Gogebic Taconite Helped to Write the Mining Bill

In an earlier post (January 27, 2013) on this blog, I said that the Mining Bill was a special interest bill intended to benefit a single company: Gogebic Taconite. It turns out that this is not as surprising as one might think because the company was able to participate in writing the bill. To see the details, go to http://www.bluecheddar.net/?p=28182&utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+BlueCheddarBlog+%28blue+cheddar+blog%29 and read Blue Cheddar's blog post entitled " Protected: Happy Groundhog Day, Early." This sleazier than even I imagined.

Make Your Voice Heard, Have Fun and Take a Break From Your Routine

Madison Action Day: An Opportunity You Should Not Miss

Every now and then you have an opportunity to do something good for your community, take a break for your regular routine and have fun.  Madison Action Day on March 14 is such an opportunity.  Madison Action Day, which is sponsored by the Wisconsin Council of churches and locally by our own ESTHER, is an opportunity for all of us to unite in support of programs to promote social justice in Wisconsin.  It is a day-long program that includes meetings with legislators, seminars and a speech by Rev. Brian N. Massingale of Marquette University in Milwaukee.

You’ll even get lunch. 

Join Us On the Bus

ESTHER has chartered a bus, which will leave at 7:00 AM from St. Mark’s Lutheran Church in Neenah (140 South Green Bay Road). You can leave your car in the parking lot on the further end from the church.  If you prefer to drive yourself to Madison, you can join us at Bethel Lutheran Church; 312 Wisconsin Ave, Madison WI.  The registration fee, which includes the cost of the lunch and the bus, is $35.  To register, go to ESTHER’s website.

Many From the Fox Cities Will Attend – Please Unite Your Voice To Theirs

Many people from our community will be attending this event.  If you are not a member of ESTHER or do not attend any church, do not be discouraged. We hope you will join us because among the issues that will be discussed are two of particular importance to our community. They include our bus system and proposed prison reforms

Our Bus System Is At Stake

One of these is a bill that will authorize the Fox cities to create a regional rapid transit authority.  As I said in a post in this blog on January 9, we need a regional transit authority because our community has become too large to receive federal support for the operating expenses of our bus system.  A regional transit authority ought to be a no-brainer.  It is a solution that allows local people to solve a local problem with their own money.  The solution is supported not only by ESTHER but also by the Post-Crescent, by our local Chamber of Commerce and by the mayors of our cities.  However, there are some radical rightists in the legislature who are so spooked by the thought of any sort of tax that they have opposed the regional transit authority on doctrinaire grounds in spite of the fact that the regional transit authority would only be able to impose a sales tax of up to ½% after the tax has been approved by referendum.  Public transit is important to many people in our community and to many businesses.  So come to Madison with us and make your voice heard in support of public transit in the Fox Cities.

Treatment Instead of Prison:  Effective and Cheap

The other issue of importance to our community is funding in the budget for Treatment Alternative Diversion (TAD) programs.TAD programs provide treatment for nonviolent offenders instead of imprisonment.  As I discussed in a post on this blog on January 10, TAD programs are among the very rare cases where you get to have it all.  TAD programs are cheaper, more humane and more effective than prison.  We can make our communities safer and save money at the same time.  What’s not to like about that?  To make it a reality, money has to be allocated for TAD programs in the state budget. So join us in Madison and be a voice for good sense in the criminal justice system.

The reason why it is so important for all of us who support these programs to be in Madison on March 14 is that at that time the state budget will be under discussion for the next biennium, and good intentions are worth nothing unless they have adequate funding.  So we have to be there during the budget discussion if we want to have any real effect.

Event: People of Faith United For Justice Madison Action Day

Date: March 14, 2013

Event Location: Bethel Lutheran Church; 312 Wisconsin Ave, Madison WI.

Event Time: 9:30 AM to 4:00 PM

Bus leaves the Fox Cities from St. Mark’s Lutheran Church in Neenah, 140 South Green Bay Road.

Bus leaves at 7:00 AM.

Cost: $35

Don’t miss this opportunity to make your voice heard!  Go to ESTHER Fox Valley and register now to attend Madison Action Day on March 14.

Is Rep. Steineke Stumping for a Special Interest?

Summary: Rep. Steineke supported the "mining bill" in an article in the Post-Crescent, but the bill appears to be a special interest bill that is designed to benefit Gogebic Taconite and its investors. Is Steineke stumping for a special interest?

Steineke Promotes “Reform” of the Review of the Review Process for a Proposed Iron Mine

On January 26, Rep. Jim Steineke advocated eloquently in the Post-Crescent for reforms in the permitting process for mining in Wisconsin. The issue has come up because of the mining permit requested by Gogebic Taconite for an iron mine near Hurley Wisconsin.  In order to expedite the permit, Gov. Walker’s administration has introduced a mining bill (2013 AB1/SB1) and presented the bill to the public as a much-needed reform that will stimulate economic development and create thousands of jobs. Steineke went to Hurley to see for himself what the bill could do for the community and came back with a glowing report.

Instead of Reform, the Mining Bill Creates a Special Process for Iron Mining

Unfortunately, the “mining bill” is not exactly the reform that it presents itself to be. It does not offer anything like a general reform of the reviewing process for proposed mining in Wisconsin.  Instead, it is tailored to the needs of Gogebic Taconite and its investors. You can see this in great detail by reading the Legislative Analysis of the bill on the state’s web site (https://docs.legis.wisconsin.gov/2013/related/proposals/sb1). 

Wisconsin’s laws establish a permitting process for all metallic mining, and AB1/SB1 merely separates iron mining from other metallic mining.  The bill defines a special permitting process for iron mining that is less rigorous and quicker than the regular permitting process for other metallic mining. The special process also provides looser environmental requirements and less opportunity for public input than the regular process does.  The supporters of the bill have not explained why we should treat iron mining differently from other metallic mining. They have given us no reason to believe that iron mining is inherently safer or cleaner than other kinds of metallic mining.  So we have to ask ourselves why we should make an exception for iron mining.  Could the reason be political?  Could the mining bill be intended to reward a major campaign contributor?

Gogebic Taconite, a Major Campaign Contributor, Proposes the Iron Mine

The only company currently requesting an iron mining permit in Wisconsin is Gogebic Taconite, and the owner of that company is Florida billionaire Chris Cline. He, his executives and his business associates gave almost $40,000 (pocket change for a billionaire) to political campaigns in Wisconsin in 2010, including $10,000 to Governor Walker’s campaign, according to Wisconsin Campaign for Democracy. (http://www.wisdc.org/pr121510.php)  Other Wisconsin politicians who received money from Cline this group include Democratic State Senator Jeff Plale, Republican Representative Mark Honadel, both of South Milwaukee, and Republican legislative candidate Shirl LaBarre of Hayward.

This political campaign is a continuation of the effort that began a couple of years ago when Gov. Walker and his allies in Madison tried unsuccessfully to pass an earlier version of this bill. According to the Wisconsin Center for Investigative Journalism (http://www.wisconsinwatch.org/2011/08/25/mining-bill-not-a-lobbying-success-story/), Gogebic Taconite spent $114,883 in 2011 on lobbying to pass the bill [AB426, the predecessor of the current bill].

The Mine May Create Few Jobs

Rep. Steineke would have us believe that the proposed mine will create thousands of jobs, but those jobs are far from certain. The Capital Times reported on January 25, 2013 (http://host.madison.com/33bad812-666e-11e2-97fc-001a4bcf887a.html) that mining companies in the Upper Peninsula of Michigan are laying off people and even shutting some mines down because of low prices for iron ore on the world market. The paper says,

… industry analysts are predicting a bear market for iron ore over the next several years.   Some commodity experts forecast the world supply of iron ore will exceed the demand by 2015 and beyond.

If Gogebic Taconite expects to make money from the mine near Hurley under these market conditions, they must be taking a very long view, and in that case, there is really no need for an expedited process.  We have plenty of time to do a thorough environmental review. Moreover, since iron ore prices will be low for several years at least, we should not expect a flood of new jobs in Wisconsin any time soon.

Big Benefits For Gogebic Taconite

On the other hand, the mining bill will certainly save money for Gogebic Taconite by shortening the permitting process and by limiting public input. The company will probably also save money by having fewer and less restrictive environmental requirements to meet. The bill gives regulators more leeway to ignore indicators of environmental damage, and in this case, the regulators will be working for Gov. Walker whose friendliness to business and contempt for environmental regulation are well known.

Is Steineke Stumping For a Special Interest?

So, Rep. Steineke appears to have been stumping for a bill that was designed to benefit a single company and its investors who have been major donors to political campaigns in Wisconsin. What do you think? Was Rep. Steineke promoting a pay-off to a special interest?

Progressive Democrats are the Party of Fiscal Responsibility

 

Republicans of the Radical Right are Fiscally Irresponsible

It never ceases to amaze me that radical rightist Republicans are able to present themselves as the party of fiscal responsibility when the truth is that they are anything but.  Yesterday (January 23, 2013), the Post-Crescent reported that Governor Walker and his allies in the legislature are hoping to give us all a reduction in our income taxes.  The paper says, “The governor has made his proposed income tax cuts a key part of his budget, which he is expected to present next month, and highlighted the cuts in his State of the State address last week.”  Governor Walker is proposing these cuts, he says, because our state has a budget surplus of about $342 million.  The budget surplus is largely due to the fact that Wisconsin has collected more in revenue than was projected, and the extra revenue is due largely to the improvement in our economy.  To use this extra revenue to cut taxes makes no sense from the point of view of fiscal responsibility.

Cutting Taxes is Like Giving Your Bonus Back to the Boss

The extra revenue is like a bonus that a company’s employees receive when the company does especially well.  Now let me ask you, if you received a bonus from your employer and you found that it exceeded your expectations, would you go back to your employer and say, “I don’t really need that money.  So please don’t give it to me,” or would you use the money to pay down your debts, make an extra contribution to your retirement account, add to your savings account, or save it for your children’s education?  Would you expect to receive a similar bonus every year, or would you treat the bonus as an unexpected windfall?

We Cannot Count on Having a Surplus Every Year

The situation of our state is just like the situation of an employee who has received a bonus.  The improvement of our economy has given our state some extra revenue, and the money could be used to improve our roads and bridges or to restore the cuts that were made in the funding for education in the budget for the last biennium.  We could also use that revenue to pay down our state’s debts or to put money away in the state’s Rainy Day Fund.  This last alternative would be particularly prudent because we cannot assume that a growing economy will give us a budget surplus every year.  We have to assume that we will sometimes have deficits in the future.  In this situation, using the money for a tax cut is an example of shortsighted fiscal irresponsibility.

We Don’t Really Know the Size of the Surplus

It gets worse.  The real size of the budgetary surplus is questionable because Governor. Walker’s administration has been budgeting based on the same suspect accounting methods for which he criticized his predecessor.  Governor Walker has been using cash flow accounting rather than accrual accounting just as his predecessor did, because cash flow accounting allows him to ignore obligations accrued in this year that will not be paid until next year.  Using cash flow accounting, the state can make the budget appear to be in balance merely by shifting expenses from the current year into next year.  So, it is hard to tell just how big the surplus really is, and it is equally hard to tell how much money might be available to fund the tax-cut.  In short, the Republican radical rightists in Madison are fiscally irresponsible not only because they are failing to pay down the state’s debts or to save money for a rainy day but also because they are doing so when they do not really know how much money they have.  Why are they doing this?

The Real Goal of the Radical Right Is To Reduce Key Government Services

They are doing it because the real goal of the radical right is not fiscal responsibility.  The real goal is to shrink the size of government.  The radical rightists believe that taxes should be cut whenever possible in order to force reductions in the size of government.  Of course, “reductions in the size of government” means reductions in key government services.  It means reductions in things like education, conservation, healthcare and the maintenance of roads and bridges.  We need these services, and our fellow citizens are smart enough to see that.  As a result, the radical right’s strategy has never worked. It was tried by President Reagan, and instead of shrinking the size of government, it led to unprecedentedly large federal deficits.  It was tried again by President Bush, and the result was the same.  Why does this happen?  It happens because everybody loves paying less tax, but we all resist reductions in government services that we know are important.  The radical rightists do not want to recognize the fact that their strategy has never worked, because they have a blind faith in the rightness of their cause and because people like the Koch brothers can always be counted on to support politicians who push for lower taxes.

Progressive Democrats Are the Real Party of Fiscal Responsibility

It is time for us to recognize that the Republican radical right is the party of fiscal irresponsibility.  We progressive Democrats are the only real fiscal conservatives in the country because we understand that if we want to have government services we have to pay for them.  We must reject budgeting based on fantasy.

There are No Conservative Republicans or Entitlements in Our Country

There Are No Conservative Republicans or Entitlements in Our Country

Summary:  Words like “conservative” and “entitlement” should be replaced by “radical rightist” and “earned benefit.”  Words matter because they carry emotional freight, and we should not allow the radical right to select the words that we use.

Right Wing Republicans Are Radicals, Not Conservatives

Radical rightists in the Republican Party like to call themselves “conservatives,” but they are not conservatives.  They are radicals. Conservatives want to conserve what we have, but the rightists in the Republican Party want to make radical changes.  That makes them radicals, and the fact that they are on the political right does not change that.

So, we progressives should always use the term “radical rightists.”  The word “conservative” should disappear from our vocabulary except perhaps in a historical context.  It is important that we do this because words make a difference. The word “conservative” is warm and fuzzy.  It has good connotations among voters.  The term “radical rightist” has no such good connotations. Most voters don’t like radicals.

Take Back Control of the Vocabulary of Political Discourse

The radical right has been very clever in its use of words.  For example, they have persuaded us to use the term “pro-life” instead of the term “anti-abortion.”  “Pro-life’ sounds so much better, don’t you think?  We progressives have not really done what we could to influence the vocabulary that is used for political discussion, and “radical right” is a good place for us to start. Those of you who have been reading this blog for a while may have noticed that I never use the term “conservative.”  I always say “radical rightist” and I encourage you to do the same. Let’s take back control of the vocabulary of political discourse.

Entitlements Should Be Called “Earned Benefits”

Another word that we should eliminate from our vocabulary is “entitlements”.  Radical rightists like to use the term to refer to Social Security and Medicare because it sounds as though people were encouraged to feel as if they were entitled to a government benefit.  It sounds as though people were encouraged to be dependent on government handouts. In fact, these programs should not be thought of as entitlements. They should be thought of as earned benefits.  People pay for these programs throughout their lives.  Calling these programs “entitlements” is a slur, not a description. Worse, the use of the term reduces the electorate’s support for these programs, which, of course, is exactly what it is supposed to do.   So, “entitlements” is another word that should be banished from the vocabulary of every progressive. We should always speak of “earned benefits.”

I’m sure you can think of other words that need to be changed, and I encourage you to tell us about them in comments on this post.

Can We Maintain Social Security And Medicare Benefits?

Summary:  The supposed demographic crunch that will require us to reduce Social Security and Medicare benefits is a myth because of rising productivity. Nevertheless, we need to think about mechanisms for funding them as a the number of workers declines .

Productivity Increase Allows Living Standards to Be Maintained

This posting is a response to an article (see the link below) by the Center for Economic Policy and Research. The article that tells us convincingly that there is no demographic crunch coming to make a decent standard of living for retirees impossible. The "demographic crunch" is the fact that the number of workers per retiree is falling. In effect, fewer workers must support more retirees. The article shows that this trend is not new. It has persisted for decades, but as the number of workers has fallen in relation to the number of retirees over the last 50 years, there has been no drop in the living standards of either workers or retirees.  The reason why living standards have been maintained is not far to seek: productivity has risen.  Each worker produces much more than either of his grandparents did.  So, living standards can be maintained even though fewer people are working.

But The Payroll Tax In Its Current Form May Fall Short

Productivity increases may provide the wealth to maintain our living standards, but they do not by themselves provide an adequate funding mechanism for Social Security.  Social Security has always been funded through a payroll tax, and both employers and employees have contributed to funding Social Security through contributions which are set at a percentage of wages.  Unfortunately, in recent decades increases in productivity have not led to increases in wages.  On the contrary, real wages have fallen over the last couple of decades.  Another way of saying this is that, while workers are producing more, their share of the total wealth being created is falling, and because the workers' share is falling, Social Security’s share is also falling because it is a percentage of wages.

So, the Funding Mechanism For Social Security Must Change

In order for living standards for retirees to be maintained, there must be changes in the way that Social Security’s funded.  There are several possibilities.  One possibility is that we raise the wage limit beyond which we do not collect Social Security taxes today. In 2012, we collected the payroll tax that funds Social Security only on the first $110,100 of income. Income above that level was not taxed, but  we could collect Social Security taxes on all wages and salaries at every level.  We could also collect Social Security taxes on other forms of income including interest, dividends and  capital gains, which we do not do today.  There is a certain justice to this possibility because today those types of income represent a larger share of the total than they did when Social Security was created in the 1930s.  There are undoubtedly other possibilities beyond those that I have mentioned, but the key point to be understood is that while we do not lack wealth that we can use to provide a decent standard of living for retirees, we do have to think about the means by which we fund Social Security in order to make a decent standard of living a reality.  In any case, it is not acceptable for retirees in the world’s richest country to live in penury.

Link to the CEPR Article:
http://www.cepr.net/index.php/blogs/cepr-blog/the-nonsense-about-a-demographic-crisis?utm_source=CEPR+feedburner&utm_medium=feed&utm_campaign=Feed%3A+cepr+%28CEPR%29

Companies Should Not Impose Costs on Communities

Summary. Today, when a company closes a plant, it does so to increase its profits, but most of the cost of the closing is born by the plant’s community. These costs include lost income, reduced property values and retraining costs. It is unjust for the cost of a business decision to be paid by people who do not share in its returns. We need to find a way to insure that the company’s shareholders bear at least some of the costs of decisions that create profits for them. This is a difficult problem, and I invite readers to submit comments or pieces for posting that explore ways to do it.

The Wealthy Traditionally Recognize Responsibility for Their Communities

Two recent posts on this blog that were written by friends of mine dealt with the problem of the responsibility that companies may have for the communities in which they operate.  So, I would like to offer a more systematic meditation on the subject.  It is almost universally recognized that wealthy and prominent members of a community have responsibilities toward their community that are commensurate with their wealth and positions.  We in the Fox cities have been very fortunate in having people in our community who feel that responsibility deeply.  Thus for example, we have Theda Clarke hospital and a performing arts center, which was largely paid for by contributions from prominent members of our community.  Sometimes, a company itself rather than an individual may identify closely with the community where it operates and feel a responsibility to contribute to its well-being.  In the Fox Cities, we have Thrivent financial, which has been a fine corporate citizen for many years.

Today, Large Companies Often Feel No Responsibility

Today however, many large companies are owned by thousands of shareholders who know nothing of the communities in which those companies operate.  Some of those shareholders are likely to be pension funds or mutual funds who are not even interested in the companies accept as their operations are reflected in the prices of their shares.  Companies with these kinds of shareholders are likely to have little interest in the communities where they operate and may well cause those communities great harm by closing facilities and firing workers.

Costs Imposed on Communities are “Externalities”

In this situation, a company may increase its profits or its share price by imposing large costs on a community.  These costs may include lost income for the laid-off workers and for the merchants who sell to them.  The costs may also include lost value for homeowners and other property holders as well as retraining costs for the workers.  When a company is able to impose costs on persons outside of the company, is said to externalize the costs, and externalized costs are referred to by economists as “externalities.”

Injustice of Externalities Is Recognized By Our Laws

Our laws recognize the injustice of externalities in some cases.  For example, we no longer allow companies to impose the cost of environmental pollution on the communities where they operate.  We require the companies to install scrubbers on their smokestacks or to clean up their waste products before dumping them into our waterways.  We may even require companies to assist in cleaning up the environment when they have already polluted it as in the case where companies that dumped PCBs into the Fox River have been required to pay part of the cost of removing them.

 A different kind of example may be found in unemployment insurance.  A company may be able to increase its profits or insure its survival by laying off its workers.  In this case, we recognize that the cost of the layoff is borne by the workers, and so we have created unemployment insurance and required employers to pay into the insurance fund.  Thus, at least part of the cost of the layoffs is borne by the employers.

Plant Closings Should Not Impose Costs on Communities

Perhaps a plant closing may be thought of in a similar framework.  Perhaps, we should think of the costs of a plant closing as externalities, and we should not allow companies to impose them on a community any more than we allow them to do so with the cost of environmental pollution.  Perhaps we need to have a fund analogous to unemployment insurance to cover the costs imposed on communities when a plant is closed.  Doing this would not be a simple matter.  We would need to devise a system that was fair and that minimized the inevitable disruption of what would otherwise be free market forces.  We want to have costs fairly shared, but we also want to avoid creating rigidities in our economy that would increase unemployment and impoverish our communities. 

Join in a Conversation to Explore This Topic

I think this complex problem deserves careful consideration, and I suggest that we start a conversation on the topic.  I invite everyone to make comments or to submit pieces on this topic to me for posting.

Publicly Funded Pensions Good for the Fox Cities

    
Retirees Facing Fiscal Cliff.
The Post-Crescent recently printed an article entitled “Retirees Are Facing Their Own Fiscal Cliff” that is worth comment.
(http://www.postcrescent.com/article/20130117/APC06/301170098/Column-Retirees-facing-their-own-fiscal-cliff)  
The article points out that most people facing retirement soon will not have enough money to live out their lives comfortably.  Many will have five dollars a day or less for food.  Three quarters have $30,000 or less saved for retirement.  Some people may simply have failed to save for retirement, but most never earned enough to have significant savings.  In recent years, wages have stagnated, and the value of people’s homes has declined on average by about 17%.

 What Should We Do?
     What should we do in this situation?  Is it acceptable for all people to starve in the middle of the richest country in the world?  Can we solve our fiscal problems by reducing Social Security and Medicare benefits – the only safety nets for millions of people who are approaching retirement?  Can we renege on our promises?  Can we fail to provide benefits for which people have paid all their lives?  Of course not! 

Establish Publicly Managed Pension Funds for All
    The article in the post Crescent also suggests that one way to solve this problem for the future would be to establish publicly managed defined-benefit programs (a.k.a. pensions) for all citizens.  Such pensions would provide people with a decent life and would also be good for business, for the labor market and for our Fox Cities community.

Don't Speak of Entitlements - They are Earned Benefits
    Radical rightists like to speak disparagingly of what they call “entitlements,” but the term is misleading.  Social Security and Medicare are not entitlements.  They are earned benefits.  If we find that we do not have enough money to pay the benefits that have been promised people, we should consider ourselves contractually obliged to find the money.  Cheating people of benefits they have earned is not acceptable behavior for an honorable free people.

Reducing Benefits Would Be Bad For Everyone
    Moreover, reducing the cost of Social Security or Medicare by raising the age at which people became eligible to receive those benefits to 70 would be bad for our middle class because it would reduce the number of jobs available to young people.  Millions of people in their late 60s would hang on to their jobs until they became eligible for Social Security and Medicare, and millions of young people would be unable to find jobs because their parents were unable to retire.

    We should note also that the poverty of the old would reverberate through our economy.  Consumer spending accounts for the bulk of spending in the United States.  Serious reductions in the money available to consumers would harm many businesses, and that would cause increases in unemployment.  As people earned less and spent less our local, state and national governments would collect less in taxes, and we would find ourselves in a spiral of declining income.

 Group Pension Funds Would Earn Higher Returns
    The article in the Post-Crescent suggests that one way to solve this problem for the future would be to establish publicly managed defined-benefit programs (a.k.a. pensions) for all citizens.  The article points out that the returns earned by publicly managed pension programs are always much higher than the returns earned by individual IRA or 401(k) accounts because publicly managed pension programs have a lot of money and a long time frame to work with. Publicly managed programs are also able to manage using average earnings and average life expectancies.  Money now paid by employers and employees into IRAs and 401(k)s could instead be directed to publicly managed pension programs. 

Avoid Rigidity in the Labor Market
    Publicly managed pension programs for all citizens would have an advantage over programs managed by individual companies just as individual health insurance has an advantage over health insurance provided by an employer.  Pensions and health insurance provided by an employer create rigidity in the labor market.  Employers are reluctant to hire new employees because of the cost of benefits for them.  People who have jobs are reluctant to leave them because they are afraid to lose their health insurance or their pensions.  Like Obamacare, which will make it possible for individuals to purchase their own health insurance instead of being dependent on an employer, a publicly managed pension program would make it possible for employees to change jobs more easily and for companies to hire new employees more easily.

We in the Fox Cities need to give serious consideration to the idea of publicly managed pension programs, and we need to fund Social Security and Medicare fully for the future. Doing so will benefit our people, our businesses, and our community.

Laws Needed to Regulate Plant Closings

This post was written by a friend who prefers to remain anonymous.  It is a response to an article that appeared in the Wausau Daily Herald, which may be found at the following address.

http://www.wausaudailyherald.com/article/20130116/WDH06/301150387/Our-View-Community-must-respond-Wausau-Paper-mill-sale?gcheck=1

 

A year from now, the workers who created the value of Wausau Paper will still be collecting unemployment (if they are lucky) and trying to hang onto their homes if not their savings. Gradually many of their neighbors will lump them in with the "takers" who populate their imaginations and upon whom they place blame for the sinking value of their homes, the stagnation of their incomes, their unacceptably high taxes and their high cost of health care. It does not seem to occur to anyone to ask what responsibility the stockholders have in knocking down an entire community --- again. Why is it acceptable for investors to walk away after stripping out everything of value? To add insult to injury, the communities involved will be left with abandoned plants we politely refer to as "brownfields." They got the color right when they made up that Orwellian term.

 

Last week it was a Los Angeles hedge fund shutting down Golden Guernsey Dairy; this week it's to be Wausau Paper; not so long ago it was NewPage being ground up in acts of "creative destruction," and in between the list is too long to include here. Pretty soon that fabled 47% is going to look more like 77%.

 

At some point, individuals must learn to behave with the same resolve shown by ruthless hedge fund managers and the stockholders who employ them. Many of our grandparents figured this out about 100 years ago and acted accordingly.

The dirty little secret in many of these business assassinations is that the enterprises were in fact making a tidy profit; just not enough to satisfy the greedheads running the show. Maybe we need a law that employees be given first right of refusal to buy the assets (free of most liabilities because they have usually been artificially inflated) in any bankruptcy or shutdown, with the value being set by a neutral third party. Employee owned businesses have the potential to be more competitive in the marketplace because they are not frittering away their cash paying bonuses and bloated salaries to a few at the top. All pension assets should be returned to the employees in cash or in kind before any other creditor is paid in a liquidation. In many cases, this would provide sufficient capital investment to purchase the plant and equipment. The state should take over the land, leasing it for a minimal amount for a period of time until the new owners can buy it, while the new owners continue to pay for public services in the form of a PILOT.

 

Many will say that such laws would cause businesses to leave Wisconsin for greener pastures. Really? What does that say about the expectations of these businesses? Why are we spending our tax dollars to prop up or attract people without morals, ethics, or scruples to our state? Unlike vultures, which generally feed only on carrion, these operators are predators who take down the living. We don't need them to rebuild prosperity in Wisconsin.

Big Money Trumps Science in the Nation and in Wisconsin

Richard Schoenbohm and I both contributed to this post.

Governor Walker is going to try again to pass the iron ore mining bill that barely failed in the last legislative session, and big money is again promoting the project. 

During the last session,  Wisconsin Manufacturing and Commerce (WMC), the powerful big-business lobby in Madison, alleged it was a myth that the bill would allow mining corporations to dump toxic waste into wetlands.  WMC claimed in a slick release that this environmental concern is “completely false, and ridiculous. Like current law, the bill requires any mining company to go through a permitting process before disturbing any wetland.”¹

It is no myth, and the concern is not false.  The Nature Conservancy reports that the bill prevents in-depth scientific evaluation of proposed mines by limiting amount of time the DNR will have to create the Environmental Impact Statement (EIS) to one year. The report says,

Unlike in Michigan and Minnesota, the bill limits the amount of time the DNR will have to create the Environmental Impact Statement (EIS) to one year no matter the complexity of the site or the quality of the company’s Environmental Impact Report (EIR).

·   The data gathered and used by the company during the writing of the EIR no longer has to be shared with the DNR, nor is the department consulted in the methods used to gather the data.

·     By removing contested case hearings as well as hearings on the Environmental Impact Statement, there is no third party verification of the company’s data or methodologies.

·        The DNR cannot consider the quality of the information submitted by the company when deeming the application complete. An application could include poor environmental evaluations, but the Department would have no option but to rule the application complete. The Department would not have the time to redo many of these studies in the remaining 360 days. A comprehensive hydrological study takes a minimum of two years.

So how does WMC, a lobby arm of corporate interests, get press time on a scientific issue?  It certainly isn’t its scientific credential.  It is money.  Energy corporations, for example, know that enough expensive propaganda produces policy decisions in their favor despite scientific evidence to the contrary.  How much money?  Here is what Shawn Lawrence Otto reports in Fool Me Twice:  Fighting the Assault on Science in America.

Public data from the Securities and Exchange Commission and charitable organizations’ reports to the IRS show that between 2005 and 2008, Exxon-Mobile gave about $9 million to groups linked to climate change denial, while foundations associated with the private oil giant Koch Industries gave nearly $25 million.  The third major funder was the American Petroleum Institute (API). Between them they created and funded dozens of groups engaged in producing pseudoscience, activism, organizing, media outreach, and lobbying and implemented an all-out propaganda campaign.  But this was a drop in the bucket compared to what they would spend overall.  Between 1999 and 2010, the energy industry spent more than $2 billion fighting climate change legislation, more than $500 million of it from January 2009 to June 2010, or almost $1,900 per day in lobby expenditures for every US senator and representative in Washington – and those numbers don’t include nonreportable expenses like publicity, earned media, rallies, and polling.  They spent an estimated $73 million more on anti-clean-energy ads from January through October 2010, and Koch family foundations gave an overall $48 million to groups engaged in climate change denial between 1997 and 2008.”²

Wisconsin is no different. A lot of big money has been spread around by supporters of the mining project.  Wisconsin Manufacturers and Commerce spent at least $2 million to influence last year’s recall election, and its members gave more than $1.15 million to candidates in the 2012 election cycle.  Americans for Prosperity, a group founded by the Koch brothers, spent about at least $8 million to influence elections in Wisconsin in 2011-2012.

So, we should not be surprised to learn that Governor Walker is going to try again this year to pass the mining bill. In his “state of the state” speech on January 15, 2013, he said,

One of the best ways we can show the people of Wisconsin that their state government is focused on jobs is to pass a bill that streamlines the process for safe and environmentally sound mining. Start with the legislation that was approved in the Joint Finance Committee last session, include some reasonable modifications, and send me a bill to sign into law early this year.

Maybe you think that Governor Walker’s support of the mining bill is unrelated to the financial support he and other radical rightists in Wisconsin have received, but we are skeptical.

 

1.       Wisconsin Manufacturing and Commerce, Mining Bill 426:  Iron Mining Reform
2.      Shawn Lawrence Otto, Fool Me Twice:  Fighting the Assault on Science in America, p. 198, Rodale, 2011.

Rubio's New Stand on Immigration Reform Is Good For The Fox Valley

I was pleased to see in today’s New York Times that Sen. Marco Rubio, the darling of the Tea Party, is proposing a reasonable if complex approach to dealing with the millions of undocumented immigrants who live in the United States.  He does not yet have the full support of his party, but he is moving in the right direction, and I have little doubt that support for his proposals in the GOP will grow.

According to the Times article,

“The right way to deal with them is not amnesty,” Mr. Rubio said, “and it is not a special pathway to citizenship.” Instead, he said, he would offer a provisional legal status to immigrants who passed criminal background checks, paid fines and passed English and civics tests.

But, he said, “Ultimately it’s not good for our country to have people permanently trapped in that status where they can’t become citizens.” After a certain period, he said, immigrants would be allowed to apply to become legal permanent residents, a status that would eventually allow them to become citizens.

We also learn that Mr. Rubio now supports The Dream Act, which offers a fast-track to legal residence for young people who were brought to this country illegally as small children.

Our own Paul Ryan now says that he supports the same principles that Mr. Rubio supports.  The Times says,

Mr. Ryan, on his Facebook page, wrote that Mr. Rubio was “exactly right on the need to fix our broken immigration system.”

“I support the principles he’s outlined,” Mr. Ryan said, “modernization of our immigration laws; stronger security to curb illegal immigration; and respect for the rule of law in addressing the complex challenge of the undocumented population.”

I am pleased to see this change of heart on the part of prominent Republicans not only because the things he is proposing will help us to solve an important national problem but also because regularizing the status of undocumented immigrants is an important issue for us in northeastern Wisconsin.  Undocumented immigrants play an important role in our economy.  Several large dairy farms within an hour’s drive of the Fox cities have work forces composed largely of undocumented immigrants.  In addition, several factories in the Fox Cities employ many such people.  They have not displaced other workers as we can see from the fact that our area has a very low rate of unemployment.  The undocumented immigrants in our area have been hired because they are needed, and sending them back to their home countries would seriously disrupt our economy.

Our current laws do not prevent the employment of undocumented immigrants, but their lives are made pointlessly inconvenient.  Thus, for example, many people cannot obtain drivers’ licenses, and so they have a hard time getting to work, but, like the rest of us, they need to work in order to live.  So they manage.  Some drive illegally, and of course that means that they do not have insurance, which is a problem for the rest of us.

Our economy needs these people, and it is stupid as well as unjust for our laws to create difficulties for people whom we need.  We have shown clearly over a number of years that we are not prepared to disrupt our economy by sending them home or by penalizing their employers.  Our undocumented neighbors are here to stay.  So I am pleased to see that important members of the Republican Party are finally coming out of the haze of fantasy that they have been living in and have begun to look for ways to deal realistically with the world that the rest of us live in.

If you agree with Senators Rubio and Ryan (and me), and you want to support the passage of reasonable and just laws to regularize the status of undocumented immigrants, check out ESTHER Fox Valley’s web site (http://esther-foxvalley.org/).  ESTHER Fox Valley’s Immigration Task Force is working on this problem, and you can help.

The Post-Crescent Asks the Wrong Questions

A recent article in the Appleton Post–Crescent shows very clearly the way that the climate of opinion created by the radical right has distorted our public discussion.  The paper is running a series of detailed and well-written articles about salaries in our public institutions.  The first article in the series deals with salaries at Fox Valley Technical College. The article focuses mainly on the very large overages earned by a few of FVTC’s teachers, and it is true that a few teachers seem to have earned a great deal of money.

The article recognizes but does not emphasize that the teachers who earned these overages were able to do so for two reasons.  The first is that the current recession has created a huge demand for the training classes that FVTC offers.  “Overages” are additional compensation earned by employees of FVTC for work that they perform beyond what is required under their contracts.  A teacher is required to teach a certain number of class hours each week under his or her contract, and when the teacher teaches more hours than those required, he or she is entitled to be paid for the extra work.  When the demand for training exceeds the number of hours that the teachers can teach under their contracts – as it has in the current recession – someone must be found to teach the additional classes, or the demand will not be met.  In that case, people who need job training will not receive it, and employers’ needs for skilled workers will go unfulfilled.

If FVTC is to meet the demand for training in this situation, it must either hire new teachers or ask the existing faculty to teach more hours.  Asking the additional faculty to teach more hours is much cheaper, because when new faculty are hired, FVTC must pay their benefits as well as their salaries, but when existing faculty are used, only the salaries must be paid.  So, by paying the overages, FVTC chose a more economical alternative, and as taxpayers, we should be pleased by that.

The second reason for the concentration of overage payments in a few teachers’ hands is that the union contract under which the teachers are employed specifies that the most senior teachers be given the first opportunities to work overtime.  It does appear that a few teachers may have abused that privilege.  That is unfortunate, but it is not really of much concern to us as taxpayers.  As taxpayers, we want to know that our tax dollars are being well spent in the sense that we are receiving the services that we are paying for and that costs are being well managed.  In the case of FVTC, we want to know whether the institution is providing the training that makes it possible for our people to obtain good jobs and for our local companies to obtain the workers they need. We also want to know whether FVTC has done a good job managing the cost of providing the training. No one doubts that FVTC has performed admirably.  Certainly, the Post- Crescent raised no question about this in its article.  In fact, most people in our community will agree that FVTC is one of the jewels of the Fox Cities.  We are definitely getting good value for our money.

The Post-Crescent’s article does not see this simple fact because it asks the wrong questions.  It professes to be an article addressed to taxpayers concerning the ways in which their tax money is being spent, but it actually focuses on issues of no concern to taxpayers.  The writer of the article appears to be concerned primarily to write an exposé about the excessive compensation that few faculty members receive by abusing the terms of a union contract.  The writer does not even ask – much less answer – the question of whether we as taxpayers are receiving value for our money.

I do not really fault of the Post-Crescent for the mistaken emphasis of the article.  It was written in the climate of opinion created by the radical right.  In that climate of opinion, institutions that use tax dollars are always seen as wasteful, and pointing out what appears to be an improper use of tax money is an effective way of stimulating resentment of those institutions among the taxpayers.  In the long run, that resentment leads to a decline in support for the institutions, and that is an important goal of the radical right, which always wants to reduce the activities of government.  

I do not suggest that the writer of the article was primarily concerned to stimulate taxpayer resentment or to reduce community support for FVTC, but he chose to answer only questions that are important in the climate of opinion created by the radical right, and by doing so, he was inevitably led to ignore the really important question, which is whether we as taxpayers are receiving good value for our money.  Are we getting something that is worth the money we are paying for it?  If not, we should consider other uses for our money.  Otherwise, we should continue to pay for what we see as a good value.  The question of the proper distribution of overage payments among the faculty is not a problem for us as taxpayers.  It may be a problem for the president of that institution Dr. Susan May.  That is what we pay her for, but it is not a problem for us. 

If we want answers that really matter to us as taxpayers, we have to ask the right questions, and to do so, we have to escape from the current climate of opinion.  It is a trap laid for us by the radical right, and until we escape from that trap, we will never be able to make good decisions.

We Need a Balanced Bottom Line Now

This post was written by Richard Schoenbohm, who asked me to post it.

Younger people remind me that the world has changed, and that in the new world, only business profits count.  We compete in a world market.  Banks, pharmacies and department stores are not locally owned.  Labor unions are a shadow of their old selves.  The new mantra is less regulation and lower business taxes.¹ Corporate profit is said to be the panacea for all.  I disagree. Profit must be balanced with the needs of the community and employees.  It is the only just and sustainable approach to capitalism.  It is the approach that will keep our country strong and working for all of us.

One of the worst effects of considering only profits is the elimination of millions of full-time jobs while replacing them with part-time jobs that cannot support a family. For example, the New York Times reported in 2006 that Wal-Mart – which has 29,514 employees in Wisconsin -  planned to transform its work force from 20 percent part-time to 40 percent part-time. Walmart is riding a trend. Burt Flickinger III, managing director of a retail consulting firm reports: “Over the past two decades, many major retailers went from a quotient of 70 to 80 percent full-time to at least 70 percent part-time across the industry.”² In the same source, the Bureau of Labor Statistics says that the retail and wholesale sector, with a total of 18.6 million jobs, has cut a million full-time jobs since 2006, while adding more than 500,000 part-time jobs.

This trend, so destructive to working families and our nation, is driven by obsession with corporate bottom line - regardless of employee and community needs.  Many of those working part-time desperately want the family-sustaining wages that only come with a full-time job.  In the retailing and hospitality industries, the number of part-time workers who would prefer to work full-time has jumped to 3.1 million, two-and-a-half times the 2006 level,² but there is no place for employee aspirations when profit is the only bottom line. 

They matter to families.   According to the Bureau of Labor Statistics, part-time workers in service jobs receive average compensation of $10.92 per hour compared to $17.18 per hour for full-time employees.²   Factor in the fewer hours that the part-time workers get, and difference is huge.  A part-time employee working a 25 hours a week will only gross $273 compared to $687 for a full-time employee.

The effect ripples through the entire community.  The reduced purchasing power of part-time employees starves the business of the hair dresser, the home remodeler, the restaurant owner, and the car salesman.  The part-time worker, to keep their family’s head above water, turns to government services, such a food stamps and Badger Care.  As far back as October 2005, Wisconsin Citizen Action estimated that large corporations, led by Wal-Mart, were costing the state $46 million a year because participation by their employees in public medical assistance programs.  Tax payers, in effect, pay to keep corporations’ low-paid workers healthy.

The corporate bottom line keeps the poor poor and transfers the wealth of the middle class to the very few at the top. The Center on Wisconsin Strategy reports that between 1996 and 2010, the bottom 40% of Wisconsin earners experienced an average decrease of $2,407 in their adjusted annual gross income.⁴   The top 20% saw an increase of $17,286 per year, and the top 1% saw a huge annual increase of $168,773.

The economy will not be sustainable if the middle class lose their buying power and are drained by taxes to subsidize corporations’ part-time workers.⁵   I support a triple bottom line accounting that takes into account employees and community in addition to financial performance.  That ain’t old fashion.  That’s progressive.

1.  http://badgerherald.com/news/2012/11/20/report_income_inequa.php

2.  http://www.nytimes.com/2012/10/28/business/a-part-time-life-as-hours-shrink-and-shift-for-american-workers.html?emc=eta1&_r=0&pagewanted=print

3.  http://www.goodjobsfirst.org/corporate-subsidy-watch/hidden-taxpayer-costs

4. http://www.wisconsinbudgetproject.org/wp-content/uploads/2012/11/inequality-release-11-18-12.pdf

5.  http://www.nytimes.com/2012/09/13/us/us-incomes-dropped-last-year-census-bureau-says.html?_r=0

Treatment Instead of Prison – It's a No-Brainer

    Sometimes you really get to have it all.  You get to do the right thing, the humane thing, and save money at same time.  The "treatment instead of prison" program, which is being promoted by the Wisconsin Council of Churches, by WISDOM, and locally by ESTHER (WISDOM's local affiliate) is such a case.  According to a careful and thorough health impact assessment conducted by Human Impact Partners together with WISDOM, expanding Wisconsin's treatment alternative diversion (TAD) programs to make them statewide will very likely reduce crime, strengthen Wisconsin's communities and families and improve public health while at the same time saving our state a lot of money in public safety, health care and social services.

    This sounds much too good to be true, but it isn't, and we all need to understand why.  Today our state incarcerates a very large number of nonviolent offenders including drug offenders and drunk drivers.  It costs about $32,000 per year to incarcerate someone but it only costs about $7551 per year to put a person in a TAD program.  Pilot TAD programs have been running for some time now in seven Wisconsin counties, and we can look at the results.

    It turns out that TAD programs are not only cheaper than incarceration, they are also more effective.  People who complete TAD programs are much less likely to commit crimes later than people who have been to prison. TAD program graduates are less likely to go to jail and less likely to go to prison after completing those programs that are people who have been to prison.  The Wisconsin office of Justice Assistance estimates that every dollar spent on TAD programs saves two dollars in criminal justice costs alone.  WISDOM and the Wisconsin Council of Churches are recommending that our state increase funding for TAD programs to $75 million a year, which would yield savings of $150 million a year. That is not all.  Since graduates of TAD programs are less likely to commit crimes then are former prisoners, fewer crimes would be committed if we put more people in TAD programs.  So our communities would be safer places. 

    How can we not support something that will keep people out of prison, make our communities safer places and save us money at the same time?  But don't take my word for it.  Read the health impact assessment report yourself.  You can find it at http://prayforjusticeinwi.org/.  You can also learn more about the Treatment Instead of Prison program at the ESTHER's website which is http://esther-foxvalley.org/.  If you're as excited about this as I am, you might even want to join ESTHER and help to promote Treatment Instead of Prison.