Obama - the fiscally responsible president

There has been a lot of coverage lately on the Internet and in the news in general about statistics provided by the Office of Management and Budget, the Congressional Budget Office and Haver Analytics.  The data shows clearly that Barack Obama has been a fiscally responsible president.  The annualized growth of federal spending has been reduced to just 1.4% during the Obama Administration compared to 8.1% during Bush II's second administration. (click here) .

Needless to say, there has been a lot of push back from conservative bloggers and Republicans in general.  We all know that statistics can sometimes play with the truth.  If we want to prove something, just turn to statistics.  The funny thing here is that this information comes to us from non-partisan sources.  In reality, the slow pace of Federal spending is hurting economic recovery.  Paul Krugman has been a critic of Obama from time to time because of his fiscal restraint.  We all know that Congressional obstruction is behind the slow economy.  If you don't know that by now, you live in a bubble!

Barack Obama's plan to increase Federal revenues through a modest tax increase on the wealthiest Americans is a step towards fiscal sustainability.  Republicans are blind to the fact that government needs to pay for wars, fix infrastructure, protect our environment and improve the lives of everyone by raising revenue judiciously. Republicans and the wealthiest Americans used to be true patriots.  They are not anymore.  There seems to be no sense of responsibility to this country when it comes to paying for the freedoms we all enjoy.  I guess that includes the freedom to hide your money is Swiss bank accounts and accounts in the Cayman Islands-Mitt Romney.

As for those that feel violated by the facts displayed in this government report, I'm sure you will read your conservative blogs and find lying vindication.  I suggest however that you turn to the Politifact analysis of the debate where you will learn that Obama has slowed the growth of Federal spending more than any president in the past 60 years.  Politifact rates the Obama spending story as mostly true.

If you want your government to be fiscally responsible, the chart demonstrates the need to elect Democrats.

tomtoak

Remembering Andy Griffith

I have been away for a long time.  Traveled to the west coast and enjoyed the view of the Pacific.  Before I start posting again I thought it would be appropriate to honor an icon who just passed away.  Andy Griffith was a life-long Democrat who supported progressive causes.  He will be missed.  I thought that the best way to honor him is to re-post my March 29, 2009 story; "A good dose of Andy Griffith".  Keep the original date in mind as you read the story.  Also, the link in the story to the video no longer works as it has been removed by the originator, Ron Howard.

Tuesday, March 24, 2009

A Good Dose of Andy Griffith is What the Doctor Ordered!

I like to watch a lot of 1950, 1960 and 1970 TV shows. I probably catch 3 or 4 reruns of the Andy Griffith show every week. The show last night really "struck a cord" with me. It made me think of more innocent times; a time when neighbors really cared about each other. With today's "toxic mortgage" discussion in the background, this show really drew my attention.

In the episode, a local Mayberry family is going through some tough times and is going to have their mortgage foreclosed by the "Scrooge" like character, Ben Weaver, who owns Weaver's Department Store. Of course, Sheriff Taylor has to serve the papers on this family that is an important part of the community. The family; down on their luck had a few children, not 14 children like "Octomom".

While the community worked on ways to assist the family, Andy was faced with a dilemma. It was his responsibility to serve the foreclosure papers. He was deeply concerned because the Ben Weaver character only wanted to foreclose so he could build a new factory. Andy knew the law and as we all know, had unique ways to walk around it when it involved people. Andy reasoned that the law required the homeowner to have full knowledge of the foreclosure action; therefore, if he stole his friends glasses, he would be unable to read the foreclosure documents. Of course, Andy stole the glasses and the foreclosure action was delayed long enough to find a resolution. That resolution involved shaming the Ben Weaver character into giving the good folks some more time to settle their debt. In the end, the factory took a back seat.

Wow! What a powerful message. People are given a break and can stay in their homes; and, this is more important than the new factory. Whenever I hear political pundits referring to those that have "toxic" mortgages as "losers", I am disgusted by their attitude. Every Mayberry loving American should be disgusted too.

Sheriff Taylor and Aunt Bea didn't consider those people losers. Heck; they didn't consider Otis Cambell to be a loser. Everyone in the community was important. Where have those times gone? We all accepted and loved the message back in the 1960s. Why do we have to listen to the hatred spewed forth on talk radio against some people that have been eaten up in this economy?

I think each and every American needs another good dose of Andy Griffith, Mayberry and the values of true patriots. During the election, I had a nice dose of the old Andy Griffith and the, now old, Ron Howard. If you want to see how these men have responded to today's politics during the election of 2008, follow the link (click here).

I'll continue to watch the Andy Griffith Show to regain my balance from today's "talking heads" that don't know what they are saying. By the way, Andy did return his friend's glasses. We all should have the vision of Sheriff Taylor.

tomtoak

Disgusting Rhode Island and Studio 38

I think they need to change the name of the State of Rhode Island and Providence Plantations to, "Nausea Island and Providence Robber Barons."  While driving home to Rhode Island the other day one of the first things you notice is a rest stop along Route 95 that is now closed to the public.  This rest stop was recently constructed, within the past 8 years, and cost the state $millions to construct. Why is it closed?  Simply put, the state refuses to hire anybody.  There is no problem building facilities, but damned to hell if anyone wants to hire people to care for those facilities.

Now we come to the predicted demise of "Studio 38", the Curt Schilling gaming company that was heralded as a savior for the Rhode Island economy and that was granted $75 million in loan guarantees from taxpayer money.  To follow the story more closely, I suggest you visit RIFuture.org.  This is the best progressive political site in Rhode Island. 

Yes, Rhode Island has not only stolen from the future financial security of its public employees by attacking pension systems state wide, but it has stolen from everybody throwing money at ill-conceived ventures.  Rhode Island acts like a venture capital firm, but is never successful with its investments.  This has to be the only state that built a major downtown hotel (The Westin) and then suffered operating losses of $25 million per year for over a decade.  This has to be the only state that is stupid enough to guarantee the profits of a gambling casino which will one day cost $millions because of the casino bill in Massachusetts.  This has to be the only state that stupidly backs a gaming company that could not raise its own revenues from venture capital sources. How about spending over $44million on the new Wickford train station that nobody uses. These disasters are just the tip of the iceberg.

This state has robbed from the poor and middle class to give to the rich and there is no sign that it is willing to stop.  Sounds like Republican politics but beware, we happen to live in a "Republicrat" state, if you know what I mean.  The state has reduced the state work force by over 3000 employees during the past 10 years while the state budget skyrockets to new heights each and every year.  Stop blaming the public employees and stop stealing from them.  Rhode Island is throwing its money away in the direction of rich people and that is why our unemployment rate remains higher than 11% and is growing all of the time.  As our problems grow, the state continues to throw money haphazardly in every direction except the right one.  Government has to do what it is suppose to do. Government needs to use its tax dollars to educate, regulate, protect, and preserve.  Government should not be in the "business game". 

Until Rhode Island can move in the opposite direction of its leadership and whiny radio talking heads, you can expect higher unemployment, growing government debt and the scapegoating of public sector employees.  Welcome to "Nausea Island"!

tomtoak

Raimondo's faulty pension data begins to sting Rhode Island

As seen in this blog in prior posts, the pension law changes shoved down the throats of our weak kneed legislature was based on faulty assumptions that I argued would lead to economic decline in this state. Raimondo's most egregious error was to rely on data from actuaries that live in outer space. Her insistence that the life expectancy for retirees should be 87.6 years on average is absolute hogwash. Using such bad data created the crisis which she so joyfully capitalized on.

I draw your attention to the chart. This chart represents a random study of deaths in Rhode Island during the Fall of 2011. Days were randomly selected and age at death calculated from the obituary page of the Providence Journal. In total, there were 257 deaths recorded. The average age of death was 77.4 years and out of the 257 deaths recorded during the study; 50 people lived past 88 years. The green line represents Raimondo's science fiction while the red line represents today's reality. (Please note: On the chart the green line says 88.6 but it represents the 87.6 year target - my mistake) Raimondo's unbelievable pension plan actually adds on 10 years of life in one giant leap of economic whackyness.

I know this information is anecdotal and not a scientific study. This chart does provide a view of the present day longevity of Rhode Island residents. It can be used for comparison purposes. You need to also remember that the chart represents only those people with the hard cash to pay the Providence Journal for the listing. These folks may actually live a little longer than those without the cash. Regardless; the assumptions made by Raimondo are wild-ass assumptions.

Now on to the state's economic decline. Today's Providence Journal rag has a lead story entitled; "Job losses edge up for fourth month." (Please note: I no longer link to the Providence Journal as policy for this blog) Rhode Island lost 1,900 jobs in November and the unemployment rate is again increasing for the first time in nearly 2 years (10.5%). In the same edition of the Journal, the national news headline is: "The Economy: Edging toward recovery" The national unemployment rate has ticked down to 8.6%. While things are getting better in the nation, Rhode Island's downward spiral continues. I guess stealing $billions from retirees is not working. Rhode Island can't even add jobs during the Holiday season. Do you think it has something to do with consumer confidence and retirees holding tight to their money? You bet it does! Get ready for 19 more years of this. Is it coincidence that Rhode Island has been faltering economically during the past 4 months: The same 4 months as the pension debate boiled?

In other more promising news: The Rhode Island Supreme Court denied the state's request for summary judgement on the issue of state pensions being contractual. The Supreme Court sent the case back to Superior Court for trial because the unions have a solid case. Maybe it will take the courts in Rhode Island to straighten up the economy. God knows, the Governor and Treasurer can't do it. Retirees have won round 2!

tomtoak

Federal taxes are at their lowest point in decades

After filing my taxes for 2010, I noticed that my effective tax rate was just under 10%. This is about as low as it has ever been. Why all of the Tea Party angst? Republicans continue to keep screaming about taxes while they have no concept of economic reality. The reality I'm talking about is the need to raise revenue to pay for their ridiculous war in Iraq and the failings of the Bush administration to keep the economy on course. It's funny how Republicans never mentioned the deficit when Bush was President but they blast Obama daily for inheriting his mess.

There is a great web site that I happened upon the other day called; "VisualizingEconomics.com". In one article, the top marginal tax rates from 1916 to 2010 are charted. Categories of taxation on the chart include income tax, corporate tax and capital gains for the period. Just look at the picture; a picture is worth a thousand words in this case. I'm still not sure that Republicans will get it as they are still tied to Reagan voodoo economics that has caused our massive Federal deficit.

I have a smaller problem with lowering the corporate tax rate from the current 35% to 25% as even Obama has suggested. The key here is to have 100% of U.S. corporations paying taxes, not the current 25%. Corporate lobbyists have done a great job making sure their interests avoid taxes. The middle class has no such luxury in this country.

So why all of the fuss about taxes? It's truly a ruse created by the Republican Party to win votes through radical propaganda. Barack only wants to turn the green line on the chart back to where it was during the Clinton administration. Remember, this is only being considered for those incomes that exceed $250,000 per year (35% to 39%). Please note that this rate was 91% during the Eisenhower administration and at 50% during the Reagan administration.

Republicans continue to say that America has spoken because of the 2010 election. I hate to clue them in but, Barack Obama won in 2008 by over 5 million votes and ran on this very concept. Barack stood in front of the American people and insisted that the top marginal tax rate needed to be where it was during the Clinton administration. Tea Party Republicans are simply wrong.

tomtoak

Wisdom from the Woods XI

Wisdom from the Woods is an occasional column that outlines complex issues.


What the hell is President Obama going to do about employment issues this country is facing? Today I am bringing my class to a favorite spot in the woods to discuss recreation and the problems associated with maintaining public lands. You see; governments are not providing the human resources required to maintain the millions of acres in the conservation system. My favorite spot is a great place to demonstrate the work of the Civilian Conservation Corps (CCC) from the 1930s.

In today's world nobody seems to want to get their hands dirty. Nobody wants to foul up the keyboards of their computers. We do need to have people working in our woodlands as the CCC infrastructure that is still providing services to this day is now starting to fail. Our public lands are in deplorable shape and Governor Nothing (Carcieri) could care less. So we have a problem maintaining our conservation lands and we have a severe unemployment problem. Can't we put the 2 things together again.

I'm not suggesting that we recreate the CCC; but I do believe that there is a ready resource of talented people that could lend a hand to conservation agencies across this country. I think people can be put to work without spending much money. Today's unemployment benefits are continually extended as they should be. I contend that the first 6 months of benefits should remain as it is. After 6 months, why not utilize that unemployed work force to improve conservation infrastructure and to assist natural resource agencies collect data for critical monitoring programs. In other words, keep providing unemployment benefits but require individuals to work 3 days a week for those benefits. The remaining 2 days a week could still be used for employment search. There are many other areas of government that could use a helping hand.

Some will say that searching for work is a full time job. In a normal economy I would argue; yes. Today we do not have a normal economy and let's be realistic, many unemployed folks don't want to find that job until the benefits run out. In my former role I could have put dozens of people to work and I did during the downturn through the Carter years. The Emergency Job Unemployment Act(EJUA) as well as the CETA program provided multiple opportunities to get conservation work done. If the unemployed are getting paid anyway, let's find a way to utilize their talents.

tomtoak

Kelo v. City of New London Revisited

Do you remember the landmark Supreme Court case of Kelo v. New London, Connecticut when the court ruled that lands taken by eminent domain could be transferred to other private concerns? In this case 7 homeowners had their property seized for commercial development. David Souter was the deciding vote in a 5-4 decision.

Well; after the court ruling and the destruction of all property, the land was cleared for the construction of a new Pfizer pharmaceutical plant. Yesterday the pharmaceutical giant backed out of the deal. New London is left holding a vacant lot without any consideration of the "public good". Truth be told, the confiscation of this land was never going to be in the public best interest. Contrary to popular belief, when commercial and industrial development occurs, the taxes of citizens in the community always goes up. While jobs may be good for some people, the benefit to the community as a whole is negative.

I think it unfortunate that the lawyers for the plaintiffs in this case did not have their hands on the tax study done by the Southern New England Forest Consortium, Inc. and the Trust for Public lands in Connecticut's case. Please view my April 15, 2009 post that graphically presents the case against the public good when commercial and industrial development occurs. That post was my tax day protest. The studies conducted clearly show that as the commercial and industrial taxable value increases in any community, the effective tax rates for residents always go up.

Yes, there may be good for some; however, the "public good" should be considered as this requires that everyone benefit. Private transfer of land to private concerns does not meet that simple litmus test. There is a clear and direct correlation between growing your commercial and industrial base and the subsequent increase in property taxes. Those unaffected by the development are damaged when their property tax increases. Taking lands by eminent domain requires that everyone benefit, not a corporate giant.

You may recall that there was a movement in New Hampshire to take away David Souter's cabin in the woods by eminent domain to build a rustic hotel and vacation destination. It's too bad that never happened. For those of you that believe that this is a liberal thing, think again. This action was taken because of corporate greed. I stand with the homeowners that had their life crushed by the hands of government and blame conservative thinking for this disaster of public policy. I sincerely hope that the landowners get their property back and succeed in pursuing further legal action against those involved. It's too bad you can't sue the Supreme Court. It's not often that such a bad decision becomes so painfully obvious so quickly. I hope there is a lesson in this for everyone. I was steaming when it happened and I'm still steaming over the injustice to the individuals in this case.

tomtoak

Grasping at Windmills

As this country struggles to find ways to deal with our dependence on foreign oil, we continue to grasp for alternative technologies without doing much thinking. The non-stop talk about the development of wind energy is great; but stop talking. Before this country actually moves ahead with pending proposals, somebody needs to start thinking.

Off shore proposals have been getting all of the press and political support. How stupid are we? Does anyone realize the excessive costs of developing our energy off shore? Building windmills that can live through 150 MPH winds is one thing; but what additional costs are needed to engineer wind energy facilities that can live through a 50 foot wall of water from a storm surge or rouge wave? Now you build them so you have to maintain them. How do you do that? You build a fleet of ships to service all off shore facilities. Now you need to build infrastructure to get transmission lines out to sea; I'll bet you that's not cheap! Of course you've made your decision to build your electrical grid and energy generators in the most corrosive environment on earth. That's right you giants of industry, didn't anyone ever teach you that salt water corrodes? I'm not saying that you engineering geniuses can't solve the problems; but at what cost?

While traveling in Austria a few years ago I marveled at the miles and miles of wind farms adjacent to the train traveling from Vienna to Saltsburg. You see, the windmills were growing in all of the agricultural fields. There was still plenty of room for crops and the land was serving multiple purposes. We are always looking for ways to help our farmers. Why can't our turf farmers in Rhode Island be growing windmills along with their grass. Why not line the median strips of major east coast highways (Route 95 - Maine to Florida - Route 195 in Rhode Island and Massachusetts) with windmills. The highway is close to the ocean, energy infrastructure is readily available along the way, maintenance can be accomplished using trucks from GM, Ford and Chrysler, windmills do not have to be able to withstand 50 foot waves, corrosion is of less concern because of inland locations, infrastructure to fuel electric cars will be roadside and construction costs have to be a fraction of the costs of developing off shore.

Building the future wind energy infrastructure needs to be done on shore. Some will tell me that there is a problem with wind. Yes you may lose a few turns on the generator, but east coast highways are all close to sea level. Build the structures high enough and you'll save billions on construction costs. And you know what? Our electric bills will be a lot cheaper and the construction can occur a lot faster.

Please start thinking!

tomtoak

Backing a company that is too large to fail is an Obama mistake

I have never been a fan of consolidations in government or business. If you track back to my May 31st and June 2nd posts, I explain my position in greater detail. Cost savings are always disguised when the entity grows larger and more complex. Some of GM and AIG's problems grew out of the consolidations of the past.

Of all of the economic maneuvers of the Obama administration, the strategy that has me most concerned is the continued financial backing of companies that are still considered too big to fail. AIG, GM, Chrysler and major banks have been the recipients of tax payer bailouts. I continue to maintain that no company in America can become so large that it's failure would significantly damage our Nation.

I just came across this quotation that I think the Obama team needs to live by:

"Any intelligent fool can make things bigger and more complex......It takes a touch of genus-----and a lot of courage to move in the opposite direction." Albert Einstein

While the auto industry (GM) is shedding divisions like Pontiac, the underlying intent is to make GM as strong as ever. GM officials will seek to do this in a way that would avoid competition. Removing a Pontiac from the market place will water down the competition for GM. Money thrown at AIG and the banks is going to end up in the hands of overpaid, over-egoed executives. This has already been widely reported to have happened. As for the working middle-class; they have been the ones that are forced to "sacrifice".

I keep going back to the AT&T model here. I think that it took courage to bust apart an American corporate icon that simply became too big and controlled too large a sector of the American economy. I maintain that GM needed to be broken into 4 separate corporations left to compete for our dollars. Insurance and banking industries need to be separated and appropriately regulated. We can no longer afford to let this failed marriage experiment in capitalism lead our lives. If we don't move in the opposite direction as Einstein proposed, our problems will remain with us for decades to come.

tomtoak

Republican Radio Making Noise

You have to read today's front page story of the Providence Pamphlet (Providence Journal) regarding the feud at Rhode Island's premier radio talk station, WPRO (click here). It seems like even neo-conservative talk show folks just can't get along with each other, let alone define a vision for fixing things in this country.

If you read between the lines it is clear that John DePetro is not a team player. He's lucky he only got hit with a piece of paper in the eye. His little tantrum because Buddy Cianci asked one of his guests (Bruce Sundlun) to stay for his show (the show that followed) is truly "school yard". Oh what a tangled web we weave when first we practice to ...... act like A-holes! Let's face it, the line up on WPRO is disturbingly full of hatred, bigotry, arrogance and ignorance. The only host that shows some level of normalcy is Buddy, but even he falters frequently.

Republican radio seems to be obsessed with making the news instead of talking about the news. When they talk about the news, they use no basis in fact a high percentage of the time and consequently, generate the controversy that they all crave. They are all looking for the headline and are jealous when somebody else steals their thunder. In the end though, its the lies that we are all left to ponder. Rush Limbaugh is the "biggest" example of the need to make the headlines. He will say anything to make the nightly news cycle and it is mostly lies and hatred that he continues to foster.

Additionally, the problem with radio talk is the current culture centered on Republican philosophy that has failed us miserably. OK, it is Republican radio after all so one would expect radio hosts to sing the Republican song. We hear radio hosts repeatedly beat listeners over the head with the "Obama deficits" that will cripple us for years to come. I agree with the need to solve deficits, but get your facts straight! Bush era practices have lead to the lion share of future deficits. If you don't believe me; click here.

Many Republicans are highly critical of Keith Olbermann because of his reporting the liberal side of the news. I can understand that. His special commentaries can be extremely hard hitting and rude. If you have never watched his show on MSNBC, you should. Keith does something that conservative pundits never seem to do. Keith always backs up his sentiments with a stream of facts that can make your head spin. He especially loves to turn things around on Republicans when they make some off-handed stupid comment for political posturing. Just yesterday, Newt Gingrich made the comment that he is not a "citizen of the world" like Obama, he's a "citizen of the United States". Keith shows up with a tape of Ronald Reagan saying; "I am a citizen of the world" and all of a sudden, Gingrich looks like a fool.

From Limbaugh to WPRO right here in little Rhode Island, Republican radio needs to be reformed. If the FCC won't do it, then I think progressive citizens need to start seeking out new ways to change the dialogue. We need to start complaining to the sponsors of what has now become a joke in America.

I have one suggestion for WPRO. Try firing DiPetro; hell, he's been fired many times before for his bigotry. Then install Tara Granahan in his morning post. When she filled in for him last Friday, I heard her handle some of John DiPetro's usual crowd. She stood up to them with style and grace. Unfortunately, Republican radio is not looking for style and grace; they are looking for headlines.

tomtoak

Consolidations in education - a wise move?

Conventional wisdom seems to like consolidations when budgets get tight. I'm not so sure that consolidation is a good thing; and quite frankly, I have learned that consolidations are a really bad strategy. While in business consolidations can save companies from bankruptcy, it has been my experience that well intentioned consolidations in government can be disastrous.

I recently read a short article on the plan at the University of Massachusetts (UMass) to abolish the College of Natural Sciences and Mathematics and the College of Natural Resources and the Environment in order to to form a single college which will be known as the College of Natural Sciences. In the words of Steve Goodwin, dean of the College of Natural Resources and the Environment; the consolidation of two colleges "better positions us to compete nationally and internationally and enhances our ability to attract and retain the best faculty and offer excellent education for our students." Who can argue with that? There is no doubt that dedicated people are trying to do the right thing.

Let's look a little deeper. Initially, by the fall of 2009, the new college will house the following programs: Astronomy, Biochemistry and Molecular Biology, Biology, Chemistry, Computer Science, Environmental Sciences, Food Science, Geosciences, Mathematics and Statistics, Microbiology, Natural Resources Conservation, Physics, Plant, Soil and Insect Sciences,Polymer Science and Engineering, Psychology, Stockbridge School of Agriculture and Veterinary and Animal Sciences. The plan seems to call for future college realignments which will result in disciplines like Psychology, Computer Science and Polymer Science and Engineering to find new homes by 2010. Even with that change, the new College of Natural Sciences is a monster!

Having been a UMass graduate (1972) with a forestry degree, you can imagine why I'm concerned. Does Forestry, Wildlife Conservation and Wood Technology seem a little buried? Here is the larger issue; while immediate cost savings may be demonstrable, larger is never cheaper. In time, the new college will prove more expensive. Think about it; consolidations in government seldom see anyone cast aside from the pay rolls. The new monster college will result in higher compensation for administrators. Initial savings are almost always impossible to maintain.

The new college will be under the same cost restraints as the original two. As time moves forward, decisions regarding program cuts will be made. Programs with the least power and the fewest students will be jettisoned like a bad penny. Administrators making the decisions will be too far removed from the issues to fully comprehend consequences. Students will not be better served and educational opportunities will be diminished. Some disciplines such as forestry will never command the student numbers of a mathematics program. The need for those 25 or 30 graduates each year in forestry may be critical to the state's environmental efforts in the decades ahead. When the dean of the college may well be a chemistry professor, understanding forestry issues will be a real stretch.

In my opinion, maintaining the original colleges will result in better decisions into the future. Think about the most successful businesses today. The fastest growing business segment involves the dot.com companies that are small with simple strategic visions. Netflix, Google, and Amazon, just to name a few, are now giants. Time-Warner did not have the corporate mentality to create an AOL. AOL was purchased by Time-Warner and now Time-Warner has had to cast AOL aside because administrators were too far removed from the dot.com culture. Time-Warner had no idea how to make decisions that would enhance the AOL position. I fear the same lack of sensitivity when consolidations take place in government and universities.

While administrators struggle with some harsh economic realities, I think they need to remember this - larger is not cheaper and bigger is not better.

tomtoak

Consolidations - bigger is not always better!

Having lived through consolidations in government, I think that leaders have to re-evaluate the efficacy of such actions. As we look at the current state of the economy; ask yourselves, is bigger really better? Was it better to have AIG so big that it could not fail? Is it better to have GM so large that it can't function in the down economy? Was it wise to split AT&T into multiple companies a few decades ago?

It seems like every time there is a financial crunch in government or business, administrators react by insisting on larger organizations. The argument is always the same; by consolidating operations, we all become stronger. I want to be diplomatic in my response; but I think I need to say, bull shit! While leaders of institutions are well intentioned when devising new, larger organizations, they need to fully comprehend the consequences. Administrators need to look beyond quarterly results, annual results and even bi-annual results. True leaders need to look at a longer time horizon; perhaps decades. I'll go as far as saying, bigger is almost never better!

I lived and supported a reorganization that consolidated environmental functions within the State of Rhode Island. In the late 1970's, the Department of Natural Resources was combined with the environmental regulatory functions housed within the Department of Health. The new agency was named the Department of Environmental Management (DEM). The arguments all seemed to make sense and the leaders behind the change were the most dedicated professional I have ever known. In retrospect, the change was disastrous.

In the new agency, financial pressures did not disappear. Over time, fiscal issues took an exhausting toll on one side of the agency. The new DEM, when faced with mandates from the EPA and others, struggled to find resources to accommodate the needs of everyone. The consequence of the merger resulted in the draining of financial and personnel resources from the natural resource areas and shifted those resources to the environmental regulatory areas. In 1986, I became the chief of the forestry agency that had 65 full time positions, coupled with dozens of part time summer positions. When I retired in 2005; a retirement fostered by the frustration of dealing with management needs, I had 29 full time positions. Today, my successor has only 17 full time positions. Responsibilities have been amended, but the public generally requires the same service.

This is not the end of the story. When I retired in 2005, the DEM had roughly the same total number of employees as when I started as chief. Emphasis and power changed the allocation of resources. The legislature, fed up with the regulatory burdens imposed on businesses and citizens, continually limited the financial resources of the department. The natural resource areas; the white hat side of the department, was devastated by the continual shifting of money and personnel towards the other side of the agency. The regulatory areas; the black hat side of the department, kept on growing and growing at the expense of natural resources.

Today, natural resources areas at DEM have been decimated, eviscerated, castrated and left to struggle with an almost impossible job. I feel for the employees that are trying to do their best for the people of Rhode Island. Rhode Island is not better off because of the shifting financial dynamics within the larger, "more powerful" agency. The larger agency has lost status in the eyes of the legislature and the struggle to correct the lack of fairness will take generations.

Bigger is not better!

Tomorrow, I will discuss another pending reorganization that will have lasting negative consequences for years to come. This story will involve the consolidation of two colleges at the University of Massachusetts.

tomtoak

U.S. Automakers Taking Different Roads

Why don't I follow my own advice? If you track back to an earlier post (February 21, 2009), you can read about my feelings on that date regarding the troubles being experienced by the United States automakers. At that time, I discussed the big three and concluded that Ford Motor Company was the best bet into the future.

I'm not a financial wizard; but I told readers that if I had to lay my money down, I would put it on Ford. Here we are a couple of months later and the share price has gone from $1.85 when I wrote the article, to a close yesterday at $5.69 per share. In the meantime, GM and Chrysler continue towards some form of bankruptcy, even with the help of the government.

Yesterday, we learn that Ford has outsold Toyota for the month of April because of the growing interest in its Ford Fusion hybrid automobile. While sales were way down from last year, Ford captured 16% of the existing market for the month.

GM continues to wallow in stupidity. GM cars fell more sharply than its trucks; and as reported in the Associated Press story, GM "goes against the Federal goal of selling smaller, cleaner cars." The definition of disaster is General Motors. Evidently, a forced change at the top has made no difference in steering the company into a road to the future.

I think it is a huge mistake for the Obama administration to offer GM, one more penny. While there is validity in trying to protect our prior investment, I just don't think that the team at GM knows how to make wise decisions. Casting aside their Pontiac division is going to be a devastating blow to the company. Pontiac was their 3rd best selling brand. What's more important is that they had many models, like the Pontiac G6 that was affordable, gasoline efficient, and stylish. Pontiac had its own followers throughout the country as Pontiac car clubs are found throughout the United States. I don't think there is a Buick car club to be found (I have not researched this). I happened to stay at a hotel one day in the Midwest that was hosting a Pontiac Grand Prix convention. The parking lot was quite a site. I actually traveled their in my own Grand Prix having no knowledge of the convention. Needless to say, I fit right in.

I have owned a number of Pontiac Grand Prixs and the mileage on these models was a respectable 26 MPG. The Pontiac G6 was rated at 30 MPG. My Pontiac Vibe (4 wheel drive model) is rated at 31 MPG and I had a Pontiac Bonneville that gave me 24 MPG.

In a recent article on GM, it was reported that their Pontiac brand was the best selling GM product among young people. If GM is going to market towards the middle-aged and elderly population, they will be out of business in a very short time. I think they should have been forced into a structured bankruptcy and the company split into 4 separate companies. Maybe then they could have found one executive that knows how to run a car company.

I guess I've bought my last Pontiac!!

tomtoak

Tea Party Tax Nuts Have it all Wrong

Today is the day of the Republican Tea Parties to be held throughout the land. I know; some of you may be saying it's not the Republicans, but it is. In city after city, dozens of people will show up to scream at the Obama administration because of their taxes; taxes by the way, that were just lowered for 95% of the population. OK, you're mad as hell and you're going to do something about it; right?

Today on Republican radio and on the news tonight, we will hear citizens saying that government is at fault and is always in the way of business. Truth be known; we are actually in the mess we are in because government was not in the way of business, and I mean big business (I'm not talking about small business here). We will hear talking heads try to educate us about the importance of growing the economy, lowering business taxes and personal taxes, so freedom and liberty is saved. What most people still don't understand is that whenever the economy grows and businesses grow, so do your taxes.

If you are thinking that Donald Carcieri in Rhode Island has it right by eliminating corporate taxation, and if you think that this will improve your personal economic situation, you are sorely mistaken. I think most people attending the tea parties live by this creed as if it were a religion. They are wrong.

Around the year 2000, the Southern New England Forest Consortium, Inc. (SNEFCI), commissioned a study to address common misconceptions regarding commercial and industrial development and the impact it has on community taxation. The study took all Rhode Island communities, ranked them according to fair market value of commercial and industrial taxable property and divided the state into 4 equal-sized groups. The effective tax rates were then calculated for these groups and compared to commercial and industrial tax base.

As you can see in the graph from the report (Figure 5.), the communities with the smallest commercial and industrial tax base had the smallest effective tax rate of $15.62. As the commercial and industrial tax base grew, so does the effective tax rate. We all want to see business flourish and we need jobs for our children. I'm not arguing this point. I just want people to stop fooling themselves. As communities grow and business grows, so do your taxes. People need to stop making claims that turning this economy around and growing business will lower our taxes. It never has and it never will.

From the same report, SNEFCI compared open land in the aggregated communities and compared that percentage with the effective tax rate. As you can see from the graph in the report (Figure 8.), communities with very little open land had the highest tax rate of $26.02, compared to the communities with the most open space, that enjoyed an effective tax rate of $18.11. Think about it logically, the highest taxes in this country are found in New York City, the most populated business capital in the world. I don't know where the community is that enjoys the smallest property taxes in this country, but I'm sure it's a rural community that has been able to avoid the infrastructure costs associated with commercial and industrial development. We need business, we need jobs, we want our kids to have a secure future, but stop dreaming of a world with no taxes. As the economy grows, your taxes will grow.

SNEFCI commissioned another well known study, The Cost of Community Services study that won regional awards as well as a national award. The Executive summary explains the details. If you want to track back to my March 10, 2009 post, please do so. In this post I describe in detail exactly why costs in communities increase with commercial and industrial development. Enjoy the tea parties, but understand that you have diminished the history of the country. The Boston Tea Party was all about, "taxation without representation". You all have plenty of representation; that we don't need more of. (You can click on the graphs to expand them)

tomtoak

Obama is no Socialist

Republicans seem to like to throw the word socialism around in an attempt to falsely define Barack Obama. During the campaign this was true and it certainly is true today. It seems like they have to try to portray him as something worse than "liberal". Sarah Palin had a real knack for whipping up hatred in the crowd to try and make this point. I'm losing patience with the right wing of the Republican party over this issue as are many democrats ( "The Democratic Daily" has a great post regarding this issue).

Take for example, the Republicans that fought against bailout money for major American corporations. These folks told us time and time again, let capitalism work and let these corporations file for bankruptcy. They speak of fears that Obama will nationalize banks and the auto industry. He has actually been avoiding this strategy with his every breath. I think that he may be wrong by trying to save these companies that are perceived to be too big to fail. By fighting to prevent bankruptcy, Obama has taken a course that is the opposite of socialism.

To the Republicans out there that disagree with the administration and feel that bankruptcy is the way to go; I have this message for you, get a f*****g clue. When a company files for bankruptcy protection, the company is taken over by the government. Decisions are made by a bankruptcy court, not the corporation. So stop trying to paint Obama as the socialist when you folks actually argue on the side of nationalizing these businesses through bankruptcy protection. That's right Republicans, many of you have been arguing for socializing businesses while Obama has been trying his best to keep these companies private.

Another case in point; Republicans have been screaming about Obama's demand that the Bush tax cut for the wealthiest Americans be returned to the level of the Clinton Administration. Does the notion of "creeping socialism" strike fear in your heart? This is the great claim of Republicans across this country. Obama is only trying to return this Nation to normalcy after a disastrous 8 years of failed economic and foreign policy. Returning the tax rate for the highest income bracket to 39.6% from its current 35% is not socialism. Republicans are wrong, disingenuous, arrogant and stupid when they draw this inference.

The taxation level for the highest income bracket during Ronald Reagan's presidency was 50%; during Nixon's presidency it was 70%; during Eisenhower's presidency it was 91%. To see a full report from the "Washington Monthly"; (click here). Did you notice that the administrations mentioned were all Republican administrations? What a bunch of socialists here!

Barack Obama is a true defender of capitalism from what I can see. His defense of corporations and desire to keep the government's hands off, may be a flaw in his strategy. I think that bankruptcy is inevitable for some corporations and any corporation that is too big needs to be dismantled. Lean and mean is the best way to protect capitalism.

tomtoak

Pathetic Providence Pamphlet

Yes; the Providence Journal (Pro Jo) has become a pathetic newspaper which can't stay in business much longer without major improvements to its news pages. I still subscribe because I don't make all of the decisions in my household. I'm not buying the argument that it is the cost of publication. Hell; the Pro Jo feels as thick as usual on a Sunday morning, there just isn't any news in it. The paper has plenty of pictures, a lot of advertising and little substance.

I actually had trouble finding the front news pages when I picked up my Sunday paper. For a considerable time, I thought the newspaper delivery person had left out the most important part. I was so excited when I found it! Ten pages of nothing. That's right; the entire section was only 10 pages but that's not all, there was a grand total of 3 pages in news items to read. Remove the pictures, advertisements and the special feature and my Sunday paper brought me approximately 3 pages of news from around the world. This is unacceptable and totally disgusting.

Let's move to the paper's local section on Sunday which is 8 pages long. Not counting the obituary page, there was a total of approximately 2.75 pages of local news. A great deal of this newsprint was taken up in community notices which is not really news. Absolutely unbelievable, is my only reaction! I have extreme difficulty talking about the sports page. The Pro Jo thinks that nothing exists outside of the Providence College Basketball team. All year long I had to be subjected to stories of the "glory years"; day after day after day after day after day.... Somebody stop me; please!

I finished reading my Sunday Pro Jo in record time; 4 minutes and that included the editorial pages (2). Sorry Pro Jo; I want more entertainment than that. You just raised the price by 25% and laid of workers; and, I get 4 minutes of reading news on Sunday morning?

I just read that the Huffington Post has started an investigative journalism venture and will be hiring 10 investigative journalists. It was reported that the web site hoped to draw on displaced investigative journalists who have been laid off by the failing newspapers from across the country. This is great news for those of us that go to a computer every day, but not so great news for elderly people that want to stay in touch. The largest and most consistent voting block in this country is no longer getting all of the news that's needed to make informed decisions.

Providence has just hired a consulting firm to come up with a new logo to rebrand the city. The new motto for the city; "Creative Providence", was chosen. The logo is a rather large orange "P". That's right; the city that distinguishes itself because it has the finest design school in the country, the Rhode Island School of Design, has settled on an orange "P". I'm not kidding. Only Sarah Palin could write this comedy. I don't know what Providence paid for this ground breaking venture in self promotion; but next time, save some money and go to one of the local grammar schools.

I think the choice is fitting though; the orange "P" really stands for "Pathetic Providence Pamphlet".

Why orange? I only think of caution signs and road work when I see orange!! Think of Providence every time you think of "P"! I suppose it could have been yellow!

tomtoak

A Good Dose of Andy Griffith is What the Doctor Ordered!

I like to watch a lot of 1950, 1960 and 1970 TV shows. I probably catch 3 or 4 reruns of the Andy Griffith show every week. The show last night really "struck a chord" with me. It made me think of more innocent times; a time when neighbors really cared about each other. With today's "toxic mortgage" discussion in the background, this show really drew my attention.

In the episode; a local Mayberry family is going through some tough times and is going to have their mortgage foreclosed by the "Scrooge" like character, Ben Weaver, who owns Weaver's Department Store. Of course, Sheriff Taylor has to serve the papers on this family that is an important part of the community. The family; down on their luck had a few children, not 14 children like "Octomom".

While the community worked on ways to assist the family, Andy was faced with a dilemma. It was his responsibility to serve the foreclosure papers. He was deeply concerned because the Ben Weaver character only wanted to foreclose so he could build a new factory. Andy knew the law and as we all know, had unique ways to walk around it when it involved people. Andy reasoned that the law required the homeowner to have full knowledge of the foreclosure action; therefore, if he stole his friends glasses, he would be unable to read the foreclosure documents. Of course, Andy stole the glasses and the foreclosure action was delayed long enough to find a resolution. That resolution involved shaming the Ben Weaver character into giving the good folks some more time to settle their debt. In the end, the factory took a back seat.

Wow! What a powerful message. People are given a break and can stay in their homes; and, this is more important than the new factory. Whenever I hear political pundits referring to those that have "toxic" mortgages as "losers", I am disgusted by their attitude. Every Mayberry loving American should be disgusted too.

Sheriff Taylor and Aunt Bea didn't consider those people losers. Heck; they didn't consider Otis Campbell to be a loser. Everyone in the community was important. Where have those times gone? We all accepted and loved the message back in the 1960s. Why do we have to listen to the hatred spewed forth on talk radio against some people that have been eaten up in this economy?

I think each and every American needs another good dose of Andy Griffith, Mayberry and the values of true patriots. During the election, I had a nice dose of the old Andy Griffith and the, now old, Ron Howard. If you want to see how these men have responded to today's politics during the election of 2008, follow the link (click here).

I'll continue to watch the Andy Griffith Show to regain my balance from today's "talking heads" that don't know what they are saying. By the way, Andy did return his friend's glasses. We all should have the vision of Sheriff Taylor.

tomtoak

Sherman Antitrust Act and AIG

I spoke to a good friend last night and he brought up a very good point that I haven't heard mentioned throughout this meltdown in our economy. Is it a good thing for banks to be merging? Bank of America keeps getting larger as is swallows financial institutions throughout our economy. Why was a company like AIG allowed to become so large, that it could not fail?

Remember when the Government broke apart AT&T because of that company's control of the communications industry? In 1982, the U.S. Government took that drastic step. Today it seems like the Obama administration is doing everything it can to keep AIG whole. I have not heard discussions that connect the Sherman Antitrust Act to the situation with AIG. Why not?

As time goes on, mergers throughout our economy are severely limiting competition in the marketplace. We have far fewer oil companies today than existed 20 years ago because of mergers in the industry. I've heard some talk about the necessity of mergers between the big three automakers. Seems like this just may make the situation far worse. Government policy should not lead to building larger more unmanageable companies.

The Justice Department has an Antitrust Division. What's been going on here? The world did not end with the dismantling of AT&T. I don't think that breaking apart AIG will end capitalism as we know it. It might be the best thing. Something tells me that we also can't afford to have banks that are too big to fail. Maybe if the Justice Department focused its attention on this issue, we wouldn't have to deal with today's bailout of companies that simply can not fail.

I've got to thank my friend for the conversation we had last night. There's a lot of food for thought here.

tomtoak

Wisdom from the Woods II

Wisdom from the Woods is an occasional column that outlines complex issues.

I'm in the woods again today as you can see. The rock in the picture is an artifact from Native American ceremonies. I have a dozen of these specimens on my property. The ledge on which this rock sits is perfectly aligned with the rising sun. I've read that the purpose behind lifting the rocks and chalking them as you see here was to allow easy access for rocking the boulders back and forth on the ledge. The sound created was an integral component of the ceremony and could be heard from miles away.

Today I'm thinking about corporate culture and how it contrasts with public sector employment. Having served in the public sector, I'm very sensitive towards criticism, especially when that criticism is unfounded. Today, we are finally seeing for the first time in recent memory, the corporate culture in this country being attacked. There are hundreds of protesters outside of AIG headquarters as I write.

It's funny that our society only seems to care about these things when it perceives that tax dollars are being squandered. Exxon-Mobil can tax us to death and nobody seems to care. Whether the money is coming through the government to the corporation or whether the money leaves our hands directly and goes to the corporation seems like an insignificant difference. AIG is changing the way citizens think of big business.

I worked hard in the public sector for years. Some years I managed to bring an additional hundreds of thousands of dollars to my state for projects that helped everyone. When I was successful, I got no bonus. I never wanted a bonus. My vocation to perform at my job was driven by the vision of a secure future and a wish to do the right thing. That secure future was spelled out in advance to me through the public employee pension system. This is the future that I wanted. Public employment works for the benefit of everyone, but it will only function efficiently as long as employees are provided for.

The corporate culture of annual bonuses, layoffs and huge severance packages is fine if that is what you bought into. I'll never understand bonuses for poor performance, and that is exactly what we are seeing at AIG.

I know many young people today who are making more money than their school teachers that may have been in the profession for 30 years. That's OK; I have no problem with that. It's always been that way. Those school teachers in 90% of the cases that I am familiar with did a great job. There were no bonuses; just good people doing their job. Hopefully, it was a job that they loved. The concern that I have today is the drive to take the future away from our school teachers and long term public employees. You can argue all you want that the public sector needs to be more like the private sector. I think not; just look at AIG. I can imagine what newspapers will be saying on the day that government starts handing out bonuses. Do you want your government to be run like that? I don't!

tomtoak

AIG: Americans In Graft

Graft is defined as the acquisition of money or advantage by dishonest or unfair means; especially through the abuse of one's position or influence through politics. AIG has positioned itself so that it simply can not fail. If AIG fails, reports indicate that the entire banking system is at risk. How does AIG respond to the crisis which is their making? Handing out bonuses to connected executives responsible for the largest corporate losses in U.S. history.

AIG executives in my estimation are traitors. If capitalism is at risk in this crisis, point your fingers at AIG, not the government of the United States. The Huffington Post outlines the situation and decries the abuse of this inexcusable corporate greed. A loss of $61.7 billion and now AIG is going to pay out $450 million in bonuses to top corporate executives. For what? Sending this country and the world into a depression? All of this happens after the citizens of this Nation have supplied a $170 billion rescue package in many installments to this traitoress company.

AIG; Americans in Graft, Americans in Greed, Americans in Gloom, Americans in Glee? Take your pick. This corporate greed needs to stop under the force of law. That's right capitalist America; under the force of law, and corporate greed is responsible not progressive politicians.

tomtoak