GSA Implodes; White House Avoids Blame — Yet Again

Reading the NY Times and Washington Post, it’s hard not to conclude that the primary goal of both publications in their coverage was to minimize the White House’s responsibility for the GSA scandal.

Their take––like most scandal press coverage––is that a few individuals, who will now lose their jobs, ignored policy. A few bad apples threaten the otherwise good barrel.

But is that the REAL story?

We have to ask why did it take 18 months for this scandal to be exposed?

The reason in this case was that not until someone tipped off the Inspector General’s office did the extravagance of the October 2010 event get called into question. So one must ask why all but a handful of the GSA employees in Washington involved in the planning of the event and the 300 persons who attended this event found nothing untoward in being the recipients of $823,000 worth of expenditures for the purpose of training in job skills and “an exchange of ideas between higher-ups”? (Washington Post)

Those expenditures included $44 per person daily breakfasts, semi-private catered in-room parties, $75,000 for a team-building exercise, $146,000 on catered food and drink, a “mind reader,” a clown, $6,325 on commemorative coins in velvet boxes and $8,130 for “yearbooks” with photos for all participants.

Let’s go over that one more time to make sure everyone gets the point.

We’re not just talking about a few maverick higher-ups who spent lavishly––although they did, taking six trips out to Vegas to make sure the city could handled their needs. What we have is a case where almost all of the 300 GAO employees involved felt what they experienced at the M Resort and Casino was responsible use of their time and of the taxpayer’s dollar. Only a few complained.

Anyone who did not formally complain should be disciplined and it should be made clear to all 12,600 GSA employees that to remain silent in the face of such behavior is grounds for dismissal.

Now let’s come back to the Obama Administration’s role in this.

Recall it was only last summer when we learned that the Justice Department was prolifigate in its conference spending. While the $16 originally reported as the cost of muffins was miscalculated, the Justice did not retract the expenditure of $7.32 per serving for “beef Wellington hors d’oeuvres” or the “$76-per-person” conference luncheon which featured “slow-cooked Berkshire pork carnitas, hearts-of-romaine salad — and coffee at $8.24 a cup.” (Washington Post, 10/28/11)

The director of the Office of Budget and Management came to the President’s rescue on that occasion stating “from the start of this Administration, it has been a priority of the President to make sure that the Government operates with the utmost efficiency and eliminates unnecessary or wasteful spending.” (Washington Post)

The president then ordered “a government-wide review of conference expenses.” Too late as it turned out for the GSA administrators who followed “neither federal procurement laws nor its own policy on conference spending.” (What Happens in Vegas Doesn’t Always Stay in Vegas – GSA is “over the top”, Project on Government Oversight, 4/3/12)

But even as the Inspector General was investigating mind-reader gate, the Project on Government Oversight reports the GSA is planning to send 150 of its employees to San Diego in July for 5 days for a conference of industrial operations analysts and administrative contracting officers. This conference will cost taxpayers upwards of $150,000 before muffins, hors d’oeuvres and in-room parties. I hear they’re looking for a motivational speaker who can help GSA employees weather a scandal. Name your price.

What it comes down to is the President continues to talk a good game, but has made little headway in the battle against privilege and entitlement that exists in the federal bureaucracy. On what basis could GSA managers justify the need to go “over the top” on behalf of 300 regional employees? What payoff did they imagine would result from the job skills training or the exchange of ideas among higher-ups?

In truth, these events are a form of payoff for the onerous duties that befall people who sacrifice what would otherwise be magnificent careers to work for the federal government AND for those contractors who suffer from having to submit so much paperwork in order to sell their $500 screwdrivers to the federal government. If this were not par for the GSA course, a lot of people would have said “Are you kidding me? No way.”

What’s needed is a policy that says the GSA shall have no conferences under any circumstances for any of its employees. After all those employees undoubtedly have the latest in communications technologies. If they can’t exchange ideas via email, text-messaging or courier pigeon, their ideas probably aren’t worth exchanging and if they don’t have the skills necessary to do the job, who in the hell hired them?

A Question About Control of Illegal Guns

The Empire Page conducted a poll on the question of whether to continue an expensive government program that obtains ballistic identification information on every handgun sold in NYS. 95% of the respondents said ‘No. Shut it down’ while only 1% voted to keep it going no matter the cost.

The key selling point for shutting down the program is that in its 11-year history it has not led to a single arrest or conviction, which was the original justification for the law. That does not mean, however, that there are not plenty of handgun crimes committed in NYS. Earlier this month a NYC police officer was shot and killed by a fugitive with an illegal gun. Apparently the vast majority of the guns used in crimes in New York are both illegal and brought to New York from other states.

Writing in the Wall Street Journal, former Manhattan District Attorney Robert M. Morgenthau argues that Congress is not doing enough to end the flood of illegal guns into New York.

Morganthau states that by failing to appoint a permanent director of the bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Congress has undermined that agency’s commitment to stopping the illegal gun traffic. His evidence is a roughly 30 percent decline in federal prosecutions over the period that ATF has lacked a permanent director.

Morganthau states that the “gun lobby” is responsible for the holdup, due to pressure on Congress.

So, here’s a question: If the NRA and other organizations that seek to protect the rights of Americans under the 2nd Amendment to own firearms want government to stop harassing legal gun owners, don’t they have an obligation to support government’s efforts to prosecute those involved in the trafficking of illegal guns? On what grounds can they justify lobbying against the appointment of a permanent director of the ATF without being hypocritical?

Social Contract Roundtable Now Live

Recently, Elizabeth Warren, Harvard law professor, former Obama regulator and candidate for the Democratic nomination for the Massachusetts Senate seat formerly held by Edward Kennedy, sparked a national debate by positing that people who are successful in business owe that success to a large extent because of the state’s contributions in the form of schooling, public utilities, police and fire protection, and thus the state should be able to take as large a share of their wealth as it needs in order to provide such services as it deems necessary.

George F. Will, writing in the Washington Post, argues that Warren’s social contract is “antithetical to America’s premise, which is: Government – including such public goods as roads, schools and police – is instituted to faciliate individual striving, a.k.a., the pursuit of happiness.” This debate encapsulates the differences between the two national political parties and thus may play a role in the outcome of the 2012 election. Who is right — Warren and Occupy Wall Street or WIll and the Tea Party, or is there a third view?

The Empire Page, a website devoted to stimulate discussion of issues relevant to NYS, today launched its own discussion of the social contract issue with pieces written by former Albany Times Union managing editor Dan Lynch, by environmental expert and columnist Paul M. Bray and by yours truly.

Here’s the link: http://www.empirepage.com/2011/10/18/roundtable-on-the-social-contract.

Comments and contributions (longer than comments) are welcome. They will be added to the site as received.

Is ‘Fair Share’ Fair?

President Obama wants the rich to pay their fair share of taxes. He says higher taxes for the rich must be part of the agreement that Congress needs to reach by August 2 in order for the U.S. to avoid defaulting on our national debt. To many that only seems fair. Everyone has to do their part, and if the rich aren’t paying their fair share, then why won’t the Republicans agree to make them do so?

Let’s do what some of us were taught to do in college. Let’s examine the President’s language and see what he is really saying?

To start with when he says the rich aren’t pay their fair share, he’s not telling us what that means. What is fair to one person is unfair to another. So he’s asking the public to trust him on the numbers without being specific. Assuming we’re talking about personal income taxes, what percentage is fair and how does one arrive at that percentage?

Everyone ought to know that income tax rates in the U.S. are progressive. The more you earn, the higher percentage you pay. Is that fair? Most people think it is, but some think we ought to have a flat tax rate where everyone pays the same percentage.

The current top taxable income rate is 35%. For 2010, that kicked in at $373,651 for singles and married individuals filing separately. If one’s personal income ranged between $171,851 and $373,651, the rate was $33%. Compare that with the millions people who paid 15% on taxable incomes over $8,375, but below $34,000. So the “rich” are already paying more than double the rate of low-income earners. Some people think that’s okay because the rich can afford it. But is it fair? Just because one can afford to pay more, should s/he be required to do so?

There’s an unspoken assumption I believe behind those who want to increases taxes on the rich that people who earn high incomes don’t deserve them. Many people feel the rich are made up of people who were born with silver spoons (i.e., their parents were rich) or they are overpaid (like movie stars and pro athletes) or they “stole” the money by taking advantage of our economic system. Is that the case or is it a species of envy – i.e., do people believe the rich do not deserve what they have so therefore why shouldn’t we take it from them to pay for programs that we who are not rich want.

The President ought to be required to answer the following questions: (1) At what income level does one become “rich”? (2) What percentage ought the rich pay? and (3) How has he determined those numbers?

It is likely that the income levels and tax rates that the President wants are linked directly to how much tax revenue he wants to bring in. In other words fairness is to be determined by need. Is that fair? If we cut spending enough, we won’t need to bring in that extra income. That will result in pain, some argue. Yes, but since we’re talking about fair, is one person’s pain less important than another’s? Whose pain needs to be relieved and how will the President determine that?

The Republicans talk a lot about not raising taxes on the rich because of the negative effect that would have on the business climate. To me that’s not their strongest argument. What investors need is certainty and right now we are living with uncertainty. Once business leaders and investors know what they’re up against they’ll find ways to grow their businesses and make money. It might mean investing in China, Brazil and Russia rather than the U.S., but that’s apparently a price many are willing to pay.

I think the Republicans would win over more people if they talked about President Obama’s use of the term ‘fair share’ to make the public think he’s the good guy and the GOP is protecting those who (a) don’t deserve what they have and (b) can afford to give up a lot more.

Conclusion: The president’s ‘fair share’ position is neither fair nor honest. The term ‘fair share’ is a piece of political rhetoric undoubtedly designed to build public support for his re-election campaign and for the defeat of Republicans in Congress. It begs the questions about what is fair, how much we as a country should spend and on what programs and how much people should be asked to pay.

Poll Question & Top Weekend Column

Poll Question

Last week we asked people if they thought illegal aliens ought to be entitled to healthcare under the proposed new system. An overwhelming 78% said ‘no’ while only 16% said ‘yes’. The rest were undecided.

This week we want you to guess what percentage of the general population in New York is paying attention to the Senate scandal? The underlying assumption is that most of the time the percentage of people who follow state government is very small — definitely fewer than 1 in 10 and probably fewer than 1 in 100 residents. Has coverage of the Senate fiasco gotten through to the public, do you think? If you have an opinion on what percentage of the population are paying attention, please vote.

Top Column of the Weekend

This weekend saw a continuing assault on the members of the State Senate by the state’s editorial boards and regular columnists. Empire Page subscribers will find links to those by Alan Chartock, Bob McCarthy and others on our links pages. But the one that all New York taxpayers ought to read appeared today in the Ithaca Journal: “Public pension time bomb ticking away” by Robert Julian.

The Journal identifies Julian as “semi-retired from Cornell University” [and] “president of Retirement Planning Consultants, an organization providing information and education on planning for retirement.” They state that Julian “has been researching, writing and teaching in the retirement-related field for more than 30 years.” You can tell. Julian lays out the “time bomb” in very clear straightforward tems.

He warns that local governments and school districts are going to have to increase their contributions to the state retirement fund and that means local taxes will have to increase to cover those costs or services will have to be cut. Just what we don’t want to hear. The economy remains weak, people who can afford to move out of the state are doing so in record numbers, and the folks who remain are going to have to pay more and more and more.

Will our political leaders step up to the plate to defuse this time-bomb? I won’t be holding my breath.

Poll Supports Cuomo Plus Today’s Best Editorials

The voters in last week’s Poll Question of the Week on the Empire Page strongly believe that Andrew Cuomo will be New York’s next governor.  Seventy-eight percent feel he definitely or most likely will be the next governor.

This week we’re asking the public whether the gay marriage bill introduced this past week by Gov. Paterson will be signed into law in 2009.  You don’t have to be a subscriber to the Empire Page to vote in our polls.

The editorial writers at the Glens Falls Post Star and Jamestown Post-Journal earned their pay this week-end.  Their contributions top my list of the best editorials of the day.

The memory of April 15 must have been in the minds of the Post-Journal editorial writers this week because they want to know what we are getting for all those tax dollars we’re sending to the state and federal government?  They point out that the IRS is collecting more money than ever before  — $2.7 trillion in 2008 — a 36% increase in five years.   On top of that in New York we are funding such things as big raises for Gov. Paterson’s staffers while the state’s infrastructure is in need of repair.  Even at the local level the Post-Journal reminds us our tax dollars are going to entitlements, including health insurance for part-time Chautauqua Co. legislators, when they might be spent on needed services.

If you think things should change in New York, you could be placing your hopes on seeing some new faces in elected office.  If so, however, you may not have studied the state’s election laws lately.   As the Glens Falls Post Star’s editorial board notes, “the state’s arduous ballot access regulations…prevent or discourage candidates from running for office.”  They review several bills currently being considered by the Legislature that would reduce the number of signatures required for gaining a place on the ballot or make it more difficult for the powers that be to throw challengers off the ballot over minor flaws in their petitions.

Change in New York needs to start with making it easier for reformers to run for office.  Read the Post Star’s editorial and let your state legislators know you favor passage of measures that make our state more democratic than it is today.

What is the Word I’m Looking For?

Help me. I’m having trouble describing the following person:

• He is charged with failing to pay taxes on income derived from an off-shore property.
• He used a rent-controlled property that he owns as an office in violation of rent laws.
• He used official government stationery to solicit contributions to a school that will bear his name.
• He reportedly preserved a tax break for an oil-drilling company in exchange for a $1-million contribution to the planned school.
• He became indignant over the AIG bonuses one week after having opposed taxing the bonuses.
• He has received more than $100,000 in campaign donations from AIG, which he justified as being no more than was received by “most of the senior members of the House and the Senate.”
• He had solicited AIG for donations to his would-be school.
• He is one of the most powerful men in the U.S. Congress – so powerful his colleagues are afraid to conduct the ethics investigation that he himself asked for to “clear his name.”
• He said: “Dreams have been shattered and homes have been lost because a small group of executives were motivated by greed rather than preserving a system that America and the world depended upon.”

How can you describe someone who has enriched himself at the public expense, very likely violated numerous laws as well as the code of ethics that applies to members of Congress and then has the audacity to gang up on a group of people who have not been accused of violating any laws and who by all accounts were not the ones responsible for the financial crisis facing AIG?  Words fail me.

Empire Page Readers Oppose Restoring Fairness Doctrine

By an 11 to 4 margin, readers of the Empire Page oppose restoring the so-called Fairness Doctrine that would require broadcasters to give equal time to opposing viewpoints.   150 readers voted in the poll which was conducted between Nov. 30 and Dec. 7.

George F. Will, the syndicated columnist explicated the hyprocrisy of those who advocate for restoring the doctrine in his Dec. 7 column in the Washington Post.  Rather than promoting fairness the doctrine is intended to quash minority expression.

I recommend that people read Will’s article and let their representatives and senators know they oppose its re-introduction.

Too many cars?

There is an important parallel between the housing crisis and the crisis that the American auto manufacturers find themselves in.  Each has too much inventory which is driving down prices and threatens the long-term viability of each manufacturer.  Why shouldn’t the solutions be similar?

In the housing industry developers overbuilt — each trying to get in on the boom while it lasted.  When the bubble burst and increasing numbers of people found themselves unable to pay their mortgages, sellers outnumbered buyers and as a result, prices started coming down.  That cycle in turn caused problems for other home owners and for mortgage lenders as the amount owed on many homes exceeded the market price and the ability of home-owners to repay.

One part of the solution was for the developers to stop building, which to a large extent they have done.  The last estimate I saw claimed more than one year’s inventory of homes are still on the market.  Until people feel the prices have bottomed out and it’s safe to buy, it will remain difficult for the housing market to recover to the point where developers might once again think about building more houses, apartments and condos.

Some developers in the meantime have gone out of business. Others have laid off a large percentage of their workforce.

Now let’s examine the auto situation.  As in the case of home builders the capacity for producing cars outgrew demand.  Manufacturers thought the boom would continue forever.  They didn’t take into account the fact that cars are built better today than ever before and therefore last longer and they didn’t foresee the increase in the price of gasoline.

Thus, today there is a glut of unsold vehicles sitting on lots at the dealers and at manufacturers.  As a result manufacturers are cutting prices in an effort to get rid of that inventory, but the public is hesitant about buying and when they want to buy many find it difficult to get auto loans at decent interest rates.

The auto manufacturers are in the process of reducing capacity.  That is good. It shows that they are still capable of some degree of rational thought.  Meanwhile, however, President-Elect Obama and the Democratic Party want Detroit to start manufacturing the car of the future.  That puts the big three in a bind.

The auto manufacturers have a big problem. They need to remain profitable in order to survive.  Today they are losing money at a rate that defies the imagination.  For GM this fall it’s been $2 billion a month. To restore profitability means Detroit must continue to sell the cars they already have in inventory or in production.

The time needed to produce radically new cars — whether hydrogen-fueled or electric or cars propelled by using large rubber bands that you have to twist tightly like the toy airplanes we played with as children — is years off.  Detroit will not be capable of producing such vehicles profitably for 5 to 10 years at best.

Few believe that the $25 billion they already have received from the government to increase mileage coupled with the $25 billion they say will get them through this crisis will do the trick.  They assumes a lot more sales of SUVs than they have any reason to believe they can sell…even if the price of gas stays under $2/gallon, which it will not.

The cost to society when one developer fails is relatively small.  A few dozen people may lose their jobs. When 100 developers spread across the country close, it’s still a manageable event.   If an auto manufacturer fails, the number of jobs lost would be greater and certainly Michigan would be hit much harder than any other state.  Yet why should we assume that the solution is to sell more cars?

If Detroit stopped manufacturing cars for one year, car buyers would not have to walk to work or to the mall.  There is enough inventory of unsold new cars, enough capacity available from non-US manufacturers and enough used cars so that the car buyer might not be able to get the exact model she or he wants, but a car would be available at an affordable price.

What would happen to Detroit?  What if they the majority of their plants and put most of their people on unemployment, but took the $50 billion in our tax dollars to develop the cars of the future with a goal of resuming production in five years?  By focusing all of their resources on the development of new cars they would move ahead of Toyota, Honda and their competitors who are also in the race to build those wind-up cars of the future.

The cars those companies produced could restore the US as the center of automobile manufacturing and give the big three a chance to regain their lost market share.   If it’s right for the housing industry, why isn’t it right for Detroit?

Questions that People Should Be Asking Themselves About the Auto Industry Bailout

1. Are there better uses for the $25 billion?

If we spent $25 billion on mass transit instead of bailing out the big three, would that be better in the long run for our country?  Would it be better for our economy, our environment and our energy policy?

2. What happened to the $7 billion Detroit got from the Clinton Administration to increase gas mileage?

In 1993 the Clinton Administration offered Detroit a “Partnership for a New Generation of Vehicles” under which the auto manufacturers got $7 billion to create cars capable of getting 80 MPG by 2000. What happened to that money?  According to one analyst, the partnership “failed to deliver improvements in fuel economy. By defusing environmentalists’ demands for increases in CAFE standards, it has probably done more harm than good.”  (Johne Buntin, American Prospect, 11/30/2002)

3. Can the big three compete paying more than $70/hour to assembly-line workers when their competitors pay 50% less?

The UAW president told Congress they have made concessions, but if competitors have lower labor costs can the big three ever be as profitable?  How much added productivity can GM, Ford and Chrysler build into their production facilities?  Enough to overcome the fact that they’re paying 50% more to their hourly workers?

4. Is opposition to the loan Union Busting?

Some characterize opposition to the Senate’s proposed $25 billion loan to the big three auto manufacturers as motivated by those who wish to break the UAW (United Automobile Workers).  Is this based in fact or is it a union tactic to blackmail the public into supporting the bailout?

5. Do we need all three companies to survive?

The anticipated annual new car sales is likely to drop from 17 to under 15 million a year for the foreseeable future.   Ford looks like it can survive and Chrysler is privately owned and should be left to its own fate.  What’s wrong with letting GM go into bankruptcy?  They could re-negotiate their labor contracts, get rid of factories and brands that are no longer viable and survive meaner and leaner.