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
Three Reasons Why It’s Better For The Economy If The Super-Committee Fails To Get A Deal
Last Thursday’s Washington Postheadline blared: “Debt panel’s lack of progress raises alarm on Hill.”
In fact it is far better for everyday Americans if the so-called Super Committee fails entirely to get a deal.
The overarching reason is simple: any deal they are likely to strike will make life worse for everyday Americans — and worsen our prospects for long-term economic growth.
Of course that’s not the view of many denizens of the Capitol who are still obsessed by the notion that it is critical for the Congress to produce a “compromise” that raises revenue and cuts “entitlements.” There are three reasons why these people are wrong:
1). Any deal would likely slash the income of many everyday Americans. You could design a plan to substantially reduce the deficit without big cuts in Social Security, Medicare or Medicaid. My wife, Congresswoman Jan Schakowsky, who served on President Obama’s Fiscal Commission, designed just such a proposal last year. And, of course, Social Security has nothing to do with the deficit in the first place.
Unfortunately, however, in order to get Republican support any large-scale deal in the Super Committee would almost certainly require big cuts in either Social Security, Medicare or Medicaid — or all of them. Substantial cuts in any of these programs will make life harder for everyday Americans and reduce the likelihood of long-term economic growth.
Without a “deal” in the Super Committee, the current budget plan does not cut Social Security, Medicare and Medicaid — and that’s a good thing.
According to the Social Security Administration, the average monthly Social Security check now averages the princely sum of $1,082 — or about $13,000 per year. Next year, for the first time since 2009, payments will increase by $39 per month to offset inflation, but $18 a month of that increase will go right back out the door in the form of Medicare premium increases.
Already under current law, Medicare Part B premiums, that cover services like doctors, outpatient care and home health services, must be set annually to cover 25% of program costs. And remember that Medicare recipients aren’t getting an “entitlement” — they are getting an earned benefit that they paid for throughout their working lives. The same, of course, is true of Social Security.
Mean while, Medicaid is the principle means of assuring that America actually begins to provide health care for all — including nursing home and home care.
The problem with medical care costs isn’t that “greedy” seniors and others are gobbling up too much care. The problem is that the costs of providing care are going up too fast. In fact, the per capita costs of providing health care in America is 50% higher than anywhere else on earth, and the World Health Organization only ranks health care outcomes as 37th, in the world.
Medicare is actually the most efficient means in the American economy for providing health care. Any action by the “Super Committee” that reduces the percentage of Americans on Medicare — say, by raising the eligibility age from 65 to 67 — would cost the American economy.
- According to a study by the Kaiser Family Foundation, if such a proposal were operational in 2014 it would raise total health care spending in America by $5.7 billion per year.
- This is so because, while it would save the Federal government a net of about $5.7 billion ($24 billion savings in Medicare payments largely offset by $18 billion of increased Medicaid payments and subsidies to low-income participants in exchanges), it would also generate an additional $11.4 billion in higher health care costs for individuals, employers and states — resulting in a net cost to the economy of $5.7 billion.
The one thing you could do to cut Medicare costs without hurting ordinary families or the economy as a whole is to require Medicare to negotiate with the drug companies for lower prices the same way the Veterans Administration does today. That would cut hundreds of billions in costs to the government over the next ten years, but don’t expect the Republicans to include that as an acceptable cut in “entitlements” as part of a Super Committee deal.
Of course, America has no business cutting the income of seniors who get $13,000 a year in Social Security payments regardless of anything else that is in a deal. The deficit problem should be fixed by asking millionaires and billionaires to pay their fair share and by jobs plans that put America back on a path of sustained economic growth. And we have no business reducing access to health care for everyday people so that CEO’s can fly around in their corporate jets, oil companies can keep their tax breaks, or Wall Street hot shots — who we all bailed out just three years ago — can pack in their huge bonuses.
Even if a Super Committee proposal includes increases in revenue to the government from millionaires and billionaires, that is not reason that normal people — whose real incomes have dropped over the last decade — should also be called upon to “share in the sacrifice.”
The problem isn’t that everyday Americans are gorging themselves on excesses that “America can’t afford.” The problem is that Wall Street, the financial sector and the 1% have gobbled up all of the increases in economic growth that the country has produced over the last two decades.
That has meant that the standard of living for normal people has been stagnant. But just as problematic, it has lead to a stagnant economic growth. Since the incomes of everyday people haven’t increased at the same rate as increased worker productivity, there simply haven’t been enough new customers to buy the new products and services that American businesses produce. That is the formula for recession and depression. And that’s just what happened.
American corporations are sitting on two trillion dollars of cash. The reason they aren’t hiring has nothing to do with the need for more tax breaks. What stops them isn’t lack of “confidence,” it’s a lack of customers.
For decades the International Monetary Fund (IMF) has preached the need for fiscal constraint and austerity. According to the Washington Post, now even the IMF is warning that, “austerity may trigger a new recession, and is urging countries to look for ways to boost growth.
If you want to lay a foundation for long-term economic growth in America, the last thing you would do is reduce the income going to ordinary Americans — even over the long run. That’s not the problem — just the opposite. We do not need ordinary people to “share in the sacrifice.” We need policies that will increase the share of income going to ordinary people and reduce the exploding inequality between the 99% and the 1%.
Any deal in the Super Committee will almost certainly do just the opposite.
2.). The worst effects of sequestration could be solved without a “grand bargain”. The one big downside of a failure of the Super-Committee to act would be the level of discretionary spending cuts that would be required through the resulting sequestration. This is particularly true of cuts in education funding.
The budget deal that was struck in order to prevent Republicans from plunging America into default last summer requires an additional $1.2 trillion reduction in the deficit over the next ten years. If the Super Committee fails to agree on the distribution of these cuts, they will automatically be spread over defense and non-defense segments of the budget beginning in 2013. But there would be no cuts in Social Security, Medicare or Medicaid.
Congress would have the ability to adjust these sequestration requirements between now and 2013, regardless. But the “fast track” authority that would require up or down votes on a proposal from the “Super Committee” would expire if the Committee cannot reach agreement by November 23rd.
The best solution to the problem of big cuts in discretionary spending would be to put together a smaller deal to raise some revenue and reduce cuts in discretionary and – if necessary — military spending — after the mandate of the Super Committee has expired.
The Congress will have a year to help solve this problem, and the pressure to ameliorate some of the cuts in military spending that have so far proved ineffective at forcing Republicans to consider big revenue increase, may be more persuasive when it comes to smaller increases as the actual date of sequestration (2013) draws near.
Of course it’s possible that the Super Committee itself could come with a small-bore deal of this sort, simply to avoid the full force of sequestration. But that would be very different than a $1.2 trillion dollar package that includes cuts in Social Security, Medicare and Medicaid. Progressives should avoid cuts to these programs at all costs, because any cuts that sliced Social Security, Medicare or Medicaid benefits would require changes in the structure of the programs themselves that would last forever. Cuts in discretionary spending — as bad as they might be — are one-time events and do not fundamentally change the structure of the American social contract.
3). There is no reason for Congress to fear that its failure to act on a “Super Committee” agreement will have massive adverse consequences on “market confidence,” since the level of the deficit will not be affected. That has already been set — with a mandate for a $1.2 trillion cut. The Wall Street gang and the ratings agencies might sputter something about government dysfunction for a day or two. But the fundamentals will not be affected, since the level of government borrowing won’t be affected by whether or not there is a deal.
It’s also worth noting that even after Standard and Poor’s downgraded the U.S. debt because of the process leading up to the debt ceiling deal, it had no effect on the interest rates the government is paying for bonds. In fact those interest rates dropped to record lows. U.S. government debt remains the safest investment in the world, no matter what S&P did, and the market reflected that indisputable fact.
In other words then, Congress does not have its back against the wall like it did during the debt ceiling “hostage” crisis. When it came to the debt-ceiling deadline, failure was not an option. In the case of the “Super Committee” failure to come to an agreement is a very real option — in fact, it’s the best option.
There are some in Congress — most notably in the Senate — who truly believe that what the country needs is a “grand bargain” that cuts the deficit by making ordinary people “share in the sacrifice” even if millionaires and billionaires are asked to share some as well.
Hopefully those who are working for such bargain will be thwarted by two important political realities.
First, that cuts in Social Security, Medicare and Medicaid are politically toxic. People get really angry when you take away something they have earned.
Second, the Republican’s stubborn unwillingness to give an ounce of new revenue from the pockets of millionaires and billionaires – who, after all, are the true core constituency of the Republican Party.
This time a little “gridlock” may be a good thing.
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
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
The GOP’s Latest Tax Gimmickry: Soak The Poor
It’s one of the strangest things in our politics: The only “big” ideas Republicans and conservatives seem to offer these days revolve around novel and sometimes bizarre ways of cutting taxes on rich people.
Given all the attention that Herman Cain’s nonsensical and regressive 9-9-9 tax plan has received, the Republican debates should have as their soundtrack that old Beatles song that droned on about the number nine.
Now, Texas Gov. Rick Perry hopes to pump up his campaign with a supposedly bold proposal to institute a flat tax, which would also deliver more money to the well-off. Perry plans to outline his proposal this week, but he has already touted it as a sure-fire way of “scrapping the 3 million words of the current tax code.”
There is absolutely nothing new about this idea, and candidates who pushed flat taxes in the past saw their campaigns flat-line, most prominently businessman Steve Forbes in 1996 and again in 2000. Politically, the idea falls apart rather quickly when middle-income voters realize that its main effect is to cut taxes on the financially privileged while usually raising them on Americans who have more modest incomes.
Note to Perry: Voters are shrewd in figuring out whether tax proposals really benefit them. That’s why raising taxes on millionaires — the exact opposite of what Cain and Perry want to do — wins support from a broad majority.
But the more interesting question is: Why are today’s Republicans so enthralled by tax gimmicks? Their party, after all, was once innovative in thinking about affirmative uses of government. The Grand Old Party instituted the Homestead Act and created land-grant colleges, the interstate highway system, student loans, the Pure Food and Drug Act and even a prescription drug benefit under Medicare.
It was Richard Nixon who supported laws establishing the Environmental Protection Agency and the Occupational Safety and Health Administration. In signing the OSHA bill, Nixon called it “one of the most important pieces of legislation, from the standpoint of 55 million people who will be covered by it, ever passed by the Congress of the United States, because it involves their lives.” Yes, government regulations save lives, a view now heretical in the GOP.
Republicans have boxed themselves into a rejection of both their own traditions and the idea that government can do any good. Thus they have confined themselves to endless fiddling with the tax code. Almost everything conservatives suggest these days is built around the single idea that if only government took less money away from the wealthy, all our problems would magically disappear.
There is a history to this. The Republican fixation on taxes dates to the mid-1970s, when supply-side economics began taking hold. The late Jude Wanniski, an editorial writer for the Wall Street Journal who campaigned indefatigably on behalf of lower marginal tax rates, came up with the “Two Santa Clauses” theory. He argued that if Democrats earned support by giving voters benefits through government programs, Republicans should play Santa by giving people tax cuts.
Wanniski sold his tax ideas to Jack Kemp, one of the most ebullient political figures of his generation, who in turn sold them to Ronald Reagan. Reagan made Kemp’s 30 percent tax cut (co-sponsored with Sen. Bill Roth) a centerpiece of his 1980 campaign. The political scientist Wilson Carey McWilliams perfectly described the result in a 1981 essay. “After years of learning that ‘you don’t shoot Santa Claus,’ ” he wrote, “the Republicans decided to nominate him.”
But Republicans have a problem now. In the Kemp-Reagan days, they were selling across-the-board tax cuts. Most of their benefits flowed to the rich, but almost everyone got a piece. Today, many Republicans complain resentfully that less prosperous Americans don’t pay enough in taxes — overlooking the fact that citizens who don’t pay income taxes still shell out a significant share of their earnings in payroll, sales and (directly or through their rents) property taxes.
Reagan’s optimism has thus been replaced by crabby put-downs of the less affluent. Perry said it directly in his announcement speech: “We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax.” Considering the other injustices in our society, this seems an odd and mean-spirited obsession.
“Tax the poor” is a lousy political slogan. That’s why Cain’s 9-9-9 plan and Perry’s flat tax are doomed to fail. Among conservatives, Santa Claus has given way to Scrooge.
By: E. J. Dionne, Opinion Writer, The Washington Post, October 21, 2011
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