Author Archives: James A. Bacon

From Rising Temperatures to Big Government In Six Easy Steps

Posted on February 3, 2012 by James A. Bacon| 7 Comments

The 160-year perspective. Source: Met Office-University of East Anglia Climatic Research Unit

by James A. Bacon

When the United Kingdom’s Met Office released its 2011 global temperature numbers back in November, the results were ambiguous enough that both the Global Warming (GW) establishment and skeptics both felt vindicated. A compilation of the world’s three leading global temperature databases — the East Anglia Climate Research Unit, the NOAA Climate Data Center and the NASA Goddard Institute for Space Studies — showed that 2011 was on track to be the 11th warmest year in the past 150 years, stated the Met Office in an article headed, “Warm global temperatures continue in 2011.” Yet skeptics seized on the fact that, despite dramatic increases in greenhouse gases over the past 14 years, global temperatures have plateaued.

The 15-year perspective. Source: (U.K.) Mail Online. (Click for more legible image.)

The GW establishment attributed the pause in rising temperatures to “a very persistent and strong La Niña, which brings cooler water to the surface of the Pacific Ocean.” When the La Niña disappears, global temperatures will resume their rise. Skeptics contend that solar activity plays a far greater role than acknowledged in mainstream climate models and that the earth could be entering a new solar cycle resembling the so-called “Maunder Minimum” that brought on the Little Ice Age.

The scientific battle lines are clearly drawn now, and we should know pretty conclusively within another decade which side is right. I am agnostic on the issue, which, I suppose makes me a closet skeptic because I don’t believe the “science is settled.” But it soon will be. Within the not-too-distant future, one of the two sets of predictions being made now will be proven conclusively wrong.

What won’t be settled, especially if the GW camp’s predictions pan out, is what to do about it. Witness a recent exchange in the letters page in the Wall Street Journal in which Kevin Trenberth and 37 other scientists responded to an op-ed previously published by 16 other scientists disputing that the evidence for global warming was “incontrovertible.” (Local angle: One of those “other” scientists was James McGrath, a world leader in polymer chemistry at Virginia Tech.)

Trenberth made an appeal to authority in support of his position that the planet  “unequivocally” is getting hotter. “More than 97% of scientists actively publishing in the field agree that climate change is real and human caused,” he wrote. “It would be an act of recklessness for any political leader to disregard the weight of evidence and ignore the enormous risks that climate change clearly poses.”

He then went on to state, “In addition, there is very clear evidence that investing in the transition to a low-carbon economy will not only allow the world to avoid the worst risks of climate change, but could also drive decades of economic growth.”

Thus, Trenberth transitioned from an appeal to scientific authority to a bald assertion about the economy, which, he, as a climate scientist and not an economist, has no professional basis for making. Will a “transition to a low-carbon economy” really avoid the worst risks of climate change? Would it really drive economic growth? The point is less than incontrovertibly settled. According to today’s Wall Street Journal, the green movement is rethinking its commitment to Europe’s multibillion-dollar commitment to biofuels. In another straw in the wind, the European Commission’s energy department is reappraising its commitment to renewable energy sources in the absence of a global agreement to combat climate change. EU companies would suffer eroding international competitiveness because clean power sources are so much more expensive.

There are multiple layers to the Global Warming (GW) debate, and I am not at all convinced that they lead ineluctably to Trenberth’s position in support of massive government intervention in the economy. Indeed, I suspect that the only people who are persuaded by that chain of reasoning are predisposed to be suspicious of free markets and inclined to favor big government, especially when greater government control puts like-minded people at the helm. Consider these ongoing issues:

  1. Can we really trust our temperature measures? Skeptics have called attention to various biases in the way temperatures are monitored, pointing to land-based measurement stations that once were located in the countryside but now, due to sprawling development, experience the urban heat-island effect. The GW establishment says it has corrected for that upward bias. For the GW orthodoxy to stand, one must agree that the statistical massaging of  temperature databases adequately addresses this very real phenomenon. (I suspect that it probably has, and I discount this as a major issue — but it is out there.)
  2. Are today’s temperatures truly unprecedented? Skeptics contend that temperatures have undergone long-wave cycles since the end of the last Ice Age, bringing on periods of global warming during the Roman era and again during the Middle Ages. If they are correct, the current temperature peak we are experiencing could be due to factors other than rising levels of greenhouse gases, with the implication that global climate models are flawed. Using “proxy” measures such as tree ring widths, lake sediments and other natural phenomenon that vary with temperature, the GW orthodoxy downplays past warming eras and maintains that today’s temperature rise is unprecedented. Again, for the orthodoxy to stand, the reconstruction of past temperature peaks must be correct.
  3. Will greenhouse gases lead to runaway temperature increases? No one disputes the conclusion, all other things being equal, that rising levels of greenhouse gases will have a warming effect on the planet. But the GW orthodoxy goes beyond that, insisting that climatic feedback mechanisms such as increased evaporation of water into the atmosphere — water vapor  is a far more potent greenhouse gas than carbon dioxide — will magnify the effect and lead to runaway temperature increases. Skeptics note that even higher CO2 levels did not lead to runaway warming in past climate epochs. Moreover, they say, crucial climate dynamics like cloud formation are still ill-understood. An increase in cloud cover would increase the earth’s reflectivity and reduce the warming sunlight penetrating the atmosphere. Skeptics claim that cloud formation is heavily influenced by varying levels of solar radiation, which interacts with the earth’s magnetosphere to bloc cosmic rays. The cosmic rays, it is postulated, interact with elements in the atmosphere to seed clouds. If this competing explanation is correct, the climate models underlying the GW orthodoxy need significant revision.
  4. Will rising temperatures be an unmitigated environmental disaster? It is not sufficient for the GW orthodoxy to maintain that temperatures are rising, it must insist that rising temperatures will lead to a string of mankind-threatening calamities from rising sea levels and stronger hurricanes to drought, starvation and conflict caused by scarce resources and the spread of environmental refugees. The potential consequences are so dire that global warming must be halted at all costs. But it strikes me that those hewing to the GW orthodoxy trumpet the downside while muting potential benefits of warming. The dangers have been well publicized. What no one cares to acknowledge, however, is that increasing levels of C02 amount to atmospheric fertilizer that stimulates plant growth and increases plant resistance to drought. Some have made the argument that global warming would be a boon to crop yields and beneficial to plant life generally. While the GW priesthood worries about higher temperatures spreading malaria, no one seems to explore the potential impact on of warmer weather on cold-weather diseases, such as colds and influenza. The depiction of unmitigated environmental disaster seems incredibly one-sided. Yet the view of global warming as environmental Armageddon is critical to justifying the empowerment of the state over the economy.
  5. Is curtailing greenhouse gases the best way to stave off the impact of global warming? Some economists have argued that the best way to adapt to runaway global warming, assuming it occurs, is to foster economic growth that will enable fragile developing nations to adapt to the postulated increase in fire, flood, disease and famine. Rich societies are more resilient than poor ones. But GW orthodoxy will not entertain that train of thought. The only solution is to roll back the level of greenhouse gas emissions in the belief that (a) the global climate is amenable to such fine tuning, (b) we haven’t passed a tipping point, or point of no return, on climate change, and (c) there is some ideal, steady-state temperature to which we should aspire, and which happens to be the point in time at which people began to get alarmed about climate change.
  6. Is government the best agent of change? Finally, the adherents of GW orthodoxy believe that government, in its all-knowing, far-seeing wisdom, must lead the charge. Private individuals and enterprises cannot bring about the required deep,  structural changes to the economy in a timely fashion. Government must coerce, subsidize, threaten and cajole people to accelerate the shift to the low-carbon economy. In the United State, government has lavished billions of dollars upon schemes from home- conservation programs to ethanol and Renewable Portfolio Standards that require power companies to acquire an increasing share of their energy from renewable sources. The home conservation programs were a fiasco. Ethanol, environmentalists have now concluded, represent a step backward, and an expensive one to boot. Solar energy subsidies have brought us Solyndra, there is a growing backlash against wind power, and it is slowly sinking in that variable energy sources like wind and solar require a massive back-up of natural gas-fired generating capacity. Followers of the GW orthodoxy are sublimely confident in their ability to get things right yet they repeatedly get blind-sided by special interests and rent seekers who manipulate the subsidies, tax credits and regulations to their advantage. Tens of billions of dollars (perhaps hundreds of billions in Europe) have been largely wasted already, and the tab would run even higher if the Trenberths had their way. Ironically, if you want to see real progress in energy conservation, look to the one sphere of activity not subject to government meddling — the retrofit of commercial and industrial properties — and you’ll find dramatic progress.

To justify the current array of GW policies put into place in Europe, the U.S., Virginia and increasingly across the world requires the feat of answering “yes” to all six of the yes-no questions I have just enumerated. I am willing to trust the scientific process to sort out the first three of those sets of issues. But I’m not willing to entrust our economy to true believers attempting to implement their vision by means of a corrupted political process.

Finally, I repeat my admonition to my friends in Virginia’s environmental and smart-growth communities: Decouple your arguments for smart growth from Global Warming. If temperatures resume their upward climb in the next 10 years, the scientific debate may be settled once and you will be proven correct. On the other hand, if the orthodoxy collapses — so will a major justification for smart growth. As I hope to show in future posts, a solid case for smart growth can be built on a foundation of fiscal conservatism and repair to Virginia’s native environment.

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Posted in 2012, Abortion, Environment

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A VDOT Breakthrough in Paving Productivity

Posted on February 2, 2012 by James A. Bacon| 1 Comment

The Landford crew used a Wirtgen paver that scraped up asphalt, reconstituted it and paved it on the spot. Photo credit: VDOT.

by James A. Bacon

America’s Interstate highways are reaching the end of their design lives. Reconstructing them could cost Virginia billions of dollars  and cause massive disruptions to traffic while they are under repair. Fortunately, the Virginia Department of Transportation has developed a system for cutting the costs and slashing construction times that could make the cost affordable and the reconstruction process tolerable.

In a first-in-the-nation demonstration project, VDOT repaired 3.7 miles of Interstate 81 near Staunton last year that could provide the prototype for rebuilding the state’s interstate highway system. Working with contractor Lanford Brothers Company, Inc., of Roanoke, the highway department combined three existing processes — cold in-place recycling, cold central-plant recycling and full in-depth reclamation. The project cost $7.4 million as opposed to an estimated $40 million using traditional techniques.

“Using these pavement recycling methods has the potential to revolutionize how we rehabilitate our aging roads, both in Virginia and nationally,” said Governor Bob McDonnell in a press release.  “We expect to continue using these processes, where appropriate, to save money and materials as we rebuild older roads throughout the commonwealth.  VDOT next plans to use cold in-place recycling to rebuild a section of U.S. 17 in Isle of Wight County in Hampton Roads during the 2012 paving season.”

Highways consist of three layers:  a compacted soil base, a foot of compacted stone aggregate and a foot of hot-mix asphalt. On I-81, the right, southbound lane had received the heaviest pounding and needed the most work. The contractor milled down the upper asphalt layer, stockpiling it on site for reuse. Then it applied a stabilizing agent (cement or lime) to strengthen the aggregate below. The milled asphalt was processed at a nearby mobile plant and applied as a new top layer. For the left southbound lane, which was in better shape, five inches were pulverized in place, mixed with a binding agent, applied back to the roadway and topped off with four inches of traditional hot-mix asphalt. Much of the material work was conducted at ambient, rather than hot, temperatures.

“Savings on the I-81 in-place pavement recycling project go beyond time, money and materials,” said VDOT Commissioner Greg Whirley.  “It saved fuel because it reduced the need to transport as much new and old materials. It increased safety for drivers and road workers on the project, because it reduced work-zone congestion. This section of rebuilt pavement also will be stronger from bottom to top, extending its service life and reducing the need for such complex maintenance for many years.”

Using traditional methods, the work would have consumed a year or more non-stop during which much of I-81 traffic would have been diverted to Route 11, where it would have conflicted with local traffic. With the new process, the plan called for work to be confined to eight five-day stretches. In actual practice, only three or four of those segments were needed, says Sandy Myers, public relations manager for the Staunton transportation district.

The project also used a novel traffic-management plan to detour cars onto U.S. 11 away from the construction while large trucks used a lane on I-81 that was not under construction. VDOT alerted motorists to the work several hundred miles from the project via on-road, Web and other communication tools.

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Posted in 2012, Transportation

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Taking a Closer Look at the Jobs Governor’s Industrial Policy

Posted on February 2, 2012 by James A. Bacon| 1 Comment

by James A. Bacon

Tax subsidies for businesses locating in the proposed 55-mile Route 460 Corridor-Interstate 85 Connector Economic Development Zone could add up to $50 million over 2015 and 2016, if HB 1183 is passed into law. Remarkably, no one seems to be questioning the propriety of such aggressive use of the tax code to promote industrial development.

The bill would allow out-of-state companies to exempt taxes on income generated from activities within the zone, which includes the counties of Isle of Wight, Prince George, Sussex, and Southampton and the Cities of Chesapeake, Norfolk, Portsmouth, Suffolk, and Virginia Beach. Twenty-five percent of income would be exempted for companies employing at least 25 full-time employees, 50% for 50 employees, 75% for 75 employees, and 100% for 100 employees. Companies must be engaged either in maritime commerce or import-export manufacturing.

The bill, sponsored by Delegates Cosgrove, R-Chesapeake, and Bob Purkey, R-Virginia Beach, is part of a larger McDonnell administration initiative to stimulate commerce and manufacturing along the U.S. 460 corridor between Petersburg and Hampton Roads. (SB 578, sponsored by Sen. Frank Wagner, R-Virginia Beach, is the counterpart bill in the senate.) Gov. Bob McDonnell also has allocated $500 million toward the upgrade of U.S. 460 between Petersburg and Suffolk into an Interstate-caliber highway by means of a public-private partnership.

If Republicans want to establish their bona fides as fiscal conservatives, this is not the way to do it. Fifty million dollars in tax credits? No wonder tax revenues are stagnant — a multitude of credits, exemptions, deductions and carve-outs has shot Virginia’s tax code full of more holes than Bonnie and Clyde. If legislators want to subsidize corporate interests, then let them put a line item in the budget where it is highly visible to all. Don’t hide behind the tax code!

The General Assembly has already agreed to sweeten the pot of discretionary funds available to the governor to grease the skids for economic-development deals statewide. Now the governor needs more? Tax breaks for the Port of Virginia plus a 500 million state contribution to upgrade U.S. 460 isn’t enough? Surely the Governor’s Opportunity Fund should be sufficient to entice companies employing no more than 100 employees. It’s not as if we’re trying to land a new automobile assembly plant here — is it?

There are at least three points worth making.

First, if the Port of Virginia is so well positioned to attract new cargo traffic when the Panama Canal widening is complete in two years, and if the state is already subsidizing construction of a new stretch of Interstate-quality highway, why do we need to subsidize corporate investment to the area? Is Virginia that uncompetitive?

One possible response is that other states are subsidizing new corporate investment, so we need to as well. That logic fails utterly, too, as I shall explain in the second point:

Do we really want to create an expectation among companies investing in Virginia that subsidies are there for the asking? That just encourages them to press for more, whether they need the assistance or not. The giveaways vitiate the fiscal conservative’s ideal of creating a level tax playing field for everyone. Our goal should be to make the tax base as broad as possible in order to set rates as low as possible. Tax subsidies may create short-term job gains — jobs that might have come to Virginia anyway — but they are the ruin of tax policy. The existence of tax loopholes keep rates higher, thus discouraging economic activity in sectors not favored by politicians. Trouble is, we never see the jobs not created, so we never know what we are losing.

Thirdly, the argument for subsidizing job creation ignores the impact of those jobs on the demand for infrastructure and government services in areas now lacking them. It’s one thing to land jobs in a population center like Norfolk-Virginia Beach where thousands of unemployed factory workers could be put back to work without relocating or straining public services. It’s another thing to bring the jobs to out-of-way places like Sussex and Isle of Wight counties.

Why do I mention Sussex and Isle of Wight? Because those are the counties where, according to a recent McDonnell administration-funded economic impact analysis, two new “mega manufacturing” industrial sites are planned. (See “U.S. 460 Project as Economic Development Powerhouse.”) The new manufacturing firms have the potential to support 2,635 permanent jobs directly and thousands more indirectly.

Perhaps someone deep in the bowels of the McDonnell administration has addressed the implications, but I have seen nothing. How well equipped are Sussex County (population 12,056) and Isle of Wight (population 35,457) to handle the influx of jobs and population? How much will the state have to spend on new roads? How much will the counties have to spend on new schools, utilities and public services?

Meanwhile, the McDonnell team would make matters worse with another piece of legislation that would capture new state revenue attributed to a transportation project, siphon it out of the General Fund and into the Transportation Trust Fund, and thus weaken the ability of the General Fund to pay for education, Medicaid, corrections and other things that only the General Fund can pay for.

This welter of economic development initiatives may burnish McDonnell’s credentials as “the jobs governor,” but it is not well thought out from a tax perspective. Virginia is becoming as bad as the federal government. We are creating so many subsidies and tax loopholes that it’s impossible to keep track of it all, much less to make economic decisions based on economic fundamentals. Conservatives have a name for this kind of boosterism. It’s called “industrial policy.” It is antithesis is small government and free markets.

Gov. Bob has aspirations, it is said, to be selected as a vice presidential running mate. Really? For which party?

Update: A reader reminds me that the Virginia Port Authority board agreed in principle back in September 2011 to chip in $5 million a  year in state port funding to help pay for up to $250 million of the road. That would represent yet another subsidy, although a defensible one. The ports are the No. 1 beneficiary of the highway project and should be expected to contribute. Meanwhile, the Virginia Department of Transportation has applied for a $20 million federal TIGER grant and $200 million in federal TIFIA loan guarantee financing.

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Posted in 2012, Economic development, Transportation

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Legislators Spike Mandatory PLA for State Projects

Posted on February 1, 2012 by James A. Bacon| 13 Comments

Virginia legislators delivered a rebuke to the Metropolitan Washington Airports Authority (MWAA) yesterday when both the House and Senate passed bills that would prohibit government-mandated Public Labor Agreements (PLA) on state and state-assisted projects in Virginia. The MWAA board had previously declared its intention to mandate a PLA requiring a union workforce for Phase 2 of the Rail-to-Dulles heavy rail project.

HB 33, sponsored by Del. Barbara Comstock, R-McLean, passed on a mostly party-line vote 69 to 27, while SB 242, sponsored by Sen. Mark Obenshain, R-Harrisonburg, passed the bill in a 20-20 vote in which Lieutenant Governor Bill Bolling broke the tie.

MWAA now faces a tough decision. It can maintain its support for a mandated PLA as the time grows nigh to solicit bids for Phase 2, or it can risk losing the $150 million in supplemental funding promised by the state late last year in a restructuring of the project’s financing.

Foes argued that the PLA would discourage many non-union construction firms from bidding on the METRO extension, which is estimated to cost $2.8 billion. Fewer bidders increases the likelihood of a higher price by the winning contractor. Additionally, legislators argued that because the vast majority of Virginia’s construction workers are non-union, any agreement requiring the prime contractor to hire from a union work hall would mean that many workers would end up coming from Maryland.

The McDonnell administration had previously publicized a Memorandum of Agreement with MWAA that upheld the rights of non-union workers under the Virginia right to work law. But there was confusion as to what that MOA meant for the mandatory PLA. In the lead-up to the House and Senate votes, however, administration officials made it clear that they opposed mandatory PLAs.

Now the ball’s in MWAA’s court. The board has refused to seat two new board members appointed by Gov. Bob McDonnell until Virginia and Washington, D.C., ratify changes to the bistate compact governing MWAA. That means the existing MWAA board will have a free hand until the necessary ratification goes into effect July 1. There is a high probability that MWAA will issue its guidelines for the Phase 2 bids before then. According to a recent “presolicitation paper,” MWAA expects to issue its RFP in May.

The MWAA board meets again Feb. 15, but it has to be careful not to antagonize McDonnell and the Republican-dominated General Assembly — MWAA still needs that $150 million in supplemental state funds to make the Phase 2 project financing work. If cooler heads prevail, MWAA may keep mum on its intentions until after the General Assembly session, giving legislators no cause to deny the extra money. I’m not enough of a parliamentarian to know what happens if the General Assembly approprites the funds but MWAA subsequently includes a mandatory PLA in its RFP. Is there a way for McDonnell to withhold the funds?

Whatever the answer, this drama is far from over.

– JAB

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Posted in 2012, Transportation

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Virginia Population Hits 8.1 Million

Posted on February 1, 2012 by James A. Bacon| 5 Comments

Virginia’s population grew 1.2% in 2011, reaching 8.1 million, according to the official population estimate developed by the University of Virginia’s Weldon Cooper Center for Public Service. Nationally, population growth hit 1.0%. Virginia posted the 13th highest growth rate and the seventh largest numerical gain.

Consistent with long-standing trends, the largest gains were concentrated in the Northern Virginia, Hampton Roads and Richmond metropolitan areas. But Fredericksburg was the fastest-growing locality, experiencing a growth rate of 4.9%.

While Southside and Southwest Virginia continued losing population, some independent cities showed modest growth, including economically hard-hit Danville and Martinsville.

– JAB

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Posted in 2012, Demographics

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MWAA’s Double Standard

Posted on February 1, 2012 by James A. Bacon| 16 Comments

Rob Whitfield, a member of the Dulles Corridor Users Group, raises a good point regarding Metropolitan Washington Airports Authority (MWAA) governance. Earlier this year, the board refused to seat two new members appointed by Gov. Bob McDonnell in accordance with federal legislation that expanded Virginia’s representation on the board. MWAA officials justified their defiance by noting that the authority’s bi-state compact between Virginia and Washington, D.C., had not yet been ratified by both Virginia and D.C.

Why, then, asked Whitfield in an op-ed published in the Washington Examiner, did not MWAA seek similar ratification “when former Gov. Tim Kaine unilaterally decided to transfer control of the Dulles Toll Road and responsibility for building Dulles Rail to MWAA in December 2005, an action that significantly amended provisions of the 1986 congressional act, which created the bistate MWAA compact?”

It’s blatant inconsistencies like this that make many outsiders regard the current MWAA board as a self-dealing clique eager to amass power and authority with no accountability. Controversial decisions to build a super-expensive METRO station at Dulles airport, since revoked, and to mandate a Project Labor Agreement for Phase 2 of the Rail-to-Dulles project have come to light. What other decisions have been made, what other practices have been tolerated?

MWAA runs Virginia’s two largest airports as well as the Dulles Toll Road. The more the board resists accountability, the more outsiders wonder what it has to hide.

– JAB

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Posted in 2012, Transportation

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LeMunyon Seeks to Restructure CTB Representation

Posted on January 31, 2012 by James A. Bacon| 24 Comments

From this...

Del. Jim LeMunyon, R-Oak Hill, has proposed reorganizing representation on the Commonwealth Transportation Board to give more power to Virginia’s fast-growth areas. The idea is simple: Instead of appointing a member from each of the state’s nine transportation districts, in which Virginia’s major metro areas are under-represented, his bill would appoint a member from each of Virginia’s congressional districts.

... to this?

LeMunyon’s proposal, submitted as HB 600, would keep the size of the board constant by dropping one “rural at-large” member and one “urban at-large” member.

A new representation scheme for the CTB would come at a time when the body is wrestling with fundamental issues like the devolution of secondary roads to local governments, the fine-tuning of maintenance and funding formulas, and the approval of a slew of transportation mega-projects initiated by the McDonnell administration.

In theory, there should be a big split between the interests of Virginia’s densely populated metropolitan areas and those of the lightly populated hinterlands. In the six months I have been covering the CTB, however, I have seen little evidence of such a divide — even though I have been looking for one. (Hey, I’m a journalist — I thirst for controversy!) The CTB seems to be a collegial group with few overt conflicts. (The sole exception that I have seen was over the Charlottesville Bypass.) As a rule, only two or three board members raise uncomfortable issues or ask uncomfortable questions. It appears to be up to the discretion of the chairman, the secretary of transportation, whether or not to elevate an issue to a concrete agenda item or to assign staff time to flesh out more information. Furthermore, the governor has the authority to replace any member at will if he gets too obstreperous.

For the most part, the CTB functions as a rubber stamp for the administration, which at present happens to be the McDonnell administration. LeMunyon’s bill would represent a step forward in making the board more democratically representative of Virginia’s population, and thus should be passed. But would it make the board any less passive? Would anything change in practice? I doubt it.

The bill was referred to the Committee on Transportation and then was assigned to Sub-Committee #4. The subcommittee tabled the bill Jan. 26. However, the underlying issue — the misalignment of representation — will not go away. There is a near-universal sentiment in Northern Virginia (whether valid or not) that it gets a raw deal in the distribution of highway dollars. LeMunyon, or someone who thinks like him, will be back.

Update: Upon further reflection, appointing CTB representatives by congressional districts makes no more sense than the congressional districts themselves do. They’re all gerrymandered, for crying out loud! They don’t reflect any natural community of interest. In a better world, CTB representatives would represent organic components of human society and economy such as Metropolitan Statistical Areas. Four from NoVa, three from Hampton Roads, two from Richmond, one from Roanoke, with the balance consisting of rural, at-large members… something like that.

JAB

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Posted in 2012, Transportation

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Keeping Virginia Colleges Accountable

Posted on January 31, 2012 by James A. Bacon| 7 Comments

by James A. Bacon

At last we have a critical look at Virginia’s system of higher education — not from within the system itself, or even from within Virginia but from the American Council of Trustees and Alumni. Kudos do go, however, to the Beazley Foundation of Portsmouth for underwriting the report, “The Diffusion of Light and Education: Meeting the Challenges of Higher Education in Virginia.”

The report will not make happy reading for Virginians accustomed to slapping themselves on the back over how the commonwealth has the greatest system of higher education in the country. While Virginia higher ed often does out-perform other states based on metrics highlighted in the report, that’s damning by faint praise. One might as well say, “The lad isn’t so bad. He was only convicted of selling marijuana. He could have been peddling crack!”

Here are some of the highlights.

Core curriculum. The authors examined whether Virginia institutions require students to take general education courses in seven key subjects: Composition, Literature, Foreign Language, U.S. Government or History, Economics, Mathematics, and Natural or Physical Science. Ten public institutions have three or fewer general education requirements, meaning students can graduate, on the taxpayer’s dime, with “vast gaps in their education.” Curricular standouts are James Madison University Hampden-Sydney College, both of which require five of the seven core courses.

Tuition cost.  Nationwide, during the six-year period ending in 2010-11, inflation-adjusted tuition and required fees at four-year public colleges increased by an average of 29 percent. At private institutions, they increased by 18.2 percent. Every public institution but Old Dominion University and Virginia State University exceeded the national average. The result of upward creep in tuitions is that at 17 of 38 public and private schools, “tuition and fees now represent more than 40 percent of the median household income. This is a marked increase over the number of institutions that topped the 40 percent mark in 2004-05, a jump from 10 schools to 17.”

Administrative bloat. Nationally, per-pupil administrative costs (up 61.2%) have increased at a far higher rate than instructional (39.3%) or research & service (37.8%) between 1993 and 2007. Virginia is not immune from these trends, although some schools have done far more to curb administrative overhead than others. Virginia Commonwealth University increased 42.9% while Longwood University’s administrative overhead shot up by 131.5%. Only Norfolk State University, which had experienced serious bloat previously, actually managed to cut administrative costs.

Underutilized facilities. There’s nothing Virginia’s colleges and universities like better than statewide bond issues to pay for new buildings. But most universities fail to meet the State Council for Higher Education in Virginia (SCHEV) standard of utilizing classrooms 40 hours per week on average and labs 26 hours. “It appears that Virginia public institutions show a widespread pattern of underutilization of teaching facilities.”

Freshman drop-out rate.  State and federal governments spent an estimated $9 billion between 2003 and 2008 on students who dropped out of college during their freshman year. The national average for first-year retention is 79.5 percent for public colleges and 80 percent for private not-for-profit colleges. At the high end, William & Mary and the University of Virginia top the chart with retention rates at 95 percent and 96 percent, respectively. At the low end, four public institutions—Norfolk State, Radford, University of Virginia’s College at Wise, and Virginia State—fall below the national average, with Norfolk State the lowest at 66 percent.

On-Time graduation. Nationally, less than 58 percent of today’s students graduate in six years: 54.9 percent of the students in public institutions and 64.6 percent of the students in private, non-profit colleges and universities. Virginia’s public schools, as a whole, fare better than the national average, graduating an average of 67.9 percent. However, being better than the national average is little cause for celebration. Six-year graduation rates range widely, including the low of 34 percent at Norfolk State to the high of 93 percent at the University of Virginia.

How do we hold public universities accountable? We have a two-tiered system. SCHEV functions as a statewide coordinating body, acting as a gatekeeper for proposed new degree programs and departments. It also creates a strategic plan. But implementation is left up to individual boards of visitors. That’s where they power is.

As citizens and alumni, we must ask to what extent boards function as cheerleaders for the initiatives of university administrations. To what extent do they exercise real oversight? Do boards have real authority, or do they function as rubber stamps? Do board members see their appointments as an honor… or a responsibility? Are board members cronies of the president who look forward to being wined and dined four times a year, or are they truly independent?

That’s where the real analysis comes in, and all the SCHEV and ACTA metrics in the world can’t help us with it. But benchmarking performance can help citizens determine if closer scrutiny is in order.

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Posted in 2012, Education (higher ed)

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Who Is Mamadi Diané, and Why Did He Serve on the MWAA Board So Long?

Posted on January 30, 2012 by James A. Bacon| 21 Comments

Abidjan, capital and commercial center of the Ivory Coast.

by James A. Bacon

Consider the odd case of Mamadi Diané. The former Metropolitan Washington Airports Authority (MWAA) board member, whose term expired last year, was cited, though not by name, in two recent letters during the General Assembly imbroglio over Virginia’s representation to the tri-state authority.

The McDonnell administration was lobbying Del. David Toscano, D-Charlottesville, among others, to support emergency legislation that would reform the board representation of MWAA in accordance with recently passed federal law. The bill would increase Virginia’s representation on the board and would terminate members’ service at the end of their term rather than allow them to serve until their replacements are seated. (See “Why the Opposition to House MWAA Bill?“)

In a letter to Toscano dated Jan. 16, Transportation Secretary Sean Connaughton referred to an incident that occurred in early 2011. “These amendments are a direct result of a number of recent controversies involving the Board. One example is a Board member voting on matters while under house arrest in Africa even though his term had expired and he had not attended an MWAA meeting for two years.”

Another letter to Toscano, from Tom Davis, MWAA vice chair, and Rust Conner, chair of the MWAA finance committee, dated the same day, made a similar point. “Current law allows [board members] to cast a deciding vote for the hiring of the new CEO, from the Ivory Coast, although he had not attended a meeting in two years and had not taken part in any of the interviews conducted to fill the position.”

(Read the two letters on the House GOP Caucus’ unofficial blog.)

Holy moly! What a story! A guy casting a vote while under house arrest… in the  Ivory Coast… after his term had expired? It sounds like the MWAA was totally out of control. No wonder the McDonnell administration wanted to rush through emergency legislation to reform MWAA’s governance! I, too, have been critical of MWAA’s governance, and this was just too good to pass up. I resolved to find out more. Who was this mysterious board member?

After making some inquiries, I found that the board member in question was a certain Mamadi Diané, who had been appointed by the mayor of Washington, D.C., and who, according to his MWAA bio, was the founder and CEO of AMEX International. AMEX describes itself on its website as a small business that for 25 years has provided “quality consulting, shipping and procurement services to US government agencies, foreign governments, international institutions, and private corporations worldwide.”

Diané became briefly embroiled in controversy in February 2011 when the MWAA board was considering the appointment of a new CEO for the authority: Nathaniel P. Ford Sr., the head of San Francisco’s municipal transit agency. While Ford had excellent credentials, concerns emerged over back taxes owed and allegedly lavish use of company credit cards. The issue made the Washington Post when one board member, H.R. Crawford, suggested that critical questions posed to Ford, an African-American, were racist. According to the Post, he also wielded a “proxy” from Diané , who could not attend, tipping an informal board vote to 7-6 in favor of Ford. The board subsequently decided to start the CEO search over.

Diané, according to WaPo reporting, had attended “only one meeting in two years; his most re­cent absence was because he is stuck in a ho­tel in Ivory Coast because of post-election po­lit­ical unrest.” Another article noted that “Mr. Diane spends much of his time over­seas” and had met nei­ther Ford nor the oth­er leading can­didates.

According to the BBC’s Asia Africa Intelligence Wire in 2002, Diané had been naturalized as an American citizen “several years” before. The report described him then as “a fund-raising specialist for the Democrats in Washington,” and he was in fact an active contributor to Democratic candidates. The report also described him as “well-known in American political and financial circles.”

One of his pals, according to this article in the Times-Picayune, was disgraced Rep. William Jefferson, the New Orleans congressman whose freezer was infamously found stuffed with cash. Diané was instrumental in linking Jefferson with Vernon L. Jackson, the Kentucky telecommunications executive who subsequently was convicted of paying more than $400,000 in bribes to Jefferson to gain help in obtaining business deals in Africa. Diané and a business partner, Jack W. White, had encouraged Gates to broaden his company’s horizons to Africa. Diané was never accused of any wrong-doing.

Diané ‘s consulting work frequently got him involved in African politics. According to the Times-Picayune, Diané once served as the unofficial Washington spokesman for former Zaire dictator Mobutu Sese Seko, who was exiled in 1997.  In 2002, according to the BBC, he created an organization aimed at fighting President Lansana Conte’s dictatorship in Guinea. In 2010, he was still active in that country. Voice of America quoted him as objecting to election irregularities there. In February 2011, the Ivory Coast, where Diané was supposedly detained, was locked in a stalemate when the losing candidate Laurent Gbagbo, refused to relinquish office.

That much can be gleaned from the Internet. I tried contacting Diané via his AMEX office in Washington, D.C., but was told that he was out of the country and could not be contacted by email. But his brother Mori Diané, AMEX vice president, did return my phone call. Their father was from Guinea and mother from the Ivory Coast, said Mori. He does not recall exactly where his brother was in February 2011, he said. Mamadi travels frequently to the Ivory Coast and might well have been there. But Mori  insisted that his Mamadi was never “under house arrest” there, as described in Connaughton’s letter. Mori also said he did not recall his brother having been “stuck in a hotel” as described by the Post, although he was less emphatic in his denial. He also said that, to his knowledge,  Mamadi never acted as a spokesman for Mobutu. Mori said he knew nothing of his brother’s activities on the MWAA board.

Mamadi Diané was appointed to his first term on the MWAA board in February 1999 by the then-mayor of Washington Anthony Williams, and reappointed by Williams in 2003. He served on the Audit and the Planning & Construction committees. His term expired in 2009 but he remained on the board because the mayor did not replace him. When I asked MWAA spokeperson Kimberly Gibbs about his attendance record, she replied by email that he had attended “multiple meetings in 2008.” Her narrowly worded response did not contradict the claim in Connaughton’s letter that Diané “had not attended an MWAA meeting for  two years,” which would have encompassed 2010 and 2011.

Regarding Diané’s “proxy” vote, Gibbs sidestepped my question of whether an informal vote had taken place. Rather, she stated, “Formal votes by Board members must be made in public and the Members must be physically present.” It’s not clear that “casting an absentee vote,” as the Post put it on the basis of anonymous sources, is an accurate description of what took place. The vote may have been more akin to a straw poll, indicating sentiment going forward. In such an instance, it would not have been inappropriate for Crawford to express Diané’s sentiment. The exact circumstances remain murky.

However, it is clear that Diané remained a MWAA board member long after his term expired in 2009. He didn’t drop off until March 2011, when he was replaced by Shirley Robinson Hall. That was an eight-year gig — two years beyond the normal six. Presumably, MWAA board members Davis and Conner speak from personal experience when they say that Diané attended no board meetings in the last two years. Other than the Post‘s assertion that he had attended only one meeting, I have yet to see any evidence to contradict the assertion.

Bacon’s bottom line: While some of the particulars of the Connaughton and Davis-Conner letters probably were inaccurate, they got the most important point right: An MWAA board member remained on the board for two additional years even though he had largely ceased performing his duties.  It is entirely reasonable to require MWAA to remove from the board members whose terms have expired. Whether that rises to the level of emergency legislation now that Diané has been replaced is another question for another blog post.

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Posted in 2012, Transportation

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Fleeced by the Fed

Posted on January 29, 2012 by James A. Bacon| 19 Comments

Fed’s zero interest rate bails out Wall Street and Treasury, sinks middle class

by James A. Bacon

The Federal Reserve Board announced plans last Tuesday to keep short-term interest rates at near zero for another three years and said it might embark upon another bond-buying program to drive down long-term interest rates. The stock market rallied and President Obama’s supporters hailed the rising stock market as a sign of his brilliance as a manager of the economy.

Call me a party pooper, but I see nothing good coming from this. Let’s set aside fears that the Fed’s jam-down-the-pedal monetary policy might drive down the dollar or ignite a monster credit bubble and focus on the topic that seems to preoccupy Washington’s political class these days: the distribution of wealth.

There will be winners and losers from the Fed’s monetary policy. The winners will be the nation’s debtors. The losers will be the nation’s creditors and savers. Debtors will continue to pay rock-bottom interest rates. Creditors and savers will earn rock-bottom returns on their investments. Indeed, with the Fed’s stated objective of maintaining a 2 percent inflation rate, many small savers will see the real value of their savings erode.

The largest debtor and biggest beneficiary of the Fed policy, of course, is the federal government, which owes more than $15 trillion and is on track to owe $16 trillion before the year is out. When compiling the fiscal 2012 budget, the Office of Management and Budget assumed that the interest on 10-year Treasury notes would average 3.6 percent this year while 91-day Treasury bills would average 1.0. percent. Compare that to actual interest rates today under the Fed’s easy-money policy: 2.1 percent for 10-year notes and 0.4 percent for T-bills. That averages out to roughly a full percentage point less than forecast – cutting Uncle Sam’s anticipated interest payments by about $150 billion.

That’s not the end to the Fed’s largesse. As the Fed purchases more long-term bonds, it collects more interest on the bonds, which it kicks over to the Treasury. In 2010, the interest amounted to $79.3 billion. As the Fed pushes bond purchases well past the $2 trillion mark, that number is likely to rise. Thus, Chairman Ben S. Bernanke’s contribution to deficit reduction could approach $250 billion this year – and yet more in 2013 and 2014.

So, how has this economic stimulus worked out? American consumers are huge debtors, too, but they haven’t seen remotely the same benefit. Total consumer credit outstanding in the third quarter of 2011 stood at $2.47 trillion – the same level as in 2009. But interest rates are lower, right? Yes, but only marginally:

  • The average interest rate on a four-year auto loan declined from 6.7 percent to 5.9 percent over the same period.
  • The average interest rate on personal loans slipped from 11.1 percent to 10.8 percent.
  • The average interest rate on credit cards eased from 13.4 percent to 12.3 percent.

If consumer spending has boosted gross-domestic-product growth over the past year, it’s not because marginally lower interest rates have made it so much cheaper for consumers to borrow. It’s because lower interest rates have devastated the incentive to save. What’s the point of setting aside money to earn a half-percent interest in a bank certificate of deposit or money-market fund when inflation trotted along at 3.0 percent in 2011 and, if the Fed is right, will continue at 2.0 percent this year? Your savings are losing value. Why not spend the money instead?

Mr. Obama bemoans the difficulties of America’s middle class. His answer: Raise taxes on rich people. Meanwhile, he says nothing as Fed policy eviscerates the savings of middle-class families who don’t have $1 million or more to invest in exclusive hedge funds or private-equity accounts that generate higher returns.

Mr. Obama bashes the greed-meisters on Wall Street yet says nothing about Fed policy that props up bank profits with hundreds of billions of dollars of low-interest lending.

The American people understand what they have to lose from higher tax rates, but they have no concept of how the Fed is fleecing them. Monetary policy is opaque even to those who follow it for a living, and it’s simply beyond the comprehension of most Americans – including a brain-dead press corps that is all too happy to peddle Mr. Obama’s narrative of a growing income gap and the injustice of the tax rate paid by Warren Buffett’s secretary.

But give Mr. Obama credit for this: While his handmaiden Bernanke plunders the middle class in order to prop up Wall Street and the U.S. Treasury, the president has exploited the resulting uncertainty and unease by posing as a champion of Middle America. That’s more than you can say for Newt Gingrich, who is attacking Mitt Romney for the sin of being a successful, wealth-creating capitalist, or for Mr. Romney, who seems incapable of defending himself. Like Sherlock Holmes and Professor Moriarty at Reichenbach Falls, they are locked in a death grip that will plunge them to their political demise.

I’ve never been much of a fan of Rep. Ron Paul, but the man is making more and more sense when he says it’s time to abolish the Fed.

This column was published originally in the Washington Times.

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Posted in 2012, Budget, Economy, Federal, Poverty & income gap

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