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
Lynch Law Lives On Stage And In Troy Davis Execution
When you visit Atlanta, ask about the death of Troy Davis, an execution by lethal injection as miles of people across land and sea kept a vigil until it came to pass at 11:08 p.m. last Wednesday evening.
Nice to know law and order—or do I mean lynch law and order?—prevails in the stubborn deep South, whatever the world thinks. Davis was put to death despite a slew of supporters, including dignitaries and law enforcement experts, who found shades of reasonable doubt in his murder case.
In a stroke of amazing timing and relevance, Georgia’s capital city is the setting of a tragical musical, Parade, based on a true story of a 1915 lynching. I just saw the brilliant production on opening night at Ford’s Theatre on 10th Street here in Washington—the very spot where Abraham Lincoln was shot at close range, by someone he never saw coming in the dark. A vengeful son of the South, an actor, played a Shakespearean scene for all he was worth—MacBeth, Lincoln’s favorite.
On that tragic April night, Lincoln was heartily enjoying a comedy. Similarly, all seems bright at first in this Ford’s Theatre play. Parade’s exuberant ensemble charms with spring songs, costumes, and revelry as the curtain opens on Atlanta’s celebration of “Confederate Memorial Day” in April 1913. But the holiday itself reveals the defiance of Atlanta’s white society, keeping the anti-Yankee candles burning.
The theatre director, Paul R. Tetreault, expertly captures the tableau of a wounded world that tells itself, over and over, that it was never vanquished, despite the festering sore of the Recent Unpleasantness.
An old guard culture, hostile to outsiders, was the downfall for a Jewish New Yorker in his early 30s, Leo Frank, who made a good living as a factory superintendent. He was accused and arrested of a gruesome child murder. Playwright Alfred Uhry, author of Driving Miss Daisy, wrote the book for the Broadway play, launched onstage in 1998. Uhry has family ties to the story, in true Southern storytelling style. There are no secrets down there, except the ones they choose to tell years later.
Parade is no picnic as it wends its way through the Southern justice system on a murder case that became a national cause, like the Davis case. Frank was found guilty of fatally strangling a girl worker in his pencil factory. When he was sentenced to hang, there was an outcry from quarters who felt a virulent strain of anti-Yankee anti-Semitism played a part in the verdict.
The governor of Georgia a century ago, John Slaton, went against the will of Atlanta’s townspeople. His character, portrayed by Stephen F. Schmidt, exhibits courage and pathos, clear about the consequences of bucking the establishment. Governor Slaton reviews the conflicting evidence in Frank’s case and grants him clemency: life imprisonment instead of death by the state’s hand. That is precisely what Georgia state officials refused to do for Troy Davis.
Lead actor Euan Morton telegraphs Frank’s desperate plight with impressive restraint. Jenny Fellner, the actress who plays his wife Lucille, sparkles onstage with her singing voice and her journey to loving her husband, locked up and alone, more than she ever did.
Relentlessly, the end closes in. A well-connected mob of white men break into the jail where Frank is held, to take him for a long night ride. It was a well-planned thing. In the show as in life, the hooded men string Frank up—as he prays in Hebrew—and hang him, with picture postcards to show for it all. Very nice.
So if you get to Marietta, ask them about the tree where Frank was hanged. Yes, Georgia has lots of colorful local history, and the fun part is trying to see where the past ends and the present begins. Both the Davis and Frank convictions were reviewed by the U.S. Supreme Court, which denied relief or mercy in both cases. Oliver Wendell Holmes, the famous justice, scolded Georgia for what he called a form of “lynch law” in Frank’s trial. But he was a damn Yankee in the minority.
Tetreault and others chose this timely tale to inaugurate The Lincoln Legacy Project, an initiative to spark a national dialogue on overcoming violence based on hate or bigotry. Parade’s history lesson could not be more sobering. Early in the 20th century, lynchings of black men were at an all-time high in the Southern states (including Maryland.) This was a spur to the founding of the National Association for the Advancement of Colored People (NAACP) in 1909. Ari Roth of Theater J, a partner in co-producing the play, notes Frank met the same fate as so many black men at the hands of mobs. Parade, Roth said, is a “galvanizing reminder of what can go wrong in our country when hate speech and raging angers aren’t tempered and set to rest.”
Amen. And let the conversation begin.
By: Jamie Stiehm, U. S. News and World Report, September 26, 2011
Conservative Word Games Manipulate Immigration Debate
Gabriel Thompson’s “How the Right Made Racism Sound Fair–and Changed Immigration Politics” at Colorlines.com goes long and deep into the psychology of conservative lingo and terminology used by the MSM in the immigration debate. A teaser:
…Colorlines.com reviewed the archives of the nation’s largest-circulation newspapers to compare how often their articles describe people as “illegal” or “alien” versus describing them as “undocumented” or “unauthorized.” We found a striking and growing imbalance, particularly at key moments in the immigration reform debate. In 2006 and 2007, for example, years in which Congress engaged a pitched battle over immigration reform, the New York Times published 1,483 articles in which people were labeled as “illegal” or “alien;” just 171 articles used the adjectives “undocumented” or “unauthorized.”That imbalance isn’t coincidental. In the wake of 9/11, as immigration politics have grown more heated and media organizations have worked to codify language they deem neutral, pollsters in both parties have pushed their leaders toward a punitive framework for discussing immigration. Conservatives have done this unabashedly to rally their base; Democrats have shifted rhetoric with the hopes that it will make their reform proposals more palatable to centrists. But to date, the result has only been to move the political center ever rightward–and to turn the conversation about immigrants violently ugly.
Thompson, author of “Working in the Shadows: A Year of Doing the Jobs (Most) Americans Won’t Do,” has written an excellent analysis which merits a close read — especially by Dem candidates and staffers who are involved in immigration politics.
By: The Democratic Strategist Staff, September 21, 2011
With The Death Penalty, “Probably” Isn’t Good Enough
The death penalty is a barbaric anachronism, a crude instrument not of justice but of revenge. Most countries banished it long ago. This country should banish it now.
The state of Georgia was wrong to execute convicted murderer Troy Anthony Davis as protesters and journalists kept a ghoulish vigil Wednesday night — just as the state of Texas was wrong, hours earlier, to execute racist killer Lawrence Russell Brewer.
That’s hard for me to write, because if anyone deserved a syringe full of lethal poison it was Brewer. He was an avowed white supremacist who had been convicted, along with two accomplices, of the 1998 hate-crime murder of a black man, James Byrd Jr. They offered Byrd a ride, beat him up and then killed him by chaining his ankles to the back of their pickup and dragging him for more than two miles. When police found Byrd’s body, it was dismembered and decapitated.
“I have no regrets,” Brewer said in an interview with Beaumont, Tex., television station KFDM this year. “I’d do it all over again, to tell you the truth.”
Sweet guy, huh? Still, I can’t applaud his death at the hands of the well-practiced Texas executioners. It’s not that I believe his life had any redeeming value, just that the state was wrong to snuff it out.
The Davis case drew worldwide attention because of questions about the evidence of his guilt. Davis was found guilty of killing a Savannah, Ga., police officer, Mark MacPhail, in 1989. The conviction was based almost entirely on eyewitness testimony, and in the two decades since that trial, seven of nine witnesses have at least partially recanted.
The case became a cause celebre. Luminaries who could never be accused of being soft on crime — such as former FBI Director William Sessions and former GOP Rep. Bob Barr — argued that Davis should not be executed because of doubt about his guilt.
Wednesday night, in his last words, Davis told MacPhail’s family that “I did not personally kill your son, father and brother. I am innocent.” Then a deadly cocktail of drugs was pumped into his veins.
The Davis case makes a compelling case against the death penalty — but not because it is exceptional. On the contrary, it’s fairly ordinary.
Despite what you see on “CSI,” there isn’t always DNA or other physical evidence to prove guilt with 99.9 percent certainty. Jurors often have to rely on witnesses whose field of vision may have been limited — and whose recall, imperfect to begin with, degrades over time. Even when there’s no “reasonable doubt” about the defendant’s guilt — the standard for conviction — there’s often some measure of doubt.
And there are questions of process. Were witnesses coerced into testifying against Davis? A few say now that they were. Did prosecutors prove their case? The jurors certainly believed they did. Could racial bias have been a factor? Unlikely, given that the jury included seven blacks and five whites. Should Davis’s attorney have done a better job of presenting a defense? Almost surely.
It’s a mixed bag. I can’t ignore the fact that over the years, not one of the many judges who examined the case concluded there had been a true miscarriage of justice. This suggests to me that Davis was probably guilty.
But “probably” isn’t good enough in a capital case — and this is why the death penalty is flawed as a practical matter. Someone who is wrongly imprisoned can always be released, but death — to state the obvious — is irrevocable.
In scores of cases across the country, newly examined DNA evidence has proved that inmates jailed for rape or other sexual crimes were in fact not guilty. It is not just likely but certain that some defendants now on death row are innocent. Even if only one is eventually executed, that will be a tragic and unacceptable abuse of state power.
There was a chilling moment in a recent GOP candidates’ debate when Texas Gov. Rick Perry was asked about having authorized 234 executions, more than any other governor in modern U.S. history. The crowd, drawn largely from Tea Party ranks, cheered this record as if it were a great accomplishment. “I’ve never struggled with that at all,” Perry said, referring to execution as “the ultimate justice.”
But he should struggle with it. We all should.
By: Eugene Robinson, Opinion Writer, The Washington Post, September 22, 2011
The GOP’s Lies And ‘Monstrous’ Lies
In politics these days, there are lies, “monstrous lies,” and statistics. By lies I mean the mundane nonsense that dribbles out of politicians’ mouths when the facts don’t suit them or they just don’t know any better. By “monstrous lies,” if I can borrow the phrase of the moment, I refer to the grander deceptions swallowed by whole political movements, delusions and deceptions that infect larger issues of policy and worldview.
Statistics in this case, along with pesky facts, help expose and distinguish the two species of falsehood—both of which have been on dramatic display during the GOP presidential primary campaign.
Take, for example, Michele Bachmann, who is practically a walking, talking full-employment plan for journalistic fact-checkers. Appearing at last week’s Republican debate (sponsored by CNN and the Tea Party Express—does that mean that the Tea Party is now part of the lamestream media?), Bachmann repeated a favorite talking point, that the Constitution forbids states to mandate that their citizens buy health insurance, Romneycare-style. “If you believe that states can have it and that it’s constitutional, you’re not committed” to repealing the Affordable Care Act, she argued. But the conservative case against the healthcare law rests on the notion that because the Constitution does not explicitly authorize such a law, the federal government is barred from instituting one. Since the 10th Amendment reserves powers not delegated to the federal government back to the states, it is constitutional for, say, Massachusetts to require its citizens to purchase health insurance (or car insurance, for that matter). Bachmann’s stance, one blogger at the influential conservative blog Red State argued, is “either ignorance on display or dishonest pandering.”
Bachmann was even more egregious after the debate, when she went on Fox News Channel, and later the Today show, and asserted that Gardasil, the vaccine that Texas Gov. Rick Perry had tried to mandate for Texas schoolgirls, caused “mental retardation.” It’s such whole-cloth twaddle that even the likes of Rush Limbaugh (“she might have jumped the shark”) and the Weekly Standard (“Bachmann seemed to go off the deep end”) blasted her for it.
But Bachmann is literally and figuratively small potatoes, Perry’s arrival having returned her to the lower tier of GOP contenders. And she is minor league compared to Perry in the “monstrous lie” department.
The phrase of course comes from his memorable description of Social Security. “It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you’ve paid into a program that’s going to be there,” Perry said at his first presidential debate. “Anybody that’s for the status quo with Social Security today is involved with a monstrous lie to our kids, and that’s not right.” Elsewhere he has called the program “by any measure … a failure” and cited it as “by far the best example” of an extra-constitutional program “violently tossing aside any respect for our founding principles.”
It’s a catchy turn of argument, but one monstrously divorced from reality. His “failure” kept nearly 14 million seniors and 1.1 million children out of poverty last year, according to Census Bureau data. Here are the facts about Social Security: Without any modification, it will pay out full benefits for the next 24 years. Starting in 2035, its trust fund will no longer be able to pay full benefits. Instead it will pay roughly three quarters benefits through 2084, which is as foreseeable a future as anyone can peer into in these matters—a problematic future, but hardly a monstrous one and certainly not an impossible one.
Indeed, the Congressional Budget Office has produced 30 policy recommendations, some combination of which could fix the Social Security shortfall. Here’s one: Remove the payroll tax cap so that more wages are subject to the payroll tax. That would make the program solvent for the 75-year window—again, hardly a monstrous situation. (To put it another way, the Social Security shortfall figures to be roughly 0.8 percent of GDP—roughly the same as the cost of extending the Bush tax cuts over the same period.)
Social Security wasn’t the only topic this week of Texas-size Perry misinformation. Obama “had $800 billion worth of stimulus in the first round of stimulus,” Perry said. “It created zero jobs.”
This gem—a staple of GOP talking points—earned a “Pants on Fire” rating from PolitiFact, which pointed to several independent analyses that came to quite different conclusions. The Congressional Budget Office has estimated that the first round of stimulus created or saved between 1.3 million and 3.6 million jobs; HIS/Global Insight put the number at 2.45 million, Macroeconomic Advisers at 2.3 million, and Moody’s Economy.com at 2.5 million. The GOP may disdain jobs that come from public spending (recall Speaker John Boehner’s “so be it” comment when asked about budget cuts leading to fewer jobs), but they cannot seriously argue that the economy would be better off if the ranks of the unemployed were 2.5 million persons more swollen. So instead forgo the inconvenient truth in favor of the monstrous lie.
These lies are monstrous because they are not one-offs, but are central to the GOP case—that Social Security (except, they are quick to add, for those currently on it) and the stimulus plan don’t work. So they have real-world policy consequences—see the emerging conservative line of attack against Obama’s American Jobs Act, that it is a stimulus retread. “Four hundred-plus billion dollars in this package,” Perry concluded at the debate. “And I can do the math on that one. Half of zero jobs is going to be zero jobs.”
He may be able to do math, but his grasp on the facts is tenuous at best.
By: Robert Schlesinger, U. S. News and World Report, September 22, 2011
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