Author Archives: James A. Bacon

McAuliffe Establishes Clean Energy Working Group

carbon_reduction

by James A. Bacon

Governor Terry McAuliffe has set up a work group to recommend concrete steps to reduce “carbon pollution” from Virginia’s electric power plants. Utilities cut carbon emissions 21% between 2005 and 2014, and the group will focus on how to continue the trajectory “in a way that makes clean energy a meaningful part of Virginia’s energy portfolio.”

“Many of the largest employers on the globe have made it clear that the availability of clean energy is a key part of their decision-making process when it comes to new jobs and investments,” said McAuliffe in a press release, in an apparent reference to Amazon Web Services and other companies who are working to develop clean energy sources for their Northern Virginia data centers. “To continue attracting competitive and innovative businesses, we need to invest in a 21st century energy policy to ensure our grid is reliable, affordable, and clean.”

The electric sector is responsible for 30% of man-made carbon dioxide emissions in the Commonwealth, stated the press release. “The electric sector is changing rapidly through increasing reliance on low and zero carbon resources. As such, it is vital that the Commonwealth could continue to facilitate and engage in a dialogue on carbon reduction methods while simultaneously creating a pathway for clean energy initiatives that will grow jobs and help diversify Virginia’s economy.”

While the work group is tasked with reducing carbon emissions, it shall “consider” the impact of such initiatives on electric reliability, electric rates, affordability for low-income communities, and economic development, among other factors. The group also shall reflect a diverse range of perspectives from scientists, energy experts, business leaders and environmental advocates.

McAuliffe has already convened a work group to update the Kaine administration’s report on climate change, and a group to advise the Department of Environmental Quality (DEQ) on how Virginia should implement the federal Clean Power Plan. Other actions have set up a Solar Energy Development Authority, directed state agencies to implement energy efficient practices, and set procurement standards to get 8% of their electricity from renewable sources within three years.

Bacon’s bottom line: It’s not clear to me what this group will accomplish that the others have not. But I guess it never hurts to take another bite of the apple.

Boomergeddon Update: Medicare HI

Image credit: 2016 Medicare Trust Fund Board of Trustees annual report

Image credit: 2016 Medicare Trust Fund Board of Trustees annual report

by James A. Bacon

The Hospital Insurance Trust Fund, one of the four major components of the Medicare program, will run out of money in 2028 — two years earlier than previously projected. That appraisal comes from the Medicare Board of Trustees, which, the last time I checked, is not funded by the Koch Brothers.

The news of the accelerating structural crisis in the nation’s health care safety net stirred only the slightest of ripples in the news media, which buried the story deeper than an Iranian nuclear research facility. One would think the news to be of more than passing interest to the program’s 55.3 million recipients and thus to major media, but the nation’s elite journalists are so obsessed with the latest Tourettes-like tweets by Donald Trump that they cannot bestir themselves to ask the presidential candidates how they intend to preserve the social safety net.

This news comes soon after Congress and the Obama administration avoided the impending depletion of Social Security’s Disability Insurance (DI) trust fund only through the expediency of folding it into the Old Age Survivors Insurance trust fund, thus accelerating by a year the impending breakdown of both by 2034.

Medicare and Social Security will not collapse when the trust funds run out, but the gap between spending and revenues will have to be covered either by a hike in taxes, a cut in benefits or an increase in government borrowing, each of which would be grievous in its own way. The magnitude of this gap, caused by the retirement of the Baby Boomer generation, will precipitate the nation’s greatest economic crisis since the Great Depression — what I call Boomergeddon.

And to what do we owe the accelerating crack-up of Medicare’s hospital insurance program (often referred to as Medicare Part A). Not to accelerating health care costs, ironically enough. “Since 2008, U.S. national health expenditure (NHE) growth has been below historical averages, despite having accelerated in 2014 mainly due to insurance expansions,” state the Medicare trustees.

But having said what the problem is not, the Medicare trustees fail to explain what it was. That is understandable, given the politically sensitive nature of what appears to be going wrong — weak job growth, the low labor participation rates, and less-than-expected payroll revenues. After real-world economic performance has under-performed forecast economic forecast every year for seven years running, the Obama administration appears to be adjusting its long-range forecasts for purposes of long-term budgetary planning.

Nobody wants to admit, least of all in an election year, that economic growth and job creation stink. But that is precisely what underlies the rush to ruin of Medicare, Social Security and the federal budget deficit generally. A weak economy means weak revenue.

Bacon’s bottom line. Boomergeddon is running right on track. The Congressional Budget Office projects a $534 billion deficit this year. (We don’t hear about that number from our journalistic elite either.) Were it not for monetary easing, ultra-low interest rates and multi-billion remittances from the Federal Reserve Bank, the deficit would be far bigger. In any case, CBO projects a cumulative $9.4 trillion in deficits, to be added to the existing $19 trillion national debt. The U.S. is on track to carry World War II levels of borrowing by the mid-2030s, the big difference being that in 1945 the war was over and the nation could demobilize its massive military, while in 2035 the nation will not be in a position to demobilize its social safety net.

Meanwhile, the structural budget deficit of the United States must be viewed in the context of chronic deficits of the European countries and Japan, and the massive over-leveraging of the Chinese economy. As McKinsey & Co. pointed out in a 2015 report, the global economy has added $57 trillion since the Great Recession; rather than de-leveraging, virtually every major nation has doubled down with increased borrowing. Systemic risk has never been greater. All it takes is a black swan event, and financial chaos will rip through the global economy, transmitted by financial linkages that public policy makers don’t even know exist. The Bear Stearns/Lehman Brothers financial panic will be a picnic by comparison.

The question, as always, for Virginians is this: How do we as citizens and taxpayers protect ourselves from the inevitable financial reckoning? Borrowing more is not an answer. (Somebody please tell Richmond Mayor Dwight Jones, who proposes raising the city’s debt limit in order to borrow $580 million more in bonds over the next 10 years.) Building new transportation mega-projects that require subsidies indefinitely into the future is not an answer. Expanding social welfare programs like Medicaid is not an answer. The storm is coming, and we must prepare.

McDonnell Wins Appeal

Photo credit: New York Times

Photo credit: New York Times

In a unanimous ruling, the U.S. Supreme Court has overturned Bob McDonnell’s bribery conviction. The former Governor had been found guilty in 2014 of accepting more than $165,000 in gifts and loans from Richmond businessman Jonnie Williams in exchange for using his office to promote a dietary supplement.

Prosecutors had charged that McDonnell had committed at least five “official acts” on behalf of Williams, including hosting and attending events at the Governor’s Mansion and arranging meetings for Williams with state employees. He was convicted in a Richmond jury trial, and the conviction was upheld in appeals court.

As Justice John Roberts said in his opinion, the case revolves around the proper interpretation of the phrase “official act.”

We reject the Government’s reading … and adopt a more bounded interpretation of “official act.” Under that interpretation, setting up a meeting, calling another public official, or hosting an event does not, standing alone, qualify as an “official act.”

“There is no doubt that this case is distasteful; it may be worse than that,” wrote Roberts. “But our concern is not with tawdry tales of Ferraris, Rolexes and ball gowns. it is instead with the broader legal implications of the government’s boundless interpretation of the federal bribery statute. A more limited interpretation of the term ‘official act’ leaves ample room for prosecuting corruption, while comporting with the text of the statute and the precedent of this court.”

I’m no legal scholar, but Roberts’ thinking is precisely why I found McDonnell’s conviction so incomprehensible in the first place. The governor opened doors for Williams, but he never strong-armed anyone or intervened in any way to get Williams the state funds he craved.

The trial revealed unseemly behavior and poor judgment by McDonnell that, in my mind, disqualified him from public office — and the Supreme Court ruling does not change that. But McDonnell’s deeds did not rise to the level of a criminal offense. I’m glad to see McDonnell cleared of criminal charges. He has spent two years in purgatory. At last the man can go about rebuilding his life.

— JAB

Virginia’s New Road Funding Process — Less Political but Still Opaque

Project scorecard for

Project scorecard for improvements to intersection at Patterson Ave. and Parham Road.

by James A. Bacon

In a rare bipartisan achievement, Virginia is doing something that no other state in the union is doing: basing its transportation investments on an objective scoring system.

Earlier this month, the Commonwealth Transportation Board (CTB) approved $1.7 billion to be spent on 163 projects selected through the System for the Management and Allocation of Resources for Transportation, or SMART SCALE. The process rates projects for their impact on safety, congestion reduction, accessibility, land use, economic development and the environment.

“SMART SCALE revolutionizes the way Virginia delivers transportation,” wrote Transportation Secretary Aubrey Layne in a Richmond Times-Dispatch op-ed Sunday. “Future administrations can’t develop wish lists on a whim. Projects must be scored and vetted through the data-driven system.”

The bottom-up process starts with a consistent set of standards by which localities select projects for scoring. All nominated projects are screened and scored and funding recommendations made on the basis of the scores. The scenarios are presented to the localities and the public for a round of input. Then the CTB has the final say.

The legislation setting up the new system originated with General Assembly Republicans and was embraced by Governor Terry McAuliffe. The reform is remarkable in that the governor and powerful legislators relinquished much of their power to reward friends and punish enemies through the doling out of transportation dollars and turning it over to a process-driven system.

“No longer are we allowing politics and wish lists determine what gets built. This process is critical to moving people, jobs, and commerce, all of which is essential to building the new Virginia economy,” said McAuliffe in a press release touting the CTB vote.

“With SMART SCALE, we are promoting greater accountability, safeguarding against waste and ending the politicization that has been rampant in our transportation process for so long,” said House Speaker William J. Howell in the same press release.

Bacon’s bottom line: So, I can visit the SMART SCALE website and find a list of 287 projects along with a breakdown of their scores. There, I can see that a project about a mile from my house — $5 million to make improvements to the intersection of Patterson Avenue and Parham Road, a miserable, stinking, soul-scorching abomination of a crossroads if there ever was one — ranked 92 statewide among all projects. And I can view the scores assigned to a variety of metrics, as seen here:

scoring_weights2

That’s all well and good, but none of this is intuitive. I don’t have the faintest idea what these scores mean. Are higher scores better than lower scores? I can imagine that a major benefit of the project would be improving “travel time reliability,” as reflected in its 24.6 score. But why would “travel time delay” be so meager at 0.6? Isn’t that closely related to travel time reliability? Is the same scale being applied to each criteria? Is the scale 0 to 1, 1 to 100, or something else entirely? The explanation on how to read a scorecard doesn’t help much.

And how about the data underlying this statistics? How many car crashes and injuries occur at this intersection? How many hours of delay occur, and how is that number measured? How does one calculate the increase in access to jobs? And how does one evaluate the impact of the project on land use?

The information available to me as a member of the public doesn’t allow me to evaluate much of anything. Further, I can’t imagine being a CTB board member and finding the data any more helpful — unless they are given special training in interpreting the numbers or have VDOT staff at their beck and call to answer their questions.

While SMART SCALE undoubtedly represents an improvement over what preceded it, the state might as well be publishing its scores in hieroglyphics. Transparency is not served when the the scoring system is so indecipherable as to be unintelligible as to defeat all efforts at understanding.

The House that Bacon Built

Photo credit: Virginian-Pilot

Photo credit: Virginian-Pilot

The Gwaltney mansion in Smithfield, built by pork and bacon magnate P.D. Gwaltney Jr., is up for auction after staying within the family for 115 years. The building has been on sale on and off for several years. Latest asking price: $940,000. The Virginian-Pilot has the story here.

Truant Teachers — a Systemic Failure?

Bad Teacher. At least Cameron Diaz showed up for school!

Bad Teacher. At least Cameron Diaz showed up for school!

by James A. Bacon

Everyone knows that truancy is a problem in Virginia’s public schools. If students don’t make it to class, they don’t learn, they drop out, and many go on to live miserable, impoverished lives. We’ve all heard the story.

What happens when teachers don’t show up at school? The problem is more prevalent than I’d imagined.

John Butcher, writing at Cranky’s Blog, has a knack for digging up arcane educational data, and it turns out that the U.S. Department of Education’s “Civil Rights Data Collection” tracks the number of teachers absent from work for more than ten days for reasons not related to professional development.

There is extraordinary variability by school district, Butcher finds. Here in Virginia, of the 656 teachers in Franklin County public schools, not a single teacher was absent more than ten days in 2014. By contrast, 68 of 98 teachers (69%) in Lancaster County public schools missed school. In a majority of districts, the percentage of truant teachers ran between 20% and 40%.

This strikes me as a phenomenon that needs exploring.

First, it is worth inquiring whether there is a link between high teacher truancy and low educational achievement. All other things being equal, a substitute teacher parachuting into a classroom cannot be as effective as a teacher who knows the students, knows what has been taught already, and knows what needs to be taught.

Second, it is also worth inquiring whether there is a link between teacher truancy and the number of substitute teachers that schools must maintain on staff. In other words, does the problem force schools to spend more money on payroll than they would otherwise? If so, how much are absentee teachers costing the schools?

Third, the extreme variability in teacher truancy suggests that some school systems are more effective at managing the problem than others. If half your school system’s teachers are absent more than 10 days, it sounds like you’ve got a major management issue. Could addressing the truant teacher problem be a lever for school administrators to improve student achievement and save money?

Finally, before going off the deep end and declaring that we have a system failure on our hands, it would be helpful to better understand the nature of the numbers. What exactly do “absences” include, and why is the baseline set at ten days? I assume that teachers are allowed a number of “personal” days off to deal with personal and family emergencies — perhaps that’s why USDOE tracks only teachers who have been absent more than 10 times.

However, unless there is something about these statistics that doesn’t meet the eye, it looks like literally thousands of Virginia teachers are playing hooky. I cannot see how such behavior can be countenanced. Why isn’t this a scandal?

Update: Butcher’s follow-up analysis shows even more variability between individual schools within the City of Richmond than between school districts. Overall, Richmond schools have the ninth highest teacher truancy rate of all school districts in Virginia. At John Marshall High School only 16% of teachers were no-shows more than ten days. But at Lucille M. Brown Middle School, the rate was 94% of teachers!

Butcher then asked a critical question: Is there any correlation between teacher truancy and student performance? Based on the sample of Richmond schools, the answer appears to be not. However, he notes that the school system spent $4.1 million on substitute teachers in 2014. If the city could cut the use of substitutes by half, it could give its other teachers a 2% raise.

Map of the Day: Hopewell Turns Minority-Majority

Map credit: Wall Street Journal

Map credit: Wall Street Journal

Note the presence of the city of Hopewell, Va., on this map. According to the Wall Street Journal, Hopewell was one of seven counties where racial minorities came to comprise a majority in 2015. Of the nation’s 3,142 counties, 12% are minority-majorities now.

— JAB