Tag Archives: infrastructure

There Never Was Any Plan: The Story of the entire Orange Blossom Administration

Return with us now to those days of yesterday, if not exactly yesterday, when the Trump declared his health care plan would be wonderful — “No one will lose coverage. There will be insurance for everybody. Healthcare will be a “lot less expensive” for everyone — the government, consumers, providers.”  [Politico]  That was March 13 2017.  Well now, some people have lost coverage, it isn’t going to be any less expensive to get health insurance. In fact, health insurance premiums are expected to increase in California, Connecticut, and Pennsylvania, and it is just as bad elsewhere:

Rate filings to date show that many insurers are requesting large premium increases for 2019. The average requested rate increase was 30.2 percent in Maryland and 24 percent in New York state. Most insurers have specifically cited the repeal of the individual mandate in their actuarial memorandums. In New York, insurers attributed about half their large requested increases to mandate repeal. Even in states with small rate increases or overall decreases, insurer filings state that premiums next year would be significantly lower in the absence of federal sabotage. For example, BlueCross BlueShield of Vermontrequested a relatively small 7.5 percent increase for 2019 but said that its request would have been 2.2 percentage points lower if not for mandate repeal. Peter V. Lee, the director of Covered California, said that his state’s average rate increase of 9 percent “could—and should—have been much lower.” [CAP]

Let’s be serious here. There wasn’t a health care plan, not one with any specifics. There was a ton of “repeal and replace” rhetoric.  Trumpian campaign slogans never translated into much more than the continual erosion of Affordable Care Act provisions in favor of the insurance industry.  There never was a comprehensive plan to deal with market problems, industry sector issues, and the health care needs of some 330 million people in this country.  This administration doesn’t PLAN.

But wait, wasn’t there an “infrastructure plan?”  It would seem there should be since we keep having infrastructure weeks?   On February 11, 2018 the administration rolled out its grand infrastructure proposal [CNN] albeit without any suggestion about how this would be paid for;

“At the Conference of Mayors in January, Gribbin explained that the Trump administration would not be proposing a specific funding mechanism for the infrastructure plan, saying that will be a conversation with Congress. But that discussion just got a lot harder following the passage of a tax plan that is expected to expand the deficit by over a trillion dollars over ten years.” [MoneyCnn]

So, we got “conversations with Congress” about how to implement the “infrastructure plan,” but no infrastructure plan with much of anything except sops to for profit job training centers, lowered work rule and environmental permitting standards, and precious little else.  There never was a real, a comprehensive, plan in place such that the negotiations (or conversations) with Congress would ever be on a firm foundation. Surprised? We shouldn’t be.

Perhaps we should have been impressed with the trade plan?  After all, isn’t this supposed to put America First?  However, our friends and trading partners have been reduced to using color coded cue cards to explain high school level trade concepts to an American president [Marketwatch] and he doesn’t give any appearance he understands  fundamental concepts.  Reason sums up one area of dissonance:

“As Veronique de Rugy noted here a couple of weeks ago, “This is one policy area where he’s been remarkably consistent over the years.” Even when Trump pays lip service to free markets, she observed, it’s with the aim of increasing exports and reducing imports so as to bring down the number he thinks crystallizes our failure and lack of resolve. Trump is not talking like a mercantilist in service of free trade; he is talking like a free trader in service of mercantilism.” [Reason]

Let’s just operate on the simpler assumption — he doesn’t understand the subject; he doesn’t really have a plan; and, all the “motion” that passes for “action” in this administration’s trade policy is tantamount to economic and monetary plate juggling.  As long as he can make grand announcements about vague promises to eventually do something, and none of the plates fall, he’s all good.  Witness the EU deal:  “In reality, the Europeans gave up little except their prior refusal to negotiate under threat. Juncker’s pledge that the E.U. would import more U.S.-grown soybeans, for instance, formalized something that was likely to happen anyway.” [NewYorker]  Always assume: There is NO Plan.

And, about that Immigration enforcement policy which was supposed to have a plan to reunite children with their parents?   As of June 22, 2018 the Trump Mis-administration had to admit it had NO PLAN to reunite all children with their parents. [NYMag]  Really?  Well, not really completely opaque since the policy was all about punishing people who had the temerity to appeal for asylum in the United States who happened to be people with slightly darker skin than their Caucasian cohorts.   Thus if the policy didn’t meet the needs of the children and their parents, then the children could be conveniently re-categorized as “ineligible”  meaning the mis-administration might side step any accountability for their plight. [MSNBC]

Pick a topic, any topic.  Speak of environmental protections, clean drinking water, the protection of wildlife, or the protection of consumers from banking institution predation.  Speak of plans to provide better housing for married members of the US Armed Forces? Speak of plans to offer better, more efficient educational, medical, or dental services to Veterans?  Speak of plans to insure more cities are not plagued with lead in their water supplies?  Speak of how to provide long term assistance to American ranchers and farmers, and to promote the global trade in the crops and animals they raise for sale? Speak of how to research, study, and restrain the levels of gun violence in this country so that we are a safer place for ourselves and our children?  Speak of how we address matters of election security? To address Russian infiltration and attacks on our political institutions?  Pick a topic. Any topic.  Then rest unassured, this administration HAS NO PLAN.

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Filed under Health Care, health insurance, Immigration, Infrastructure, Politics, trade deficit

The Republican Money Pits

money whirlpool So, how many ways can the House GOP find to waste taxpayer money? Let’s start with the House Oversight Committee which wasn’t pleased with the FBI’s conclusions on their manufactured outrage narrative concerning Secretary Clinton’s emails – now they want to haul the FBI director in for a grilling. [TPM]  However, this is only the latest.

Meanwhile, it’s estimated by the Department of Agriculture that 15.3 million children in the United States under the age of 18 live in homes where they don’t have consist access to enough nutritious food to sustain a health life. [FA.org]

It was reported yesterday that House leadership was meeting to discuss whether to launch a formal investigation into the sit-in staged by House Democrats over the failure of the leadership to bring a gun safety bill to the House floor. [TPM]

Meanwhile,  every day 7 children in the United States die in gun violence, and another 41 survive being shot in assaults (31), suicide attempts (1), and accidental shootings (8). [BC.org]

Representative Marsha Blackburn (R-TN) continues to pump for more investigations into … Planned Parenthood. Who would have guessed? Not that the committee hasn’t soaked up some 80% of the supplemental funds for the House Administration Committee, that would be $790,000.  [Esq]

Meanwhile,  the CDC reports that between 2011-2014 the prevalence of children with obesity aged 2-5 yrs. was 8.9%, 17.5% among children between the ages of 6 and 11; and, 20.5% among adolescents aged 12 to 19. [CDC pdf]

The House Republicans racked up approximately $7,000,000 in expenses for its interminable Benghazi hearings.  [BBN]  The State Department spent about $14,000,000 trying to process and present information requested by the Committee, the Pentagon reported about $2 million in expenses associated with the “investigations.”

Meanwhile,  when the FAST Act expires at the end of FY 2020, the Congressional Budget Office projects the average annual shortfall to the federal Highway Trust Fund will grow to $16 billion, [TRIP scrib] and we have a backlog of pavement projects of about $59 billion, and another $30 billion needed to improve and maintain bridges.  This isn’t even county the $100 billion we need for highway system expansion and enhancement. [TRIP scrib]

Is it not reasonable to conclude that the House GOP is far more interested in political scandal mongering than it is in … investigating why 15.3 million children aren’t getting enough nutritious food to eat? Or, why 20% of our teenagers are suffering the health effects of obesity? Or, why we’re losing 7 children every day to gun violence?  Or, why we’re only spending 61% of what we should be allocating to the repair and maintenance of our national highway system?

Is there to be no investigation into why there isn’t adequate affordable housing in one single county in the entire United States? [Fortune]  Why aren’t members of the Congressional leadership interested in hearing why the gender pay gap is the widest for blue collar women? [Detroit News]

Instead, the House GOP seems entangled in the past, engaged in corybantic fits of furor over all but imaginary “threats” while veritably ignoring the very real economic, health, educational, infrastructure, and commercial interests of this country.  A person can reside in the past only so long as the future doesn’t catch up.

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Filed under Gun Issues, Health Care, Infrastructure, Republicans, youth

Distracted to Distraction?

carnival barker What are there? Some 412 days until the next general election, and the broadcast media is behaving like that is going to happen any moment? Perhaps we might call the campaign thus far, as presented by the beltway media and associated punditry, “The Click Bait Campaign?”  There are as many explanations for why the campaign appearances and speeches by Democratic candidates (Clinton, Sanders, etc.) aren’t getting the press coverage garnered by the Republican Clown Car as there are Punditatti to express them.  But while the press-gangs muse about whether Secretary Clinton is seen as “reliable,” or if Senator Sanders is perceived as “electable,” of if candidate Fiorina is “crisp and effective”… or if candidate Trump is “serious”… we’re missing some issues that deserve far more attention than the National ADHD click bait coverage is giving us.  Here’s what I’m waiting to hear more about.

The national economy.  The candidate who can convince me that he or she understands the shape of the American economy is probably the one who will get my vote.  Surely someone can clarify and amplify the changes in the U.S. economy in the past forty years:

“Previously, income grew more or less in step with household wealth. From 1962 to 1966, a period of low inflation and robust economic growth, real private sector wages rose 27.5 percent while real net worth increased 23.6 percent, according to Bloomberg News calculations based on government data. In the five-year period ending in 1996, real net worth gained 15.6 percent while private wages grew 11.3 percent. More recently, the gap between household net worth and wage growth has widened. From 2001 to 2005, the value of household assets minus liabilities rose 16.6 percent after inflation. Private sector wages rose just 2.7 percent.” [Bloomberg 2006]

Thus we  have an hour-glass economy, [Salmon, Reuters] one in which the wealth is concentrated at the upper end of the scale, and more occupations continue fall into the low-income levels. [Salon]  Senator Sanders has made continuous reference to the Income Inequality Gap, [Sanders] and Secretary Clinton has made this topic part of her repertoire on the campaign trail. [WSJ]

By February 2015 someone on the Republican side of the aisle noticed the Income Inequality gap (hour glass economy) [NYT] and Senator Marco Rubio attempted to slot into the issue by suggesting expanding the Child Tax Credit and cutting the tax brackets from seven to two (15% and 35%) unfortunately there’s no suggestion as to how to pay for this. Nor does he specify how to pay for expanding tax credits to childless adults; put simply, his arithmetic doesn’t work.  [NYT]  And, then there’s the rather tired Republican “promise” to create “flex funds” – another way of expressing the block grant anti-poverty programs proposal which lends itself nicely to eventual (and predictable) cuts to the grants by Congress.  In short, there’s nothing much new here: Credit Card Conservatism, and cuts to anti-poverty programs.  Meanwhile, we have the Limping Middle Class.

Perhaps we need a What To Watch For List?

  • Which candidates are speaking of a taxation system which rewards work and not just wealth?
  • Which candidates are addressing the decline in middle class income jobs in this country?
  • Which candidates are advocating equal pay for equal work? And/or an increase in funding for child care?
  • Which candidates are proposing an increase in the federal minimum wage?
  • Which candidates are suggesting we need to address the restoration of the manufacturing sector in this country?
  • Which candidates are supportive of workers’ rights to organize and form unions to bring more balance with multi-national corporations?
  • Which candidates are advocating funding for the improvement and maintenance of our national infrastructure?

It may be difficult to listen for these points since the media seems intent on speculating about the “electoral” effect of what candidates are proposing instead of explaining or clarifying the implications of their policy positions.  Meanwhile the media focuses on “Abortion!” or the “Planned Parenthood” hoax videos – the “Email,” the “Islamists!” the Whatever Will Get The Clicks of the Day.  A little over 412 days from now Americans will vote, and we’ll probably cast ballots based on the issue that is and remains the top American concern: It’s the Economy Stupid. Or, It’s the Stupid Economy.

Recommended: Robert Reich, “The Limping Middle Class,” New York Times, 9/03/11.  Danny Vinik, “Marco Rubio…”, New Republic, 1/14/15. Brendan Nyham, “Why Republicans are suddenly talking about economic inequality,” New York Times, 2/13/15.  Andrew Leonard, “The Hour Glass Economy,” Salon, 9/13/15.  Future of Jobs, “In an Hourglass Economy,” transcript, Marketplace.org, 8/2011. Bernard Starr, “Corporations Plan for a Post Middle Class America,” Business, Huffington Post, 4/6/12.  Mollie Reilly, “Thomas Piketty calls out Republican hypocrisy on income inequality,” Huffington Post, 3/11/15.

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Filed under Economy, elections

Infrastructure Spending: Saving Pennies Costs Dollars

Infrastructure Spending

The Hill reported on the appropriations bill for transportation and housing last week:

“The House late Tuesday passed the fifth of a dozen spending bills for fiscal 2016 to fund transportation and housing projects.

Lawmakers approved the $55.3 billion measure by a razor-thin margin, 216-210, after rejecting amendments from Democrats that would have increased funding for Amtrak and the D.C. Metro, as well as doing away with a provision restricting travel to Cuba.

All but three Democrats voted against the bill, while all but 31 Republicans voted in favor. Lawmakers could be seen gazing up at the gallery displaying their votes as the bill appeared close to failing.”

Yet the meager spending for infrastructure needs was entirely too much for Heritage Action, the ultra-conservative lobby arm of the Heritage Foundation.  True to its corporate oriented interests, if anyone in the gallery was representing Heritage Action, they were looking for: the closing of the Federal Transit Administration; the elimination of all operating and debt service grants to Amtrak; the elimination of the Maritime Administration; the privatization of the Saint Lawrence Seaway Development Corporation; the elimination of the Transportation Investment Generating Economic Recovery (TIGER) grant program; eliminating the Essential Air Service Program; privatizing the FAA; shuttering the Appalachian Regional Commission; and eliminating subsidies for the D.C. Metro.  Heritage Action must be smiling at Representative Mo Brooks:

“Rep. Mo Brooks (R-Ala.) offered two amendments to slash Amtrak funding further. His first proposal, rejected 143-283 with 99 Republicans in opposition, would eliminate all $288.5 million for Amtrak operating grants. The other amendment, defeated 139-286, would strike the entire $850 million allocation for Amtrak capital and debt service grants.” [TheHill]

At least someone recognized that approximately 840,000 people commute to work on rail lines every work day. [Cap] Nevada Representatives Heck, Hardy, and Amodei voted in favor of the funding bill.  [HR 2577 rc 329]  Representative Titus voted against this measure to further diminish investment in our national infrastructure.

Pie in the Sky Meets Rubber on the Road

Perhaps there’s something about buzz words (Freedom and Free Market for example) which tend to obscure the obvious – that the failure to invest – as a nation – in our infrastructure has a negative effect on our economy.

Let’s stay with the rail line topic for a moment. The need is readily apparent in the Northeast Corridor,  which is:

“The most heavily traveled portion of the national passenger rail system is the Northeast Corridor, or NEC, which stretches from Washington, D.C., to Boston, Massachusetts. The Northeast mega-region is home to one in every seven Americans, or more than 50 million people. All told, the region accounts for $1 out of every $5 of economic productivity.” [Cap] (emphasis added)

One region accounts for 20% of our total economic productivity.  So, how do people get to work (to be productive) in this region?

“As highway congestion within the region has grown, so has Amtrak’s role as an efficient alternative to driving. In 2001, Amtrak provided 37 percent of combined air and passenger rail trips between Washington, D.C., and New York City. By 2011, its share of combined service had risen to 75 percent. The mode share growth for the segment from New York to Boston is also impressive. In 2001, Amtrak provided just 20 percent of combined rail and air trips. This share grew to 54 percent by 2011.” [Cap]

And, it’s not just congestion on the highways that is a problem, airlines are experiencing it as well.  The Bureau of Transportation Statistics reported on May 14, 2015 that:

“Load factor in February (84.2) was higher than in any month since the peaks in January and February 2014. The February 2015 load factor was the third highest all-time, just below the first two months of 2014 (Table 2). Load factors have generally increased since the recession because passenger travel has increased at a faster pace than capacity. In February, RPMs (revenue per mile) were at the second highest level, down from the all-time high set in December but exceeding January, the third highest month. The last 10 months, starting with May 2014 through February 2015 are the 10 all-time highest months for RPMs (Table 4).

“Capacity declined in February from December, the highest all-time level, and from January, the eighth highest month, revised from last month’s Air Traffic press release. November, December and January are the only post-recession months among the top 10 for capacity, showing that after six years, capacity has returned to pre-recession levels (Table 6). Systemwide enplanements in February were the highest since the recession. February international enplanements were the fifth highest all-time. Domestic enplanements have been rising slowly but remain below pre-recession levels. Domestic enplanements in February were at the highest level since March 2008 (Tables 8, 10, 12).” [BTS]

Translation: Loads are up, capacity is down, and we’re all trying to fly at rates not seen since the Recession of 2007-2008.   There’s always the family wagon?  In 1980 we had 9,215 miles of interstate highways, and another 6,774 miles of “other freeways and expressways,” by 2013 these numbers grew to 17,866 interstate miles and another 11,602 in the “other” category [FHWA] And we can jam them up on any given rush hour and holiday weekend. These numbers actually don’t mean all that much until we take into account our attempts to maintain this system with a Highway Trust Fund which has a closing balance down 17.8% from last year. [FHWA]

It’s all well and good to offer Pie In The Sky privatization schemes and other “market driven” fantasies, however what our economy needs is a nationwide transportation system which gets people to work and products to market.

“Highway bottlenecks affecting freight are a problem today because they delay large numbers of truck freight shipments. They will become increasingly problematic in the future as the U.S. economy grows and generates more demand for truck freight shipments. If the U.S. economy grows at a conservative annual rate of 2.5 to 3 percent over the next 20 years, domestic freight tonnage will almost double and the volume of freight moving through the largest international gateways may triple or quadruple.” [FHWA]

The following map from FHWA shows where these bottlenecks are at present, not that we couldn’t guess:

Highway bottlenecks Every time a freight load is delayed in these interchange bottlenecks it costs money, and there are other kinds of bottlenecks as well. Steep grade bottlenecks costs in 2006 (12% of total truck hours of delay) were  about $32.15 per hour.  Signal bottlenecks can also cost approximately $32.15 per hour.   If we believe in a “market based” economy then perhaps we ought to think of the market inefficiency created by various and sundry bottlenecks which are costing us $32.15 per hour for Nothing.  Now, think of a truck load of goods experiencing an interchange bottleneck, a signal bottleneck, and a steep grade bottleneck?

We could be working on these bottlenecks, and on the maintenance of our highway system – but that would cost money, including money from the TIGER grants from the Department of Transportation.  (TIGER = Transportation Investment Generating Economic Recovery) So, what did the House do?

“The overwhelmingly popular TIGER program would shrink from $500 million to $100 million. In addition, the size of grants would be far smaller, within a range of $2-15 million, down from last year’s range of $10-200 million. This year’s T-HUD also reduces the share that the federal government will cover for TIGER projects, from 60 percent to 50 percent, requiring more local or state money to be brought to the table.” [T4Am]

Remember, the idea of a national transportation system in a modern economy is to get goods to a nationwide market.  Across the rails, over the highways, or via air freight, none of which the House of Representatives thought worthy of increased appropriations – in the “interest” of fiscal austerity.  It’s penny wise and pound foolish, as the old saw goes, and worse still it places the seamless transportation of both workers and the products they make increasingly at the mercy of state and local governments which are unable to raise the funds to complete the necessary maintenance and improvement projects.

It’s obvious what outdated and uninspected components can do to a transportation system – train wrecks, highway deaths, delayed freight, air accidents.  It’s not so obvious when the drain is hidden from view – hours wasted in any one of the three types of bottlenecks measured by the Federal Highway Administration, hours and money wasted in unnecessarily long commutes, congestion delays at airports and railway freight terminals … Time is money and we’re wasting both commodities.

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Filed under Infrastructure

The Wreck of the Penn Central: Conservatives want to replicate another financial debacle?

Rail logos Two days ago Fox News was happily promoting the privatization of Amtrak. [C&L]

“Gasparino went on to promote privatization. He said that the northeast corridor, between Washington and Boston, is a “very profitable service” and “there is no rationale why that service cannot be privatized. …If you put private management in there, it would probably be even more profitable and they could pay for even more upgrades.” “I’m not saying privatize the whole thing, at least not at first,” Gasparino said. But he insisted that privatization would make for “a Jet Blue of rail traffic.”

I admit to having “senior moments,” but I haven’t forgotten the fact that the reason Amtrak was created in 1971 was because of the FAILURE of private corporations to run the railroads.

A Bit of History

Once upon a time there was the Penn Central Transportation Company.

“The Penn Central merger was consummated on February 1, 1968, between the Pennsylvania Railroad and the New York Central Railroad. At the end of 1968, the New York New Haven & Hartford Railroad was merged into PC by order of the Interstate Commerce Commission.

Financial problems plagued the PC during its first couple years. Even though the merger had been planned for 10 years (on and off) before its inception, many problems faced the combined companies, such as incompatible computer systems and signaling systems.

Penn Central also invested in other companies, such as real estate, pipelines, and other ventures. The idea was to create a conglomerate corporation, with the railroad as one part of it. This diversification program, even 20 years later, is a point of debate over the fall of the PC, as some people say funds that were invested in other companies could have been used to run the railroad.” [PCRRHS]

Take a measure of mergers/acquisitions, add “diversification,” and … the world watched as the newly formed company created “dismal numbers.”  Enter the investment bankers. There were warnings.  One warning came before the big merger, in which it was noted that Penn Central had more than $1 billion in debt which would mature by 1982. When Penn Central finally went into bankruptcy it’s long term indebtedness, including obligations due in one year was an eye-popping $2.6 billion. $1 billion was due in five years; $228 million fell due in 1970; $156 million was due in 1971; $172 million came due in 1972; $270 million due in 1973, with another $160 million due in 1974. [Wreck of PCentral]

How this happened should sound eerily familiar:

“…economist Henry Kaufman says of this period in the late 1960s, “I watched with growing alarm as sources of corporate borrowers – in an effort to circumvent regulatory lending constraints – piled into the commercial market as issuers. The trend continued, and culminated in the collapse of the Penn Central Railroad.” [BuyHold]

And collapse it did, into the largest bankruptcy the nation had experienced up to that point, but not before:

“Penn Central’s subsidiaries were stripped of their treasuries in order to prop up PC’s own earnings. For example, New York Central Transport, a trucking subsidiary, had profits of only $4.2 million and yet paid $14.5 million in dividends to the parent. Despite this kind of maneuvering, the dividend on Penn Central common was slashed from $2.40 to $1.80 in 1969. Chairman Saunders vowed to hike it back up, soon. [It was later learned, however, that insiders at PC were unloading their company stock and bonds while all of this was going on.” [BuyHold]

We had a batch of corporate borrowers trying to get around regulations on lending, combined with a company fiddling the books trying to prop up its earnings reports, and taking on massive amounts of debt.  What could possibly go wrong?   The answer, of course, was “everything.”  June 21, 1970 the company declared bankruptcy.  What of the passengers?

“October, 1970, in an attempt to revive passenger rail service, congress passed the Rail Passenger Service Act. That Act created Amtrak, a private company which, on May 1, 1971 began managing a nation-wide rail system dedicated to passenger service.” [Amtrak]

Where was Wall Street?  Again, Wall Street didn’t appear to be all that helpful, except perhaps to themselves.  Goldman Sachs won “the opportunity” to underwrite Penn Central’s commercial paper in 1968.  We can almost guess what happened next:

“For large fees, Goldman sold the paper to its clients, including big companies such as American Express and Disney, and smaller ones such as Welch’s Foods, the grape-juice maker, and Younkers, a Des Moines retailer. Welch’s and Younkers, particularly, counted on the fact that Goldman told them that the Penn Central paper was safe and could be easily redeemed. Welch’s invested $1 million — some of it payroll cash — and Younkers invested $500,000, both at Goldman’s recommendation.” [TribLive]

After the Penn Central’s bankruptcy filing the SEC conducted an investigation.  This, too, is a bit too common for comfort:

After Penn Central filed for bankruptcy, an SEC investigation discovered that Goldman continued to sell the railroad’s debt to its clients at 100 cents on the dollar — even though, by the end of 1969, the firm knew that Penn Central’s finances were deteriorating rapidly.Not only was Goldman privy to Penn Central’s internal numbers, it also heard repeatedly from the railroad’s executives that it was rapidly running out of cash. [TribLive]

By February 1970 Goldman had about $10 million in Penn Central commercial paper on its books.  On February 5, 1970 Goldman Sachs demanded that the railroad buy back that $10 million inventory at 100 cents on the dollar even though it obviously wasn’t worth that much at that point. Goldman Sachs didn’t tell any of its clients about the offer, nor did it tell the customers that it had already taken care of its own interests before theirs.  Plus ca change, plus c’est la meme chose? [see also: WaPo 2102]

It doesn’t take too much imagination to see how (1) a boom in commercial paper – indebtedness; combined with (2) underlying debts incurred in operations, mergers, and acquisitions; abetted by (3) investors seeking ways around regulations; and (4) investment banking more interested in self preservation than best business practices combined to create a blockbuster bankruptcy. 

But yet, we have the Cato Institute, the bastion of conservative economic imagination pontificating:

“Budgetarily, Amtrak has become a runaway train, consuming huge subsidies and providing little or no return. Four decades of subsidies to passenger trains that are many times greater than subsidies to airlines and highways have failed to significantly alter American travel habits. Simple justice to Amtrak’s competitors as well as to taxpayers demands an end to those subsidies. The only real solution for Amtrak is privatization.”

The conservatives are missing several points.  The point may not be to “alter” travel habits – but to maintain services which people were already using for their commute to work, especially in the Northeast Corridor.  The rationale for the act included stabilizing services for passengers, the general public, and shippers. [RRA]

Going to Court

Amtrak is a private corporation, albeit one with some very special features.   If we want to get technical about  it, the official name is the National Railroad Passenger Corporation.  In fact, the point was driven home in a legal case two years ago in which the private nature of the NRP Corporation was pivotal:

“A three-judge panel of the U.S. Court of Appeals in Washington today said Congress had improperly delegated to Amtrak, a private corporation, the power to draft performance standards that affected companies whose tracks the passenger carrier uses. Amtrak trains have legal priority over freight.

“Though the federal government’s involvement in Amtrak is considerable, Congress has both designated it a private corporation and instructed that it be managed so as to maximize profit,” U.S. Circuit Judge Janice Rogers Brown said in the ruling.” [Skift]

The case got the attention of the U.S. Supreme Court. [FRAdvisor] Enter the “fish or fowl” phase.  Roger’s decision was “vacated and remanded” on a 9-0 decision.  Could Amtrak “metrics and standards” be set aside because the Congress unconstitutionally delegated power to a private corporation? And the Court said:

“No. Justice Anthony M. Kennedy delivered the opinion for the majority. The Court held that, for purposes of determining the validity of the metrics and standards, Amtrak is a governmental entity. The members of Amtrak’s Board of Directors are appointed by the President and confirmed by the Senate, and Amtrak is required by statute to pursue broad public objectives. Because of Amtrak’s significant ties to the government, Amtrak is not a private enterprise, and therefore, treating Amtrak as a governmental entity is consistent with the constitutional separation of powers.” [Oyez]

Therefore, what the Cato Institute and its allies are arguing is that the decision in DOT vs. Association of American Railroads (49 USC 24301) should be overturned and the railways should exist without any “regulations” imposed by Amtrak which would be applicable to freight haulers.   Extrapolating the Cato’s position to absurdity, under their reasoning we could revert to the wonderful old days of differing track gauges. 

Riding the Thin Rail

However, perhaps the most crucial point the conservatives are missing isn’t about the legislative and legal nature of the National Railroad Passenger Corporation, but why this entity was established in the first place.  Although a person might think we’d have learned something from the financial debacle of 2007-2008, the calls to privatize Amtrak have a remarkably familiar ring.

In a financial atmosphere in which commercial debt is treated as fodder for the creation of derivative financial products, and trading is barely regulated in the face of financialist opposition, and mergers and acquisitions generate incentives for corporate mismanagement, and there isn’t an old school investment bank left on the American landscape because of the casino mentality of Wall Street during the Housing Bubble, are we truly going to believe that privatization is the panacea for all that ails the passenger rail system in the United States?

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Filed under Economy, financial regulation, Infrastructure, public transportation

It’s A Train Wreck?

Amtrack wreck Reno The cable news networks are off on their usual “Who’s To Blame?” penchant in reporting tragic news, and in the midst of the palaver over the Pennsylvania Amtrack wreck there’s the usual lack of context.

For example, has the media told us there were 220 derailments in 2012, 191 in 2013, and 228 in 2014? [FRA]  Or, when looking at accident or incident causation we have the following information at hand? [FRA]

Cause 2012 2013 2014 2015
Track 112 91 87 101
Human 98 96 132 112
Equipment 39 33 47 44
Signal 12 9 8 6

What is interesting about this abbreviated table is the the track and human failure seems to predominate, while equipment and signal failures account for substantially less than the  first two factors.  (Miscellaneous factors are not included in this summation.)

There’s another way to observe train accidents, by state, and we find the following among the states with the highest number of accidents:

State 2012 2013 2014 2015
California 17 20 13 18
Illinois 24 33 50 38
Minnesota 10 9 4 3
North Dakota 5 4 6 4
Nebraska 13 7 8 11
Ohio 14 10 15 14
Texas 35 22 31 37

*This summary doesn’t include crossing accidents.

The Federal Railroad Administration also keeps records of fatalities and injuries, and this is what garners most attention from the news media. Again, we can look at the record over the last four years, noting that those numbers for 2015 are preliminary.

Fatalities 2012 2013 2014 2015
California 19 12 18 25
Florida 4 8 7 4
Georgia 6 4 5 3
Louisiana 3 2 1 6
New York 4 7 1 12
N. Carolina 4 8 5 5
Ohio 7 3 5 4
Pennsylvania 3 4 3 3
Massachusetts 3 1 0 0
Texas 11 7 4 18

*PA will add 8, those fatalities in the Amtrak accident near Philadelphia, May, 2015.

What we might expect to find are a higher number of fatalities in the Northeast Corridor, where ridership includes commuting,  but the reports indicate higher numbers generally in California and Texas.  If the accident numbers (in terms of passenger travel) appear to be increasing, so is the ridership, as shown from BTS (interactive) figures from 2000 to 2015.  The light blue line doesn’t include seasonal adjustment.

Rail passenger miles

The general trend shown by the unadjusted and adjusted numbers indicates more people using rail transportation since 2000. In calendar year 2006 the FRA reported 602,280,892 passengers transported; the number of passengers transported as of the end of calendar year 2014 was 694,507,965.

FRA regions map And, where is the ridership?  Where we would expect it.  Region 1 reported 369,467,363 transported, Region 2 reported another  83,444,579.  Region 7 reported 99,512,195; Region 6 reported 56,260,844.  Region 4 reported 41,748,653. Region 5 reported 32,943,327.  Region 3 reported 5,938, 814; and, Region 8 reported the lowest passenger traffic at 5,149,686.

What Use Can We Make Of The Numbers?

First, if we take a look at the ridership numbers (which don’t include local transit services) and the reported fatalities,  it’s reasonably clear that passenger travel is remarkably safe. Certainly safer than travel by private automobile.

Secondly, we can question the popular opinion offered to explain the political inaction on public transportation funding – like for Amtrack – that low funding is because most of the country isn’t using passenger rail service.  Granted that Regions One and Two (Northeast Corridor) are reporting the highest usage, but quite obviously Region Seven (California) and Region Four (the upper Mid West) are contributing significant ridership numbers.  The assertion that low ridership may equate to low support could only true for the Southeast and the Northwest.

Third, if we look at accident causation, it’s worth repeating that track issues and human error are the most common.  Therefore, while it’s useful to speak of new and better gadgets for passenger train safety – and we should be applying the best technology we can devise for passenger safety – it’s also true that suggestions like putting a second person in the cab, or promoting better track maintenance should be part of the larger conversation.

Fourth, if we focus down on the human error factor, we should note the 2006 FRA study of the fatigue factor:

“As part of the study, researchers analyzed the 30-day work-schedule histories of locomotive crews preceding approximately 1,400 train accidents and found a strong statistical correlation between the crew’s estimated level of alertness and the likelihood that they would be involved in an accident caused by human factors, FRA said.”

We can delve into the details to substantiate this conclusion:

The risk of human factors accidents was elevated at any effectiveness score below 90 and increased progressively with reduced effectiveness. At an effectiveness score ≤ 50, human factors accidents were 65 percent more likely than chance. Human factors accident risk increases reliably when effectiveness goes below 70, a value that is the rough equivalent of a 0.08 blood alcohol level or being awake for 21 hour following an 8-hour sleep period the previous night. Below an effectiveness score of 70, accident cause codes indicated the kinds of operator errors consistent with fatigue, confirming that the relationship between accident risk and effectiveness was meaningful. [FRA]

If preventing the next accident is our major concern then addressing the fatigue factor is crucial, and yet we have a situation in which railroad employees and management are at odds over the safety rules. For example, SEPTA (the Southeastern Pennsylvania Transportation Authority) wanted to relax fatigue abatement rules in 2014:

“Regional Rail engineers have asked federal regulators to require SEPTA to follow a safety rule designed to limit fatigue. SEPTA wants the Federal Railroad Administration to renew a waiver that the transit agency has had from the work rule for two years. The Brotherhood of Locomotive Engineers and Trainmen asked the federal agency to deny SEPTA’s request and hold a public hearing on the issue, citing accidents at other railroads caused by fatigued engineers.” [Phl.com]

And the reason for the waiver request?  That can be safely predicted:

“SEPTA said the waiver was “in the best interests of the riding public from both a service (more employees available for duty to address service demands) and economic standpoint (reduced labor costs by eliminating a potential need to hire additional employees).”

“Maintaining tight controls on labor expenses and operating expenses is one way SEPTA manages to fulfill that obligation [to operate efficiently],” SEPTA said in its request for the waiver extension.

“SEPTA estimates one additional crew costs approximately $150,000 annually, so even one new employee could cost SEPTA hundreds of thousands of dollars in labor expenses in a relatively short period of time.”[Phl.com]

In short, to address demands for service it was deemed better (from an economic standpoint) to have fewer workers working longer hours, in spite of the FRA report eight years before demonstrating the decline in the probability of passenger safety.  Is the “mission” of SEPTA to function “efficiently” or “safely?”

Fifth, returning to the gadget fixation there’s an abiding American proclivity to believe that we can apply tools to fix human problems.  It’s one of our basic strengths – we have a problem, we invent a tool to mitigate or solve it.  The news media has been abuzz about the Positive Control Train System, but while we have this tool in the box it’s not been applied universally.  The recent wreck provides a case to the point:

“In 2008, Congress ordered the installation of what are known as positive train control systems, which can detect an out-of-control, speeding train and automatically slow it down. But because lawmakers failed to provide the railroads access to the wireless frequencies required to make the system work, Amtrak was forced to negotiate for airwaves owned by private companies that are often used in mobile broadband.

Officials said Amtrak had made installation of the congressionally mandated safety system a priority and was ahead of most other railroads around the country. But the railroad struggled for four years to buy the rights to airwaves in the Northeast Corridor that would have allowed them to turn the system on.” [NYT]

This junction of private vs. public concerns was literally a wreck waiting to happen? Could Congress have made the wireless frequencies immediately available to the railroads? Probably yes. Would they buck the powerful lobbying interests of the mobile broadband providers? It doesn’t look as if they did.

Sixth, in the interests of not perpetually “fighting the last war,” or focusing too narrowly on factors associated with one instance of a rail system problem, we need to be cognizant of the other common factor in derailments and related accidents – the track inspections.  Perhaps it’s time for a report along the lines of the Deep Dive study conducted on the Metro North system, which called for Metro North to “create a plan for the use of advanced (track) inspection technology, ensure track is maintained to Metro North Track Standards, collaborate with labor unions to increase the availability of off hours maintenance time, improve training programs for track inspection and maintenance, and to analyze train schedules to determine whether there is sufficient time for inspection and maintenance of track.”

It’s not reassuring to find out that Minnesota has only one track inspector for its 4,500 mile of track. [MST]  Pennsylvania has 5,600 miles of track and “There are currently six PUC railroad inspectors who each focus on a specific discipline (track, operating practices, hazardous materials, grade crossing and motive power and equipment). PUC inspectors work in close coordination with FRA inspectors to ensure safe train movements throughout the entire state.” [PPUC]  Please tell me there are more than 6 people working on inspections!  The recent controversy over the Oil Trains moved New York to conduct an examination:

“Governor Andrew M. Cuomo today announced completion of the latest round of targeted crude oil tank car and rail inspections, which uncovered 100 defects, including eight critical safety defects that require immediate action. The inspections were the latest part of the Governor’s push to protect New Yorkers from the potential dangers associated with the transport of crude oil by freight rail companies. State and federal teams examined 704 crude oil tank cars and approximately 95 miles of track in these inspections.”  [Gov.NY]

Perhaps the Amtrack accident might move the states to engage in comprehensive reviews of track safety?

Finally, we need to address some philosophical and political problems.  What is the “mission” of our transportation system, especially with regard to our railroads?  As usual, there are more questions than answers.

Is the mission, to replicate the focus as illustrated by SEPTA  on “management efficiency,” or is the mission to provide safe, reliable, and modernized transportation for passengers and freight?  Have we down-sized employment levels of engineers and track inspectors to a point where we are being penny wise and pound foolish?  Are we requiring adherence to the best safety standards or simply accepting what is “economical” at the moment?

Have we placed impediments to modernization such as the implementation of Positive Control systems? Have we also jeopardized other safety considerations and systems by emphasizing privatization at the expense of public safety and the economic benefits of infrastructure improvement?

Are we perceiving our transportation system and infrastructure as essential to the economic well being and growth, or are we limiting our vision to the quotidian arguments between labor and management?

The national conversation about railway infrastructure and its management needs to be far broader than the current fixation on how to prevent wrecks.  That train left the station long ago.

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Filed under Economy, Infrastructure, labor

Heads Up Items: Infrastructure, ALEC, Social Security, Financial Reform

Jig Saw Puzzle

There are items which don’t lend themselves to a full blog post, but are of immediate interest. Here’s a sampling:

#1. ALEC may be down to nine big corporate sponsors, but that doesn’t mean it doesn’t have a full agenda for its 2015 legislative season.  Watch for bills, often crafted from ALEC ‘models,’ on pre-empting efforts to increase the minimum wage. depriving low wage workers of health insurance, deregulating electronic cigarettes, protesting global taxes on tobacco, regulating ride share companies, lowering certification standards for dental practitioners, limiting the ability of individuals or businesses to dispute a denied property insurance claim, and school privatization.

#2. We’d probably ought to be watching the state of pipeline infrastructure in this country.  The current pipelines are aging, and some were constructed during the 1950s when low frequency electric resistance welds were popular – these welds are failing.  There’s more information from Inside Climate News, and from the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration reports.

#3.  There are inklings that the Republicans in Congress are planning to turn discussions of Social Security into an Annual Crisis – such as they’ve done with debates about the budget deficit and the national debt.  The process is almost an art form: Declare a CRISIS; mount a full-on publicity campaign complete with constant press releases, comments from members of Congress, and pundits on television; ignore factual refutation and information; then use the CRISIS to leverage concessions from the Democrats.

#4. Expect the Republicans in Congress to step up their attacks on the financial reform regulations enacted in the Dodd-Frank Act.  For some excellent background information see the conversation between Bill Moyers and Simon JohnsonSalon also has a piece on the same subject, and the New York Times weighs in as well.  If you missed these, it might be a good idea to have a click and read.

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Filed under Economy, financial regulation, Infrastructure, Social Security

A Little Common Sense and Economic Literacy Required

The GOP filibuster of the bill to extend unemployment insurance benefits for “long term” unemployed people was broken by a 60-37 vote in the U.S. Senate [vote 2] with both Nevada Senators voting in favor of the cloture motion.  The bill will now move over to the House side where passage is less certain.

While Senator Heller (R-NV) is anxious for us to know that he’s “still a conservative,” [WaPo Fix] he’s also representing a state with a heavy 3.9% long term unemployment rate.  [BusinessInsider]

How They Voted – States with 3% or higher long term unemployment

Rhode Island  4.1%   Reed (D) Whitehouse (D) Yes

Nevada 3.9% Reid (D) Heller (R) Yes

New Jersey 3.9%  Booker (D) Menendez (D) Yes

Illinois 3.7% Durbin (D) Yes Kirk (R) No

California 3.7% Boxer (D) Feinstein (D) Yes

Mississippi 3.6% Cochran (R) Wicker (R) No

North Carolina 3.6% Hagan (D) Yes Burr (R) No

New York 3.5% Gillibrand (D) Schumer (D) Yes

Georgia 3.5% Chambliss (R) Isakson (R) No

Florida 3.3%  Nelson (D) Yes  Rubio (R) No

Michigan 3.3% Levin (D) Stabenow (D) Yes

Pennsylvania 3.0%  Casey (D) Yes  Toomey (R) No

South Carolina 3.0% Graham (R)  Scott (R) No

These “no” votes make no economic sense.   First, we ought to look at some of the statistics related to unemployment in this country.  The BLS report for November 2013 on characteristics of those unemployed show that of the 10,271,000 unemployed persons in the U.S. 5,400,000 were those who had been laid off or who had finished temporary jobs.   For some 4,448,000 these were not temporary lay offs.  3,329,000 were permanent job losses.  1,160,000 were those who had completed temporary jobs.

Secondly, we should look at where the jobs are increasing.  The last comprehensive report issued in November shows some pockets of economic activity which aren’t promising.  For example, in the health care and services category showed increases in most subcategories, approximately 4,000 nursing home care jobs were lost. [BLS]   While mining and logging showed general growth, support services for mining were down 3.1%.  The manufacturing sector slugged along, with significant employment up for motor vehicles and parts, up 6.7%.  Transportation equipment manufacturing was up 4.9%, and fabricated metal products related employment increased by 3.1%.

In the retail sector of the U.S. economy there was more mixed news.  Employment in electronics and appliance stores down 3.6%, in food an beverage stores down 5.4%, in health and personal care stores down 3.4% in a sector which showed an overall 22.3% increase Oct/Nov 2013.  [BLS]

The mixed news created the chart below, indicating that while employment levels were generally higher, this wasn’t necessarily good news for those who were among the long term unemployed (longer than 26 weeks.)

Duration Unemployment 2013Looking at some of the other labor data could indicate some of the employment sector weakness facing the long term unemployed.  Unemployment rates in the construction sector, while far better than in 2012, were still at 8.6% as of November 2013. [BLS]  The unemployment rate in the leisure and hospitality sector was still above the national average at 9%, and unemployment in the agricultural sector was at 9.7%.

Given a situation in which there hasn’t been enough job creation in significant sectors, and in which while employment has generally improved, there remain pockets of losses, and what we don’t want to create are more “discouraged workers.”

BLS Table A-16 puts paid to the conservative theme that the unemployed are sitting on the stoop swilling beverages of choice and “taking” a living from “hard working Americans.”

Discouraged Workers 2013The number of Americans “marginally attached” to the labor force declined from 2,505,000 in 2012 to 2,096,000 in 2013, meaning that there was a decrease in the number of persons “who want a job, have searched for work during the prior 12 months, and were available to take a job during the reference week, but had not looked for work in the past 4 weeks.”

There was also a decline in the “discouraged worker” category, from 979,000 in 2012 to 762,000 in November 2013.   Discouraged workers  are categorized as “those who did not actively look for work in the prior 4 weeks for reasons such as thinks no work available, could not find work, lacks schooling or training, employer thinks too young or old, and other types of discrimination.”  These people obviously didn’t drop into the infamous “other category” because those numbers also declined.

Others is a category which “Includes those who did not actively look for work in the prior 4 weeks for such reasons as school or family responsibilities, ill health, and transportation problems, as well as a number for whom reason for nonparticipation was not determined.”  Those numbers dropped from 1,526,000 to 1,334,000 between November 2012 and November 2013.   It’s truly hard to argue that people are willing to avoid work when even at a point at which there are three applicants for every single job available those who have only the most tenuous connection to the labor force are demonstrating a reduction in their numbers.

When the numbers of “marginal, discouraged, and ‘other'” workers are dropping people are obviously NOT willing to accept “dependency” on the government for their income.

If we are truly interested in improved economic growth then we’d be well advised to take both some long term and short term measures to develop it.

Short term activities should include extending unemployment insurance benefits so that people have the wherewithal to continue to seek work.  No one is giving away gasoline to get to job fairs and interviews.  Further, (once more will feeling) such benefits act as a automatic stabilizer for the economy, keeping spending levels from gyrating wildly in times of economic instability.  DB’s been on this topic at least since April 2011.

Long term investments in infrastructure rehabilitation and construction would go a long way toward providing employment to meet short term needs in the construction sector and long term necessities for economic activity.

However, there may be little hope that the 233 Republicans in the House of Representatives (112th Congress) will manage to throw off the shackles of ideology.  We know that Trickle Down Economics is a hoax.  We’ve had thirty years of it.  We know that tax cuts don’t “boost the economy;” had this been the case the Bush Administration would have been wildly successful.  We know that deregulation produced one amazing financial sector collapse. And, we can see from the BLS statistics that unemployed people are leeches on the body politic.

However, all this information and experience didn’t prevent 37 Republican members of the U.S. Senate from voting to sustain their filibuster of the bill to extend unemployment insurance benefits to the long term unemployed — including some from the states which could have definitely benefited from the legislation.

Common sense and a modicum of economic literacy are in order.

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Filed under Heller, Politics, Reid

The Session From Nowhere

Capitol DomeThe members of the 113th Congress have almost managed the impossible — to beat the Do-Nothing Congress of 1947-48, the one excoriated for enacting only 395 bits of legislation. [USAT]

Bills Enacted by session of Congress*the 113th Congress is still in session.

Not only is the last column in the graphic painfully small, but it becomes even more pathetic when we look at a graphic illustration of the number of bill which even made it to an up or down vote:

Bills up or down by Session 1973-2013Not only has the 113th Congress not enacted any legislation, it hasn’t even brought many bills to the floor for a vote.

It is one thing to crow about protecting the huddled masses from iniquitous laws, and quite another to simply obstruct the entire process by not even considering them.  From a technical perspective the Republican controlled 113th’s obstruction is a function of the misuse of the filibuster in the U.S. Senate and the absurd application of the ephemeral “Hastert Rule” in the House which asserts that legislation which doesn’t have the support of the majority party’s caucus will never reach the floor.  There is also the matter of legislation passing the House which has absolutely no chance in the Senate, and was never intended to have any life in that body, bills simply passed to pad the records or to make a display.  Witness the number of attempts to rescind Roe v. Wade.  The technical obstructionism of the Tea Party Republicans requires some heavy lifting in the justification department.

The previous “low” for Congressional enactment was the 112th Congress’s record of 284 bills to be sent to the White House, thus far by GovTrack’s count the 113th has managed only 56.   As the Nevada Progressive calls it, Less isn’t More.   What’s left on the table?

The Farm Bill – both houses have passed their own versions, and in the lovely but over-simplified “I’m Just A Bill On Capitol Hill” this should lead to a conference to hammer out a compromise bill which can be passed in both wings of the building.  The conference is in progress [WaPo] but there’s little progress to report.  “Competing House and Senate proposals remain tens of billions of dollars apart — the Senate proposes slashing about $4 billion in SNAP funding over the next decade, while the House would cut nearly $40 billion,” [WaPo] and the chasm remains.   For those who are unrepentant clock watchers, the House and Senate are facing a January 1 deadline.

ENDA – (Employee Non-Discrimination Act)  The Senate passed this bill, S. 815, on November 7, 2013 on a 64-32 vote. [rc 232] Even conservative Republican Senator Dean Heller (R-NV) assisted with passage in the Senate, however the bill may die in the House:

“The Speaker believes this legislation will increase frivolous litigation and cost American jobs, especially small business jobs,” Boehner’s spokesman Michael Steel said in an emailed statement. Other House Republicans have been outspoken against the bill, arguing that it imposes on the religious liberties of business owners and managers. Although, there is a religious exemption under the law that protects churches and other religious institutions from being penalized under ENDA.” [USNWR]

The “increase in frivolous litigation” argument is boilerplate language applied by the GOP to any and all legislation pertaining to human or civil rights.  The House version, H.R. 1755, with 200 co-sponsors, has made it as far as the House Subcommittee on the Constitution and Civil Justice [Thomas] to which it was assigned on June 14, 2013 — and no further.  Sub-Committee membership includes Chairman  Rep. Trent Franks (R-AZ),  Rep. Steve King (R-IA), and the memorable logician Rep. Louie Gohmert (R-Neverland), among the eight Republicans facing five Democrats. [USHSCCJ]  Hope that H.R. 1755 will emerge from this conglomeration of Tea Party favorites must be slim indeed.

Comprehensive Immigration Policy Reform – The Senate’s version, S. 744, passed the Senate on June 27, 2013 on a 68-32 vote. [Thomas] It, too, has entered the House of No Return.  There are 11 pieces of the measure, or bills related to the measure, in various stages of decay in the House.  [Thomas]

 Common Sense Gun Regulations –  Polling conducted by Pew Research in May 2013 showed 81% of Americans in favor of universal background checks for gun purchases.  Including 81% support among Republicans and 83% support from Democrats. [Pew]  Massive support notwithstanding – the bill was filibustered in the Senate.  [WaPo]   Senator Heller voted to support the GOP filibuster on April 17, 2013 [rc 97], one of the 46 members of that body who voted to kill the bill.

JOBS –  Let’s look at our infrastructure needs by drilling down to one bill as an example. Rep. Nick Rahall (D-WV) introduced the SAFE Bridges Act of 2013 (H.R. 2428) on June 19, 2013.  “Directs the Secretary of Transportation (DOT) to establish a program to assist states to rehabilitate or replace bridges found to be structurally deficient, functionally obsolete, or fracture critical. Requires states to use apportioned program funds for projects to rehabilitate and replace such bridges. Sets the federal share of project costs at 100%.”   Rehabilitating or replacing insubstantial or dysfunctional bridges would be a blessing for the stumbling construction sector.  It would also, indeed, make us safer.

One in nine of American bridges are rates structurally deficient by the ASCE. [Report Card pdf] And, some 200 million trips are taken every day in this country over deficient bridges in 102 American metropolitan regions.   At least we made it over the river (and through the woods) to Grandma’s house for Thanksgiving… now we have to do it again for Christmas?  The ASCE is clear that just because we’ve not worried about our infrastructure doesn’t mean we shouldn’t:

“Most of America’s infrastructure was built after WWII.  These investments of the 20th century spurred our nation’s economic boom and made us a global power. Today, quite simply, that tab is coming due. Australia currently spends 2.4% of GDP on capital investment, compared to 0.60% by the U.S.  Canada’s federal government investment in infrastructure is approximately 2.9% of GDP. And though our percentages of GDP spent on infrastructure are indeed comparable to Germany, in 2011, Germany adopted a five-year, $52 billion federal Framework Investment Plan for infrastructure. The question facing our country is are we going to maintain our 20th century foundation while making new investments for a prosperous 21st century. This is a unique challenge. America’s economy must lead the world, and as such, the foundation of that economy—our infrastructure—should lead the way. ” [ASCE]

The sputtering of conservative think tanks about the efficacy of public-private partnerships is singularly insufficient to address the massive infrastructure and transportation needs faced by this nation.   Meanwhile, Rep. Rahall’s bill sits in the House Subcommittee on Highways and Transit — and has done so since the day after it was introduced. [Thomas]

A more comprehensive bill, the American Jobs Act, was re-introduced by Representative Frederica Wilson (D-FL) in the 113th Congress [HuffPo]

“According to independent analysts including Moody’s Economy, the American Jobs Act would mean up to 1.9 million new jobs.  The bill would provide tax cuts to tens of millions of low- to moderate-income Americans and stop layoffs of teachers, firefighters, and other public workers.  To ensure that the bill does not add to the federal budget deficit, it includes a series of cost-saving changes to the taxation of hedge fund investment income as well as cuts to corporate subsidies.  In addition to the provisions from President Obama’s original bill, the new 2013 American Jobs Act includes a simple provision to cancel the reckless, across-the-board budget cuts known as Sequestration for the coming fiscal years.”  [Wilson]

H.R. 2821 was assigned to the appropriate House committees on July 24, 2013, and then went to the land of No Return.

It’s not like we don’t have enough to do … it’s just that there is a Congress, especially the House of Representatives, which has demonstrated its incapacity to address the issues which need to be discussed and faced rationally, and to work for the American people.  The House Calendar (pdf) for the 113th first session Congress is “pretty blank,” and the second session is even further reduced.  The problem of un-productivity is exacerbated by the lack of  work time allotted to actually Doing anything.

President Harry Truman thought he had a problem with the 80th Congress when he spoke at a campaign stop in Elizabeth, New Jersey on October 7, 1948:

“Some people say I ought not to talk so much about the Republican 80th “do-nothing” Congress in this campaign.  I will tell you why I will talk about it.  If two-thirds of the people stay at home again on election day as they did in 1946, and if we get another Republican Congress like the 80th Congress, it will be controlled by the same men who controlled that 80th Congress–the Tabers and the Tafts, the Martins and the Hallecks–would be the bosses.  The same men would be the bosses, the same as those who passed the Taft-Hartley Act, and passed the rich man’s tax bill, and took Social Security away from a million workers.”  [SpeechesUSA]

Heaven bless him, he never had to work with the 113th lead by Representatives Boehner, Cantor, and the likes of Louie  Gohmert.

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Filed under Economy, Nevada politics, Politics

The Crisis Factory goes Dancing With the Debt Fetish

Marathon DancersOne of the little problems with the Politics of Hyperbole is that eventually someone may notice not every minor annoyance constitutes an emergency.  Not even every major issue is an emergency.  However, nothing has prevented the radicals from manufacturing crisis after crisis in order to monopolize the conversation and distract this country from some very real issues we need to address.

The Distractions

Pillar OnePeople are in imminent danger of becoming dependent upon government.   Hogwash. Only the most extreme social libertarian would contend that having police, fire, and emergency medical personnel creates “dependency,” and how foolish does a person have to be to argue that we don’t need public health inspectors?  Further, if we allow for the old saws that two “heads are better than one,” and “many hands make light work,” then we know there are many tasks at which we do much better when we work together: Building roads, dams and bridges; Conducting relations with foreign countries; Protecting our citizens from or responding to natural and man-made disasters; Promoting our national economy.  And the list goes on.  Or, to introduce yet another well known concept:

“No man is an island,
Entire of itself,
Every man is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manor of thy friend’s
Or of thine own were:
Any man’s death diminishes me,
Because I am involved in mankind,
And therefore never send to know for whom the bell tolls;
It tolls for thee.” — John Donne (1572-1631)

Pillar Two: People are burdened by an unconscionable level of federal debt.   This argument is extremely convenient for those who have another agenda — cutting spending on domestic programs with which they are in fundamental disagreement.  The proposition requires adopting a variation on the White Queen’s belief in “six impossible things before breakfast.”

The United States is the most powerful nation, with the most powerful economy in the world.  China’s GDP is $8.227 trillion; U.S. GDP is $15.68 trillion.  Therefore, it is necessary to manufacture PERIL in order to substantiate the claims that we are burdened by indebtedness such that we cannot afford to (fill in the blank with the program one wishes to dismantle).   There are some real issues, just not the ones usually cited in the conservative press.  For example:

The Trifflin Dilemma Peril:  “He pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfill world demand for these foreign exchange reserves, and thus cause a trade deficit.”  Translation – The stronger the nation the more likely other nations are to want to invest in it, and the more other nations invest in it the more vulnerable the nation becomes to foreign influences on its economy.

A variation on the Trifflin Dilemma often shows up in the conservative media in the form of a new version of the old obnoxious  Yellow Peril argument — What if China called in its investments?  They could OWN us.  Instead of rewriting the posts, this topic has been discussed at more length in “The Republican Debt Wish” (2006), “Something to Think About,” (2008) and “When Willful Ignorance Meets Economic Reality,” (2011).

One one of the consequences of paying attention to the debt, as opposed to focusing on the economic growth which facilitates the repayment of those obligations, is dangerous in itself, as explained by Nobel Prize winning economist Joseph Stiglitz:

“The fundamental problem is not government debt. Over the past few years, the budget deficit has been caused by low growth. If we focus on growth, then we get growth, and our deficit will go down. If we just focus on the deficit, we’re not going to get anywhere.

This deficit fetishism is killing our economy. And you know what? This is linked to inequality. If we go into austerity, that will lead to higher unemployment and will increase inequality. Wages go down, aggregate demand goes down, wealth goes down.” [HuffPo]

Pillar Three: The free market will cure all ills.   When pressed to explain why, for example, the Affordable Care Act, is so onerous, the right is often moved to propose that the “free market” could have solved all the problems associated with health care insurance situation in the United States.

The first question we need to ask in regard to this contention is: Are we using the right tool from the box?  Consider your utensil drawer in the kitchen.  Does it contain at least one table knife, bent at the tip because it was pressed into service as a screw driver or as a lever?  Like the trusty table knife, the free market is an excellent tool for delivering the goods and services we require, but there are some tasks for which is it simply not the best implement to apply.

We could apply the free market to our transportation system by privatizing all our now public roads and charging tolls for their maintenance and use — however, we need to calculate the cost to our economy of raising costs for the factors in our transportation sector.  In this instance, the cost to the trucking industry is a negative factor in economic growth, and it is better policy to “subsidize” the industry by providing well maintained roads and functional bridges to secure the benefits of our economy.

Since we accept that corporations should operate for a profit, then in the realm of health care insurance it makes good free market sense for the company to insure only healthy persons (certainly not those with pre-existing medical conditions, or those who are elderly) and to keep those medical loss ratios at the lowest possible level.  In short, if we allow the free market to function in its purest form in the delivery of health care, then we should rationally expect that the least costly services will be provided, to those who need the least service.  Sometimes it’s really not about the money.

We can quantify the economic contribution of a father or mother in the family, but that doesn’t determine his or her value.  We don’t calculate a cost-benefit analysis in order to decide on marriage. We can quantify the economic contribution of roads, bridges, and airports, but that alone doesn’t determine their value to us.  We can quantify the benefits of education in terms of test scores, but we can’t determine how a person will synthesize information accumulated from the arts and from engineering to determine the best design for a marketable household appliance.

Focus Please

There are issues we need to address, most of which have profound implications for our economy. Among these are:

#1. Global climate change.  This isn’t “lib’rul hype;” this is about living on a planet capable of sustaining human life. Yes, if we foul our nest, the planet will probably last another 6 billion years, but WE won’t.   The 2007 University of Maryland study (pdf) projects economic impacts in terms of agriculture, energy, and transportation; in terms of our eco-system; and, in terms of water and infrastructure elements.   The fifth assessment from the IPCC released recently should convince all but the most delusional that WE are the problem.

The conservatives continue dancing with the Debt Fetish

#2. Student Loan Indebtedness.  If we’d really like to have young people start contributing to our economy, especially in regard to consumer spending, then it would be nice if they had more unencumbered income with which to do just that.  The Wall Street Journal calls the current situation the “Student Loan Straitjacket.”

The conservatives continue to dance with the Debt Fetish, but “What of the debt for our grandchildren?”  Flash Dispatch to the conservatives — These ARE our grandchildren.

#3. Infrastructure issues.  It isn’t like the American Society of Civil Engineers haven’t been trying to get our attention.  The National Report Card is not pleasant or reassuring reading — but it should be read, and we should be paying attention.

The conservatives continue to dance with the Debt Fetish.  How do we pay off any portion of the debt if our physical infrastructure is so dilapidated as to impede the progress of our distribution systems?

#4.  Employment. Of all the associated issues this is the most central.  We could be putting people in the construction sector back to work if we could enact funding for infrastructure projects.  We could be putting people to work in alternative energy projects… We could be putting people back to work in new jobs in new manufacturing sectors.  However, we are still dancing with the Debt Fetish…

…and like the marathon dancers of the Depression Era we will proceed having put a great deal of effort into endeavors promising very paltry results.

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