Across the Great Divide

GOP The Party of Business — Really?

I think I know why the Minnesota GOP is so hard on the minimum wage. Its business brains need all the help they can get just to break even.

Mitch Berg, Luke Hellier and the MNGOP itself seem to think State Auditor Rebecca Otto is, to quote Mitch, "Like A Junkie With A Stolen Platinum Card."

As I have pointed out elsewhere, Otto saved the state far more money by eliminating the featherbed position occupied by former deputy auditor Tony Sutton (now MNGOP Chair) than she will ever spend on her expense reports.

Really, like a junkie? Because she split a lobster dinner with another state employee and paid the book rate at a conference hotel?

The MNGOP is supposed to be the party of business, but their brain trust can’t figure out an expense report. Let me help. Otto traveled on December 8th (on a Saturday to qualify for a lower air fare) and  returned on the 12th, the time for which she submitted her controversial expense report. The state meal reimbursement is $31 per day. She claimed $90.48 for the period, not just for one day.

We trust our readers here to do their own math.

As for the claims about exorbitant hotel rates, ask your own company CEO what he thinks a top executive’s time is worth and whether he goes to Days Inn to save the shareholders money. Or whether the cheap hotel savings would be spent on cabs back and forth from the conference hotel.

The PERA, for which Otto is a trustee, budgets for its trustees to attend two conferences. As near as I can tell, she only attended one for the year in question.

All Candidates are on Equal Footing in MInnesota.

Dick Cheney did it. George W. Bush did it. Hillary Clinton did it.

But Tom Emmer, Tom Horner and Matt Entenza will not.

To be fair, federal law requires disclosure of tax returns by candidates. Minnesota law does not, so the refuseniks are within their rights.

People who believe in transparency in government have a case that financial disclosure, including a spouse's income, provides insight into what influences may come into play if that candidate is elected.

Those who believe financial privacy should prevail are in the minority, it appears. Many other states mandate disclosure of a spouse's income and financial assets.

All I have to add here is that candidate financial disclosure is one place in Minnesota where gay and lesbian couples have the same rights as married couples!

Link Blog Wednesday.

Too many acres of badly built generic spaces selling the same crap everyone sells but no one needs, surrounded by asphalt wastelands and owned by over-extended speculators who are walking away from their mortgages.

When you put it that way, the home foreclosures don't sound so bad.

From TC Sidewalks:

It also reminds me of how overbuilt the US retail sector is, in general. In her book Big Box Swindle, ISLR author Stacy Mitchell describes how we have way more retail real estate than we would ever possibly need. Our cities and suburbs are way past saturated with big box stores, malls, and everything else under the sun. And for a long time, due to a lucrative regulatory climate (tax breaks for depreciation, up-front tax money from cities), these have been rock solid investments.

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Glenn Miller writes about different sort of commercial abandonment — the Linden Hills Coop moving out of Linden Hills.

What the co-op leaders might be overlooking is what marketers call sensation transference — that is, the enjoyment one gains from shopping in the co-op because it’s located in the heart of Linden Hills. A key part of its brand is its location — it is part of a larger, balanced econ-system.

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Switzerland issues tickets for speeding with fines based on ability to pay.

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What do France, Iceland, New Zealand, Germany and Russia have in common? Same as Denny Hecker. [Both via Visualizing Economics]

Death, Taxes and the American Way.

Yesterday, I was in a Telluride art gallery for the opening of a show featuring the work of a friend. Since we were driving back that night, I had to lay off the Colorado-made vodka being poured. And since I was in Colorado, I missed Drinking Liberally with the candidate I'd most want to have a beer with — Tom Rukavina.

(Who would I put on the opposite end of the scale, among the DFL candidates? John Marty and Mark Dayton, just because I doubt having beer around would loosen up the conversation in either case. Come to think of it, hard to imagine Rukavina getting any looser than he already is.)

Since this is about crossing the divide on occasion, I'd have to pick Marty Seifert as my top GOP beerpanion, unless Norm Coleman were available, in which case, I'd pick him and... no, I'm going to stay high road on this one.

Anyway, when I returned, I read Spot's piece on the estate tax repeal for 2010, and its implications for the estates of people unlucky enough to die in 2010. In the words of the New York Times editorial he quotes:

The bottom line is this: there will be many more losers than winners under estate-tax repeal, and the losers will be among Americans who are farther down the wealth ladder.

As Spot notes, the estate tax is not a "death" tax. ("Death tax" is not just a propaganda line used by anti-tax zealots. The term has crept into official Treasury Department and other government documents during the Bush Administration.) Death is an event we all get to attend, and most of us will never have to pay such a tax, as heirs or posthumously. 

Instead, the estate tax is tax on the transfer of value from one party to another — as with most taxes, in the form of wages, interest, sales of property or goods, and realized capital gains. (Property taxes, motor vehicle taxes and pollution taxes are among the exceptions.)

The preferred argument against the estate tax is that it would hurt heirs of small businesses and family farms, which with the exemptions in place before the 2010 repeal, was nonsense. This happened very rarely, in cases where the estate holders failed to take advantage of planning safeguards in the tax law.

Which brings me back to Telluride, a former remote mining town transformed by a ski hill and lot of money arriving in seven- and eight-digit bundles. Most of those family ranches, from Ridgway (cowboy fantasy of Ralph Lauren) to Telluride, have already passed into the hands of wealthy trophy homeowners, speculators, developers and the over-extended.

Yesterday, we watched a woman buy about six pieces of art gallery jewelry (no price tags visible) just for giggles. Somehow, she was able to make it through the day, despite the estate tax.

Don't Look to Rush or to Hawaii to Rate U.S. Healthcare System.

I have been treated to the best health care the world has to offer -- that is right here in the United States. I don't think there is one thing wrong with the American health care system. It is working just fine, just dandy.

– Rush Limbaugh

Limbaugh is quoted after a visit to a Hawaiian hospital that admitted him with severe chest pains... But presumably before he received his EOB from the insurance company.

Drawing conclusions about a system, based on anecdotal experience, is always hazardous, especially when the person doing the drawing is a wealthy celebrity blinkered by ideology.

He does not detail the treatment that was so dandy or whether it actually resolved a medical problem other than transient pain. Most important, he does not say — and probably doesn't know — how much it cost.

My own experience with medicine in the islands is limited, but possibly relevant. In 2003, I accompanied someone experiencing severe abdominal pain to a Maui ER. I'll spare you the details, except to say the problem was likely a ruptured ovarian cyst that was going to resolve itself and apparently did by the time the dose of pain killers wore off. A CT scan and ultrasound revealed nothing — just as in Rush's case — and a laproscopy offered after the patient felt ready to leave was turned down.

However, the patient spent most of the day on a gurney in the ER — without a pillow (they were out of pillows) — for continuing "observation," which meant "lie here by yourself until we can find the specialist to come back and take another look at you."

The charges for this visit, which did not involve an ambulance, room or medical intervention other than fluids, meds and the diagnostic tests, came to $14,000. Fortunately, the costs were picked up by insurance, but because they were out-of-network for the Minnesota-based policy, Medica (and its policy-holders) paid a higher portion of the bill. 

The care was "best" if best means borderline over-provision of services with no adverse outcome. (We'll guess Rush got a pillow.)

Ironically, because Hawaii has an employer mandate and a relatively high number of people with health insurance, its hospital emergency rooms don't provide the level of indigent and outpatient care that burden costs at mainland hospitals.

Most Hawaiians see their regular doctor, use fewer health care services and are admitted to hospitals 26 percent less than the United States average. The ERs can deal with true emergencies, like chest pain, abdominal pain and surf-slammed tourists. In 2007, the state had 34 percent lower ER outpatient visits than the national average.

Other states tried employer-mandated care only to repeal the efforts after employers threatened to move across state lines. Hawaii’s isolation forestalled such threats, and its paternalistic plantation history made employer-provided care an easy fit.

There are perils in drawing conclusions about how a national health care system would work based on one isolated state's experiences — and liberals and conservatives will find the lessons they're looking for.

One thing you already knew, though. Rush Limbaugh isn't telling you the whole story.

Will Chinese Banks Repeat Our Sins?

In a subscribers-only story, the Wall Street Journal describes a troubling lender practice that Chinese banking regulators are starting to examine more closely.

The banks temporarily sell their loans to Chinese trust companies with a promise to repurchase the loans within a few years. This gives the banks more money to lend, while moving the loans off their balance sheets, making their loan exposure appear less than it is. The trusts repackage the loans into financial instruments for their clients.

If this sounds similar to the mortgage securitization practices in the U.S. that helped pump more money into risky loans, that's because it is similar, although the motivation also appears to be a way to reduce the banks' loan balances at a time when China's regulators are pushing banks to increase reserves to protect against bad loans, the article says.

Instead of being good, the banks are just trying to look good. That usually turns into a mess, whether you are Enron, Bernie Madoff or Tiger Woods.

As I wrote in this piece about the empty villas in one Chinese city, there may be good reason for regulators to be concerned about banks getting overexposed to bad loans.

One reason Chinese banks weren't so badly hurt in financial crisis — those nasty commie regulators wouldn't let them play the games the big boys in the west were playing.

[h/t Fran in Spokane]

Weekend Reading: Bailing out Banks and Cars.

Today's Strib ran a very long and sympathetic profile of Neel Kashkari, the bank bailout czar who burned out big-time working for the Treasury Department, trying to avert an economic meltdown. As a one-time near workaholic, I thought the account of the stress and Kashkari's enlightenment from his experiences rang pretty true.

However, the rerun doesn't mention the news that broke the day after the profile originally appeared in the Washington Post — and that the Strib did report last week — that Kashkari has taken a job with PIMCO, an investment firm that was deeply "enmeshed in the recovery effort he helped lead."

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I don't think Minnesota's titan of finance, Rep. Michele Bachmann, is impressed with what Kashkari thinks his team helped pull off.

She seems to think that the lack of a total economic meltdown is proof that no intervention was needed. The failure of lax regulation of runaway financial risk proves that regulation doesn't work, in her book.

Giving more power to government bureaucracies that have failed in the past* will do nothing to stabilize our markets.

This statement sounds a ringing note of principle that doesn't actually have to cash its check in the aftermath of now-stabilized markets. I shudder to think where we'd be had Bachmann been in Neel Kaskari's job.

* Presumably this does not apply to the Departments of Defense or Immigration

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The Minnetonka City Council is restricting a parking lot expansion proposed by the high school. Too many students drive to school and can't park on the campus, so they park along a nearby frontage road or in a K-Mart lot. These conditions are unsafe, school officials insist, and they must cut down 110 trees to make room for more cars.

[Minnetonka High School Principal Dave] Adney said it's troubling for the school to be portrayed as "not good guardians of the site."

"We are all environmentalists. We don't want anyone to think that parking lots are more important than trees.''

But parking lots are more important than sidewalks or other measures that might reduce traffic and improve safety.

There's irony upon irony in this tale of students who need more car-enabling infrastructure built because the car-enabling infrastructure around the school makes it unsafe for them to walk to school. More parking will mean more students can drive instead of having to car pool or (gasp!) take the bus, walk or cycle to school, making it more dangerous for those who try not to drive.

Financial PAC Money to Democrats — Less Than Meets the Eye?

Here's the kind of transparency report that annoys me because it seems to come with a point of view attached.

The House Financial Services Committee voted yesterday to give regulators the authority to break up large financial firms that create too much systemic risk, in an effort to prevent future financial crises. The vote passed by a 38-29 margin, but three Democrats joined with all Republicans voting no. Those three Democrats--Melissa Bean (D-IL), Dan Maffei (D-NY), and Gregory Meeks (D-NY)--received an average of $99,483 from banks' PACs in the last two years, 119% more than the average of $45,358 received by the 38 Democrats voting for tougher regulation.

Comparing the averages implies that the financial industry exerted a disproportionate influence over the three Democrats voting against the regulation.

But the top three Democratic members who voted for the legislation collected more than $435,ooo from the banks PACs, versus only $298,000 for the three Democrats voting against. Committee Chair Barney Frank and bill co-sponsor Paul Kanjorsky together took more PAC money than the breakaway three.

And when you look at the total dollars paid out by the industry to the top 15 recipients — which includes all three "no" voters — the 12 Democratic supporters of tougher regulation among that group collected almost $1.126 million. The other "yes" voters got another $1.384 million.

It's just possible the three Democrats voted the interests of their districts or their consciences. Looking at the money alone doesn't tell us that, but the analysis makes a dark inference.

As for the Republicans, we don't know how much they got. The analysis doesn't tell us the average amount that "bought" the GOP votes.

Was Give to the Max Day a Success?

Bob Collins at News Cut talks about yesterday's Give to the Max Day in Minnesota, which raised more than $12 million for local nonprofits yesterday. Commenters there and at this story weighed in with their confusion (and in some cases, disappointment) over the fact that $500,000 can't be a dollar-for-dollar match if there's more than $500,000 in contributions.

Duh.

The blame for this confusion is largely laid on the GiveMN organizers, but I fear it really reflects the weak state of financial acumen and development sophistication at too many non-profits.

I can't speak for the sponsoring foundations, but I think all the discussion about the match and whether the day attracted new money misses the larger point. I'd argue the day was about creating statewide awareness and increasing donor comfort with giving online.

Organizations and the members upset about their tiny match need to look at the bigger picture. GiveMN.org handed these organizations a new fundraising tool that otherwise might have been beyond their ability to implement. It spurred many of them to use the web in new ways to reach donors and considerably raised the profile of online giving.

For years, I've been using and recommending Network for Good — which appears to be affiliated with the "giving marketplace" that provides the GiveMN platform — as a way to manage one's charitable giving. For people who write just a few checks a year, a tool like this may be more than you need, but as more transactions of all types move to the web, non-profits must be able to move there, and use it effectively. This is tough to do on your own, especially in small, very resource-constrained organizations.

GiveMN also harnesses social media in ways that go beyond Network for Good, allowing donors to declare their support for organizations and share it with their personal networks — which is really how non-profits need to build their donor base.

I doubt that many organizations found new donors or raised much new money through Give to the Max Day. For most, I suspect that the annual appeal dollars and year-end giving from people figuring out their taxes might have just moved up in time.

But the dollars raised should not be the measure of success. Smart organizations will be using this day as a learning opportunity and this platform as a way to move their donor relations into a new realm.

UPDATE: A comment by Bruce at the News Cut post sheds some more light on how the confusion arose.

In their webinar presentation to charities some weeks ago, GiveMN.org reps said the $500K they secured from local foundations and other funding "partners" was to be allocated for underwriting the 4.75% fees charged by their processing "partner" Networkforgood.org until the money ran out. Then it was changed to a 1:1 match, then 1:2, then (and finally) proportional. The move to proportional came too late to effect the "buzz" of the 1:1 or 1:2 matches that were communicated prior to Nov. 17th. As late as Tuesday afternoon non-profits that one would think would know better were still representing "double your gift to us" through blast e-mails.

And the Strib comes out with a "Charitable Giving Guide" supplement on November 18th, the day after GTM Day!

How Do Communities Thrive: By Maximizing Wealth or Redistributing it?

The comments at This Road is Designed to Kill You have drifted a bit off topic — from the safety effects of traffic roundabouts to incentives for people to live closer to work to flight from city schools to the influence of school district size on student achievement. (Go ahead and read them if you haven't. I won't make many explicit references here.)

Running through the discussion is a divide that often surfaces here, and in fact simmers under most of what passes for debate in politics today. Whether the topic is health care, schools, the economy, taxes or infrastructure, it boils down to the merits of government intervention versus free market solutions as ways to solve big problems.

Another, less common way to put it is this: Communities thrive by redistributing wealth or by maximizing opportunities to accumulate wealth.

For example, Mark and Jeff had a back-and-forth over whether a single, large school district that allocated dollars first to lagging schools would help improve student performance, especially in inner city schools.

Mark says: "Turn all contiguous metropolitan areas into a single school district, with funding prioritized so as to deal with the lowest performing schools first."

Jeff responds: "The measure that shows the greatest correlation with school performance isn't funding, and it isn't class size. It's school district size. Kids in smaller school districts do far better."

Jeff is correct that studies show smaller school districts tend to have better student achievement, but size matters only insofar as it negatively affects the factors that really produce learning outcomes.

It's worth noting that school districts usually are large because a) they were formed to encompass large city boundaries with their diverse populations and the education challenges that go with them. Or b) they were consolidated from smaller districts experiencing enrollment declines, substandard offerings or funding issues that led them to seek economies of scale. In both cases, upsized districts are a consequence of factors other than pure pursuit of improved student achievement.

Mark is talking about disparity of income between districts, not size; a super district would be just one way to redistribute money to aid lower-performing schools. Of course, a similar move — giving more responsibility for school funding to the state — was tried and then has been slowly dismantled by Gov. Pawlenty. But redistributing school aid dollars isn't really the whole answer, either. Living in economically advantaged communities tends to be accompanied by other factors that relate to school performance, and these advantages are more difficult to export — or to benefit students who are bused in to those communities.

Growth & Justice delivered a research-based report last year that summarized three factors that were most critical for getting students from pre-K all the way through college. Each of these has financial implications, not necessarily tied to what we think of as "school funding."

Quality academic preparation and alignment. Children receiving sustained quality instruction, rigorous curriculum, and meaningful, ongoing assessments are more likely to succeed at the next education level.
Social supports. Relationships between children and adults in early childhood, school, and non-school settings are significant to academic success. Parents contribute to a child’s educational success when they are involved with care providers, teachers, mentors, and tutors.
Access and financial support. Access to quality providers, programs, and institutions places children and students in a position to take advantage of learning opportunities. But limited financial means can be a barrier to access. Subsidized childcare, preschool, and post-secondary tuition grants expand access to quality learning experiences for students at all income levels.

To over-simplify my point, I'd say the education discussion drifted toward comfortable positions for Mark and Jeff, but got richer as they shared the research and the complexities became more evident.

In another post, I'll discuss one other angle their discussion raised — taking personal credit for successes and blaming government for failures.