*First appeared in the August 29, 2013, edition of the Laurel Chronicle
As I considered the subject matter for this week’s column, a couple of things struck me as particularly relevant. Fifty years ago this week, Rev. Martin Luther King, Jr., delivered his famous “I Have a Dream” speech to a crowd of some 200,000 demonstrators in Washington, D.C. on the steps of the Lincoln Memorial.
I also realized that Mississippi has another anniversary August 29, the date on which Hurricane Katrina wreaked “utter devastation” on the Mississippi Gulf Coast eight years ago. Like so many Mississippians, I remember Katrina - and the mind-numbing aftermath - like it was yesterday.
As my mind wandered, I began to find parallels between the two anniversaries.
In August 1963, our nation was in the midst of a freedom movement to make good on Rev. King's “promissory note,” that proverbial check from the United States to citizens of all races for justice and equality. The speech was especially relevant to Mississippi, which was at that time under the leadership of an outspoken segregationist governor (Gov. Ross Barnett).
As a friend of mine noted, we tend to vaguely recall the “I have a dream” portion of the speech but overlook (or simply don’t know) that in his remarks, Rev. King cited our beloved state - the one with two humpbacks and twice as many crooked letters - as a hotbed of racial injustice...and opportunity.
“I have a dream that one day even the state of Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice,” declared an authoritative Rev. King in his historic remarks.
What Rev. King - the man whose being is synonymous with the civil rights movement - saw in Mississippi was a place where hatred existed, but so did a great opportunity for healing.
Rev. King’s remarks were not “an end, but a beginning” of a sea change in public policy and opinion. His comments, coupled with the courage of others who fought for civil rights in the years prior, changed hearts and minds…though not immediately. A year after the speech, three civil rights workers (James Chaney, Andrew Goodman, and Michael Schwerner) were slain in Neshoba County. Countless others were beaten, threatened, and even killed on their journey for justice. Yet progress prevailed at its slow, steady pace.
A 1963 Mississippi is not reflective of a 2013 Mississippi, a state which will celebrate the groundbreaking of the Mississippi Civil Rights Museum in late October; a state which welcomed Freedom Riders in 2011 to celebrate the 50th anniversary of their equality rides with events across the state and a formal apology from former Gov. Haley Barbour; a state which has the highest number of African-American elected officials in the nation. We are a state shaped by our past, but not defined by it.
And so it is on this eighth anniversary of Katrina that Mississippians of all races have again shown the world we are not defined by circumstances. Hurricane Katrina devastated homes and families; it destroyed infrastructure and fundamentally changed life as we knew it, particularly along our Gulf Coast. It did not, however, weaken the resolve of our people.
This mega-storm – the largest natural disaster in American history – struck Mississippi, a state rife with poverty and a shameful history of racism. Some thought that of all the states, we were the least prepared to handle such a disaster.
But like Rev. King’s speech, Katrina cast a spotlight on Mississippi. And, like fifty years ago, we had a choice: We could live up to their low expectations or seize this opportunity to change the way the world viewed the Hospitality State.
Mississippians banded together and made our choice. Blacks and whites, rich and poor, rural and suburban; none of these things mattered. Neighbors helped neighbors, regardless of race or economic status. Hospitality was extended between families whose antecedents fifty years ago might have refused to share restrooms. Our shared history made us a strong people – strong enough to recover from the devastating impacts of Katrina.
One could argue that our shared struggles uniquely prepared us to deal with Hurricane Katrina, in that we as a state are accustomed to overcoming seemingly impossible odds. The storm that fundamentally changed Mississippi, fundamentally changed the way the world views us…in the same way our progress in race relations has changed the way we view ourselves.
William Faulkner’s often quoted as saying “to understand the world, you must first understand a place like Mississippi.” Rev. King understood Mississippi as a place of great trouble but of equally great opportunity, and he was right. Today, I couldn’t be prouder that the state I call home has, in the face of great adversity, seized opportunities to create a place where we have come to realize that our destiny is tied up with others; that our freedom is inextricably bound to the freedom of others; and that, as the Rev. King said, “we cannot walk alone.”
Thursday, August 29, 2013
Thursday, August 22, 2013
Bentz replacement should take long-term view of Mississippi energy
*First appeared in the August 22, 2013 edition of the Laurel Chronicle
This week, Southern District Public Service Commissioner Leonard Bentz officially resigned to begin his new role as executive director of the South Mississippi Planning and Development District.
While the PSC will meet again in mid-September, the timetable for replacing Bentz is uncertain. The responsibility to appoint a new commissioner rests solely with Gov. Bryant who has given no indication as to who he’ll appoint or when such an announcement would come.
This “in-between” period breeds a lot of speculation and pontification as to who should be picked; where they should come from; and the like. Naturally, I didn’t want to miss this opportunity to give my humble two cents.
While the position pays more than what most Mississippians earn (about $78,000), it also comes with a built-in controversy of sorts: the Mississippi Power coal-gasification plant in Kemper County.
Construction on the plant is nearly complete, but the project hasn’t been without challenges. Internal disagreement within the company coupled with unexpected construction costs resulted in major cost overruns and, frankly, some really bad publicity for Mississippi Power. Now, some fringe opposition groups (including the Sierra Club) are attempting to convince the next commissioner to pull the plug on the whole project.
While “I’m against raising electricity rates” may be a politically expedient talking point, I would caution the next Public Service Commissioner from such a blanket statement. Policymakers – including regulators – better serve the public when they take the long-term view.
Three things we know about Kemper: It’s needed, it’s expensive, and it’s good for Mississippi.
In 2009, the PSC determined that Mississippi Power needed to build a new baseload generation power plant to ensure the company could provide enough electric capacity to serve its customers reliably. In the last 40 years, every time the PSC has found a need for a new baseload power plant, whether by Mississippi Power or Entergy, construction of that plant has resulted in higher rates.
We know we need more power and that it’s going to cost us lots of money in the short-term. Long-term? Capital-intensive projects like power plants typically cause rates to increase, then to level off or decrease. When Entergy built Grand Gulf nuclear reactor, rates increased more than 50 percent; today, this same plant produces the lowest cost baseload electricity in Entergy’s system.
In Kemper’s case, customers are looking at a rate increase of 22 percent – significantly lower than the increase associated with Grand Gulf (a success story) and about two-thirds as much as Mississippi Power had originally projected.
We need the Kemper plant to ensure the lights turn on when you flip the switch, but the next commissioner would be wise to also recognize the often-overlooked benefits of building this new power plant.
First, the plant will use Mississippi lignite coal – a resource abundant in our state. Mississippi Power will pay lignite owners about $400 million for their coal, creating a windfall for Mississippians’ pocketbooks.
The next commissioner should be mindful of the creation of thousands of jobs needed to both build the plant (estimated at 2,000) and permanently run it (estimated at 1,000 if you count both direct and indirect jobs). More than 400 Mississippi companies have a significant role in the construction of the project. Even state and local coffers will reap the benefits in terms of new tax generation, estimated at $30 million annually for the 40 to 60 year life of the plant.
The Kemper County technology includes a carbon-capture and sequestration component, which is beneficial in two ways: First, Mississippi Power will be able to sell the carbon dioxide and other chemicals to the oil and gas industry for approximately $2 billion over the life of the plant. This revenue source will reduce customers’ bills by the same amount.
Second, capturing carbon emissions reduces Kemper’s carbon footprint, meaning this facility will have the same level of emissions as a natural gas-fired power plant. This is truly clean coal, y’all, and it will set the standard in the United States for clean coal electric generation. It will also create a model for China and India to copy this Mississippi technology to greatly reduce rising CO2 emissions in their countries.
Strident opponents say the next commissioner has to make the “difficult decision” to vote against Mississippi Power and for ratepayers, but I disagree. The next commissioner can and should vote to support reliable energy production with stable rates for decades to come.
My (unsolicited) advice to the next commissioner, whoever he or she may be, is simple: Remember to take the long-term view of projects like Kemper. We know that it’s needed; we know that it’s expensive; but we also know that it’s good for Mississippians in the long-term.
This week, Southern District Public Service Commissioner Leonard Bentz officially resigned to begin his new role as executive director of the South Mississippi Planning and Development District.
While the PSC will meet again in mid-September, the timetable for replacing Bentz is uncertain. The responsibility to appoint a new commissioner rests solely with Gov. Bryant who has given no indication as to who he’ll appoint or when such an announcement would come.
This “in-between” period breeds a lot of speculation and pontification as to who should be picked; where they should come from; and the like. Naturally, I didn’t want to miss this opportunity to give my humble two cents.
While the position pays more than what most Mississippians earn (about $78,000), it also comes with a built-in controversy of sorts: the Mississippi Power coal-gasification plant in Kemper County.
Construction on the plant is nearly complete, but the project hasn’t been without challenges. Internal disagreement within the company coupled with unexpected construction costs resulted in major cost overruns and, frankly, some really bad publicity for Mississippi Power. Now, some fringe opposition groups (including the Sierra Club) are attempting to convince the next commissioner to pull the plug on the whole project.
While “I’m against raising electricity rates” may be a politically expedient talking point, I would caution the next Public Service Commissioner from such a blanket statement. Policymakers – including regulators – better serve the public when they take the long-term view.
Three things we know about Kemper: It’s needed, it’s expensive, and it’s good for Mississippi.
In 2009, the PSC determined that Mississippi Power needed to build a new baseload generation power plant to ensure the company could provide enough electric capacity to serve its customers reliably. In the last 40 years, every time the PSC has found a need for a new baseload power plant, whether by Mississippi Power or Entergy, construction of that plant has resulted in higher rates.
We know we need more power and that it’s going to cost us lots of money in the short-term. Long-term? Capital-intensive projects like power plants typically cause rates to increase, then to level off or decrease. When Entergy built Grand Gulf nuclear reactor, rates increased more than 50 percent; today, this same plant produces the lowest cost baseload electricity in Entergy’s system.
In Kemper’s case, customers are looking at a rate increase of 22 percent – significantly lower than the increase associated with Grand Gulf (a success story) and about two-thirds as much as Mississippi Power had originally projected.
We need the Kemper plant to ensure the lights turn on when you flip the switch, but the next commissioner would be wise to also recognize the often-overlooked benefits of building this new power plant.
First, the plant will use Mississippi lignite coal – a resource abundant in our state. Mississippi Power will pay lignite owners about $400 million for their coal, creating a windfall for Mississippians’ pocketbooks.
The next commissioner should be mindful of the creation of thousands of jobs needed to both build the plant (estimated at 2,000) and permanently run it (estimated at 1,000 if you count both direct and indirect jobs). More than 400 Mississippi companies have a significant role in the construction of the project. Even state and local coffers will reap the benefits in terms of new tax generation, estimated at $30 million annually for the 40 to 60 year life of the plant.
The Kemper County technology includes a carbon-capture and sequestration component, which is beneficial in two ways: First, Mississippi Power will be able to sell the carbon dioxide and other chemicals to the oil and gas industry for approximately $2 billion over the life of the plant. This revenue source will reduce customers’ bills by the same amount.
Second, capturing carbon emissions reduces Kemper’s carbon footprint, meaning this facility will have the same level of emissions as a natural gas-fired power plant. This is truly clean coal, y’all, and it will set the standard in the United States for clean coal electric generation. It will also create a model for China and India to copy this Mississippi technology to greatly reduce rising CO2 emissions in their countries.
Strident opponents say the next commissioner has to make the “difficult decision” to vote against Mississippi Power and for ratepayers, but I disagree. The next commissioner can and should vote to support reliable energy production with stable rates for decades to come.
My (unsolicited) advice to the next commissioner, whoever he or she may be, is simple: Remember to take the long-term view of projects like Kemper. We know that it’s needed; we know that it’s expensive; but we also know that it’s good for Mississippians in the long-term.
Thursday, August 15, 2013
Pension reforms about math, not politics
This week, the American Legislative Exchange Council released its new report, “Keeping the Promise: State Solutions for Government Pension Reform.” I’m a bit of a pension nerd, so I combed through the report with great interest.
Pension obligations can wreak havoc on state and local budgets, as we’ve seen with some high-profile examples (Detroit, for instance, which recently filed bankruptcy). The pension crisis cities and states face arose from decades of bad decisions, including not setting aside enough money each year to pay for retirement costs as well as increasing plan benefits without a corresponding increase in plan revenues.
Couple this with the 2008 market crash in which many retirement plans lost 20 percent of their funds…and it’s not hard to see how we got to the point where pension liabilities across the nation total up to $4 trillion. According to ALEC estimates, that’s enough money to cover a $60,000 salary and benefits package for 625,000 to 1.2 million new elementary school teachers for 20 years.
What struck me as especially poignant in the pension study were the following statements: “[The] pension problem need not be a political debate over the size or scope of government; it is a problem of math. The numbers of today’s pension plans do not add up, and observers on the right, on the left, and in the center agree on this point.”
I couldn’t agree more.
A few years ago, Gov. Haley Barbour tasked a group of business leaders, pension experts, lawyers, retirees, and legislators with looking at Mississippi’s state retirement system. The commission reviewed the retirement system with an eye toward ensuring its long-term health and sustainability, making reasonable recommendations to trim costs without jeopardizing retiree benefits.
But to hear Democrats talk about it, you would have thought that mean old Republican governor was trying to take Grandma Suzie’s retirement check and leave her destitute on the street.
Hogwash.
Let’s examine the facts. The state’s retirement system is not on the verge of collapse, but the trends are worrisome. Because the Legislature increased benefits in the late 1990s and early 2000s but failed to pay for these new costs, the plan has become excessively expensive. The system is costing taxpayers close to $900 million this year (that’s more money than it takes to fund Medicaid), and plan actuaries forecast no taxpayer relief in the foreseeable future. The 2008 market crash only compounded the problem, meaning taxpayers are on the hook for skyrocketing pension costs unless changes are made.
That’s not my opinion; that’s just math.
Reining in the costs of a retirement system is one of the most important challenges facing lawmakers today because everyone has a stake in the problem. As the ALEC report notes, “workers and retirees have a stake. People who pay high taxes are affected, as are people who pay nothing at all. The problem touches all Americans…Why? Money that is obligated to pay for pensions cannot be used to reduce tax rates or fund public programs.”
That’s exactly how big-time Democrat and Rhode Island Treasurer Gina Raimondo sees it. She campaigned on pension reform, successfully pushed it through the state’s general assembly, and defended it as a moral imperative. When asked by a disgruntled employee about her views, she responded, “[Is] it morally right to do nothing and not provide services to the state’s most vulnerable citizens? Yes, sir, I think this [reform] is moral.”
(As an aside, I heard Treasurer Raimondo speak about pension reform during a Pew Center conference a few years ago. Her determination to put Rhode Island on solid financial footing was impressive, and I expect she’ll be on the political scene for quite some time.)
If we don’t rein in the costs of our own state retirement system, I fear we’ll be left without options. To paraphrase Mayor Rahm Emanuel, we’ll have to pick between pensions and police officers; pensions or paved streets; or pensions and public health. That’s not fair to taxpayers, and it certainly isn’t fair to retirees.
As the ALEC report indicates, fixing the problem of unfunded pension liabilities is a difficult task. Legislators must overcome both technical and political challenges; they must understand arcane financial concepts and respond to statutory law, case law, and even constitutional limits. But ultimately, the question of pensions is not just an “obscure topic of interest to actuaries and accountants. It is, rather, an issue with widespread consequences.”
I certainly hope Mississippians – legislators, retirees, state employees, businessmen and women, soccer moms, and even high school graduates – recognize the benefits and necessity of reining in the costs of the state’s retirement plan. Pension reform isn’t about cutting benefits, but rather ensuring retirees get the benefits they were promised. At the end of the day, keeping our promises means making tweaks to the existing program to ensure retirees, state employees, and taxpayers are treated fairly.
This isn’t about some conservative philosophy, nor is it aligned with Democrat principles. This is about protecting the financial security of our retirees, our taxpayers, and our state.
NOTE: Here is a link to the full ALEC report.
Thursday, August 8, 2013
Experts Agree: Reforming government no easy task
*First appeared in the August 8, 2013 edition of the Laurel Chronicle.
A few weeks ago, I set out on a mission to Jackson’s rare and used bookstore (for reference, google “Choctaw Books”) to find something truly unique. While I found something pretty special, I don’t know that I’d call it “unique.”
My purchase was the Report on a Survey of the Organization and Administration of State and County Government in Mississippi, a nearly 1,000-page bound report conducted by the Brookings Institution way back in 1932. (You may recognize this name, as Brookings was the first private organization devoted to the fact-based study of national public policy issues. Today, the organization is heralded as one of the foremost advocates for effective and efficient public service and government operations.)
In the early 30s, the Mississippi Legislature created a citizen-led Research Commission (which included Laurel-native Wallace B. Rogers) to conduct “expert investigation into, and study and analysis of all conditions of the state.” In turn, the Research Commission asked the Brookings Institution to study the state’s processes and make recommendations on reform.
I was reminded of all this last week when I read an editorial calling for state government to increase accountability, efficiency, and transparency. It’s a novel idea, but certainly not a new - nor a unique - one.
The editorial gave a few examples of areas that need reform, including the more than 200 agencies, boards, and commissions that are part of Mississippi's government largesse. Similarly, Brookings opined in 1932 that one of the chief defects in Mississippi's structure was the “scattering of related functions among many offices due to the creation of numerous independent boards and departments with little references to previously established offices...Mississippi finds itself possessed of a large number of more or less independent and uncorrelated agencies.”
Instead of consolidating boards and commissions, as Brookings recommended, eight decades later we’ve seen our boards and commissions grow by 150 percent than at the time the Brookings report was published.
Other recommendations from the 1932 report include converting elected positions, such as State Treasurer and Highway Commissioners, to gubernatorially-appointed positions requiring consent of the Senate.
Another novel, yet historically doomed, idea. Candidates, legislators, and lobbyists have been resistant to this concept.
Mississippians are used to voting on, well, everything. We may not know what the Treasurer does, but we sure as heck want to cast our vote for him or her. It gives us the feeling that "we're in control" but also drives up government costs. For example, our highway system is governed by three commissioners elected from their respective districts. This process can result in fragmented oversight and an apparent lack of accountability (which is likely why most every other state has transitioned to an appointed, not elected, highway commissioner system).
Of course, others have recommended major reforms as well. Especially with the onslaught of the recession, Gov. Barbour proposed major structural changes to the way government operates in order to reduce costs while increasing efficiencies. While some cost-cutting measures were adopted, most of these bold changes met great resistance in the Legislature.
They say the definition of insanity is doing the same thing over and over, yet expecting a different outcome. With that in mind, it seems those of us who believe government can be reformed have a touch of insanity.
But, I think there’s good reason to keep the reform mindset. Unlike when Gov. Barbour was in office, Republicans now have control of the Legislature and have promised real change. Lt. Gov. Tate Reeves appointed Sen. Nancy Collins to head up a newly-created Accountability, Efficiency, and Transparency committee to review creative reform ideas. The House of Representatives created a similar committee, and Gov. Bryant has voiced his support for government reforms.
So far, the Republican-led Legislature has made good on its promise, passing landmark legislation to consolidate certain struggling school districts and reduce the amount of vehicles owned by the state by prohibiting unnecessary car purchases. Together, these laws have saved taxpayer dollars while promoting efficiency.
Let’s hope our policymakers – legislators, agency heads, and government employees – heed the 1932 warning issued by the Brookings Institution that still applies today: “Mississippi can poorly afford to sanction worn-out methods, cumbersome organization, and diffusion of responsibility in its government simply because these conditions have prevailed for years.”
A few weeks ago, I set out on a mission to Jackson’s rare and used bookstore (for reference, google “Choctaw Books”) to find something truly unique. While I found something pretty special, I don’t know that I’d call it “unique.”
My purchase was the Report on a Survey of the Organization and Administration of State and County Government in Mississippi, a nearly 1,000-page bound report conducted by the Brookings Institution way back in 1932. (You may recognize this name, as Brookings was the first private organization devoted to the fact-based study of national public policy issues. Today, the organization is heralded as one of the foremost advocates for effective and efficient public service and government operations.)
In the early 30s, the Mississippi Legislature created a citizen-led Research Commission (which included Laurel-native Wallace B. Rogers) to conduct “expert investigation into, and study and analysis of all conditions of the state.” In turn, the Research Commission asked the Brookings Institution to study the state’s processes and make recommendations on reform.
I was reminded of all this last week when I read an editorial calling for state government to increase accountability, efficiency, and transparency. It’s a novel idea, but certainly not a new - nor a unique - one.
The editorial gave a few examples of areas that need reform, including the more than 200 agencies, boards, and commissions that are part of Mississippi's government largesse. Similarly, Brookings opined in 1932 that one of the chief defects in Mississippi's structure was the “scattering of related functions among many offices due to the creation of numerous independent boards and departments with little references to previously established offices...Mississippi finds itself possessed of a large number of more or less independent and uncorrelated agencies.”
Instead of consolidating boards and commissions, as Brookings recommended, eight decades later we’ve seen our boards and commissions grow by 150 percent than at the time the Brookings report was published.
Other recommendations from the 1932 report include converting elected positions, such as State Treasurer and Highway Commissioners, to gubernatorially-appointed positions requiring consent of the Senate.
Another novel, yet historically doomed, idea. Candidates, legislators, and lobbyists have been resistant to this concept.
Mississippians are used to voting on, well, everything. We may not know what the Treasurer does, but we sure as heck want to cast our vote for him or her. It gives us the feeling that "we're in control" but also drives up government costs. For example, our highway system is governed by three commissioners elected from their respective districts. This process can result in fragmented oversight and an apparent lack of accountability (which is likely why most every other state has transitioned to an appointed, not elected, highway commissioner system).
Of course, others have recommended major reforms as well. Especially with the onslaught of the recession, Gov. Barbour proposed major structural changes to the way government operates in order to reduce costs while increasing efficiencies. While some cost-cutting measures were adopted, most of these bold changes met great resistance in the Legislature.
They say the definition of insanity is doing the same thing over and over, yet expecting a different outcome. With that in mind, it seems those of us who believe government can be reformed have a touch of insanity.
But, I think there’s good reason to keep the reform mindset. Unlike when Gov. Barbour was in office, Republicans now have control of the Legislature and have promised real change. Lt. Gov. Tate Reeves appointed Sen. Nancy Collins to head up a newly-created Accountability, Efficiency, and Transparency committee to review creative reform ideas. The House of Representatives created a similar committee, and Gov. Bryant has voiced his support for government reforms.
So far, the Republican-led Legislature has made good on its promise, passing landmark legislation to consolidate certain struggling school districts and reduce the amount of vehicles owned by the state by prohibiting unnecessary car purchases. Together, these laws have saved taxpayer dollars while promoting efficiency.
Let’s hope our policymakers – legislators, agency heads, and government employees – heed the 1932 warning issued by the Brookings Institution that still applies today: “Mississippi can poorly afford to sanction worn-out methods, cumbersome organization, and diffusion of responsibility in its government simply because these conditions have prevailed for years.”
Thursday, August 1, 2013
Detroit bankruptcy ignites discussions on affordable government pensions
*First appeared in the August 1, 2013 edition of the Laurel Chronicle.
News of Detroit filing for bankruptcy protections shook the financial and political worlds, but I felt their "surprise" at this revelation was hollow. After all, the Wall Street Journal re-affirmed what I had previously assumed: That Detroit's demise has been long-coming.
The Journal recounted that "nearly 70% of parks have been closed since 2008, and four in 10 street lights don't work. The city has cut its police force by 40% in a decade...Detroit residents pay the highest property and income taxes in the state...About 40% of revenues go toward retirement benefits and debt, much of which was issued in the last 10 years to finance pension contributions. Payments on $1.6 billion of pension-related certificates of participation consume nearly every dollar of property tax revenue."
How the Detroit fiasco plays out could have huge implications in how governments deal with unaffordable pension obligations. Forces like unions and creditors have driven governments to a borrow-tax-spend cycle at the expense of taxpayers. As the Journal notes, a Detroit "bankruptcy shows the party is over, as it may also soon be for many other cities."
Oakland, Cali. has the state's highest crime rate yet recently laid off upwards of 100 policemen to fund retirement benefits and pension-obligation bonds. On top of this, the city borrowed another $210 million to finance pensions, putting the municipality in even worse financial straits.
To make up for years of short-changing its retirement fund, Philadelphia, Penn. is currently spending about 20 percent of its budget on pensions. The Journal points out that Philly has raised sales, property, and business taxes, yet the city council is currently discussing using revenues from a one-percentage-point sales tax hike in 2009 intended for schools to finance pensions.
Former Obama White House Chief of Staff turned Chicago Mayor Rahm Emanuel declared recently that "the pension crisis is no longer around the corner; it has arrived at our schools" after the city's public schools announced 2,100 layoffs. Although Chicago (supposedly) is planning to transfer 30,000 retirees on Medicare and the Obamacare exchanges in 2017, all its savings will go toward pension payments which will triple in 2015. The Democrat mayor warned taxpayers that this could mean a 150% spike in property taxes.
According to groups like the Pew Center and Boston College's Center for Retirement Research, pension obligations run into the trillions of dollars (the last estimate I saw was roughly $3 trillion). This means that many governments "have more than likely promised their workers more than they can reasonably expect to deliver," according to the New York Times.
Clearly, pension obligations have the potential to bankrupt cities and states, both large and small. Mississippi, pay attention.
Our state retirement plan is in better condition than these examples, but the trends concern me. Although taxpayers have put significantly more money into the system, its funded status continues to decline. In 2003, the system had a funded status of 79 percent; today that number has dropped to 58 percent. Pension experts consider healthy plans to have a funded status of 80 percent or higher.
These numbers are particularly gloomy, since taxpayers have seen their contributions to the system increase more than 62 percent in the last decade. In Fiscal Year 2013, the state (taxpayers) contributed about $835 million to fund a portion of the retirement system; this level could jump above $900 million in Fiscal Year 2014. That's higher than state financial support for Medicaid!
I don't believe Mississippi's retirement system is on the verge of collapse, but there are warning signs within the system that should be addressed by policymakers, retirement board members, and taxpayers. The current plan is too costly (see above) and puts too large a fiscal burden on taxpayers who are trying to build their own non-government funded nest eggs. Small but important tweaks can be made now to ensure an affordable and sustainable future.
The Economist recently featured an insightful piece on pensions in America, writing that "it may take a financial crisis [like Detroit] for states and cities to face up to the scale of their pension shortfalls. When a crisis occurs, public-sector workers are more likely to accept the need to sacrifice."
In Mississippi, I hope we'd take actions to avoid a crisis rather than let pension obligations escalate to an unsustainable level.
News of Detroit filing for bankruptcy protections shook the financial and political worlds, but I felt their "surprise" at this revelation was hollow. After all, the Wall Street Journal re-affirmed what I had previously assumed: That Detroit's demise has been long-coming.
The Journal recounted that "nearly 70% of parks have been closed since 2008, and four in 10 street lights don't work. The city has cut its police force by 40% in a decade...Detroit residents pay the highest property and income taxes in the state...About 40% of revenues go toward retirement benefits and debt, much of which was issued in the last 10 years to finance pension contributions. Payments on $1.6 billion of pension-related certificates of participation consume nearly every dollar of property tax revenue."
How the Detroit fiasco plays out could have huge implications in how governments deal with unaffordable pension obligations. Forces like unions and creditors have driven governments to a borrow-tax-spend cycle at the expense of taxpayers. As the Journal notes, a Detroit "bankruptcy shows the party is over, as it may also soon be for many other cities."
Oakland, Cali. has the state's highest crime rate yet recently laid off upwards of 100 policemen to fund retirement benefits and pension-obligation bonds. On top of this, the city borrowed another $210 million to finance pensions, putting the municipality in even worse financial straits.
To make up for years of short-changing its retirement fund, Philadelphia, Penn. is currently spending about 20 percent of its budget on pensions. The Journal points out that Philly has raised sales, property, and business taxes, yet the city council is currently discussing using revenues from a one-percentage-point sales tax hike in 2009 intended for schools to finance pensions.
Former Obama White House Chief of Staff turned Chicago Mayor Rahm Emanuel declared recently that "the pension crisis is no longer around the corner; it has arrived at our schools" after the city's public schools announced 2,100 layoffs. Although Chicago (supposedly) is planning to transfer 30,000 retirees on Medicare and the Obamacare exchanges in 2017, all its savings will go toward pension payments which will triple in 2015. The Democrat mayor warned taxpayers that this could mean a 150% spike in property taxes.
According to groups like the Pew Center and Boston College's Center for Retirement Research, pension obligations run into the trillions of dollars (the last estimate I saw was roughly $3 trillion). This means that many governments "have more than likely promised their workers more than they can reasonably expect to deliver," according to the New York Times.
Clearly, pension obligations have the potential to bankrupt cities and states, both large and small. Mississippi, pay attention.
Our state retirement plan is in better condition than these examples, but the trends concern me. Although taxpayers have put significantly more money into the system, its funded status continues to decline. In 2003, the system had a funded status of 79 percent; today that number has dropped to 58 percent. Pension experts consider healthy plans to have a funded status of 80 percent or higher.
These numbers are particularly gloomy, since taxpayers have seen their contributions to the system increase more than 62 percent in the last decade. In Fiscal Year 2013, the state (taxpayers) contributed about $835 million to fund a portion of the retirement system; this level could jump above $900 million in Fiscal Year 2014. That's higher than state financial support for Medicaid!
I don't believe Mississippi's retirement system is on the verge of collapse, but there are warning signs within the system that should be addressed by policymakers, retirement board members, and taxpayers. The current plan is too costly (see above) and puts too large a fiscal burden on taxpayers who are trying to build their own non-government funded nest eggs. Small but important tweaks can be made now to ensure an affordable and sustainable future.
The Economist recently featured an insightful piece on pensions in America, writing that "it may take a financial crisis [like Detroit] for states and cities to face up to the scale of their pension shortfalls. When a crisis occurs, public-sector workers are more likely to accept the need to sacrifice."
In Mississippi, I hope we'd take actions to avoid a crisis rather than let pension obligations escalate to an unsustainable level.
Wednesday, July 24, 2013
Red dirt, political speeches, and cabin dwelling means it's Fair time again
First appeared in the July 25, 2013, of the Laurel Chronicle.
It's that time of year again - The Fair!
No, not the one with the corn dog stands where folks like my brother serve you fried meat on a stick, nor the kind of carnival where the laffy taffy is served up to people like my mother who love its taste but hate its can't-get-it-out-of-your-mouth chewiness.
I'm talking about THE Fair - the one where you're more likely to see a politician's face on a stick (being used to fan his or her political supporters) than fried meat. But hey, this fair has that too.
I'm talking about the Neshoba County Fair, of course, an event revered among the state's political class. The yearly trek to this Mississippi political mecca is made by nearly everyone who considers themselves to be even remotely politically inclined.
When I first dabbled my toe into the state's political waters (see: Barbour For Governor 2003), I had no idea what this supposed "fair" was. To use an old Haley Barbour phrase, I was just a pup back then.
My, how times have changed. These days, it's a rare year when you don't see me clearing my calendar to attend at least one day of the Fair.
The Fair is the hottest (both figuratively and literally) place to be in politics, especially during an election year. In attendance are the Who's Who of political operatives and their elected official bosses; in fact, I'd bet one of the requirements for making the "who's who" list is mandatory attendance. You simply can't be involved in Mississippi politics without a love of the Neshoba County Fair and its hot, steamy, and dusty fairgrounds.
While off-year fairs like this one are sure to be enjoyable, the election year fairs are not to be missed. Incumbent politicians and candidates flood the fairgrounds with campaign push cards, yard signs, and throngs of youngsters wearing "vote for my guy" t-shirts. Sometimes debates between candidates are held. Press conferences are scheduled on the front porches of fair cabins. If you're really lucky, you'll get to see a fight or two between rival campaign staffers who might have sipped a little too much from their red Dixie cups.
The Fair is where political legends are made - or, at the very least, where controversies take hold. At this gathering, politicians are expected to get their hands as dirty as your feet after a day's worth of trekking through the red clay. (Side note: If my years of experience is any indication, Neshoba County has more red clay per capita than any other county in this state, let alone nation.)
One of my favorite off-the-cuff comments is now a bit of Fair legend. It came from - who else? - former Governor Haley Barbour.
In his 2007 re-election campaign, Gov. Barbour was challenged by lawyer John Arthur Eaves, Jr., who was wealthy enough to finance his own campaign but not politically savvy enough to run an effective one. To make it for its lack of effectiveness, the Eaves campaign often made outrageous claims about Gov. Barbour's record in office, going so far as to liken the governor to Biblical "moneychangers in the temple." (I never fully understood that one.)
According to some news reports, the Eaves campaign allegedly told supporters that Eaves' new wife (from his second marriage) would "restore dignity to the governor's mansion."
By the time the Fair rolled around, well, let's just say the Barbour campaign had had enough of this slander, and the Governor's opening comments reflected this frustration. Here's the way it went down:
Governor Barbour, in typical fashion, opened his speech with something along the lines of "Hi, I'm Haley Barbour." He then brought former First Lady Marsha Barbour on stage, thanked her for their 35 years of marriage, and said the following: "That's right. I got my trophy wife the first time."
Bazinga!
The crowd went wild, as I recall, and I watched with both amusement and fascination. Admittedly, there were mixed reactions to this statement later. But it really brought back the flair - the thunder, if you will - of Fair speeches made by politicians from days gone by. Politics isn't for the faint of heart, and speeches at Neshoba aren't for those who are easily offended.
Now, I highly doubt we'll witness any real verbal jabs this year. I chuckled when I read a reporter's comment on Twitter a few days ago, in which she laments that "unless we can get a cage match" between politicians, the Fair "looks a little pale this year."
In case you go - and I highly recommend it - here are a few things to know. First, know your schedule (which can be found on neshobacountyfair.org). The political speaking lasts a couple of days, and you can catch folks like Lt. Gov. Tate Reeves and State Auditor Stacey Pickering on Wednesday, July 31. Gov. Bryant along with Speaker Philip Gunn will be speaking the following day, along with a litany of other elected officials.
Second, make friends. Fair regulars all know each other (I'm not kidding), especially those who have cabins on the fairgrounds. Cabin dwellers have established Fair communities closer knit than their neighborhoods back home. Endeavor to make friends at the Fair because it's easy...and beneficial. You'll find kindred spirits in fellow fair-goers and, if you're lucky, free food and drink. After all, that is the Fair way.
Third, despite my gushing about Fair politics, this event really is for everyone, not just the politicos. The Fair's schedule includes arts and craft shows, horse races, a beauty pageant, concerts, and even an all-night gospel sing. Who can forget the traditional fair part - rides, lemonade stands, corn dog sellers, and cotton candy?
Whether your interest is political or you're simply looking to experience something uniquely Mississippi, the Neshoba County Fair is the place for you. It's political; it's relational; it's gustational; it is, quite simply, magical.
It's that time of year again - The Fair!
No, not the one with the corn dog stands where folks like my brother serve you fried meat on a stick, nor the kind of carnival where the laffy taffy is served up to people like my mother who love its taste but hate its can't-get-it-out-of-your-mouth chewiness.
I'm talking about THE Fair - the one where you're more likely to see a politician's face on a stick (being used to fan his or her political supporters) than fried meat. But hey, this fair has that too.
I'm talking about the Neshoba County Fair, of course, an event revered among the state's political class. The yearly trek to this Mississippi political mecca is made by nearly everyone who considers themselves to be even remotely politically inclined.
When I first dabbled my toe into the state's political waters (see: Barbour For Governor 2003), I had no idea what this supposed "fair" was. To use an old Haley Barbour phrase, I was just a pup back then.
My, how times have changed. These days, it's a rare year when you don't see me clearing my calendar to attend at least one day of the Fair.
The Fair is the hottest (both figuratively and literally) place to be in politics, especially during an election year. In attendance are the Who's Who of political operatives and their elected official bosses; in fact, I'd bet one of the requirements for making the "who's who" list is mandatory attendance. You simply can't be involved in Mississippi politics without a love of the Neshoba County Fair and its hot, steamy, and dusty fairgrounds.
While off-year fairs like this one are sure to be enjoyable, the election year fairs are not to be missed. Incumbent politicians and candidates flood the fairgrounds with campaign push cards, yard signs, and throngs of youngsters wearing "vote for my guy" t-shirts. Sometimes debates between candidates are held. Press conferences are scheduled on the front porches of fair cabins. If you're really lucky, you'll get to see a fight or two between rival campaign staffers who might have sipped a little too much from their red Dixie cups.
The Fair is where political legends are made - or, at the very least, where controversies take hold. At this gathering, politicians are expected to get their hands as dirty as your feet after a day's worth of trekking through the red clay. (Side note: If my years of experience is any indication, Neshoba County has more red clay per capita than any other county in this state, let alone nation.)
One of my favorite off-the-cuff comments is now a bit of Fair legend. It came from - who else? - former Governor Haley Barbour.
In his 2007 re-election campaign, Gov. Barbour was challenged by lawyer John Arthur Eaves, Jr., who was wealthy enough to finance his own campaign but not politically savvy enough to run an effective one. To make it for its lack of effectiveness, the Eaves campaign often made outrageous claims about Gov. Barbour's record in office, going so far as to liken the governor to Biblical "moneychangers in the temple." (I never fully understood that one.)
According to some news reports, the Eaves campaign allegedly told supporters that Eaves' new wife (from his second marriage) would "restore dignity to the governor's mansion."
By the time the Fair rolled around, well, let's just say the Barbour campaign had had enough of this slander, and the Governor's opening comments reflected this frustration. Here's the way it went down:
Governor Barbour, in typical fashion, opened his speech with something along the lines of "Hi, I'm Haley Barbour." He then brought former First Lady Marsha Barbour on stage, thanked her for their 35 years of marriage, and said the following: "That's right. I got my trophy wife the first time."
Bazinga!
The crowd went wild, as I recall, and I watched with both amusement and fascination. Admittedly, there were mixed reactions to this statement later. But it really brought back the flair - the thunder, if you will - of Fair speeches made by politicians from days gone by. Politics isn't for the faint of heart, and speeches at Neshoba aren't for those who are easily offended.
Now, I highly doubt we'll witness any real verbal jabs this year. I chuckled when I read a reporter's comment on Twitter a few days ago, in which she laments that "unless we can get a cage match" between politicians, the Fair "looks a little pale this year."
In case you go - and I highly recommend it - here are a few things to know. First, know your schedule (which can be found on neshobacountyfair.org). The political speaking lasts a couple of days, and you can catch folks like Lt. Gov. Tate Reeves and State Auditor Stacey Pickering on Wednesday, July 31. Gov. Bryant along with Speaker Philip Gunn will be speaking the following day, along with a litany of other elected officials.
Second, make friends. Fair regulars all know each other (I'm not kidding), especially those who have cabins on the fairgrounds. Cabin dwellers have established Fair communities closer knit than their neighborhoods back home. Endeavor to make friends at the Fair because it's easy...and beneficial. You'll find kindred spirits in fellow fair-goers and, if you're lucky, free food and drink. After all, that is the Fair way.
Third, despite my gushing about Fair politics, this event really is for everyone, not just the politicos. The Fair's schedule includes arts and craft shows, horse races, a beauty pageant, concerts, and even an all-night gospel sing. Who can forget the traditional fair part - rides, lemonade stands, corn dog sellers, and cotton candy?
Whether your interest is political or you're simply looking to experience something uniquely Mississippi, the Neshoba County Fair is the place for you. It's political; it's relational; it's gustational; it is, quite simply, magical.
Big Brother needs Big Transparency
First appeared in the July 18, 2013, edition of the Laurel Chronicle.
Last week in this column, I wrote about Glenn Greenwald, the journalist who broke the National Security Agency (NSA) government spying story, with a particular focus on his personal story of success. Let’s continue that conversation, only this time we’ll focus on what really matters: Life, liberty, and the pursuit of…surveillance?
I must admit: Watching the news lately is like being inside a spy drama, except it’s not so easy to tell who the good guys and bad guys are. But this is no ordinary spy drama; indeed, it’s got elements of those futuristic novels we all read in high school (do they even teach those anymore?) that show a world where citizens’ actions are monitored, free thought is considered a crime, and everyone wears white jumpsuits.
I guess I wasn’t the only one who noticed these eerie similarities. Sales of the classic George Orwell novel, 1984, spiked after the NSA surveillance news broke, increasing more than 10,000% on Amazon.
Whoa.
Of course, that was precisely my reaction when I first heard about the NSA’s surveillance activities. To summarize what we all (think) we know by now: The NSA has been tracking phone calls, emails, photos, search histories, and other data in a sweeping program aimed at gathering data on potential threats to America’s national security. The information is being collected whether or not the citizen is suspected of any wrongdoing. The targets include folks like you, me, your grandmother, and the crazy cat lady next door.
A number of top internet companies, including Google, Yahoo, Facebook, Apple, and others, are also involved in the program. The extent of their involvement has mostly been kept under wraps due to a gag order, although this week Microsoft was the latest company to ask Obama’s Department of Justice to lift the gag order.
"The Constitution itself is suffering, and it will take the personal involvement of [U.S. Attorney General Eric Holder] or the President to set things right,” wrote Brad Smith, general counsel and executive vice president at Microsoft. Companies like Google and Yahoo are asking for similar freedom to prove to consumers they made efforts to protect the privacy of user data. Turning over emails and other records to the government isn’t so great for company PR.
My concern is the continual creep of the government into my personal activities. The Wall Street Journal said it best when they observed: “Americans would worry less about the government spying on them if, for example, the Justice Department wasn't secretly spying on the Associated Press and Fox News. Or if the IRS wasn't targeting White House critics. Or if the Administration in general showed a higher regard for the law when it conflicts with its policy preferences."
Today, we know the government is watching us, which causes me a great deal of concern. But if you find yourself unconcerned or confused about these programs, then you’re not alone.
One poll from Time/ABT-SRBI conducted on the topic showed mixed results, with many respondents thinking the government’s surveillance efforts have gone too far. Another poll by ABC/Washington Post showed that Americans are split down the middle when it comes to collecting “telephone and Internet data as part of anti-terrorism efforts." Importantly, roughly 90 percent of respondents said they have less privacy than previous generations when it comes to personal information.
The public policy blog of the American Enterprise Institute concluded that “most Americans seem willing to trade some privacy for security, but are unsure about the right combination.”
That seems like a fair observation. Americans are unclear as to how they feel because, I believe, they don’t have enough information to make a well-informed decision.
Consider one congressman who said that journalist Glenn Greenwald didn’t “have a clue” how the NSA program worked. In a tweeted response, Greenwald replied: “That’s why transparency is needed.”
I agree. We need more transparency from the President and his administration on this issue. We need to better understand how these programs operate. We need answers on why the NSA director's approach to citizens' data is "collect it all" as the Washington Post intimated this week. We need answers on how that's legal and not a violation of our constitutional rights. We need to understand why there are “secret courts” that make rulings on these issues. And so on and so forth.
I can't help but think of what our President said in the wake of this controversy: "You can't have 100 percent security and also then have 100 percent privacy and zero inconvenience."
The unfortunate reality is that we're never going to have 100 percent of either. We can't ensure the nation's safety against all threats, nor can we expect to maintain full privacy in an increasing digital world. But what we can have is more transparency. If Big Brother keeps on growing, so too should Big Transparency. Your freedom depends on it.
Last week in this column, I wrote about Glenn Greenwald, the journalist who broke the National Security Agency (NSA) government spying story, with a particular focus on his personal story of success. Let’s continue that conversation, only this time we’ll focus on what really matters: Life, liberty, and the pursuit of…surveillance?
I must admit: Watching the news lately is like being inside a spy drama, except it’s not so easy to tell who the good guys and bad guys are. But this is no ordinary spy drama; indeed, it’s got elements of those futuristic novels we all read in high school (do they even teach those anymore?) that show a world where citizens’ actions are monitored, free thought is considered a crime, and everyone wears white jumpsuits.
I guess I wasn’t the only one who noticed these eerie similarities. Sales of the classic George Orwell novel, 1984, spiked after the NSA surveillance news broke, increasing more than 10,000% on Amazon.
Whoa.
Of course, that was precisely my reaction when I first heard about the NSA’s surveillance activities. To summarize what we all (think) we know by now: The NSA has been tracking phone calls, emails, photos, search histories, and other data in a sweeping program aimed at gathering data on potential threats to America’s national security. The information is being collected whether or not the citizen is suspected of any wrongdoing. The targets include folks like you, me, your grandmother, and the crazy cat lady next door.
A number of top internet companies, including Google, Yahoo, Facebook, Apple, and others, are also involved in the program. The extent of their involvement has mostly been kept under wraps due to a gag order, although this week Microsoft was the latest company to ask Obama’s Department of Justice to lift the gag order.
"The Constitution itself is suffering, and it will take the personal involvement of [U.S. Attorney General Eric Holder] or the President to set things right,” wrote Brad Smith, general counsel and executive vice president at Microsoft. Companies like Google and Yahoo are asking for similar freedom to prove to consumers they made efforts to protect the privacy of user data. Turning over emails and other records to the government isn’t so great for company PR.
My concern is the continual creep of the government into my personal activities. The Wall Street Journal said it best when they observed: “Americans would worry less about the government spying on them if, for example, the Justice Department wasn't secretly spying on the Associated Press and Fox News. Or if the IRS wasn't targeting White House critics. Or if the Administration in general showed a higher regard for the law when it conflicts with its policy preferences."
Today, we know the government is watching us, which causes me a great deal of concern. But if you find yourself unconcerned or confused about these programs, then you’re not alone.
One poll from Time/ABT-SRBI conducted on the topic showed mixed results, with many respondents thinking the government’s surveillance efforts have gone too far. Another poll by ABC/Washington Post showed that Americans are split down the middle when it comes to collecting “telephone and Internet data as part of anti-terrorism efforts." Importantly, roughly 90 percent of respondents said they have less privacy than previous generations when it comes to personal information.
The public policy blog of the American Enterprise Institute concluded that “most Americans seem willing to trade some privacy for security, but are unsure about the right combination.”
That seems like a fair observation. Americans are unclear as to how they feel because, I believe, they don’t have enough information to make a well-informed decision.
Consider one congressman who said that journalist Glenn Greenwald didn’t “have a clue” how the NSA program worked. In a tweeted response, Greenwald replied: “That’s why transparency is needed.”
I agree. We need more transparency from the President and his administration on this issue. We need to better understand how these programs operate. We need answers on why the NSA director's approach to citizens' data is "collect it all" as the Washington Post intimated this week. We need answers on how that's legal and not a violation of our constitutional rights. We need to understand why there are “secret courts” that make rulings on these issues. And so on and so forth.
I can't help but think of what our President said in the wake of this controversy: "You can't have 100 percent security and also then have 100 percent privacy and zero inconvenience."
The unfortunate reality is that we're never going to have 100 percent of either. We can't ensure the nation's safety against all threats, nor can we expect to maintain full privacy in an increasing digital world. But what we can have is more transparency. If Big Brother keeps on growing, so too should Big Transparency. Your freedom depends on it.
Thursday, July 11, 2013
On lawyers, government spying, and the NYC garment industry
*First appeared in the July 11, 2013 edition of the Laurel Chronicle
When I read a bio on Glenn Greenwald, the columnist and lawyer who most recently achieved international fame (or infamy, depending on your perspective) for his role in revealing the government’s spying on law-abiding Americans, I couldn’t help but wonder: Did the New York garment industry lead to all of this?
Let me explain.
Greenwald’s bio, in short: He was a Constitutional and civil rights litigator and has authored several New York Times bestselling books. He formerly wrote for Salon and currently writes for that paper across the pond, The Guardian. By all accounts, he’s an eccentric yet highly capable individual who often finds himself at odds with both sides of the political aisle.
What really caught my eye was the high-powered law firm, Wachtell, Lipton, Rosen, & Katz, where Greenwald began his litigation career. WLR&K is one of the most prestigious merger and acquisition firms in the nation where getting hired is a “small miracle.” Its website boldly declares: “We handle some of the largest, most complex and demanding transactions in the United States and around the world…We are thought leaders.”
To understand the culture of this law firm, we must go back – way back – to the New York garment industry…that is, if we give any credence to sociologist and author Malcolm Gladwell’s theory on success.
In his national bestseller Outliers, Gladwell argues that an individual’s success is not only tied to personal aptitude and drive, but also to external factors such as history, community, and opportunity. In one chapter, he focuses on how top law firm Wachtell, Lipton, Rosen, & Katz was founded through a combination of unlikely factors.
First, the partners were Jewish, meaning they weren’t considered hirable by the old-line Wall Street firms in the 50s. Often boxed out because of their “antecedents,” Jewish lawyers had to stick together and take whatever legal work the “respectable” corporate firms didn’t want. Turns out, what the old-line firms didn’t want was litigation work, particularly hostile corporate takeovers. That left only one option: firms like WLR&K.
Second, the partners enjoyed a bit of demographic luck, having been born during the “demographic trough” of the 1930s. The economic hardship of the Depression meant fewer families were having children, and the resulting generation was significantly smaller. This meant our four founding partners enjoyed smaller class sizes through grade school, which promoted their educational growth, and highly qualified teachers, since teaching was considered a high-status career in a post-Depression America.
Finally, the garment industry provided a way for New York Jewish families to make a living while honing business skills. Looking way, way back, European Jews had for centuries clustered in cities and took up urban trades and professions. The most prevalent of these lay in the clothing trade – a skill Jewish immigrants brought to the American land of opportunity.
From the late nineteenth century through the middle of the twentieth century, New York’s most economically vibrant industry was the garment trade, driven in large part by the Jewish communities. The industry provided a modest living and another benefit: It was, as Gladwell says, “explicitly entrepreneurial.” Jewish clothing makers were learning market research, manufacturing, and negotiation techniques.
You won’t be surprised to learn, then, that our founding partners grew up in households built on the garment industry: Wachtell’s dad was in the ladies’ undergarment business; Lipton’s father was a manger in a factory; Rosen’s father was a presser in Manhattan’s garment district; and Katz’s grandfather did sewing piecework out of his house. The entrepreneurial skills of the garment industry helped these young legal minds develop a wildly successful law practice.
Fast forward to 2013, when former WLR&K lawyer Glenn Greenwald drops a bombshell on the nation – nay, the world – by breaking the year’s most important story: The U.S. government is spying on citizens by collecting phone and internet records, emails, and other forms of communications…regardless of whether we Americans are suspected of any wrongdoing.
Greenwald broke the story because he gained the confidence of Edward Snowden, a former U.S. defense contractor who read Greenwald’s work and understood his passion for liberty. Snowden’s familiarity with Greenwald was made possible by outlets like Salon and The Guardian, which gave him a worldwide audience. These news outlets hired Greenwald after reading his blog entries on the legality of government spying – an area where Greenwald had gained expertise through litigating cases at a law firm he founded. Greenwald was able to found his own practice after learning the legal tricks of the trade at WLR&K, a firm which, as we’ve learned, owes its very existence in no small part to NYC’s garment industry.
As a real-life “outlier,” Greenwald’s life tracks nicely with Gladwell’s theory on success – the measure of which is subjective, of course. But I’m betting Greenwald’s gold standard is to have citizens call into question the proper role of the government in the areas of national security and preservation of personal liberties.
In that case, I guess I’m a Greenwald success story.
NOTE: Major h/t to Malcolm Gladwell, whose writing made this column possible. Read more about him. Or, read more about his book, Outliers.
When I read a bio on Glenn Greenwald, the columnist and lawyer who most recently achieved international fame (or infamy, depending on your perspective) for his role in revealing the government’s spying on law-abiding Americans, I couldn’t help but wonder: Did the New York garment industry lead to all of this?
Let me explain.
Greenwald’s bio, in short: He was a Constitutional and civil rights litigator and has authored several New York Times bestselling books. He formerly wrote for Salon and currently writes for that paper across the pond, The Guardian. By all accounts, he’s an eccentric yet highly capable individual who often finds himself at odds with both sides of the political aisle.
What really caught my eye was the high-powered law firm, Wachtell, Lipton, Rosen, & Katz, where Greenwald began his litigation career. WLR&K is one of the most prestigious merger and acquisition firms in the nation where getting hired is a “small miracle.” Its website boldly declares: “We handle some of the largest, most complex and demanding transactions in the United States and around the world…We are thought leaders.”
To understand the culture of this law firm, we must go back – way back – to the New York garment industry…that is, if we give any credence to sociologist and author Malcolm Gladwell’s theory on success.
In his national bestseller Outliers, Gladwell argues that an individual’s success is not only tied to personal aptitude and drive, but also to external factors such as history, community, and opportunity. In one chapter, he focuses on how top law firm Wachtell, Lipton, Rosen, & Katz was founded through a combination of unlikely factors.
First, the partners were Jewish, meaning they weren’t considered hirable by the old-line Wall Street firms in the 50s. Often boxed out because of their “antecedents,” Jewish lawyers had to stick together and take whatever legal work the “respectable” corporate firms didn’t want. Turns out, what the old-line firms didn’t want was litigation work, particularly hostile corporate takeovers. That left only one option: firms like WLR&K.
Second, the partners enjoyed a bit of demographic luck, having been born during the “demographic trough” of the 1930s. The economic hardship of the Depression meant fewer families were having children, and the resulting generation was significantly smaller. This meant our four founding partners enjoyed smaller class sizes through grade school, which promoted their educational growth, and highly qualified teachers, since teaching was considered a high-status career in a post-Depression America.
Finally, the garment industry provided a way for New York Jewish families to make a living while honing business skills. Looking way, way back, European Jews had for centuries clustered in cities and took up urban trades and professions. The most prevalent of these lay in the clothing trade – a skill Jewish immigrants brought to the American land of opportunity.
From the late nineteenth century through the middle of the twentieth century, New York’s most economically vibrant industry was the garment trade, driven in large part by the Jewish communities. The industry provided a modest living and another benefit: It was, as Gladwell says, “explicitly entrepreneurial.” Jewish clothing makers were learning market research, manufacturing, and negotiation techniques.
You won’t be surprised to learn, then, that our founding partners grew up in households built on the garment industry: Wachtell’s dad was in the ladies’ undergarment business; Lipton’s father was a manger in a factory; Rosen’s father was a presser in Manhattan’s garment district; and Katz’s grandfather did sewing piecework out of his house. The entrepreneurial skills of the garment industry helped these young legal minds develop a wildly successful law practice.
Fast forward to 2013, when former WLR&K lawyer Glenn Greenwald drops a bombshell on the nation – nay, the world – by breaking the year’s most important story: The U.S. government is spying on citizens by collecting phone and internet records, emails, and other forms of communications…regardless of whether we Americans are suspected of any wrongdoing.
Greenwald broke the story because he gained the confidence of Edward Snowden, a former U.S. defense contractor who read Greenwald’s work and understood his passion for liberty. Snowden’s familiarity with Greenwald was made possible by outlets like Salon and The Guardian, which gave him a worldwide audience. These news outlets hired Greenwald after reading his blog entries on the legality of government spying – an area where Greenwald had gained expertise through litigating cases at a law firm he founded. Greenwald was able to found his own practice after learning the legal tricks of the trade at WLR&K, a firm which, as we’ve learned, owes its very existence in no small part to NYC’s garment industry.
As a real-life “outlier,” Greenwald’s life tracks nicely with Gladwell’s theory on success – the measure of which is subjective, of course. But I’m betting Greenwald’s gold standard is to have citizens call into question the proper role of the government in the areas of national security and preservation of personal liberties.
In that case, I guess I’m a Greenwald success story.
NOTE: Major h/t to Malcolm Gladwell, whose writing made this column possible. Read more about him. Or, read more about his book, Outliers.
Friday, July 5, 2013
From MDES to Medicaid, legislators no strangers to reauthorization fights
*First appeared in the Laurel Chronicle on July 4, 2013
The recent debate in Jackson on whether the state should expand its taxpayer-funded Medicaid program in accordance with the Affordable Care Act (ACA; also known as “Obamacare”) brought back certain legislative memories.
Call me crazy, but there seems to be a trend – both in the way D.C. promotes adoption of its policies under the current president and the way in which Mississippi legislators use repealers to their political advantage.
Consider the way in which Medicaid expansion is pitched to the states by President Obama. States can expand Medicaid eligibility and add thousands of beneficiaries to the rolls, but it won’t cost one cent…at least not yet. It’s the “expand now, pay later” scenario so popular with this administration. More on that later.
In the special session which ended this weekend, the Legislature reauthorized Medicaid so that it legally exists to provide health insurance to the state’s poor. (Sidebar: Generally speaking, state agencies and other programs have repeal dates, much like expiration dates, which must be acted on by the Legislature lest the programs shutdown.)
The reauthorization process didn’t come without controversy, however, as Democrats and Republicans fought over whether Mississippi should expand its Medicaid program. Ultimately, Republicans got their way, and the Legislature reauthorized the program without expanding it. Expansion may happen in the future, of course, but Republicans took the prudent approach in delaying major changes until more information about the ACA is known.
A look at yesteryear may shed light on why the most recent Medicaid reauthorization debate – and the threats about the program being shutdown - shouldn’t surprise anyone who follows the Obama Administration and Mississippi politics in general.
I’m reminded of another initiative the Administration and its allies tried to implement in Mississippi. A lesser known part of Obama’s famous stimulus package, the Unemployment Insurance Modernization Act gave states “free” money to expand unemployment programs. If states adopted certain policies, such as paying unemployment compensation to individuals who worked part-time, the federal government would pay for any additional costs– at least, temporarily. Sound familiar?
Since unemployment insurance was part of my policy portfolio, I spent a great deal of time working on this issue for former Gov. Barbour. His opposition to expanding the state’s unemployment program was shared by Republicans in the Legislature who recognized this regulation change would have created additional taxes on businesses once the stimulus money ran out.
Democrats disagreed and refused to reauthorize the Mississippi Department of Employment Security. While Democrats toted the water for the President’s liberal unemployment programs, the future of MDES, its employees, and others – such as unemployment insurance recipients and workforce trainees – was in jeopardy.
Ultimately, Gov. Barbour was able to negotiate a compromise to reauthorize the agency without expanding eligibility to part-time workers.
But, that wasn’t the first time Democrats used MDES as a pawn in legislative games. In fact, when MDES’s repealer came up in the 2008 session, Democrats refused to approve its reauthorization until Republicans agreed to increase the state’s unemployment benefits. The agency was eventually reauthorized in a special session Gov. Barbour called to deal with the issue.
In recent history, we’ve seen Democrats threaten the very existence of state agencies as a negotiation tactic to push the agenda they share with President Obama – even if it results in tax increases or additional costs to the state.
But to solely blame Democrats is a bit misleading, as both parties are guilty of using Machiavellian legislative tactics to achieve their goals, whether that’s actually making a policy change or simply raising the public’s awareness of an issue.
So, I guess my real point is this: The recent fight over Medicaid expansion is just one more example of current political trends in D.C. and Jackson.
The trend coming out of D.C. is Obama’s fondness for the “no money up front” pitch in which states can opt into expanded programs without additional costs…until a few years down the road, when the expanded programs (Medicaid, unemployment insurance, etc.) are simply too established to repeal. It’s actually a clever strategy, when it works.
The trend coming out of Jackson is one that’s been going on since before I joined the motley crue of Magnolia State politicos, and it is simple: The Mississippi Legislature loves a repealer. Seriously, check nearly any law that establishes an agency or a new program, and there will be a section that calls for the abolishment of the program on a date certain…unless the Legislature acts.
In theory, this provides a strategic advantage for legislators who threaten to shut down the agency unless certain conditions are met. But in practice, as I’ve witnessed, shutting down a government program is the exception, not the rule…even if the headlines scream differently.
The recent debate in Jackson on whether the state should expand its taxpayer-funded Medicaid program in accordance with the Affordable Care Act (ACA; also known as “Obamacare”) brought back certain legislative memories.
Call me crazy, but there seems to be a trend – both in the way D.C. promotes adoption of its policies under the current president and the way in which Mississippi legislators use repealers to their political advantage.
Consider the way in which Medicaid expansion is pitched to the states by President Obama. States can expand Medicaid eligibility and add thousands of beneficiaries to the rolls, but it won’t cost one cent…at least not yet. It’s the “expand now, pay later” scenario so popular with this administration. More on that later.
In the special session which ended this weekend, the Legislature reauthorized Medicaid so that it legally exists to provide health insurance to the state’s poor. (Sidebar: Generally speaking, state agencies and other programs have repeal dates, much like expiration dates, which must be acted on by the Legislature lest the programs shutdown.)
The reauthorization process didn’t come without controversy, however, as Democrats and Republicans fought over whether Mississippi should expand its Medicaid program. Ultimately, Republicans got their way, and the Legislature reauthorized the program without expanding it. Expansion may happen in the future, of course, but Republicans took the prudent approach in delaying major changes until more information about the ACA is known.
A look at yesteryear may shed light on why the most recent Medicaid reauthorization debate – and the threats about the program being shutdown - shouldn’t surprise anyone who follows the Obama Administration and Mississippi politics in general.
I’m reminded of another initiative the Administration and its allies tried to implement in Mississippi. A lesser known part of Obama’s famous stimulus package, the Unemployment Insurance Modernization Act gave states “free” money to expand unemployment programs. If states adopted certain policies, such as paying unemployment compensation to individuals who worked part-time, the federal government would pay for any additional costs– at least, temporarily. Sound familiar?
Since unemployment insurance was part of my policy portfolio, I spent a great deal of time working on this issue for former Gov. Barbour. His opposition to expanding the state’s unemployment program was shared by Republicans in the Legislature who recognized this regulation change would have created additional taxes on businesses once the stimulus money ran out.
Democrats disagreed and refused to reauthorize the Mississippi Department of Employment Security. While Democrats toted the water for the President’s liberal unemployment programs, the future of MDES, its employees, and others – such as unemployment insurance recipients and workforce trainees – was in jeopardy.
Ultimately, Gov. Barbour was able to negotiate a compromise to reauthorize the agency without expanding eligibility to part-time workers.
But, that wasn’t the first time Democrats used MDES as a pawn in legislative games. In fact, when MDES’s repealer came up in the 2008 session, Democrats refused to approve its reauthorization until Republicans agreed to increase the state’s unemployment benefits. The agency was eventually reauthorized in a special session Gov. Barbour called to deal with the issue.
In recent history, we’ve seen Democrats threaten the very existence of state agencies as a negotiation tactic to push the agenda they share with President Obama – even if it results in tax increases or additional costs to the state.
But to solely blame Democrats is a bit misleading, as both parties are guilty of using Machiavellian legislative tactics to achieve their goals, whether that’s actually making a policy change or simply raising the public’s awareness of an issue.
So, I guess my real point is this: The recent fight over Medicaid expansion is just one more example of current political trends in D.C. and Jackson.
The trend coming out of D.C. is Obama’s fondness for the “no money up front” pitch in which states can opt into expanded programs without additional costs…until a few years down the road, when the expanded programs (Medicaid, unemployment insurance, etc.) are simply too established to repeal. It’s actually a clever strategy, when it works.
The trend coming out of Jackson is one that’s been going on since before I joined the motley crue of Magnolia State politicos, and it is simple: The Mississippi Legislature loves a repealer. Seriously, check nearly any law that establishes an agency or a new program, and there will be a section that calls for the abolishment of the program on a date certain…unless the Legislature acts.
In theory, this provides a strategic advantage for legislators who threaten to shut down the agency unless certain conditions are met. But in practice, as I’ve witnessed, shutting down a government program is the exception, not the rule…even if the headlines scream differently.
Thursday, June 27, 2013
Budget surplus: Old “problem” in new economy
*First appeared in the Laurel Chronicle on June 27, 2013
About the same time the economy collapsed, I began working in earnest on the state’s budget as part of Gov. Barbour’s budget policy team. (Note: There was no correlation between my working on the budget & dwindling tax revenues.)
In 2007, Mississippi’s fiscal situation was beginning to crumble: After enjoying years of healthy revenue growth, Mississippi’s collections tanked alongside the rest of the states’.
To get a sense of the impending financial doom, read from Gov. Barbour’s executive budget recommendation for Fiscal Year 2009: “We have to recognize the national economy has been softening. Serious troubles in the financial markets have not only generated pessimism but also have caused a real credit crunch…This will require considerable budget discipline. It means we’ll have to tell some people ‘No;’ it means some good things won’t get funded or won’t get as much funding as some people would like.”
The week before the FY 2009 budget recommendation was published, the front page of the Wall Street Journal had proclaimed, “States prepare to tighten belts as growth in revenue slows.” And the State Economist at the time warned lawmakers that sales tax receipts for July through December 2007 (the first half of the FY 2008 fiscal year) had increased only one-tenth of one percent.
For comparison purposes, consider the following: Gov. Barbour had proposed to increase spending in FY 2008 (the year before the downturn) by 7.5 percent; in FY 2009, he proposed a cautionary 0.4 percent increase.
Although the Legislature and Governor approved a modest budget to prepare for the downturn, it wasn’t enough. Lower-than-expected revenues forced Gov. Barbour to trim spending by $200 million in FY 2009. The sluggish economy required the Governor to cut the following year’s budget five times, or a reduction of $466 million in FY 2010.
Since that time, budgetary caution has been the name of the spending game…until now, perhaps. Earlier this month, we learned the state was on its way to a budget surplus for the current fiscal year, which ends this weekend (June 30). The House Appropriations chairman told another newspaper the surplus would likely be a “substantial” amount around $300 million.
As a friend of mine would say, that’s a lot of skrilla (translation: money).
Just think – Gov. Barbour’s first round of cuts in FY 2010 was roughly $171.9 million. Fast-forward to FY 2013 when the state’s tax collections for May exceeded the estimate by the same amount.
We must remember that for the last five or so years, lawmakers have rightly weighed spending against anemic revenue growth to determine budgeting priorities. A budget surplus? Well, that’s a new one on the current class at the State Capitol.
Already, groups are laying claim to the money. The Parents’ Campaign, which lobbies for education funding, sent an email blast to its members asking them to contact their legislators: “Ask them to commit to using the surplus to fully fund the MAEP before it is spent on other things.” (MAEP is the formula used to determine how much money goes to schools.)
At their annual meeting two weeks ago, Mississippi supervisors talked about the need to find additional money for programs like healthcare implementation and homestead exemption. There’s a legislative task force aimed at finding additional revenue for our state’s highway infrastructure. No one can ignore the rising costs of programs like Medicaid and the state retirement system, both of which will gobble up additional revenue.
For a few years, the Capitol-types (lobbyists, state agencies, etc.) recognized they simply weren’t going to get as much money as they wanted – if they got any at all. Policymakers were open to considering cost-cutting reform measures because they had to be. Now, with a budget surplus on the horizon, that mindset will likely vanish. Legislators, especially those on the money committees, can expect a little extra attention during the coming session.
Legislators can use the surplus in three ways: 1) increase funding for priority areas, like education; 2) reduce taxes to spur growth; and 3) set aside money for a “rainy day.” A likely scenario includes some combination of these options.
Until a final budget is adopted, legislators should be prepared for an onslaught of new spending options. Emboldened by a revenue surplus, state agencies and lobbyists will fight tooth and nail for a larger piece of the budgetary pie. While some of the longer-serving lawmakers remember the pre-recessionary days when revenue wasn’t as tight, a large part of the current class isn’t used to this much money – or the pressures that come with it.
It’s an old problem, for sure, but the reality is that Mississippi isn’t in the clear yet. While our revenues may be higher than expected, our economic picture is still slow to brighten. According to the latest stats, the state’s unemployment rate was tied for the second-highest in the nation with close to 120,000 Mississippians unemployed. Getting people back to work will take time, and revenues won’t fully catch back up until the employment situation bounces back.
About the same time the economy collapsed, I began working in earnest on the state’s budget as part of Gov. Barbour’s budget policy team. (Note: There was no correlation between my working on the budget & dwindling tax revenues.)
In 2007, Mississippi’s fiscal situation was beginning to crumble: After enjoying years of healthy revenue growth, Mississippi’s collections tanked alongside the rest of the states’.
To get a sense of the impending financial doom, read from Gov. Barbour’s executive budget recommendation for Fiscal Year 2009: “We have to recognize the national economy has been softening. Serious troubles in the financial markets have not only generated pessimism but also have caused a real credit crunch…This will require considerable budget discipline. It means we’ll have to tell some people ‘No;’ it means some good things won’t get funded or won’t get as much funding as some people would like.”
The week before the FY 2009 budget recommendation was published, the front page of the Wall Street Journal had proclaimed, “States prepare to tighten belts as growth in revenue slows.” And the State Economist at the time warned lawmakers that sales tax receipts for July through December 2007 (the first half of the FY 2008 fiscal year) had increased only one-tenth of one percent.
For comparison purposes, consider the following: Gov. Barbour had proposed to increase spending in FY 2008 (the year before the downturn) by 7.5 percent; in FY 2009, he proposed a cautionary 0.4 percent increase.
Although the Legislature and Governor approved a modest budget to prepare for the downturn, it wasn’t enough. Lower-than-expected revenues forced Gov. Barbour to trim spending by $200 million in FY 2009. The sluggish economy required the Governor to cut the following year’s budget five times, or a reduction of $466 million in FY 2010.
Since that time, budgetary caution has been the name of the spending game…until now, perhaps. Earlier this month, we learned the state was on its way to a budget surplus for the current fiscal year, which ends this weekend (June 30). The House Appropriations chairman told another newspaper the surplus would likely be a “substantial” amount around $300 million.
As a friend of mine would say, that’s a lot of skrilla (translation: money).
Just think – Gov. Barbour’s first round of cuts in FY 2010 was roughly $171.9 million. Fast-forward to FY 2013 when the state’s tax collections for May exceeded the estimate by the same amount.
We must remember that for the last five or so years, lawmakers have rightly weighed spending against anemic revenue growth to determine budgeting priorities. A budget surplus? Well, that’s a new one on the current class at the State Capitol.
Already, groups are laying claim to the money. The Parents’ Campaign, which lobbies for education funding, sent an email blast to its members asking them to contact their legislators: “Ask them to commit to using the surplus to fully fund the MAEP before it is spent on other things.” (MAEP is the formula used to determine how much money goes to schools.)
At their annual meeting two weeks ago, Mississippi supervisors talked about the need to find additional money for programs like healthcare implementation and homestead exemption. There’s a legislative task force aimed at finding additional revenue for our state’s highway infrastructure. No one can ignore the rising costs of programs like Medicaid and the state retirement system, both of which will gobble up additional revenue.
For a few years, the Capitol-types (lobbyists, state agencies, etc.) recognized they simply weren’t going to get as much money as they wanted – if they got any at all. Policymakers were open to considering cost-cutting reform measures because they had to be. Now, with a budget surplus on the horizon, that mindset will likely vanish. Legislators, especially those on the money committees, can expect a little extra attention during the coming session.
Legislators can use the surplus in three ways: 1) increase funding for priority areas, like education; 2) reduce taxes to spur growth; and 3) set aside money for a “rainy day.” A likely scenario includes some combination of these options.
Until a final budget is adopted, legislators should be prepared for an onslaught of new spending options. Emboldened by a revenue surplus, state agencies and lobbyists will fight tooth and nail for a larger piece of the budgetary pie. While some of the longer-serving lawmakers remember the pre-recessionary days when revenue wasn’t as tight, a large part of the current class isn’t used to this much money – or the pressures that come with it.
It’s an old problem, for sure, but the reality is that Mississippi isn’t in the clear yet. While our revenues may be higher than expected, our economic picture is still slow to brighten. According to the latest stats, the state’s unemployment rate was tied for the second-highest in the nation with close to 120,000 Mississippians unemployed. Getting people back to work will take time, and revenues won’t fully catch back up until the employment situation bounces back.
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