Non-Equivalence: The Continuing Curse Of “On The One-Handism”
In Time magazine’s recent profile of Herman Cain, author Michael Crowley writes of Cain’s now famous “9-9-9” plan, “Conservative economists applaud the idea, but many others say it dramatically favors the rich and would actually raise taxes on the poor and require huge spending cuts.”
Sentences like these in magazines like this one tell us a great deal about what’s wrong with political coverage in the United States. In the first place, the sentence treats America as if it is made up of only two groups of people: “the rich” and “the poor.” It does not even allow for the existence of the vast majority of Americans who exist somewhere in-between (generally referred to—and exalted as—“the middle class”). Most egregious of all, however, is the implied equivalence between the alleged approval by “conservative economists” on the one hand and what “others” say on the other.
Now, a few questions. Who are these “others?” Are they also economists or are they, say, garbage men? And do these unnamed conservative economists applaud the idea because it “would actually raise taxes on the poor and require huge spending cuts” or in spite of it? And finally, what, Mr. Time Magazine, would the plan actually do? What is the point, Time, if not to offer readers some guidance on competing claims by “conservative economists” and “others” when it comes to the proposals of leading presidential candidates?
It’s not like it would have been so hard. The Tax Policy Center broke down the numbers behind Cain’s 9-9-9 tax plan, and Neil Klopfenstein even offered a visualization of the plan based on the Tax Policy Center’s analysis.
What we have here is a prime example of what I have called “on the one-handism,” what Paul Krugman calls “the cult of balance” and what James Fallows calls the problem of “false equivalence.” The phenomenon derives from a multiplicity of causes but rests on two essential insights.
First, conservatives have figured out that even the most high-minded members of the media will publish their claims without prejudice, even if they lack any credible supporting evidence. They will do this because they consider it both “unfair” and nonobjective to take a position between the two parties even when it involves passing along a falsehood.
Second, because of the relentless effectiveness of the right’s effort to “work the refs,” reporters and editors are particularly reluctant to invite the hassles and angry accusations certain to arrive whenever anyone prints an unfavorable truth about anyone associated with the right. Conservatives have gotten so good at this, as a matter of fact, that they even get reporters to thank them for it—as well as to misidentify their complaints with those of average everyday American citizens.
Just one case in point: In his profile of Jill Abramson, the recently named New York Times executive editor, Ken Auletta quotes her discussing her time as the paper’s Washington bureau chief, confusing the two: “All my years in Washington, and in some ways being attacked by conservatives, made me more conscious of how a story might be seen in the rest of America,” Abramson explained.
Fallows has done the world a favor in this respect by risking his reputation for moderation and overall reasonableness by getting a metaphorical bit in his mouth on the topic of false equivalence. In doing so, he demonstrates one of the blogosphere’s key blessings: the ability to return to a topic over and over for the purposes of clarification and intensification. In his discussion of a story by The Washington Post’s Aaron Blake entitled “Democrats thwart Obama’s bipartisan goals again,” Fallows notes that the story in question “manages not to use the word “filibuster” while describing why the administration’s programs have not gotten through a Senate that the Democrats ‘control.’”
This is a shame. For as I noted in Kabuki Democracy, “Accurate numbers can be difficult to discern because in most cases the mere threat is enough to win the battle at hand.” But if we examine a close corollary—cloture votes—these rose from fewer than 10 per two-year congressional session during the 1970s to more than 100 in both the 2006–2008 and 2009–2010 sessions. Political scientist Barbara Sinclair estimates that these threats have affected 70 percent of all Senate bills since 2000, nearly 10 times the average in the previous century.
The same numbers suggest that Democrats, who were no paragons of virtue on cloture votes when they were in the minority under President George W. Bush, are still no match for their opponents when it comes to using and deploying the body’s tactical weaponry of obstruction. Since the Democratic takeover of both houses of Congress in 2006, Republicans have more than doubled the 130 cloture motions Democrats had managed to force during the four previous years under George W. Bush.
Fallows reprints one of journalist Ezra Klein’s charts demonstrating the degree to which Senate Republicans have abused the filibuster relative to its use in the past. As Fallows notes, the “blue line shows just some of the filibuster threats that McConnell’s minority has used to block consideration of even routine legislation and appointments.”
Fallows also notes, “[The Post story] reflects so thorough an absorption of the idea that the filibuster-threat is normal business that it describes the latest cloture vote as a vote on the bill itself … [and] Republicans end up voting against the bill, because that is the Republican strategy.” Fallows devotes most of his attention to The Post’s coverage but he actually began with a dissection of a Times version of the same story, demonstrating how widespread the problem is at the highest reaches of mainstream media.
Of course the issue goes well beyond mere politics. Because so much mainstream media misinformation is perpetuated based on the manipulation of data by conservatives unconcerned with evidence—and often even with reality—in the service of both ideology as well as their funders’ fortunes, Americans are actually worse informed about the reality of global warming than they were years ago, and hence the threat is going unmet.
Global warming misinformation is perhaps the most dramatic case, but almost everywhere, the refusal of so many in the media to even bother with the question of truth and falsehood is at the root of the problem. Boring as it may be to hear and see and read over and over, it bears repeating until it stops.
By; Eric Alterman, Senior Fellow, Center for American Progress, October 20, 2011
Campaign Financing: Small House In Tampa Ground Zero For Mega Millions In Campaign Donations
A little over a year ago, no-party gubernatorial candidate Bud Chiles stood outside an off-white single-story building with a carefully manicured lawn in suburban Tampa and said, “This building behind me is ground zero for what’s wrong with Florida politics.”
The building’s address: 610 South Blvd., a designation found on the financial disclosure forms of countless political committees in Florida and all over the country. The unassuming building nestled in an unassuming neighborhood is a veritable political action committee mill, churning out millions of dollars and influencing elections all over the country.
The kicker: What is happening at 610 South Blvd. is completely legal.
Chiles — who eventually dropped out of the race and endorsed Democratic candidate Alex Sink — was echoing the thoughts of millions of Americans who feel that too much money goes into our country’s political system, and we know way too little about where it comes from.
610 South Blvd. provides insight into a commonly overlooked aspect of campaign financing: Because so few people understand the nuances of campaign money, politicians and activists have a limited number of places to turn to when starting a committee. That leads to a high concentration of candidates and committees at a few select addresses, none more infamous in Florida political circles than 610 South Blvd.
Nancy and Robert Watkins together run Robert Watkins and Co., the accounting firm located at 610. Thirty-nine political committees are currently registered under the address with the Federal Election Commission (FEC). The committees registered there have conservative leanings and ties exclusively to Republican politicians.
The organizations range from leadership PACs, 501(c)4s and 527s to campaign committee PACs and even a handful of Super PACs — a new and controversial type of PAC that allows groups to raise unlimited funds from corporations, individuals and unions. And these groups tend to bring in big money. In 2010, one of the Super PACs at 610 raised more than $4 million.
Watkins and Co. also has 19 state PAC clients filed with the Florida Division of Elections.
Nancy Watkins says her firm’s impressive number of clients exists because she has been in the business for more than 25 years. According to her, 610 South Blvd. is an “official address” for many groups “for a lot of reasons.” Mostly, she says, the firm provides a reliable and “durable mailing address” for all her clients.
Meredith McGehee — the policy director for The Campaign Legal Center, a nonpartisan, nonprofit organization that works in the area of campaign finance and elections — tells The Florida Independent there are no rules against multiple PACs sharing an address.
McGehee calls the FEC’s rules for what passes as coordination among these groups “ridiculous,” and says that even if groups follow FEC rules, their activities would probably not “pass a smell test for regular people.”
According to McGehee, as long as the groups do not coordinate with each other in a way that violates FEC laws, they can communicate, work together and share an address. She calls the FEC’s rules for what passes as coordination among these groups “ridiculous,” and says that even if groups follow FEC rules, their activities would probably not “pass a smell test for regular people.”
“The rules are so loose,” she says. “So there is a lot they can do. They can coordinate in common sense terms — just not legal terms.”
McGehee says these groups, for example, can share an office and “talk about general strategy” and still not violate FEC coordination rules.
Watkins says the fact that all her clients share her address “does not create a relationship between them.” She says everything done at her business is ethical, and that she does not talk to one client about another.
Federal policy-makers from all over the country turn to Watkins and Co. for their services. Former Sen. Mel Martinez and Reps. Katherine Harris, Rick Renzi and Pat Roberts are among those with ties to 610 South Blvd. In 2008, Mike Huckabee registered his Florida presidential campaign committee with the firm.
Most have created their own leadership PACs with the company. Leadership PACs are political action committees that “can be established by current and former members of Congress as well as other prominent political figures,” according to the Center for Responsive Politics.
The Center, a nonpartisan research group, explains that “leadership PACs are designed for two things: to make money and to make friends. In the rough and tumble political game, elected officials know that money and friends in high places are very important to winning elections and leadership positions.”
Watkins and Co., however, are not only providing leadership PAC services for folks in D.C. The firm also houses the paperwork for a number of state PACs, or committees of continuous existence, associated with GOP members of the Florida Legislature. Steve Precourt, Ellyn Bogdanoff, Jack Latvala, Miguel Diaz de la Portilla, Anitere Flores, Steve Crisafulli and Kevin Ambler, to name a few, all run campaign finance activity through 610 South Blvd.
Furthermore, these state PACs associated with Florida legislators have raked in a lot of money. In the year 2011 alone, these committees have brought in about $400,000. Latvala’s PAC has raised about $230,000 this year.
The office building also serves as the home for four Super PACs, controversial independent expenditure-only committees. Super PACs are a new kind of political action committee created in the wake of the federal court case SpeechNow.org v. Federal Election Commission, which loosened up previous campaign finance regulations.
According to the Center for Responsive Politics, Super PACs “may raise unlimited sums of money from corporations, unions, associations and individuals, then spend unlimited sums to overtly advocate for or against political candidates.” Thanks to new rules, Super PACs can receive unlimited amounts of money from a corporation’s treasuries (i.e. profits), something that was previously illegal.
Super PACs do have to report their donors to the FEC on a monthly or quarterly basis; unlike traditional PACs, they cannot contribute money directly to political candidates.
As of Oct. 18, the Center for Responsive Politics reports that 156 committees are registered as Super PACs and have already “reported total expenditures of $2,596,787 in the 2012 cycle.”
The Super PACs listed under 610 South Blvd. include a conservative committee called the Coalition to Protect American Values; the Ending Spending Fund, a group that ran attack ads in Nevada against Harry Reid; the We Love USA PAC, a Super PAC famous for saying Obama is a “socialist” who “detests America”; and Dick Morris’ Super PAC for America.
The Super PACs listed under 610 South Blvd. include a conservative committee called the Coalition to Protect American Values; the Ending Spending Fund, a group that ran attack ads in Nevada against Harry Reid; the We Love USA PAC, a Super PAC famous for saying Obama is a “socialist” who “detests America”; and Dick Morris’ Super PAC for America.
The firm is also contracted by more traditional PACs, such as the American Issues Project. The group is known for spending $3 million on ads during the 2008 election tying the former founder of the Weather Underground Bill Ayers to Barack Obama. Most recently, the group focused on attacking the president’s stimulus legislation in 2010.
Also at 610: Florida Working Families, a PAC funded primarily by Big Sugar, notorious for its significant political reach in Florida and all over the country. Working Families launched negative ads against Jim Davis, attacking him for missing a vote in support of Israel, and successfully attacked Mary Barley, an environmental activist who ran in the Democratic primary for agricultural commissioner in 2002.
Watkins and Co. also provides services to a PAC funded by developers, lobbyists, builder’s groups and the Florida Chamber of Commerce called Floridians for Smarter Growth. The group was among the political forces opposing last election’s Amendment 4, known as the “Hometown Democracy” amendment. According to Ballotpedia, the amendment “proposed requiring a taxpayer-funded referendum for all changes to local government comprehensive land-use plans.” Floridians for Smarter Growth launched a successful attack against the amendment and coined (.pdf) the phrase the “Vote on Everything Amendment.”
In total, about 50 different PACs get their financial assistance and guidance from Watkins and Co.
According to the IRS’ records of tax-exempt groups, there are also four 527s using the address. 527s are advocacy groups that electioneer, and spend millions on a variety of positions and issues. While they may not explicitly tell voters to cast their ballots for a specific candidate, they clearly affect the way voters see a candidate or issue.
Watkins and Co. also handles the finances for a handful of tax-exempt nonprofits, including 501(c)4 organization. New rules now allow these types of groups to spend the money they raise anonymously, because their “primary activity” is lobbying.
McGehee says these sorts of details “reveal how the system really works” in elections.
Most people, she says, have little to no participation in this part of the political process. “About .08 percent of the population will spend more that $200 in an election cycle,” McGehee says.
Echoing Watkins, McGehee says that only a select few have the campaign finance expertise that Nancy and Robert Watkins provide, which contributes to the high number of clients 610 South Blvd. works with.
According to McGehee, there is also “a desire among these groups to know what everyone else is doing.” She says that is why the firm works exclusively with conservative groups and GOP policy-makers. ”It is rare that someone is serving both sides,” McGehee says. “It’s not accidental.”
The high concentration of key players in campaign financing — whether it is contributors or accountants — has led to a situation in which the political process is dominated by very few people. McGehee says that people have noticed, even though new rules have done nothing to correct the situation.
“There has always been this populist strain, whether its the tea party or Occupy Wall Street,” McGehee says, “that knows — and is angry about — our political system being dominated by monied interests.”
By: Ashley Lopez, Florida Independent, Published in The Washington Independent, October 24, 2011
Illegal Immigrants Not To Blame For Unemployment
Memo to Alabama: George W. Bush was right.
The former president, making a too-late push for what could have been a game-changing, bipartisan immigration reform law, noted that immigrants now here illegally make an important contribution to the economy. They do the jobs Americans can’t or won’t do.
Opponents disagreed, arguing that the undocumented workers were stealing jobs that should go to Americans—jobs like picking fruit for low wages in the hot sun. That was a questionable claim when the economy was better, but as Alabama farmers are now learning, Bush’s statement is correct even now, when Americans are working for far less pay in jobs for which they are way over-qualified, just to have a job.
In June Alabama passed a draconian immigration law—most of which is still in place, even while courts decide its constitutionality—that has driven many immigrants from the state. The result has not been a wave of grateful unemployed teachers and skilled workers, eager to be underpaid for difficult manual labor. Instead, at the San Francisco Chronicle reports:
The agriculture industry suffered the most immediate impact. Farmers said they will have to downsize or let crops die in the fields. As the season’s harvest winds down, many are worried about next year.
In south Georgia, Connie Horner has heard just about every reason unemployed Americans don’t want to work on her blueberry farm. It’s hot, the hours are long, the pay isn’t enough, and it’s just plain hard.
“You can’t find legal workers,” Horner said. “Basically, they last a day or two, literally.”
There are a number of lessons here. One is that there are surely elected officials and people in the business community who are using the recession to roll back all kinds of hard-fought rights for workers, cutting pay, eliminating job security, and drastically reducing or zeroing out benefits. Another is that while Americans don’t want to do farm work for low wages, they also don’t want to pay higher prices for food harvested by workers paid a decent salary. That’s not an argument for abusing undocumented workers, but it’s also not an argument for scaring foreigners out of the state so locals can have their bad jobs.
What’s remarkable is that some of the same people who scream about illegal immigrants taking American jobs here in the United States are quieter when it comes to foreigners abroad taking what could be American jobs here. Outsourcing of manufacturing jobs increases corporate profits, but adds to the unemployment rate domestically. Those are jobs American will do. If that anti-immigrant worker crowd is genuinely concerned about retaining U.S. jobs, they should focus on bringing back the outsourced jobs—not evacuating the foreign workers.
By: Susan Milligan, U. S. News and World Report, October 24, 2011
Partisanship: Blame Grover Norquist, Not The Founders
Everyone recognizes that Washington is not working the way it should. This has led some on the left, like Harold Meyerson, to question whether the Founders “screwed up.”
Many on the right, meanwhile, are promoting radical changes to our constitutional system. They talk about a version of a Balanced Budget Amendment, which would require a super-majority for most changes in financial policy. This would enshrine in our Constitution the right’s do-little government philosophy.
But the Constitution is not the problem. If we want to get Washington working again, we should listen to the Founders — not blame them for problems of our own making or change the ground rules of the system of government they bequeathed to us.
True, the Founders established a deliberative democracy, with a series of checks and balances designed to prevent the majority from running roughshod over the rights of political minorities. But these checks and balances have served our nation well.
The problem is not the democratic system bestowed upon us by George Washington, Alexander Hamilton and James Madison. The problem is the additional obstacles to action – the filibuster, hyper-partisanship, and special interest pledges – that our Founders would have found abhorrent.
Our Founders struck a delicate balance between the promotion of majority rule – the essential predicate for a democratic government of “We the People” – and the desire to protect minority rights and prevent the “tyranny of the majority.” The Constitution is designed to delay and temper majority rule while allowing a long-standing majority to get its way.
So, for example, the Constitution staggers the election of senators so that only one third of the Senate can change hands in any one election. As a result, it usually takes more than one election for any one party to gain a governing majority.
Modern politicians have placed layer after layer of lard on this deliberative system of government, ultimately producing the gridlock now plaguing Washington. The Senate Republicans now use the filibuster rule as a virtual requirement. Every piece of legislation must enjoy a super-majority of 60 votes in the Senate — meaning a determined minority can permanently stop the majority from getting its way.
President George Washington, in his farewell address to the nation, warned about just such “alterations” to our constitutional system. He said this would “impair the energy of the system.”
Washington also decried political parties. He passionately warned the nation against any effort “to put in the place of the delegated will of the nation the will of a party.”
While political parties were forming and solidifying even as Washington uttered these words, our modern politicians have enshrined hyper-partisanship through tricks like the “majority of the majority” rule, whereby the House speaker will only bring to the House floor legislation that has the support of the majority of his political party.
It is hard to imagine a more powerful example of the precise party-over-country danger Washington warned us about.
Washington may have had the likes of Grover Norquist in mind when he warned that some men “will be enabled to subvert the power of the people and to usurp for themselves the reins of government.”
Even anti-tax Republicans, like Sen. Tom Coburn (R-Okla.) and Rep, Frank Wolf, have now decried the oversized role Norquist’s no new taxes pledge played in forcing the debt ceiling showdown and helping to prevent any solution that would have included new revenues. Coburn and others have warned their colleagues against putting Norquist’s “no–tax” pledge over their oath to support the Constitution and to serve “we the people” – not Norquist or any other special interests.
Washington today has serious problems, but we should not blame the city’s namesake for them. Rather, politicians of both parties should support a reform agenda designed to remove from our political system the modern procedural obstacles that have produced our current gridlock.
Maybe even in these divided political times we can all agree that when casting blame for what ails Washington, the fault it not with George Washington and our other Founding Fathers. It’s with the causes of our current gridlock – including figures like Norquist and his no-tax pledge.
By: Doug Kendall, Opinion Contributor, Politico, October 22, 2011
State Loan Program That Rick Perry Touted Had To Be Bailed Out
Gov. Rick Perry has anchored his presidential campaign to his claims of creating jobs.
With no business record of his own, Perry must contrast his ability to create jobs with public money against the records of two front-runners, Mitt Romney and Herman Cain, who tout credentials as private employers.
His GOP opponents already have sniped at his gubernatorial record, saying Perry inflates his job-creation numbers and takes credit for a business climate he inherited. Perry’s efforts to create jobs and spur agribusinesses as the state’s agriculture commissioner during the 1990s might provide even more fodder for the opposition.
Over his eight years as Texas’ farmer-in-chief, Perry oversaw a loan guarantee program with so many defaults that the state had to stop guaranteeing bank loans to startups in agribusiness and eventually bailed out the program with taxpayer money.
The state auditor panned Perry’s claims of creating jobs and criticized Perry and his fellow board members at the Texas Agricultural Finance Authority for not following their own lending guidelines.
In some instances, the auditor said, Perry and the authority guaranteed loans to applicants with a negative net worth or too much debt. Citing growing debts, the auditor finally suggested that state officials consider dismantling the program.
Even as the first alarms were sounded, Perry defended the program, saying no taxpayer money was at risk, blaming others and claiming he had fixed it.
It only got worse.
By 2002, Perry’s successor, Agriculture Commissioner Susan Combs, a Republican, stopped making loans as the percentage of bad loans neared 30 percent.
By 2009, her successor, Agriculture Commissioner Todd Staples, also a Republican, asked the Legislature to pay off the loan guarantees with a $14.7 million appropriation. The finance authority could no longer afford the $541,000 to cover the annual interest on the bad debts, almost all of which dated back to Perry’s tenure.
“It’s bad,” Staples told the American-Statesman at the time. “Unfortunately, taxpayers are on the hook for something that happened as long ago as 1987.”
In effect, Perry, as governor, signed his own government bailout when he approved the 2009 appropriations bill.
The Perry campaign did not respond to questions about whether Perry, as president, would use public money in economic development programs and what lessons he learned from his experience guaranteeing risky business loans with public money.
Mired in partisan politics
When the Legislature created the Texas Agricultural Finance Authority in 1987, the intent was to boost the state’s agricultural economy by selling state-backed bonds to guarantee bank loans to entrepreneurs who could not get commercial loans. The goal was to create small businesses and jobs by processing — rather than simply growing — Texas agricultural products.
The program immediately got mired in partisan politics, with Agriculture Commissioner Jim Hightower, a Democrat, on one side, and the Republican members of the finance authority appointed by Gov. Bill Clements on the other.
The impasse ensured that no loans were made during Hightower’s term.
In 1990, Perry campaigned on a promise to create jobs and expand the rural economy by making loans to agribusiness startups that would process the state’s agricultural products.
Clements’ appointees to the finance authority board gave Perry, a board member, sole authority to guarantee loans before newly elected Gov. Ann Richards, a Democrat, could replace them.
Under the program, the state would guarantee 90 percent of a lender’s loan — up to a maximum of $5 million — to an applicant.
Entrepreneurs lined up for money to spin cotton into yarn, process meats, develop cotton insulation, market canna bulbs to wholesale nurseries and sell pinto beans as a ready-to-eat frozen meal, to name a few.
‘This has not cost Texans money’
Perry had made four loan guarantees for $5.8 million by the time the attorney general ruled that he had to share that authority with his fellow board members. Even then, Perry and his staff drove the decisions.
Mary Webb, a Richards appointee who joined the finance authority as chairwoman in 1992, said the part-time board members had to rely on Perry’s staff at the agriculture department when screening loan applications.
“They did the legwork,” she said. “We looked at the deals to see if they fit with the legislation: Would they create jobs and help the agriculture community?”
By the time Webb left the board in 1995, she said she knew a couple of loans were in trouble. She said she learned only later the scope of the problems with other loans.
The first loan guarantees were financed by selling $25 million in bonds.
Twice, in 1993 and 1995, Perry campaigned for voters to approve more bonding authority.
Perry claimed the first two years of the program had created 4,100 jobs and pumped $390 million into the economy by guaranteeing loans to 47 companies. He predicted more than 40,000 jobs could be created with the additional bonding authority.
He didn’t mention troubled loans as he touted the program’s virtues at a 1993 Capitol press conference: “We think that this Texas Ag Finance Authority is, without a doubt, one of the finest programs that the Texas Legislature, that the citizens of Texas have ever gone forward with.”
At another stop, Perry said, “We can truly say it has not cost the taxpayers of Texas any money.”
Voters turned him down in 1993, but Perry finally won an extra $200 million in bonding authority two years later.
“This is one of the few government programs that truly has worked,” Perry said. “This has not cost Texans money.”
In January 1997, State Auditor Lawrence Alwin first alerted state officials, saying Perry and the board had violated their own lending guidelines.
He said 10 of the 48 companies had defaulted, and six more were in trouble. The first bad loans were written off as uncollectible in 1995, according to records.
Alwin also debunked a $40,000 report by a state-paid consultant claiming the program had created or retained more than 5,000 jobs at a cost of $412 per job as well as contributing $600 million to the economy.
The consultant’s data, which Perry submitted to the Legislature, were “unverifiable, incomplete, untimely, and inconsistent” and based on unrealistic assumptions about job creation, Alwin concluded.
A year later, Alwin warned that the situation had gotten worse. The program was $5.7 million in the red because of bad loans.
The issue hit the newspapers.
Perry and his lieutenants defended the program.
Deputy Agriculture Commissioner Larry Soward told The Dallas Morning News that the audit reflected a number of bad loans made early in the program to farmers and ranchers trying their first business ventures.
“The business acumen of the people behind them might not have been as strong as possible,” Soward said.
But he insisted the program would rebound: “The fact that there is a negative balance does not mean the program is in trouble.”
Perry echoed a similar refrain in a guest column in the Amarillo Daily News.
“By their very nature, TAFA loans are considered higher risk. Because of this, some defaults were inevitable and a negative balance was expected in the early years of the program,” he wrote.
He blamed the problems on “some unfortunate decisions made by the previous TAFA board early in the program.”
Perry promised the problem was fixed. “Today, TAFA is on solid footing with a positive balance projected by 2010,” he wrote.
He reminded readers that the loans were funded by debt — commercial paper: “No taxpayer money has ever been used to make TAFA loans.”
In 1998, Perry was elected lieutenant governor, and Combs succeeded him as agriculture commissioner.
She talked of expanding the loan guarantee program to other borrowers beyond food and fiber processors. But she asked Alwin to do a follow-up audit.
His warning was prescient. He said a program that guaranteed loans to people who typically couldn’t qualify for commercial loans would have a hard time finding enough good loans to generate the income to offset the losses from the bad ones.
In 2002, Combs and the agricultural finance authority bowed to that reality, suspending any new loans.
Twenty-nine of 102 guaranteed loans defaulted, almost all of them during Perry’s tenure, according to the records provided this month by the agriculture department.
While the majority of the loans were in good standing, the majority of the original $25 million — $14.7 million — was bad debt. Just as the auditor warned, the income from the good loans could not generate enough cash to make the program self-sustaining.
“We hit a brick wall,” Staples said in 2009.
By: Laylan Copelin, American-Statesman Staff, Statesman.com, October 22, 2011
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