you’ve been following this series of stories, you already have an idea of what that might entail.)

The next thing you need to know is that there is a Great Big Deal Presidential Commission currently at work who is charged with identifying…

“…policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. This result is projected to stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers. The magnitude and timing of the policy measures necessary to achieve this goal are subject to considerable uncertainty and will depend on the evolution of the economy. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.”

…and that the Commission is going to deliver a report with its suggestions December 1st.

It would be fair to say that there are those who are concerned that “the fix is in”, so to speak, and that the report will be the beginning of an effort to privatize Social Security…and guess what?

Managing the Federal Government’s Social Security money, for a handsome fee, would be a spectacular business opportunity for Pete Peterson and The Blackstone Group, and to help create the environment where that can happen, the Peterson Foundation is dropping $20 million on a TV ad campaign to try to convince you to get interested in privatizing Social Security, too.

This Tuesday morning, November 9th, Peterson will appear at Washington, DC’s Newseum to unveil the advertising campaign, presumably to the delight of the assembled throng and the sipping of the coffee of the assembled media; this according to a Peterson Foundation press release that came across my desk yesterday.

There’s even a catchy name for the reform program: “OweNo”…and if you’ve already written your own “Oh, No!” Social Security joke, you’re apparently a bit faster on your feet than the guy who tried to sell Chevy Novas in Spanish-speaking countries…or the folks who came up with this catch phrase.

So that’s the story: come Tuesday, Pete Peterson, with a presonal fortune that comes from a Big Fat Wall Street Firm That Would Love To Manage Your Money For Big Fat Fees, is dropping $20 million to tell you that it’s time to “get a Chilean”…and I’m here to tell you that such a procedure is going to hurt your wallet, a lot—and when it’s all over, you’re the one who’s going to be saying “Oh, No!”

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

 

On Social Security Investment, Or, What About Chile? November 3, 2010

With the election over, it’s time to move on to new things, and the folks at the Campaign for America’s Future have asked me to do some writing about Social Security, which sounds like some big fun, so here we are.

We’re going to start with some reasonably simple stuff today, just to get your feet wet; by the time we get a few stories down the road there will be some complicated economic analysis to work through—but let’s begin today by looking a bit south.

Those who support privatizing Social Security in this country often point to Chile as an example we could follow, and that seems like a good place to get the conversation going…so set your personal WayBack Machine to Santiago, May, 1981, and let’s see what we can learn.

“Of what avail are any laws, where money rules
alone,
Where Poverty can never win its cases?
Detractors of the times, who bear the Cynic’s scrip,
are known
To often sell the truth, and keep their faces!”

–Ascyltus, from Petronius’ The Satyricon

In 1981, Chile adopted a privatized Social Security-like (pension) program that requires most workers to contribute 10% of their income to a private investment account. They may contribute up to 20%. These accounts are maintained by a number of private companies (known as Administradoras de Fondos de Pensiones, or AFPs) that compete for the business by advertising directly to the investing public.

These providers charge commissions and fees for certain services which are paid on top of the contributions.

An additional 3% is collected from most workers for Disability Insurance; 7% more is deducted from wages for health care.

At retirement, the money is either used to purchase an annuity from a private provider to provide a steady source of income or it’s withdrawn at a set rate over time directly from the account.

Those who are self-employed do not have to pay into the system, but they have the option to do so if they’re so inclined.

If you don’t have enough in your private account to purchase an annuity or to withdraw steady amounts over time, but you’ve been contributing for more than 20 years, you will receive a minimum pension from the Chilean Government…but you will also lose any contributions you made to your private account.

AFPs are regulated as to how they may invest; if, through investment losses, they do not have enough money to capitalize the accounts they carry they must provide the money out of their own cash reserves. If they follow the rules, and still lose so many assets they can’t continue to operate, a government bailout is in order.

At the same time, a second “welfare” program (PASIS) was established to create a “safety net” that would provide a benefit of 75% of the poverty level or 25% of your last 10 years’ earnings, whichever is higher.

You can’t collect from both programs, but it is possible to collect from neither. More about that later.

Employers do not contribute to funding the system, however, all employers were forced to give 17% pay raises to their workers to come up with the money for the workers to make their contributions. (Chile was a military dictatorship at the time, making the “forcing” process much easier than it would be in the US today.)

The system is just turning 30 years old, and we’re now seeing the first big wave of workers who are eligible to retire.

So how has all this been working out for Chileans?

The first thing we learn is that the poorest workers probably won’t do well enough to qualify for “top tier” pensions, even though it’s projected that they’ll tend to pay for the benefit over their working lives…which will reduce their income over their working lives. (It’s also projected that workers with higher incomes should do reasonably well.)

Since most workers are poor (Chile has some of the most unequal income distribution on Earth), in the end it’s starting to look like the problems of finding enough money to support the social safety net are actually getting worse, and not better.

Additionally, other problems have come to light:

–You have to find money to “transition” from one system to another, and transition costs have been quite expensive indeed: 6.1% of Gross Domestic Product (GDP; that’s a measure of the total output of an economy) in the 1980s, 4.8% in the 1990s, and 4.3% until 2037. If we were to duplicate the Chilean experience in the US economy, 6% of the 2008 GDP (about $15 trillion) means about $900 billion annually in transition costs for the first ten years, and something north of $600 billion annually for the last 37 years of the exercise.

(Keep in mind that Chile only provides 2/3 of their population with either PASIC or a pension; since we cover a higher number than that in the US, expect those numbers to come in higher than we’re guessing here.)

Why are so many not covered? Lots of workers are working outside the “official” economy to avoid making contributions that they won’t get back later (in 1994, it was estimated that only 52% of workers regularly contribute to their accounts); additionally, many women have never participated in the labor force.

–Because the service providers are competing for the business, administrative costs (read: advertising and sales commissions) have been far higher than in the US Social Security system, where administrative costs have been at .07% of distributions, or lower, since 1990. To put this another way, during the 1990s the US Social Security Administration was paying $18.70 per year to administer a claim; at the same time Chile’s various providers were paying an average of $89.10 to do the same thing.

–All that competition, some say, has lead to lots of changing of providers, which tends to make any investment program less efficient over time. (In 1996, half of Chilean workers switched providers; it’s estimated that reduced pension accumulations across the entire system by about 20%.) The Chilean Government made changes in 1997 to try to work through this problem, and they seem to have had some considerable effect.

Evidence suggests most of the switching not related to consolidation in the AFP business is being done by a small percentage of account holders, with some switching as much as eight times in a year; today the average Chilean seems to change AFPs about once every five years. Unemployment also seems to be related to switching; this because the unemployed can establish a new account with a lower set of fees if they move to a new provider.

–Many Chileans, despite living in a system that has, for almost 30 years, required them to manage their own money, actually know very little about that money.

Less than half know that the contribution rate is 10%, only 1/3 know how much (within 20%) is in their accounts, and, according to work done at the University of Chile, “few” actually know what they pay in fees and commissions.

–Those who end up in the welfare program are guaranteed 75% of the poverty level; that suggests that if you’re elderly and on welfare, you’re living in poverty. Because of limited funding, there are qualified elderly poor in Chile who do not receive any benefit.

Today, in the US, about 12% of the elderly live in poverty. Without the current Social Security system in place, it’s estimated that 49.9% of the elderly would have been living in poverty in 2002.

–In Chile, taxes to cover the transition costs tend to rise faster than the “assets under management” for most workers, leaving them less well-off than before—an effect that is most common among the “financially illiterate”…meaning, of course, most Americans. In other words, reform, in Chile, tends to help the wealthiest and best educated at the expense of those who are less of either.

That’s a whole lot of detail, so let’s pull pack and look at the “macro” picture:

Chile has operated a version of a privatized system since 1981, and for the most part the working poor will never see any benefit from the transition. Since Chile doesn’t have much of a middle class, it’s hard to see how the Chilean experience would affect our middle class.

The US Social Security system has reduced the estimated rate of elderly poverty from nearly 50% to roughly 10%; such a reduction in poverty did not occur in Chile with their privatization.

The costs of moving to the same system here, if our experience were the same as Chile’s, would run anywhere from $600-900 billion annually for at least 50 years. Of course, since we provide a Social Security safety net to almost all of our citizens, as opposed to 2/3 of the population, as Chile does, it’s reasonable to assume our costs would be more or less 1/3 higher.

Chile forced its private-sector employers to raise wages to cover the workers’ costs of transition; I’m aware of no proposals that would, or could, impose such a cost on employers in the US.

It appears that Chilean-style privatization encouraged about half the population to engage in “under the table” work, making the funding problem for the system even worse that it would be otherwise.

Frequent switching of account providers is great for the providers, as it creates lots of chances to collect fees for opening and closing accounts and the like—but it’s not so great for the account holders, who are losing up to 20% of their potential earnings more or less because maintaining a sales force and running lots of ads are effective business practices.

It is unknown what happens when a shock like the recent recession hits the system, and we are awaiting research that will help us understand what happens when and if the State is required to refund losses incurred by the AFP if they “follow the rules” but still lose so much money that they lack sufficient capital to operate.

The costs of operating the PASIS program go up even as the cost of operating the retirement accounts are also still high, and the question of whether Chile can continue to expend “safety net” coverage to the 30% of the elderly poor who are not covered remains unknown.

So there you go: there are going to be lots of proposals to privatize Social Security this year, “getting a Chilean” may well be one of the options you hear Conservatives promote—and hopefully by now you have some idea why this doesn’t look like nearly as good an idea as some folks would tell you it is.

Next time, we’ll talk about proposals to invest Social Security money in Treasury debt, and whether such an effort is actually an investment at all.

It’ll be at least medium geeky…and hey, who doesn’t love that?