Archive for November, 2007

The economy, stupid (11/30/07)

November 30, 2007

James Carville, in order to keep things focussed, is said to have hung this list in Bill Clinton’s Little Rock campaign headquarters:

  1. Change vs. more of the same
  2. The economy, stupid
  3. Don’t forget health care.

A year prior George H.W. Bush’s approval rating had been in the 80% range, according to a Wikipedia article which fails to give a source. The library is closing, so I’ll finish this later.

Until then check out the two articles I reviewed today on Newstrust about the economy.

November 2007: 24,172
2007 YTD: 172,858
2006 TOTAL: 61,308
Total since 1/1/06: 234,166

Robert Novak Scooped by Op-Ed News (11/29/07)

November 29, 2007

I’ve only got about five minutes until my ride comes, so let me refer you to Rob Kall’s November 23 story in Op-Ed News that I alluded to today on Newstrust,

Novak’s story was not really original–Rob Kall , executive editor and publisher of Op-ed News, scooped Novak by three days, a pretty long time in the news business. Novak provided no hat-tip. Makes me wonder if Novak or his assistants read Krall or just arrived at the same idea later. And of course, either way, the connection between the defections and the lobbying laws is interesting and more people read Novak, probably.

Novak does a good job of bringing in how much Lott had already earned. I had to downgrade the article for balance and accuracy, given Novak’s glowing description of Lott’s career up until now, a description which which cherry picks and distorts. And since Novak left out any mention of what would seem to be a secondary reason for Lott’s departure–the emergence of a Democratic majority wich cuts into his power–I have to wonder if there is a political intent for this story. We can surmise Novak is political from the Plame disclosure. Is his pointing out of Lott’s wealth and the chastisement for his denying any monetary motive for leaving early an effort to keep more Republicans from deserting Congress and thus endangering the margin needed to invoke cloture, uphold Bush’s vetoes or, eventually, even hold onto enough seats to maintain an effective wedge against domination by the Democrats.

Rove Investigator In Hot Water (Still) (11/28/07)

November 28, 2007

Scott Bloch. He heads the Office of Special Counsel, charged with protecting government whistleblowers and enforcing the Hatch Act’s prohibition against federal employees taking part in partisan politics. The latter duty explains his authority to investigate whether Karl Rove and other other White House officials used government agencies to help re-elect Republicans in 2006.

Amazingly, since March 2005, Bloch himself has been under investigation on charges that he politicized Hatch Act enforcement. In addition to that charge, the Inspector General of the Office of Personnel Management has been looking into whether Bloch retaliated against internal whistleblowers, implemented illegal gag orders, and dismissed over 1,000 whistleblower disclosures without investigation,

The action was initiated by a coaltion of former OSC whistleblowers, joined by the public interest agengies Public Employees for Environmental Responsibility (PEER), the Project On Government Oversight (POGO) and the Government Accountability Project (GAP). And that coaltion has speculated that the Rove investigation may reflect not good government, but Bloch’s attempt to insulate himself from the White House. PEER had also sued Bloch for refusing FOIA requests for documents concerning his circumvention of civil service law to hire cronies and issue no-bid contracts in 2004. Then in February of this year, the Washington Postreported on accusations of intimidation in the probe.

October 1o, 2007, the three public interest groups wrote Congress urging that Bloch’s funding be cut. The same day, the coalition’s attorney Deborah Katz, had written White House counsel Fred Fielding pointing out that Bloch had obstructed the investigation and delayed its completion. And now, in the “it would be funny, if it weren’t so serious” category, John R. Wilke revealed in today’s Wall Street Journal that Bloch hired “Geeks On Call’s” D.C.’s franchise on Dec. 18 and Dec. 21, 2006 to scrub his computer and laptops belonging to his two top deputes, while he was under investigation. Bloch says he was trying to get rid of a virus, not evidence. The receipt for $1149, charged to an agency credit card doesn’t mention a virus and was for a seven level wipe, which, Wilke explains is

a thorough scrubbing that conforms to Defense Department data-security standards. The process makes it nearly impossible for forensics experts to restore the data later.

You might wonder why Bloch didn’t use his agency’s computer technicians, since Jeff Phelps, who runs the D.C. franchise told Wilke that calls placed directly by government officials are unusual. He also said that,

We don’t do a seven-level wipe for a virus.

The USA Today’s Mike Carney interviewed Phelps, though, and he told the reported he had received a call from Bloch regarding a virus.

Today, Katz sent another letter , this time to President Bush urging that Bloch be fired.

Today’s Wall Street Journal contains a report confirming what my clients and other sources within OSC have been saying since the OPM IG investigation began: that Mr. Bloch and his political henchmen have continuously obstructed the investigators’ efforts to get at the truth. Tellingly, the article quotes Mr. Bloch as defending himself with a claim that the OPM IG has a ‘conflict of interest’ in pursuing its investigation of Mr. Bloch while his office supposedly is conducting an investigation of the White House. This claim by Mr. Bloch confirms what we have repeatedly pointed out in correspondence with the White House Counsel, with Clay Johnson, Deputy Director of OMB, and with members of Congress–that Mr. Bloch launched his supposed investigation of the White House to insulate himself from the OPM IG investigation.

Danielle Brian, Executive Director of the Project on Government Oversight commented,

Under Bloch’s leadership, OSC has been utterly neutered. Bloch’s tenure epitomizes everything people distrust in government: cronyism, incompetence, retaliatory conduct and a politicized agenda. It will be interesting to find out what was going on in December that compelled Bloch to take this bizarre action.

Middle Class Hanging on “By A Thread” (11/28/07)

November 28, 2007

At noon today, I took part in a conference call for the media regarding the report By A Thread: The New Experience of America’s Middle Class authored by Jennifer Wheale. a senior fellow at Demos, and Thomas M. Shapiro, Director of the Institute for Assets and Social Policy (IASP) at Brandeis University.

Here’s the troubling news. Only 31% of those who would be considered middle class by income are financially secure and 25% are at high risk of falling back into poverty. The study defines middle class as making at least two times the federal poverty level, so for a family of four, that’s folks making $40,000 to $120,000 per year. The report is the first in a series by the two organizations which will use the Middle Class Security Index using five core economic factors: assets, educational achievement, housing costs, budget and healthcare.

In addition to the authors, I got to hear from and ask questions of Henry Cisneros, Chairman of CityView and former U.S. Secretary of Housing and Urban Development, as well as Jean Pogge, Executive Vice President, Consumer and Community Banking for ShoreBank and Ron Blackwell, Chief Economist at AFL-CIO.

Cisneros stressed the role that prior social investment played in assisting folks to attain the educaton and assets they needed to enter the middle class–the GI Bill, federal home loan guarantees and better funding for public education and college. He says the new index shoes where we are

after years of seeing those investments whittled away.

He stressed the need for not just maintaining the middle class, but growing it.

Poage talked about the rammifications of the irresponsible lending practices. Blackwell talked about the stagnation in wages and , in response to one of my questions, talked about the necessity of returning to the goal of full employment with a reasonable wage floor and the realistic right to join a union.

After looking at the report, there appear to be three policy areas which contribute to the stress on the middle class. Currently, most of the the asset formation incentives favor the rich.

The existing patchwork of policies that promote or reward savings and asset-building overwhelmingly benefit households that already have substantial net worth and economic security. According to analyses by the Corporation for Enterprise Development, while the federal government spent $367 billion on asset-building policies in 2005, 45 percent of these subsidies went to households with incomes over $1 million. The largest asset-building expenditure—the home mortgage deduction—is particularly skewed toward the best-off households in America. The bottom half of earners receive 2.9 percent of the tax benefits while the richest 10 percent receive 59 percent. Meanwhile, the “bottom” 60 percent receive a meager 3 percent of this investment budget. In order to grow and strengthen the middle class, America needs to embrace a set of principled investments.

Education is getting further out of reach .

As tuition has soared, rising faster than both inflation and family income, more students have been unable to afford college. At the start of the millennium, over 400,000 college-qualified high school graduates from low- and moderate-income families did not enroll in a 4-year college, and 168,000 did not enroll in any college at all. These statistics translate into frustrated dreams today and a weaker middle class tomorrow. America needs bold new efforts to increase access to higher education. At the same time, those students who do enroll in and complete college are taking on increasing amounts of student loan debt. Today, twothirds of college graduates borrow to pay for school and graduate with an average of $19,200 in student loan debt. Students from lower-income families are more likely to borrow and at higher amounts—making their entry into the middle class even more precarious.

The healthcasre “systerm” is not meeting most people’s needs:

Today, in nearly one in four middle-class families, at least one family member lacks health insurance, placing families at both physical and financial risk. In addition, other research indicates that the cost burden on middle-class families in the form of higher out-of-pocket expenses has also risen dramatically in the last decade. In the wake of rising premiums and often limited benefits, prior research by Dēmos has revealed that even middle-class families with health insurance have problems paying their medical expenses and are using credit cards to meet their health needs.11 Health security among the middle class can no longer be taken for granted. With a renewed public debate over how to fix the broken healthcare system in the United States—one that is characterized by high costs, widely varying degrees of benefits, and a growing uninsured population—the future security of America’s middle class hinges on whether we can muster the political and public will to markedly overhaul health-related funding and access policy in this nation.

Legislative proposals include:

  • asset building and debt reduction
    • Help Households Save for Emergencies by enacting policies to promote traditional savings through creating universal savings accounts and targeted tax credits that would provide progressively structured credits per the amount saved.
    • Make Homeownership More Secure by helping young families save for a downpayment and thereby reduce their mortgage debt. HomeSavers accounts should be created that would provide progressive matches in the form of tax credits.
    • Protect Homebuyers from Deceptive and Abusive Mortgage Lending Practices by establishing strong federal standards that would protect consumers throughout the entirety of the mortgage process, including licensure at the federal level for mortgage brokers. Lastly, require that consumers be offered the best possible loan for which they qualify, rather than the largest and most costly loan they can be convinced into taking.
    • Reduce Foreclosures Among Sub-Prime Borrowers by requiring that lenders qualify borrowers based on the fully indexed rate of the loan—not the teaser rate as is the case with “exploding” adjustable rate mortgages. Additional steps include: encouraging agencies to pursue meaningful enforcement against lenders and brokers whose underwriting practices harm homeowners; requiring that subprime lenders evaluate the borrower’s ability to repay before making a home loan; and outlawing mortgages with pre-payment penalties. Finally, Congress needs to establish a rescue fund to directly help households currently facing foreclosure as a result of aggressive and predatory subprime mortgages with no regard for their ability to repay.
    • Give Families a Fair Chance to Pay Down Debt by Prohibiting Abusive Credit Card Practices that allow the lender to change the terms of the account at any time, for any reason, and apply interest rate increases retroactively to existing balances.

  • more accessible and affordable higher education
    • Strengthen the Federal Financial Aid System by enhancing grant aid for low- and middle-income students and providing early and upfront knowledge of the financial aid available to families starting as early as 7th grade. Dēmos has developed a proposal based on these principles—The Contract for College—that would dramatically reduce student loan debt and increase college-going rates by providing a guaranteed financial aid package of loans, grants and work-study based on sliding scale system in which grant-aid would cover from 75 percent of the total costs of attendance for
      the lowest income students to 40 percent of the cost of attendance for middle-income students.

  • affordable and comprehensive healthcare

Unfortunately, there’s no program proposed for this last item.

Promoting assets for the poor (11/27/07)

November 27, 2007

So why do folks take out payday loans? Lack of the promotion and availability of alternative methods of borrowing, certainly. But also, lack of a financial cushion.

Lack of funds for an emergency may come from one’s previous falling into temptation. Ever notice the extent of advertisers’ push to consume? Lack of fiscal discipline can certainly be faulted in the case of some higher wage earners who find themselves in debt.

Those are not, for the most part however, the folks seeking out payday loans. And my guess, is that if you earn very little, you are often faced with the the dilemna of how to pay for necessities: shelter, food, medicine, even transportation in areas where mass transit is lacking. There is, however, a growing impetus, to promote at least modest savings even by low income individuals. One tool is individual development accounts (IDAs).

I first came across IDAs when I was living in Damascus, Virginia in 1998, as they were being promoted by People Incorporated, the local community action agency. But I hadn;t thought about them since then, until I read an editorial in today’s Boston Globe, “Closing the Curtain on Poverty,” which I submitted at Newtrust and am happy to report ended up in the 4 p.m. newsletter as one of the recommended stories.

More to come…

Is it time to find an alternative to payday lending? (11/26/07)7

November 26, 2007

Illustration from “The Greasy Ladder,” The Economist‘s take on a recent Pew Center Study on Economic Mobility Across Generations.

Virginia used to forbid usery in the case of small loans, capping the rate at 36%. Our neighboring state of North Carolina let its payday loan law expire on August 31, 2001. But in 2002, after a ten year seige by the payday lending industry, Virginia enacted a law allowing the practice. Since that time, the industry has been licenced by the State Corporation Commission. According to its latest list, published November 14, payday lenders include:

  • ACE Cash Express, Inc.m Licensed 06/10/2005–41 branches
  • Advance America, Cash Advance Centers Licensed 09/24/2002– 145
  • Allied Cash Advance Licenced 05/01/2003–29
  • 1st Choice Cash Advance Licensed 08/09/2002–22
  • Approved Cash Advance Licensed 06/27/2005–38

And that’s just the firms with a corporate name starting with “A” and with more than a dozen branches through page 8. The list goes on for 15 more pages.

So what is payday lending? It’s a two-week loan secured by a personal check at a rate of interest of something like 390% excluding fees. The University of Carolina’s Center for Community Capital conducts reasearch into

the transformative power of capital to change the economic health of households and communities in the United States.

November 13, it published North Carolina Consumers After Payday Lending, a study commissioned by the North Carolina Commissioner of Banks which found that former payday lendees don’t miss the “service.”

The trade association for the industry, the Community Financial Services Association of America argues that its “best practices” and “responsible lenders” make

the payday advance is a safe and viable credit option for consumers.

The Center for Responsible Lending, however, contends that,

Research shows that the payday lending business model is designed to keep borrowers in debt, not to provide one-time assistance during a time of financial need.

The latter argument seems supported by a November 25 article in the Hampton Roads Daily Press, which I reviewed today for Newstrust. In “Payday Lender Replacement?” Chris Flores includes the fact that

67 percent of payday borrowers took out at least 13 loans in 2006.

Flores also notes that

At the national average overdraft fee of $27.40, bounced checks made out to payday lenders in Virginia in 2006 brought banks $4.2 million in fees.

That would seem to be a powerful incentive for banks to let the payday loan industry thrive in our state. Thankfully, credit unions may have a role in reform. Flores writes about three in his area which have developed products that serve as alternatives for payday loans.

Maybe as a result, Newport News and Hampton City Councils are asking the General Assembly to rescind our state’s payday loan statute, according to the list maintained by the Virginia Partnership for Responsible Loans (VaPERL). Other localities including Roanoke have taken the lesser step of asking that the rate be capped, as for other small loans at 36%. To put this in perspective, the default interest cap in Virginia, if not otherwise allowed, is 12%.

*

Still no car and I just heard from Betsy, one of my roommates, that she’s on her way to get me, so I’d better close for now. Brandeis University Institute on Assets and Social Policy, in partnership with Demos.org, is releasing a report at noon on Wednesday on income insecurity and holding a conference call , so more on economic issues tomorrow.

Benefit for a Blacksburg dance floor (11/25/07)

November 25, 2007

Contra dancers will be at Squires student center along with Toss the Possum and Shawn Brennerman, who have donated their servicesto help the YMCA build a dance floor in the old Wades grocery building Hooray!

Here’s Mother Jones on immigration. My complaint is that when Yankees cover racism they think it’s only in the South. Look at the local hubbub when Spitzer wanted to give immigrants licenses in NewYork. Remember the riots in Roxbury during bussing. That’s MA, y’all. Go figure.

Yes, Virginia, citizens can understand the traffic study (11/24/07)

November 25, 2007

The Town of Blacksburg met Tuesday and agreed to set up a committee to review the traffic study for the South Main development. Unfortunately the Roanoke Times story on the matter paints citizensm including an engineer, who spent hours studying the study as just to simple to understand the complications.

Here’s the Scientific American on carbon markets. I’ve yet to read it and will be interviewing Larry Lohmann for his take and reporting back here and on llrx.

A Thousand Splendid Suns (11-23-07)

November 25, 2007

Finished reading A Thousand Splendid Suns by Khaled Hosseini. In his latest novel, the author of The Kite Runner focuses on women in Afghanistan from the time of the revoluntion until 2003, when educated women had hopes that the defeat of the Taliban meant a new era.

The Taliban now controls half of the country again, according to today’s story in The Telegraph.

Thanksgiving greetings (11/22/07)

November 25, 2007

Had a fine holiday repast with Victoria and Todd and one other couple. Todd brined a turkey and made his famed potatoes and parsnips and a loaf of homemade bread, Victoria made a dressing and brocolli, and I baked butternut squash and a cranberry/apple/walnut compote. For dessert, Miriam had baked TWO pies: pumpkin cheese cake and brownie walnut. YUM!

The sad news is my car needs a new axle and it won’t be ready until Wednesday at the earliest, so I’ll be on an abbreviated blogging schedule.

Here’s an interesting WaPo story that not all the vetoed earmarks came from Democrats. Why am I not surprised?