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Cracker Squire


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Location: Douglas, Coffee Co., The Other Georgia, United States

Sid in his law office where he sits when meeting with clients. Observant eyes will notice the statuette of one of Sid's favorite Democrats.

Sunday, March 29, 2009

Delay in Immigration Raids May Signal Policy Change -- Change in timing? Damn. Do you to tip them off about a pending raid?

From The Washington Post:

Homeland Security Secretary Janet Napolitano has delayed a series of proposed immigration raids and other enforcement actions at U.S. workplaces in recent weeks, asking agents in her department to apply more scrutiny to the selection and investigation of targets as well as the timing of raids, federal officials said.

A senior department official said the delays signal a pending change in whom agents at U.S. Immigration and Customs Enforcement choose to prosecute -- increasing the focus on businesses and executives instead of ordinary workers.

Yes! Nuclear-Power Industry Enjoys Revival 30 Years After Accident

The partial meltdown at the Three Mile Island plant, shown this month, set back nuclear power in U.S. for decades.

From The Wall Street Journal:

Thirty years after the accident at Three Mile Island, the nuclear power industry is moving ahead with plans to build a string of new reactors in the U.S., though the revival faces many uncertainties.

The crisis that erupted in the predawn hours of March 28, 1979, when a combination of worker mistakes and equipment malfunctions triggered a partial meltdown in the core of one of two reactors at a power plant near Harrisburg, Pa., was long thought to have sealed the fate of the industry in the U.S.

But rising concerns about global warming have set the stage for a comeback. Nuclear power can generate electricity without producing the greenhouse gases associated with energy sources such as coal.

The U.S. has 104 reactors from the earlier wave of construction, which generate about 20% of the nation's electricity. Utilities have applied to build 26 new reactors, often at or adjacent to existing plants, and the Nuclear Regulatory Commission, which has to approve the plans, says the first approvals could come by 2011. Given how long it takes to build a plant, the first wouldn't come on line until later in the decade.

The AJC asks: Is Barnes the man to bring Democrats back? The Cracker Squire answers: He is the only person who can bring the Democrats back.

The headline from an AJC article by James Salzer and Jim Tharpe: "Barnes eying another run for governor."

More than six years after Gov. Roy Barnes’ defeat signaled the death of Democratic dominance at the statehouse, the 61-year-old Marietta lawyer appears primed for a comeback.

He’s making the rounds of speaking circuits, venting populist outrage over the perceived wrongs of the Republican-controlled Capitol. He’s been in touch with old political allies about the 2010 governor’s race, and he’s answered endless inquiries from the media wanting to know whether he, indeed, is going to run.

But his potential candidacy raises questions: Is the polarizing politician whose crushing defeat in 2002 ushered in the first Republican administration since Reconstruction the man to bring Democrats back? And is a state that has become used to electing Republicans open to change?

Backers argue that Barnes wouldn’t get into the race to succeed Gov. Sonny Perdue, the man who beat him in 2002, if he didn’t think the answer to the last question was yes. But he’s not ready to publicly commit just yet.

“I’ve never had trouble making decisions, but this is a tough one,” Barnes said during an interview with The Atlanta Journal-Constitution. “I’m satisfied with where I’m at, but not where the state is.”

An activist governor after being elected in 1998, he tried to fix everything from Atlanta’s gridlocked traffic to Georgia’s often-criticized schools.

But Barnes alienated teachers, who thought he blamed them for the failings of Georgia’s schools. He infuriated supporters of the old Georgia flag, whose Confederate symbol was minimized by Barnes as part of a new, short-lived state banner.

He created enemies as the state pushed for a Northern Arc, a new perimeter highway north of Atlanta.

He and his staff were accused of political strong-arm tactics in raising $20 million for his 2002 re-election campaign.

Polls still made him the favorite for re-election. But by 2002, Republicans were growing stronger across the state and were hot nationally on the heels of the Sept. 11 terrorist attacks.

Barnes said [his 2002 loss to Sonny Perdue] was partly his fault, partly bad timing.

“I didn’t do a good job of listening,” he acknowledged. “Sonny Perdue said that, and it’s the only thing I agree with him on.”

[A]fter more than six years of Republican control, some Democrats believe the time may be ripe for change.

[T]he overall political climate has, for the first time in years, given Democrats hope. While Republicans continued to win elections last year, Democrats set records registering new voters, and Barack Obama got 47 percent of the vote for president in what was considered a solidly GOP state.

Tim Callahan of the Professional Association of Georgia Educators said many teachers have long memories and haven’t forgiven Barnes for the way they thought he mistreated the profession.

“If the former governor wants to start with a fresh slate, he’d almost have to start with a mea culpa,” said Callahan, whose group is the state’s largest teacher organization. “It would depend on how he approaches educators. I think educators still have bad feelings about that [Barnes] era.”

Can Barnes win? There is no question in my mind that if he runs, he will be Georgia's next governor. While admittedly I very much want him to run, were I not so convinced, as a friend I would strongly discourage him from running. To run and lose would disrupt the successful law practice and firm that have been seven years in the making.

So what are odds of a run? A 8-31-08 post entitled "Shipp: Barnes talking like a candidate for governor" notes:

"Some people have asked me [Barnes] to run," he says. "But, right now, I'm leaning against it."

If your lowly correspondent [meaning Bill Shipp] were a gambling man, I'd say the chance of Barnes running for governor are about one out of five. Some people close to Barnes put the odds nearer to 50-50.

I opined in this post:

Personally, I see the odds considerably higher than one in five, but not as high as fifty-fifty. But regardless, wouldn't it be sweet. How about let's all do our share of pushing and be willing to reach for our checkbooks.

The odds of a run by Barnes have increased since last August for a number of reasons unrelated to his willingness to run but that have improved the odds of his winning if he did.

My readers know that I think Bill Shipp hung the moon. But what you don't know is that Bill and I disagree on why, in Bill Shipp's words, "teachers detest Barnes."

A 4-24-05 post quotes the Dean -- writing about a possible Cathy Cox-Sonny Perdue matchup for the 2006 race for governor -- as follows:

Barnes, you will remember, had the audacity to assert that part of education's problems lay in teacher incompetence. He also won legislative approval of a law making it easier to discharge unsuitable teachers. Perdue's people repealed the measure and restored teacher tenure.

A 2-19-09 post entitled "The sad painful truth: Sonny Perdue is not a Georgia ‘education governor’," quotes from an editorial in The Macon Telegraph by Charles Richardson that sounds the same theme in noting:

In 2002 Sonny Perdue was elected governor with the help of teachers who chafed at Barnes’ efforts to improve public education.

But I strongly disagree with the above assessments by Bill Shipp and Charles Richardson that teachers fell out with Barnes because of his education reform bill.

I am married to a teacher and have been a school board attorney for years. I closely keep up with educational issues and legislation. Teachers by and large did not mind Barnes's reform legislation on tenure. Good teachers don't worry about whether their contract to teach will be renewed year to year, and if their superintendent recommends against their contracts being renewed for the next school year, that tenure entitles them to a hearing.

Incompetent teachers do, and while I know GAE opposed Barnes's legislation (which did not surprise me), I don't recall whether PAGE did (which is the other and now larger organization for Georgia teachers and administrators).

But what teachers did resent -- and I got an ear full from my wife Sally on more than one occasion -- was just what the above-quoted AJC article very accurately sums up in one sentence: "Barnes alienated teachers, who thought he blamed them for the failings of Georgia’s schools."

I don't know who wrote the script for Barnes when he made his first speech on his education reform legislation, but that person sure wasn't someone such as myself who was married to a dedicated teacher who gets to work before 7:00 a.m., stays till 6:00 p.m. on everyday except Friday, and works nights at home and on Saturday and Sunday at school.

And I know from being a friend of Governor Barnes that he does not now and did not then blame teachers for the failings of Georgia schools. But that is exactly how it came out. Accountability was and is a worthwhile objective. But his message was perceived as blaming all teachers with the myriad of problems public education faces these days, and as we are all aware, perception will win everytime over the facts.

In truth, had the book by James Cook discussed in the above-noted editorial in the Macon Telegraph entitled “The Governors of Georgia, 1754 – 1995” covered the period 1754 - 2002, Roy Barnes's name without question would have been included in Mr. Cook's list of Georgia's "education governors."

Another quote from the above-quoted AJC article quotes Barnes as saying: "I didn’t do a good job of listening.”

I also think this is true, and that a corollary to this truism is that Barnes listened to my good friend Bobby Kahn too much, at least too much when this resulted in being to the exclusion of being able to hear from others trying to get to him to pass along constructive suggestions.

Obviously Barnes has some work to do in these areas, but I am just as sure as grits are groveries that such work can and will be successfully done, and that if Barnes runs, he will be nominated, and when nominated, he will win.

And when he runs, I want him to remember where the Other Georgia is and to visit us more often than he did his first term. It was following a very successful fundraiser held in Coffee County that Barnes returned to his home late that evening and told the lovely Marie that he could feel it based on the enthusiam for his candidacy in South Georgia -- he was going to be Georgia's next governor.

But after being elected, I only recall his coming back to our area once, and that was to Waycross shortly before the second election.

Roy, we love you, and you always welcome here in Douglas and Coffee County.

From the above-quoted AJC article:

Roy Barnes
Age: 61
Job: Marietta attorney with the Barnes Law Group.
Personal: Wife, Marie; they have three grown children.
Political life: Democrat. Elected to the state Senate in 1974; served eight terms. Ran unsuccessfully for governor in 1990. Won state House seat, 1992. Ran for governor and won in 1998. Ran for re-election in 2002 and was defeated by Republican Sonny Perdue.
Education: Bachelor's degree in history, University of Georgia, 1969. Law degree (with honors), UGA, 1972.

Saturday, March 28, 2009

A Small Town -- Gibson, Georgia, population 700 -- Loses a Pillar: Its Only Bank

Anthony Griswell, the Glascock County chairman, foreground, and Sheriff Dean Couch at the FirstCity Bank in Gibson, Ga., which was shut down on Friday.

With fewer than 3,000 residents, Glascock County is not big enough to have its own hospital, jail or Wal-Mart. But for more than 100 years, it had a bank — until late last Friday afternoon, when regulators arrived to shut it down.

Bank closings have become almost familiar in Georgia. Since the beginning of 2008, nine banks have failed in the state, more than in any other state, according to the Federal Deposit Insurance Corporation. But almost all the closings have been in the overbuilt Atlanta area, where the collapse of the real estate market hit particularly hard.

The next Vietnam? -- White House Debate Led to Plan to Widen Afghan Effort (thankfully, primary goal won't be nation-building)

From The New York Times:

President Obama’s plan to widen United States involvement in Afghanistan came after an internal debate in which Vice President Joseph R. Biden Jr. warned against getting into a political and military quagmire, while military advisers argued that the Afghanistan war effort could be imperiled without even more troops.

All of the president’s advisers agreed that the primary goal in the region should be narrow — taking aim at Al Qaeda, as opposed to the vast attempt at nation-building the Bush administration had sought in Iraq. The question was how to get there.

The commanders in the field wanted a firmer and long-term commitment of more combat troops beyond the 17,000 that Mr. Obama had already promised to send, and a pledge that billions of dollars would be found to significantly expand the number of Afghan security forces.

Defense Secretary Robert M. Gates and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, pressed for an additional 4,000 troops to be sent to Afghanistan — but only to serve as trainers. They tempered the commanders’ request and agreed to put off any decision to order more combat troops to Afghanistan until the end of this year, when the strategy’s progress could be assessed.

During these discussions, Mr. Biden was the voice of caution, reminding the group members that they would have to sell their plans to a skeptical Congress.

Thursday, March 26, 2009

Yes!! Director of FBI Urges Renewal of Patriot Act -- Portions of Law to Expire This Year

From The Washington Post:

FBI Director Robert S. Mueller III urged lawmakers yesterday to renew intelligence-gathering measures in the USA Patriot Act that are set to expire in December, calling them "exceptional" tools to help protect national security.

The law, passed shortly after the Sept. 11, 2001, terrorist attacks, created divisions between proponents, who said it was necessary to deter terrorism, and privacy advocates warning that it tramples on Americans' civil liberties. Portions of the law are up for reauthorization this year.

Mueller told members of the Senate Judiciary Committee he hopes that the reauthorization of two provisions would be far less controversial than in previous years. One of those provisions, which helps authorities secure access to business records, "has been exceptionally helpful in our national security investigations," he said.

Wednesday, March 25, 2009

IBM to Cut U.S. Jobs, Expand in India

I am not advocating being a protectionist with respect to trade, but the below article at least for now ends my relationship with IBM. The below announced action might be OK in normal times; but these are not normal times.

IBM has held up great in this downturn in the market. This notwithstanding, tomorrow I am going to sell my law firm's holdings of IBM in our 401(k). I am not trying to wrap myself in the American flag, but neither do I desire to participate in any gains that may result from the 5,000 pink slips going out to American workers who are going to be replaced by Indian workers. Damn, and talk about timing.

The above is notwithstanding my family's long relationship with IBM. My readers probably remember that my father-in-law -- a person I loved like a father and admired greatly and whom I would have named my son for had I had one -- attended the Naval Academy, was a Navy pilot taking off from and landing on carriers, and after a distinguished Navy career, retired from the Navy as a Captain. (The rank of captain in the Army, Marines and Air Force is well below that of a captain in the Navy.)

But what I have never posted on this blog is that after retiring from the U.S. Navy he went on to enjoy a long and successful career with IBM, reaching the rank of Vice President before reaching IBM's mandatory retirement age.

From The Wall Street Journal:

International Business Machines Corp. plans to lay off about 5,000 U.S. employees, with many of the jobs being transferred to India, according to people familiar with the situation.

The technology giant has been steadily building its work force in India and other locations while reducing the number of workers based in the U.S. Foreign workers accounted for 71% of Big Blue's nearly 400,000 employees at the start of the year, up from about 65% in 2006.

Earlier this year, IBM also told employees that if they wanted to move to an emerging market, they could apply for jobs there with IBM, but they would be paid in local wages. A spokesman Wednesday said "dozens" of people have taken the offer, usually natives of those countries.

Outsourcing to India has long been a hot-button topic for IT employees in the U.S. As U.S. employers have shed millions of jobs in recent months, workers and politicians have stepped up their criticisms of the practice with little impact.

"When IBM workers see jobs being shifted offshore, it's like stabbing them in the back," said Lee Conrad, a former IBM worker who is an organizer for the Communication Workers of America, which is trying to unionize IBM.

Monday, March 23, 2009

Towery: Both Sides Should Give A Little On Obama Resolution -- I agree 100%

Matt Towery writes in InsiderAdvantage Georgia:

The controversy over a resolution honoring newly elected President Barack Obama has to stop. But all sides need to understand why and how to accommodate the political realities that exist.

For decades and decades resolutions have flooded the House and Senate honoring everything from the local beauty queen to all manner of organizations. I remember back in the mid 1990s when Mark Burkhalter and I introduced a resolution honoring the Falcons on their 30th anniversary as a club. We laughed because we didn’t find many takers to join in, but it obviously passed—this despite the team’s then even less impressive history.

This rather simple act of honoring a new president is nothing new and plenty of members of the Georgia House have ignored partisanship in recognizing significant American leaders in the past. Sorry to tell those opposed to the resolution, but Barack Obama is definitely significant and is our nation’s leader. I think he outranks the hog farmer association or even Miss Americus (yes there is or at least was such a position of honor)—no offense to either.

The suggestion by at least one legislator that the resolution be rephrased and passed as one coming simply from the Black Caucus is unacceptable. It sends the wrong message to a nation just getting over the fact that one of our most famous products, processed peanuts coming from the land of the famed “Georgia Peanut” managed to sicken hundreds and kill several. We don’t need to become the focus of more jokes or attacks.

On the other hand, the great laudatory language used in the resolution could be toned down slightly. Those who support the resolution clearly must understand that something suggesting in essence that this man is basically a saint places Republicans in districts where President Obama is not well liked at great risk against some upstart Republican opponent in a primary. And voters don’t realize that these resolutions pass non-stop and are not considered significant regardless of whose name they honor.

I chose to write this myself so that I could take the blame for any criticism of our position. It seems to me that a resolution noting President Obama’s past accomplishments such as the fact that he is a former fellow peer in his state legislature, his bestselling books, his significant electoral victory, along with an expression of hope that he leads our nation out of these dark days would not only be a reasonable compromise, but something quite appropriate. He is our president and it would be wise to resolve that all Georgians hope and pray that he brings prosperity to our nation while preserving the basic principals we all hold dear—including preserving our freedom, liberty, and security.

My columns in the past weeks have not been full of praise for many of the new president’s proposed policies. But to deny that he has many admirable traits, faces a daunting task, and needs our prayers that he succeeds in helping all Americans—even the so-called rich who aren’t feeling so rich these days—well, such a denial would be absurd and it will, I can assure you, put Georgia back in the hot spotlight of the national media and comedians.

Compromise can surely be met on this issue, and for all I know by Monday will have been achieved. But making this resolution either one simply from the Black Caucus or one that places political lives in harm’s way by making over the top declarations is unacceptable. We are sure the members of the Georgia House will work this one out quickly.

Geithner Aides Worked With AIG for Months on Bonuses

From The Wall Street Journal:

Since the fall, senior aides to Timothy Geithner have closely dealt with American International Group Inc. on compensation issues including bonuses, both from his time as president of the Federal Reserve Bank of New York and as Treasury secretary.

The extent of their involvement, which wasn't widely known, raises fresh questions about whether Mr. Geithner could have known earlier about AIG's $165 million in bonus payments. When the bonuses sparked a political firestorm last week, Mr. Geithner said he learned about their full scope in early March, just days before they were paid.

Mr. Geithner and Federal Reserve Chairman Ben Bernanke will be grilled by Congress on Tuesday in a hearing that is likely to focus heavily on AIG. The flap has prompted lawmakers to seek curbs on an array of bonuses, tested the Obama administration and undermined Mr. Geithner's standing as he attempts to implement measures to stabilize the financial system.

Treasury officials say the department's staff kept Mr. Geithner in the dark until March 10. "Secretary Geithner, who has been actively engaged in shaping and executing the president's broad economic agenda, takes full responsibility for not being aware of these programs" before that date, Treasury spokesman Isaac Baker said Sunday in a written response to questions.

This account of how Mr. Geithner and his aides were apprised of the AIG bonuses was based on interviews with government officials, lawmakers and congressional testimony.

As New York Fed president, Mr. Geithner was central to AIG's initial $85 billion bailout in September, which was carried out in a tumultuous four-day period.

Over the weekend, administration officials contended the uproar wouldn't derail their efforts. President Barack Obama and a pair of Republican senators -- Judd Gregg of New Hampshire [I sure like Sen. Gregg -- he is the GOP senator who was to be Secretary of Commerce and then changed his mind you recall; we will be hearing more about him in the years to come] and Charles Grassley of Iowa, the top Republican on the Finance Committee -- disagreed with those calling for Mr. Geithner's resignation.

"I think Geithner is going to survive this -- I think he has the trust of the president," Rep. Elijah Cummings (D., Md.), an Obama ally and early critic of AIG's bonuses, said in an interview. But "he has to put a very high-powered microscope on AIG," he added.

Five of the last seven presidents have been left-handed. Ford, Reagan, Bush the elder, Clinton and now Obama (but not Carter or Bush the younger).

And add to the list, the Cracker Squire.

Interesting article in The Washington Post entitled "Why Righties and Lefties? Scientists Have Hands Full."

At A.I.G., the Brand Is Tarnished -- A.I.G. suggests the potential pitfalls should the government move in and forcefully take control of businesses.

From The New York Times:

The government’s fourth round of assistance to the American International Group this month was a play for time — for languishing markets to rebound, for pockets to fill up again and for buyers to emerge for the sturdy insurance companies under A.I.G.’s tattered corporate umbrella.

Only when those insurance companies are sold will there be money to repay American taxpayers.

But after the latest uproar, time does not look like A.I.G.’s friend. The problem now is not a toxic spiral of derivatives like the one that crippled the company last fall, but the damage done to A.I.G.’s brand, first by the financial troubles and then by the recent wave of hearings, subpoenas, late-night television jokes and even a bus tour past executives’ homes.

A strong brand is something no insurer can afford to put at risk. Insurance companies trade, more than anything else, on their image of strength and stability.

“Why would we do business with a company that’s constantly in the news, even if the ratings are still supposedly O.K.?” wondered Greg Theis, a financial planner with Legacy Investment Services in Homer Glen, Ill. He helps 55-to-70-year-olds select variable annuities from a bewildering array of carriers.

“If they look at the brochure and at the top it says ‘A.I.G.,’ who’s going to want to explain all that?” Mr. Theis asked. “It’s a liability. A little bit dangerous.”

The giant insurance portfolio of A.I.G. looks less like it is being salvaged by the government than being savaged, as competitors try to exploit the company’s weakness and as customers grow wary of the very name. And the result at A.I.G. suggests the potential pitfalls should the government move in, as some observers contend is necessary, and forcefully take control of businesses in an array of industries that need financing to survive, be they banks or automakers.

A beloved national icon has fallen on hard times in a country where old-style Nordic socialism has fallen out of favor - Sweden Says No to Saving Saab

We might need some more of this in the good ole USA.

From Tne New York Times:

Saab Automobile may be just another crisis-ridden car company in an industry full of them. But just as the fortunes of Flint, Mich., are permanently entangled with General Motors, so it is impossible to find anyone in this city in southwest Sweden who is not somehow connected to Saab.

Which makes it all the more wrenching that the Swedish government has responded to Saab’s desperate financial situation by saying, essentially, tough luck. Or, as the enterprise minister, Maud Olofsson, put it recently, “The Swedish state is not prepared to own car factories.”

Such a view might seem jarring, coming as it does from a country with a reputation for a paternalistic view of workers and companies. The “Swedish model” for dealing with a banking crisis — nationalizing the banks, recapitalizing them and selling them — has been much debated lately in the United States, with free-market defenders warning of a slippery slope of Nordic socialism.

But Sweden has a right-leaning government, elected in 2006 after a long period of Social Democratic rule, that prefers market forces to state intervention and ownership. That fact has made the workers of Trollhattan wish the old socialist model were more in evidence.

Swedish officials have condemned what they see as protectionism by other European countries that have pledged to prop up their own failing car industries. They have also been scathing about General Motors, Saab’s owner, and the last thing they want is to seem to be bailing out a despised foreign company.

Sunday, March 22, 2009

This is irresponsible. Ga. governments -- the state, counties, cities & school districts -- needs more revenue, not less. - Corporate tax breaks urged

At this particular time this attempt is irresponsible. The State of Georgia, cities, counties and school districts need more tax revenues, not less.

I have been the attorney for the Douglas-Coffee County Economic Development Authority for years, and our success in recruiting industry is the envy of many Georgia cities and counties. Never has our corporate income tax, to my knowledge, even been brought up as a problem or consideration by any company we have recruited.

From The Augusta Chronical:

Senate leaders are trying to revive an effort to phase out Georgia's corporate income tax, which in better times has helped fill the state's coffers with more than $700 million each year.

House leaders initially proposed phasing out the tax over a 12-year period starting in 2012, but they abandoned the tax break this month over concerns it wouldn't immediately help spur job growth.

Lt. Gov. Casey Cagle is hoping to breathe new life into the idea. He said wiping out the tax would help Georgia stay competitive with neighboring states.

More good national press for The Empire State of the South, this time from both The Post and the New York Times: Honor to Obama Splits Ga. House

From The Washington Post:

Two dozen black lawmakers angrily stalked out of the Georgia House on Friday amid assertions that a decision by white Republican leaders to delay passage of a resolution honoring President Obama had racist overtones.

House Speaker Glenn Richardson (R) said the proposal to make Obama an honorary member of the Georgia Legislative Black Caucus required changes to its language and sent it to a committee. Supporters of the resolution said the move was a snub to the nation's first black president.

State Rep. Austin Scott said he and other Republicans objected to wording that would have put the full chamber on record backing the resolution and its declaration of Obama as a man with an "unimpeachable reputation for integrity." He said he blocked the proposal after Democrats balked at revising the wording.

And for the coverage in The New York Times.

Here is how the events developed as reported by the AJC's Gold Dome Live.

Yes!! Insider Advantage Poll: Barnes could threaten the GOP streak

From the AJC's Political Insider:

Insider Advantage is out this morning with a statewide poll showing former Gov. Roy Barnes could seriously threaten Republican intentions to continue their rule over the state Capitol.

The survey posits three match-ups against Republicans. In only one, against Lt. Gov. Casey Cagle, does the former Democratic governor trail:

Barnes: 35%
Cagle: 39%
No opinion: 26%
Against state Insurance Commissioner John Oxendine:

Barnes: 38%
Oxendine: 33%
No opinion: 29%
Against Secretary of State Karen Handel:

Barnes: 34%
Handel: 29%
No opinion: 29%

Furor Over AIG Bonuses May Affect Dodd -- Conn. Democratic Stalwart Tarred by Ties to His State's Financial Industry

A 3-20-09 post was about Sen. Dodd as reported by The New York Times.

This one is from The Washington Post:

For his nearly three decades in the Senate, Christopher J. Dodd has been a towering figure in tiny Connecticut, untouchable by political opponents in his four reelection races and a prodigious fundraiser thanks to his strong ties to the state's huge financial services sector.

But with banks, insurance companies and investment firms now held in widespread contempt, Dodd's political fortunes have also taken a hit. For the first time since he was elected to the Senate in 1980, he could face a serious challenge. And some of Dodd's longtime supporters are saying they will not vote for him again.

"I think his days are numbered," said Linda Walker, a retired nurse from Ridgefield. "He doesn't have the character I thought he had. That's where term limits come in."

Speaking of all long-serving politicians, Walker said, "They become so disconnected from where they're from."

"I'd rather he not run and save himself the embarrassment of losing," said Andrea Beebe, a teacher who also lives in Ridgefield. "You know, he was up to his eyeballs. He's had his hands in the mud pile for four or five years."

And these are Dodd's onetime supporters.

The most immediate issue for Dodd is the $165 million -- possibly more -- in bonus payments to employees of insurance giant American International Group. Many top AIG executives live in Connecticut, specifically in prosperous Fairfield County, one of the wealthiest in the nation. And the AIG Financial Products division, which is largely blamed for the country's financial meltdown because of its dealings in toxic mortgage-backed securities, is based here in the town of Wilton and was the target of a small but noisy protest rally Saturday.

Dodd, 64, is chairman of the Senate Banking, Housing and Urban Affairs Committee, and Wednesday night, he said his staff removed a provision from the recently enacted economic stimulus bill that would have blocked AIG from paying those bonuses. Dodd said he was acting at the request of Treasury Department officials, who feared the provision would prompt legal challenges. But earlier in the week, Dodd had said he did not know how the provision got removed from the bill.

That shift in position has only underscored for many Dodd's close relationship with AIG.

In a paradox of globalization, immigrant workers moved from Mexico to the South just as many jobs were migrating from here to Mexico.

From The New York Times:

Like many places across the United States, this factory town [Morristown]in eastern Tennessee has been transformed in the last decade by the arrival of Hispanic immigrants, many of whom are in this country illegally. Thousands of workers . . . settled in Morristown, taking the lowest-paying elbow-grease jobs, some hazardous, in chicken plants and furniture factories.

Now, with the economy spiraling downward and a crackdown continuing on illegal immigrants, many of them are learning how uncertain their foothold is in the work force in the United States.

The economic troubles are widening the gap between illegal immigrants and Americans as they navigate the job market. Many Americans who lost jobs are turning for help to the government’s unemployment safety net, with job assistance and unemployment insurance. But immigrants without legal status, by law, do not have access to it. Instead, as the recession deepens, illegal immigrants who have settled into American towns are receding from community life. They are clinging to low-wage jobs, often working more hours for less money, and taking whatever work they can find, no matter the conditions.

Despite the mounting pressures, many of the illegal immigrants are resisting leaving the country. After years of working here, they say, they have homes and education for their children, while many no longer have a stake to return to in their home countries.

Nationwide, Hispanic immigrants, both legal and illegal, saw greater job loss in 2008 than did Hispanics born in the United States or black workers, according to the Pew Hispanic Center. Nearly half of foreign-born Hispanics are illegal immigrants, according to the center, a nonpartisan research group in Washington.

Some illegal immigrants who lost jobs here, mostly workers with families back home, have left the country. Most are determined to stay. Employers, wary of immigration agents, now insist workers have valid Social Security numbers.

In a paradox of globalization, immigrant workers moved from Mexico to Morristown just as many jobs were migrating from here to Mexico.

The influx here came as Hispanic immigrants were spreading across the United States, moving beyond traditional destinations in California and the Southwest to take jobs in the Northern Plains and deep into the South.

As recently as 2006 and 2007, more than 300,000 Hispanic immigrants, legal and illegal, were joining the United States labor force each year, drawn by jobs in meatpacking, construction and agriculture. They now make up nearly 8 percent of the work force.

In Morristown, a manufacturing city set among Appalachian farmland, the loss of jobs to Mexico and other countries with lower wages depressed local factory pay long before the immigrants appeared. But while the poorest American factory workers watched jobs leave, Americans with skills found new jobs in plants making auto parts, plastics and printing supplies.

A few years ago, even illegal immigrants in Tennessee could obtain driver’s licenses, buy cars, open bank accounts and take out mortgages. In 2006, the state canceled a program that authorized immigrants who were not legal residents to drive.

Cooperation increased between state and local police and federal immigration agents. For illegal immigrants, minor traffic stops could escalate and end in deportation. After immigration raids in the region, employers and temporary agencies started to give closer scrutiny to identity documents.

[This is a long article, but worth reading.]

This won't work: Deficit Projected To Swell Beyond Earlier Estimates -- CBO Expects Trillions More in Borrowing

From The Washington Post:

President Obama's ambitious plans to cut middle-class taxes, overhaul health care and expand access to college would require massive borrowing over the next decade, leaving the nation mired far deeper in debt than the White House previously estimated, congressional budget analysts said yesterday.

In the first independent analysis of Obama's budget proposal, the nonpartisan Congressional Budget Office concluded that Obama's policies would cause government spending to swell above historic levels even after costly programs to ease the recession and stabilize the nation's financial system have ended.

Tax collections, meanwhile, would lag well behind spending, producing huge annual budget deficits that would force the nation to borrow nearly $9.3 trillion over the next decade -- $2.3 trillion more than the president predicted when he unveiled his budget request just one month ago.

The result, according to the CBO, would be an ever-expanding national debt that would exceed 82 percent of the overall economy by 2019 -- double last year's level -- and threaten the nation's financial stability.

"This clearly creates a scenario where the country's going to go bankrupt. It's almost that simple," said Sen. Judd Gregg (N.H.), the senior Republican on the Senate Budget Committee, who briefly considered joining the Obama administration as commerce secretary. "One would hope these numbers would wake somebody up," Gregg said.

This is good news for America and the average person long-term: Plan to Let Judges Alter Loans Stalls

If this legislation passes, mortgage rates for everyone, everyone, will be higher to accomodate for a percentage that could be subject to a cramdown.

From The Wall Street Journal:

Opposition from the banking industry and moderate senators of both parties has stalled a proposal to let judges modify mortgage terms in bankruptcy court.

The judicial maneuver, known as a "cramdown," is endorsed by President Barack Obama and the Democratic leadership as part of a sweeping plan to help strapped homeowners.

The cramdown issue has become a flash point for lawmakers who seek to aid homeowners -- in particular those who owe more than their house is worth -- and lawmakers who feel such aid penalizes people who have kept up with their debts.

Friday, March 20, 2009

Connecticut Senator Draws Voters’ Ire for His Bonus Role

From The New York Times:

Across Connecticut, anger is erupting against Mr. Dodd, the chairman of the Senate Banking Committee, whose stature in Washington once reflected the state’s beneficial ties with the financial industry. Now, he finds himself a symbol of the political establishment’s coziness with tainted corporations and a target of populist wrath over their excesses.

On Thursday, the senator sought to defuse the furor over the latest revelation, holding a conference call with reporters to explain how legislation meant to limit executive compensation was changed at the last minute. That change exempted bonuses protected by contracts, like those at American International Group, a big campaign contributor to Mr. Dodd that received billions in federal bailout money.

Mr. Dodd said that his staff revised the bill at the urging of Treasury officials, who he said were concerned that the compensation limits, which he had written in the original legislation, went too far and might invite lawsuits.

While he knew the language was being rewritten, the senator said he had no idea the revision would allow for the bonuses at A.I.G.

“Had I known at the time that there were any A.I.G. bonuses involved — that this was somehow going to assist in that matter — I would have rejected it completely,” he said.

On Thursday, Treasury Secretary Timothy F. Geithner came to Mr. Dodd’s defense, saying in an interview with CNN that his staff had raised concerns about whether the legislation limiting executive compensation “was vulnerable to legal challenge.”

The fierce reaction back in his home state, however, underscores the peril the usually politically invulnerable senator faces.

Legislation is prompted by $165 million bonuses to AIG employees at the unit that gutted the company and forced a massive government intervention.

Well, we will try again. We thought we had legislation that limited executive compensation, but it got changed, something that Sen. Dodd is in hot water for as noted in next post.

From The Washington Post:

"We're all going to lose on this thing," said an executive at a large bank that took federal aid. He and other bankers expressed shock at the rapid progress of legislation that could impose large pay cuts on thousands of workers, and dismay that the industry is at the mercy of an angry Congress.

A wave of public fury, which is driving the bills before the House and Senate, was unleashed over the weekend by reports that American International Group had paid $165 million in retention bonuses to employees at the unit that gutted the company and forced a massive government intervention.

The legislative action could trigger the unraveling of the broader federal bailout of troubled banks, which has grown increasingly unpopular on Capitol Hill and across the country.

The average bonus for a Wall Street employee in 2007 was more than $180,000, but top employees make much more. Lloyd Blankfein, the chief executive of Goldman Sachs, topped the charts, collecting a salary of $600,000 -- and a bonus of $68 million.

Wednesday, March 18, 2009

Damn: Death Penalty Is Repealed in New Mexico

From The New York Times:

Gov. Bill Richardson signed legislation Wednesday to repeal New Mexico’s death penalty, calling it the “most difficult decision in my political life.”

New Mexico is only the second state to ban executions since the United States Supreme Court reinstated the death penalty in 1976. New Jersey was the first, in 2007. In all, 15 states now bar capital punishment.

Mr. Richardson, who formerly supported capital punishment, said his decision was “extremely difficult” . . .

Sunday, March 15, 2009

Enough, enough. Just when you think it couldn't get any worse, it does. -- AIG Faces Growing Wrath Over Payouts

I could add so much more to this story, such as about Goldman Sach's CEO (Goldman being a big recipient of the funds discussed below) participating in the bailout decision, and maybe will in due time. But I am in the middle of something else at the moment.

From The Wall Street Journal:

Troubled insurer American International Group Inc., now 80% owned by U.S. taxpayers, spent the weekend deflecting mounting criticism of how government funds have been funneled to various banks and used to pay employee bonuses at the business unit that almost sank the company.

After calls for more transparency, AIG disclosed Sunday that roughly two-thirds of the $173.3 billion in federal aid it received has been paid out to trading partners such as banks and municipalities in the U.S. and abroad.

The disclosures came as AIG was lambasted for about $450 million in bonus payments planned for employees at a business unit that lost $40.5 billion last year. The unit's woes pushed the company to near-collapse, forcing the government bailout.

The list of AIG's trading partners reads like a who's who of global finance. It includes big U.S. banks such as Goldman Sachs, which received nearly $13 billion. Large European firms, such as Société Générale and Deutsche Bank also appear, each having received nearly $12 billion.

There are political risks to the disclosures, notably the fact that taxpayer dollars are essentially passing through AIG to make whole private businesses and foreign banks.

Former V.P. Dick Cheney is a student of former Pres. Jimmy Carter. He needs to consult with his earlier boss former Pres. Bush 41 on proper protocol.

From the AJC:

Former Vice President Dick Cheney says he believes President Barack Obama's terrorism-fighting policies are making Americans less safe.

His hypocrisy of signing the budget bill stuffed with earmarks was much worse, but now a 2nd flip-flop: Obama Admin. Is Open to Taxing Health Benefits

From The New York Times:

The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.

The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as “the largest middle-class tax increase in history.” Most Americans with insurance get it from their employers . . .

At the time, even some Obama supporters said privately that he might come to regret his position if he won the election; in effect, they said, he was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans. Now that Mr. Obama has begun the health debate, several advisers say that while he will not propose changing the tax-free status of employee health benefits, neither will he oppose it if Congress does so.

Saturday, March 14, 2009

Good show fellas. Georgia loves national attention: After Change in Federal Policy, Some States Take Steps to Limit Stem Cell Research

As predicted by Gov. Roy Barnes, press for the Empire State of the South is in today's New York Times.

Recently Jim Galloway wrote in the AJC's Political Insider:

Restrictions on embryonic stem cell research — President Barack Obama just lifted federal prohibitions — would send the wrong signal to biotech companies and to the state’s research universities, the former governor [Roy Barnes] said.

It would render Georgia a “laughing stock in the nation,” he said.

The publicity for our State is in The New York Times as follows:

Three days after President Obama announced that he would lift restrictions on federal financing for embryonic stem cell research, the Georgia legislature began a push to limit such research within the state.

The bill, passed by the Republican-controlled Senate on Thursday, bans therapeutic cloning and the creation of embryos for any purpose other than procreation.

Many other states have welcomed the reversal in federal policy, hoping for an infusion of research dollars.

Stem cells may hold the key to treating conditions including spinal cord injuries and Alzheimer’s disease.

Critics said the bill, which is opposed by the state university system, patient groups and fertility clinics, would hamper the bioscience sector, one of the brighter spots in Georgia’s faltering economy. Georgia has put an emphasis on attracting biotechnology companies to the state, and Atlanta is to host 20,000 scientists at an international biotech convention in May.

The bill has not yet been taken up in the Georgia House, which is also controlled by Republicans. But even if it does not become law, its passage by the Senate makes recruitment more difficult, said Charles Craig, the president of Georgia Bio, an industry group. “It’s sending a signal that Georgia is anti-science,” he said.

Gov. Sonny Perdue, a Republican who has pushed the state’s efforts to attract science and technology businesses, indicated he would support the bill.

Friday, March 13, 2009

More good news: Economy Foils Advocate for Immigrants

From The Wall Street Journal:

This was supposed to be a golden moment for Rep. Luis Gutierrez, a longtime champion of revamping U.S. immigration laws. The new administration had pledged during the election campaign to overhaul the get-tough policy pushed by Republicans.

Instead, rising unemployment and fears of economic dislocation have put immigration off limits for President Barack Obama. Mr. Gutierrez, a Democrat from the president's hometown of Chicago, now finds himself leading a charge against the prevailing political winds.

"To put reform back on President Obama's radar screen, we are galvanizing faith-based communities and telling stories of the devastating effects of the current immigration policy on families," Mr. Gutierrez said. "Most Americans are appalled that a mother would be separated from her children."

Event organizers are gathering signatures that Mr. Gutierrez, who is chairman of the Congressional Hispanic Caucus' immigration task force, plans to deliver to Mr. Obama.

Congress twice declined to pass a comprehensive immigration bill during the Bush administration, amid deep divisions over how to deal with 12 million undocumented immigrants in the U.S.

Mr. Gutierrez, who is of Puerto Rican heritage, has pushed for immigration changes since winning a House seat in 1993 to represent a Chicago district with a large Mexican population. Recounting several exchanges with the president, Mr. Gutierrez said, "We understand that the president has a lot of advisers, none who are telling him to deal with this issue. We have to counterbalance."

Good news; passage of this will, without question, raise mortgage rates for everyone: Mortgage 'Cramdown' Plan Hits Turbulence in Senate

From The Wall Street Journal:

A central piece of President Barack Obama's plan to aid strapped homeowners is running into turbulence in the Senate as Democrats scramble to secure support from both parties' moderates.

The bill, which has already passed the House, would allow judges to write down mortgage debt for people in bankruptcy court. Democratic leaders have long sought such a "cramdown" provision for homeowners.

But in the Senate, the measure has become a flash point for tensions between lawmakers who seek to aid homeowners -- in particular homeowners who owe more than their house is worth -- and lawmakers who feel such assistance penalizes people who have kept up with their debts.

Financial institutions have long fought against court-ordered mortgage workouts, saying they would add risk to lenders, raise mortgage rates and clog courts. Mortgages have long been excluded from personal-bankruptcy filings.

Thursday, March 12, 2009

Tom Friedman: This Is Not a Test. This Is Not a Test.

Tom Friedman writes in The New York Times:

I am deeply worried that our political system doesn’t grasp how much our financial crisis can still undermine everything we want to be as a country. Friends, this is not a test. Economically, this is the big one. This is August 1914. This is the morning after Pearl Harbor. This is 9/12. Yet, in too many ways, we seem to be playing politics as usual.

Our country has congestive heart failure. Our heart, our banking system that pumps blood to our industrial muscles, is clogged and functioning far below capacity. Nothing else remotely compares in importance to the urgent need to heal our banks.

Yet I read that we’re actually holding up dozens of key appointments at the Treasury Department because we are worried whether someone paid Social Security taxes on a nanny hired 20 years ago at $5 an hour. That’s insane. It’s as if our financial house is burning down but we won’t let the Fire Department open the hydrant until it assures us that there isn’t too much chlorine in the water. Hello?

Meanwhile, the Republican Party behaves as if it would rather see the country fail than Barack Obama succeed. Rush Limbaugh, the de facto G.O.P. boss, said so explicitly, prompting John McCain to declare about President Obama to Politico: “I don’t want him to fail in his mission of restoring our economy.” The G.O.P. is actually debating whether it wants our president to fail. Rather than help the president make the hard calls, the G.O.P. has opted for cat calls. It would be as if on the morning after 9/11, Democrats said they wanted no part of any war against Al Qaeda — “George Bush, you’re on your own.”

As for President Obama, I like his coolness under fire, yet sometimes it feels as if he is deliberately keeping his distance from the banking crisis, while pressing ahead on other popular initiatives. I understand that he doesn’t want his presidency to be held hostage to the ups and downs of bank stocks, but a hostage he is. We all are.

Great and difficult crises are what produce great presidents, so one thing we know for sure: Mr. Obama’s going to have his shot at greatness. This crisis is uniquely difficult in four respects.

First, to get out of a crisis like this you need to let markets clear. You need to let failed companies, or homeowners, go bankrupt, unlock their dead capital and reapply it to thriving entities. That is how the dot-com bust ended, and out of that carnage emerged a whole new set of companies. The problem with this crisis is that A.I.G., Citigroup and General Motors — and your neighbor’s subprime mortgage — are not Dogfood.com. You let the market clear them away, and we could all be wiped out with them. Therefore, the president has to find a way to punish bad financial actors without setting off another Lehman Brothers domino effect.

Second, we need to get a market going that would bring fair value and clarity to the “toxic mortgages” crippling the balance sheets of our major banks. This will likely require some degree of government subsidy to private equity groups and hedge funds to get them to make the first bids for these toxic assets by guaranteeing they will not lose. This could make great policy sense, but be a nightmare to sell politically. It will strike many as another unfair giveaway to Wall Street.

Unfortunately, the president may have to look the American people in the eye and explain that “fairness is not on the menu anymore.” All that’s on the menu now is whether or not we avoid a system meltdown — and this will require rewarding some new investors.

Third, the president may have to make some trillion-dollar decisions — like nationalizing major banks or doubling the economic stimulus — with no real precedent and without knowing all the long-term ramifications.

Finally, to do all this, the president has to make us realize how dangerous a moment we’re in, without creating a panic that will prompt Americans to put every dime in their mattresses and undermine the economy even more.

All this will require leadership of the highest order — bold decisions, persistence and persuasion. There is a huge amount of money on the sidelines eager to bet again on America. But right now, there is too much uncertainty; no one knows what will be the new rules governing investments in our biggest financial institutions. If President Obama can produce and sell that plan, private investors, big and small, will give us a stimulus like you’ve never seen.

Which is why I wake up every morning hoping to read this story: “President Obama announced today that he had invited the country’s 20 leading bankers, 20 leading industrialists, 20 top market economists and the Democratic and Republican leaders in the House and Senate to join him and his team at Camp David. ‘We will not come down from the mountain until we have forged a common, transparent strategy for getting us out of this banking crisis,’ the president said, as he boarded his helicopter.”

Wednesday, March 11, 2009

10-4 on this; soon the public is going to be upset. I hope Obama will move from left to the center: Obama, Geithner Get Low Grades From Economists

From The Wall Street Journal:

U.S. President Barack Obama and Treasury Secretary Timothy Geithner received failing grades for their efforts to revive the economy from participants in the latest Wall Street Journal forecasting survey.

The economists' assessment stands in stark contrast with Mr. Obama's popularity with the public, with a recent Wall Street Journal/NBC poll giving him a 60% approval rating. A majority of the 49 economists polled said they were dissatisfied with the administration's economic policies

Tuesday, March 10, 2009

Labor Bill Faces Threat in Senate

Since last year I have been doing posts opposing the "Employee Free Choice Act" that will make it easier for unions to sign up new members. Business and industry groups say the legislation will lead to massive job losses and hobble the economy, while labor groups argue that it will give a historic boost to the middle class.

Today The Wall Street Journal reports that:

Key Senate Democrats are wavering in their support of legislation that would give more power to labor unions, dealing a setback to labor's top priority as businesses warn of the damage the bill would cause.

The battle over the "Employee Free Choice Act" -- expected to be introduced Tuesday -- is seen as a power struggle among labor unions and businesses, as well as a test of whether moderate Democrats and Republicans will push back on Democratic congressional leaders and the Obama administration.

At least six Senators who have voted to move forward with the so-called card-check proposal, including one Republican, now say they are opposed or not sure -- an indication that Senate Democratic leaders are short of the 60 votes they need for approval.

The legislation is expected to sail through the House. But the new uncertainly over Democratic support makes it more likely the bill, in its current form, will be stalled without the 60 votes needed to approve contentious measures in the Senate.

The Democratic response to the economic crisis has its problems, but let’s face it, the current Republican response is totally misguided.

David Brooks pens a classic entitled "Taking a Depression Seriously" in The New York Times. The Democrats should read and follow, reversing course in the process where appropriate.

The Democratic response to the economic crisis has its problems, but let’s face it, the current Republican response is totally misguided. The House minority leader, John Boehner, has called for a federal spending freeze for the rest of the year. In other words, after a decade of profligacy, the Republicans have decided to demand a rigid fiscal straitjacket at the one moment in the past 70 years when it is completely inappropriate.

The G.O.P. leaders have adopted a posture that allows the Democrats to make all the proposals while all the Republicans can say is “no.” They’ve apparently decided that it’s easier to repeat the familiar talking points than actually think through a response to the extraordinary crisis at hand.

If the Republicans wanted to do the country some good, they’d embrace an entirely different approach.

First, they’d take the current economic crisis more seriously than the Democrats. The Obama budget projects that the recession will be mild this year and the economy will come surging back in 2010. Democrats apparently think that dealing with the crisis is a part-time job, which leaves the afternoons free to work on long-range plans to reform education, health care, energy and a dozen smaller things. Democrats are counting on a quick recovery to help pay for these long-term projects.

Republicans could point out that this crisis is not just an opportunity to do other things. It’s a bloomin’ emergency. Robert Barro of Harvard estimates that there is a 30 percent chance of a depression. Warren Buffett says economic activity “has fallen off a cliff” and is not coming back soon.

Stock market declines are destroying $23 trillion in wealth, according to Lawrence Lindsey. Auto production is down by two-thirds since 2005. In China, 20 million migrant laborers have lost their jobs. Investment in developing countries has dropped from $929 billion in 2007 to $165 billion this year. Pension systems are fragile. Household balance sheets are still a wreck.

Republicans could argue that it’s Nero-esque for Democrats to be plotting extensive renovations when the house is on fire. They could point out that history will judge this president harshly if he’s off chasing distant visions while the markets see a void where his banking policy should be.

Second, Republicans could admit that they don’t know what the future holds, and they’re not going to try to make long-range plans based on assumptions that will be obsolete by summer. Unlike the Democrats, they’re not for making trillions of dollars in long-term spending commitments until they know where things stand.

Instead, they’re going to focus obsessively on restoring equilibrium first, and they’re going to understand that there is a sharp distinction between crisis policy-making and noncrisis policy-making. In times like these, you’d do things you would never do normally. When it’s over, we can go back to our regularly scheduled debates.

Third, Republicans could offer the public a realistic appraisal of the health of capitalism. Global capitalism is an innovative force, they could argue, but we have been reminded of its shortcomings. When exogenous forces like the rise of China and a flood of easy money hit the global marketplace, they can throw the entire system of out of whack, leading to a cascade of imbalances: higher debt, a grossly enlarged financial sector and unsustainable bubbles.

If the free market party doesn’t offer the public an honest appraisal of capitalism’s weaknesses, the public will never trust it to address them. Power will inevitably slide over to those who believe this crisis is a repudiation of global capitalism as a whole.

Fourth, Republicans could get out in front of this crisis for once. That would mean being out front with ideas to support the wealth-creating parts of the economy rather than merely propping up the fading parts. That would mean supporting President Obama’s plan for global stimulus coordination, because right now most of the world is free-riding off our expenditures. That would mean eliminating all this populist talk about letting Citigroup fail, because a cascade of insolvency would inevitably lead to full-scale nationalization. It would mean coming up with a bold banking plan, rather than just whining about whatever the Democrats have on offer.

Finally, Republicans could make it clear that that the emergency has to be followed by an era of balance. This crisis was fueled by financial decadence, and public debt could be 80 percent of G.D.P. by the time it’s over. Republicans should be the party of restoring fiscal balance — whatever it takes — not trillion-dollar deficits as far as the eye can see.

If Republicans were to treat this like a genuine emergency, with initiative-grabbing approaches, they may not get their plans enacted, but voters would at least give them another look. Do I expect them to shift course in this manner? Not really.

Monday, March 09, 2009

President Obama contributes to an atmosphere of fear grown to panic as he takes a crisis & tries to turn it into an opportunity for sweeping change.

Peggy Noonan writes in The Wall Street Journal:

The White House this week was consumed by extreme interest in a celebrated radio critic, reportedly coordinating an attack line with antic Clinton-era political operatives who don't know what time it is. For them it's always the bouncy '90s and anything goes, it's all just a game. President Obama himself contributes to an atmosphere of fear grown to panic as he takes a historic crisis and turns it into what he imagines is a grand opportunity for sweeping change. What we need is stabilization—an undergirding, a restrengthening so things can settle and then rise. What we're given is multiple schemes, and the beginning of a reordering of financial realities between the individual and the state.

Saturday, March 07, 2009

You will be hearing more about this: The General Assembly needs to remove the sales tax exemption on groceries.

The following is from The Augusta Herald under the caption "Lawmakers mull tax on groceries:"

State Rep. Chuck Sims has unsuccessfully sponsored proposals for several years that would restore the sales tax on groceries for the first time since the late 1990s.

But as the state grapples with a multibillion dollar budget shortfall, his plan suddenly has fresh momentum. The latest version passed a key committee this week, and House Speaker Glenn Richardson's office said it could reach a vote before the full chamber next week.

The plan is a significant change from Mr. Sims' initial proposal to restore the grocery sales tax over a two-year period, which he hoped would raise close to $1 billion a year.

The following is part of a 10-09-04 post I did entitled "The time is now; the need is acute; sponsors solicited and welcome -- In 2005 the Gen. Assembly needs to remove the sales tax exemption on groceries:"

A shopping trip to learn the law:

Let’s go shopping in any Georgia county with a 1% SPLOST in effect, whether the local option sales tax is for your county, a municipality or the school district. I’ll make up the "grocery list."

If I asked you to note which items on my grocery list were subject to at least some sales tax, many of you would not score 100 I feel confident. But first let me make it a bit easier to get a higher score.

As you may or may not be aware, Georgia’s sales tax exemption for "food and beverages" does not apply to any 1% SPLOST. Put another way, Georgia’s statutory and constitutional provisions dealing with 1% SPLOST’s -- whether for counties, cities or school districts -- provide that the 1% tax imposed is applicable to the sale of food and beverages.

Thus I will simplify the situation; let’s just go shopping in a county without a 1% SPLOST in effect. As the following will demonstrate, the exemption for "food and beverages" is not as simple as it might appear.

The following would be subject to the regular sales tax, even though I am buying them at a grocery store:

Toiletries, napkins, laundry detergents, vitamins, pet food, alcohol, tobacco products, food which is hot at the point of sale (thus food which is cooked on-premises and kept warm will not be exempt, such as a grocery stores selling hot roasted chicken from a rotisserie), food sold in grocery stores to be eaten in the store (such as ice cream or soft drinks sold in open containers or through vending machines), etc.

The following would be exempt from the regular sales tax:

Staple food products for home consumption such as meat, poultry, fish, bread, cereals, milk, soft drinks, and infant formulas packaged for home consumption.

The Department of Revenue ("DOR") regulations say the purpose of the "food and beverages" exemption is to exempt from sales tax food purchased to be taken home, prepared and eaten. The general rule is that eligible food, sold to be eaten off-premises, qualifies for the exemption. Food sold to be eaten on-premises is not exempt.

Therefore, Georgia's regulations center on the type of food being sold and where the food is consumed.

Is this logical? It sounds likes governmental bureaucracy reins doesn’t it. It gets better.

To be understand the following, realize that eligible food (that is, food exempt from sales tax) is any food item which could be purchased with federal food stamps or WIC coupons.

And this is probably a good point to note that federal law conditions state participation in the food stamp program on the state exempting from sales taxes, purchases made with food stamps. For this reason -- generally speaking -- purchases made with food stamps have always been and will remain exempt from sales taxes.

Getting back to bureaucracy. The DOR has classified food dealers into three categories. The first category is food dealers or retailers which accept food stamps. The second category is food dealers which do not accept food stamps, but whose sales of eligible food comprise at least 50% staple items. The third category is for all other dealers including dealers which also serve the food on-premises.

Dealers in the first category (those who accept food stamps) have to keep separate records of eligible and ineligible food sales, but all sales of eligible foods will be presumed to be for off-premises consumption.

Dealers in the second category (those who do not accept food stamps) must show that 50% of their eligible food sales comprise staple products (that is, meats, breads, cereals, vegetables and dairy products). Once the retailer shows that 50% of eligible sales consist of staple products, then all eligible sales (as identified by the dealer) will be presumed to be for off-premises consumption.

Dealers in the first category, especially those with facilities for eating on-premises whose mix of eligible food sales do not fit into the second category, have the burden of maintaining records to show that the sale was for off-premises consumption. The DOR presumes that the sale was for on-premises consumption, and thus subject to the full tax unless the dealer can provide records to the contrary (that is, an item is sold "to go").

As an example, a grocery store sale of a dozen doughnuts will be presumed to be for off-premises consumption. A convenience store sale of a dozen doughnuts will likewise be presumed for off-premises consumption, but only if 50% of the store's eligible sales consist of staple products. A doughnut shop sale of a dozen doughnuts will be presumed for on-premises consumption unless the retailer keeps records indicating that the sale was for off-premises consumption.

I did not start out to make this the "food and beverages exemption 101," but you get the point. As stated above, the exemption for "food and beverages" is not as simple as it might appear.

Georgia’s current budget crisis:

My solution is an idea whose time has come, whether we like it or not. I do not see any other practical alternatives to the financial situation of our state that could pass without undue partisan quibbling. And for sure I have not heard about any being floated.

It is not one that I think should not be politicized.

This posting is not exhaustive, but is intended to generate discussion and get the ball rolling, and the sooner the better.

A brief history of Georgia’s sales tax and the exemption for groceries:

Over a half century ago then-Gov. Herman Talmadge had the legislature enact a 3% sales tax to finance across-the-board improvements in schools, highways and welfare and public health services. Along with the legislation came many exemptions, some from the outset and others such as for prescription drugs with subsequent legislation.

The general sales tax is an important source of revenue for the state, representing I think I have read some 35% or more of all state government tax revenue. I claim no accuracy whatsoever on this figure, but the role of this tax is significant, very significant.

In the nineties then-Gov. Zell Miller began a move toward tax relief by persuading the legislature to remove the sales tax on groceries. The legislation exempting the sale of groceries from sales taxes was phased in over several years, and was complete in 1998.

Thereafter Gov. Roy Barnes came along in 1999, and in the same spirit of tax relief for the masses, lowered property taxes and made it more difficult for local governments and school districts to raise them.

Throughout all of these administrations, even though we have needed to improve and go forward with ambitious transportation improvement plans, an increase in our state’s motor fuel tax -- one of the lowest motor fuel taxes in the nation and much of any increase which would be borne by non-Georgians -- has been on the untouchable list.

(I have reason to believe that this logical tax increase would have become a reality had Gov. Barnes been elected to a second term. Maybe not real early in his term with the economy down and gas prices on the rise, but during his term nonetheless.)

With Democrat Gov. Miller having lowered sales taxes by exempting groceries, Democrat Gov. Barnes having lowered property taxes, what in the world would Republican Perdue do in the way of proposing his own tax reductions.

As we remember, rather than continuing to please the masses, Gov. Perdue temporarily suffered amnesia and forgot them that brung him to the Gold Dome. Rather than cutting, his first major proposal involved raising taxes. And it wasn’t just going to be to get King Roy back by raising the property taxes that Barnes had cut.

The new governor also wanted to increase revenue for the state by reducing the consumption of taxable evil products.

(Say what Gov.? Easy, says he; I propose increasing taxes on cigarettes and liquor as a way to help balance the state budget and, at the same time, dissuade Georgians from buying alcohol and tobacco.)

Although we in South Georgian sure didn’t appreciate the Governor adding taxes to our cash crop tobacco as if our farmers didn’t already have problems enough from Washington, a compromise in Perdue’s proposed tax increase ultimately did prevail.

. . . .

Folks, the reality of the state of the state is that now health care and education costs make up 75% of the state budget, and are rising faster than tax collections, the latter being up somewhat as of late with the state’s improving economy.

Further education cuts, which are being passed to local school districts, will result in property tax increases. As a school board attorney watching such things, I have observed a shift where taxpayers seem to approve of such things as textbooks, computers and buses that were formerly financed by maintenance and operation funds (read "property taxes"), now routinely being included in SPLOST referendums, along with, of course, new or upgraded school facilities.

. . . .

Senator Everett Dirksen uttered his famous words about the U.S. government’s spending some thirty or so years ago: "A billion here, a billion there, and pretty soon you’re talking real money." The same things applies in Georgia when we are talking millions.

I am a Democrat, and consider myself a good Democrat . . . . Thus I know the arguments for and against a regressive sales tax.

(And for those of you wanting to evict me from the party for heresy for even discussing killing the sales tax exemption on groceries, much less advocating it, I find solace and can safely take refuge in having observed one thing. Like me or not, like my idea or not, you can’t kick me out of the party, can they Zell?)

I have reviewed which states do and do not exempt groceries for home consumption by reviewing a study prepared by the Center on Budget and Policy Priorities.

So how much money are we talking about here if we killed the exemption that I wish Gov. Miller never had pioneered when times we better?

I am not sure. I saw a DOR press release in 1998 when the final 1 cent was going off. It said the complete elimination of state sales tax on groceries was estimated to be in the range of $550 million.

I have heard that now the figure may be around $865 million. For me the amount is not that important. This exemption is one that represents a situation where it is best to turn back the hands of time.

So where do we go from here:

One of my good friends and confidants in Douglas is Chuck Sims. Our family ties go back to the Middle Ages. Chuck also is our Representative in the Georgia House, and has been for eight years. . . .

Chuck is with me on this one. Why don’t you email this post to your Representative and Senator.

[Rep. Sims' mother died earlier today after an extended illness.]

UPDATE: See James Salzer's post entitled "Grocery sales taxes making a comeback for visitors" in the AJC's Gold Dome Live.

UPDATE NO. 2. Damn!!! The AJC's Gold Dome Alive reports that the grocery tax hike 99 percent is dead. According to this story:

[O]nce the idea hit the media, Republican blogs exploded in opposition to the idea of putting the state’s 4 percent sales tax back on groceries.

Keep up the good work fellows: Their Ranks Bolstered, and With Big Issues Ahead, Democrats Stumble

From The New York Times:

Despite significant electoral gains in both the House and the Senate, the Democrats have been stymied by Republicans and a few Democratic defectors in what began as a fairly routine push to enact the leftover measures, needed to finance spending in the current fiscal year and tethered together into one $410 billion catchall bill.

As a result, Congress had to pass an emergency five-day stopgap on Friday to prevent an embarrassing shutdown of the government in the opening weeks of the Obama administration.

Republicans and others said some Democrats were clearly experiencing sticker shock over the combined costs of the new Democratic agenda, with the $410 billion measure coming on the heels of the $787 billion economic stimulus and just ahead of the $3.6 trillion budget for 2010 and money this year for military operations in Iraq and Afghanistan.

After the Senate overcame decades of resistance and passed a bill that would give the District of Columbia a Congressional vote, House Democrats now find themselves unable to advance their version because Republicans are threatening to extract a vote on gun rights as the price. Many Democrats seem ready to go along, fearing a rebuke by the National Rifle Association more than the disappointment of their own leaders.

A good day for those opposed to earmarks, but having won the battle, next week they will lose the war. Despite assurances, the same ole' same ole'.

From The New York Times:

Senate Republicans blocked a $410 billion omnibus spending measure on Thursday night, forcing Congressional Democrats to prepare a stopgap budget resolution to keep the federal government from shutting down.

The ability of the diminished minority to delay the bill signaled growing unease in Congress, among Democrats and Republicans, over the levels of government spending in recent months and the staggering increase in the federal deficit.

The delay of the bill was an embarrassment for Democrats and a striking, if temporary, victory for critics of so-called earmark spending initiatives, who had criticized the bill as bloated with wasteful expenditures.

The Cracker Squire, a moderate, agrees with every word below. This new development is disappointing and scaring the hell out of me.

David Brooks writes in The New York Times:

You wouldn’t know it some days, but there are moderates in this country — moderate conservatives, moderate liberals, just plain moderates. We sympathize with a lot of the things that President Obama is trying to do. We like his investments in education and energy innovation. We support health care reform that expands coverage while reducing costs.

But the Obama budget is more than just the sum of its parts. There is, entailed in it, a promiscuous unwillingness to set priorities and accept trade-offs. There is evidence of a party swept up in its own revolutionary fervor — caught up in the self-flattering belief that history has called upon it to solve all problems at once.

So programs are piled on top of each other and we wind up with a gargantuan $3.6 trillion budget. We end up with deficits that, when considered realistically, are $1 trillion a year and stretch as far as the eye can see. We end up with an agenda that is unexceptional in its parts but that, when taken as a whole, represents a social-engineering experiment that is entirely new.

The U.S. has never been a society riven by class resentment. Yet the Obama budget is predicated on a class divide. The president issued a read-my-lips pledge that no new burdens will fall on 95 percent of the American people. All the costs will be borne by the rich and all benefits redistributed downward.

The U.S. has always been a decentralized nation, skeptical of top-down planning. Yet, the current administration concentrates enormous power in Washington, while plan after plan emanates from a small group of understaffed experts.

The U.S. has always had vibrant neighborhood associations. But in its very first budget, the Obama administration raises the cost of charitable giving. It punishes civic activism and expands state intervention.

The U.S. has traditionally had a relatively limited central government. But federal spending as a share of G.D.P. is zooming from its modern norm of 20 percent to an unacknowledged level somewhere far beyond.

Those of us who consider ourselves moderates — moderate-conservative, in my case — are forced to confront the reality that Barack Obama is not who we thought he was. His words are responsible; his character is inspiring. But his actions betray a transformational liberalism that should put every centrist on notice. As Clive Crook, an Obama admirer, wrote in The Financial Times, the Obama budget “contains no trace of compromise. It makes no gesture, however small, however costless to its larger agenda, of a bipartisan approach to the great questions it addresses. It is a liberal’s dream of a new New Deal.”

Moderates now find themselves betwixt and between. On the left, there is a president who appears to be, as Crook says, “a conviction politician, a bold progressive liberal.” On the right, there are the Rush Limbaugh brigades. The only thing more scary than Obama’s experiment is the thought that it might fail and the political power will swing over to a Republican Party that is currently unfit to wield it.

Those of us in the moderate tradition — the Hamiltonian tradition that believes in limited but energetic government — thus find ourselves facing a void. We moderates are going to have to assert ourselves. We’re going to have to take a centrist tendency that has been politically feckless and intellectually vapid and turn it into an influential force.

The first task will be to block the excesses of unchecked liberalism. In the past weeks, Democrats have legislated provisions to dilute welfare reform, restrict the inflow of skilled immigrants and gut a voucher program designed for poor students. It will be up to moderates to raise the alarms against these ideological outrages.

But beyond that, moderates will have to sketch out an alternative vision. This is a vision of a nation in which we’re all in it together — in which burdens are shared broadly, rather than simply inflicted upon a small minority. This is a vision of a nation that does not try to build prosperity on a foundation of debt. This is a vision that puts competitiveness and growth first, not redistribution first.

Moderates are going to have to try to tamp down the polarizing warfare that is sure to flow from Obama’s über-partisan budget. They will have to face fiscal realities honestly and not base revenue projections on rosy scenarios of a shallow recession and robust growth next year.

They will have to take the economic crisis seriously and not use it as a cue to focus on every other problem under the sun. They’re going to have to offer an agenda that inspires confidence by its steadiness rather than shaking confidence with its hyperactivity.

If they can do that, maybe they can lure this White House back to its best self — and someday offer respite from the endless war of the extremes.

UPDATE: Later in the week David Brooks wrote:

On Tuesday, I wrote that the Obama budget is a liberal, big government document that should make moderates nervous. The column generated a large positive response from moderate Obama supporters who are anxious about where the administration is headed. It was not so popular inside the White House. Within a day, I had conversations with four senior members of the administration and in the interest of fairness, I thought I’d share their arguments with you today.

Their arguments are included in this David Brooks column.

Thursday, March 05, 2009

Pres. Obama won't veto this, but he is letting America down by not doing so: Democrats Stop Effort To Remove Earmarks

The president talked the talk but is not walking the walk. Sad, very sad indeed. This would be such a good time to step up to the plate and show some leadership.

From The Washington Post:

The Senate approved $10 million in funding yesterday for clients of a now-disbanded lobbying firm that is under federal investigation for alleged fraud in political contributions to members of Congress, while approving an additional $16 million for pet projects such as a water-taxi service and manure management.

"We have a broken system that breeds this sort of behavior," Sen. John McCain (R-Ariz.) said during a tense debate.

McCain and Sen. Tom Coburn (R-Okla.), the main sponsor of yesterday's amendments, have lost at every turn this week in their effort to curb earmarks, which are narrow funding requests inserted into the annual spending bills.

Sunday, March 01, 2009

President Obama dons the presidential cloak; and the president, politically, has three big things going for him as he faces this crisis.

Peggy Noonan writes in The Wall Street Journal:

A mysterious thing happened in that speech Tuesday night. By the end of it Barack Obama had become president. Every president has a moment when suddenly he becomes what he meant to be, or knows what he is, and those moments aren't always public. Bill Safire thought he saw it with Richard Nixon one day in the new president's private study. Nixon always put a hand towel on the hassock where he put his feet, to protect the fabric, but this time he didn't use the towel, he just put up his feet. As if it were his hassock. And his house.

So with Mr. Obama, about four-fifths of the way through the speech. He was looking from the prompters to the congressmen and senators, and suddenly he was engaging on what seemed a deeper level. His voice took on inflection. He wasn't detached, as if he was wondering how he was doing. He seemed equal to the moment and then, in some new way, in command of it. It happened around here:

"The eyes of all people in all nations are once again upon us—watching to see what we do with this moment; waiting for us to lead. Those of us gathered here tonight have been called to govern in extraordinary times."

"Called to govern" is one of those phrases that lift you out of the grimy proceedings of government and into something loftier. Is that how he sees it? Such a call is "a tremendous burden, but also a great privilege," one entrusted to few.

Mr. Obama's advisers believed they'd reached the right balance between candor about the crisis and optimism about our ability to meet it. . . . Mr. Obama doesn't do jaunty. Something in his demeanor defeats joy; his default mode is mild indignation when his job is inspiration. He did not leave people thinking, Now I know we will defeat this calamity. But he did leave them feeling, Now I know someone's in charge, finally someone's taken ownership of the mess. . . .

I think the president, politically, has three big things going for him as he faces this crisis.

First, legitimacy. Our last two presidents were haunted by the circumstances of their election, and significant swathes of the country never fully accepted them. George W. Bush had the cloud of the 2000 recount, and his loss that year of the popular vote; Bill Clinton won in 1992 with only 43% , in a three-man race in which the other two were, essentially, Republican. But no one doubts Mr. Obama's legitimacy. He won by seven points, with 53%. He's the first president without the illegitimacy cloud since Bush I.

Second, we're in the middle of an emergency. In times like this, Americans want their president to succeed. Politically the crisis works for Mr. Obama.

Third is an unspoken public sense that we cannot afford another failed presidency, that we just got through one and a second would be terrible. Americans know how much good a successful presidency does for us in the world, in the public mind. The last unalloyed, inarguable success was Reagan. We need another. Liberal? Conservative? That, to the great middle of America, would, at the moment, be secondary. They want successful. They want "That worked." They want the foreign visitor to say, "I like your president." They want to respond, "So do I."