Category Archives: Economy

Boomer….Wha?

a-bomb peace signBy Peter Galuszka

Remember the federal deficit that lurked behind the corner? Where did it go?

Al Kamen of The Washington Post asks that question in a column today. He writes:

“Not long ago, the federal deficit was projected to destroy the country, our country’s future and just about everything else. The politicians and the news media regularly fretted about what to do. Budget battles shut down the entire government for a couple of weeks.”

He continues: “So, what happened? The simple answer, of course, is that the deficit is way down and, for now, is no longer a big problem.”

The Congressional Budget Office estimated last week that the deficit for f/y 2014 is $492 billion or 2.8 percent of GDP. That puts us back in the early years of the George W. Bush administration.

Hmm. Kinda of makes you wonder where all this out-of-control spending is coming from that the Tea Party types talk about so much.

It is off the media radar screen. The Post has a graphic showing that the words or mention of the “national debt,” federal debt” or “federal deficit,” reached a high around the first half of 2010. The conservative Washington Times the most at 18; The Post with 13; and the New York Times with 10. Now it’s around three.

This isn’t to say that federal spending doesn’t merit watching. But where is Jim Bacon when you need him?

RAM, Coal and Massive Hypocrisy

The Pikesville RAM clinic in 2011. Photo by Scott Elmquist

The Pikesville RAM clinic in 2011. Photo by Scott Elmquist

By Peter Galuszka

Sure it’s a photo op but more power to him.

Gov. Terry McAuliffe is freshly arrived from the cocktail and canape circuit in Europe on a trade mission and is quickly heading out to the rugged and impoverished coal country of Wise County.

There, he, Attorney General Mark Herring and Health and Human Resources Secretary William A. Hazel will participate in a free clinic to help the mountain poor get free health care. The political opportunity is simple: Many of the 1,000 or more who will be attending the Remote Area Medical clinic are exactly the kind of people getting screwed over by the General Assembly’s failure to expand Medicaid to 400,000 low income Virginians.

RAM makes its Wise run every summer and people line up often in the wee morning hours to get a free medical and dental checkup. For many, it’s the only health care they get all year unless it’s an emergency. Another problem: Distances are great in the remote mountains and hospitals can be an hour away.

Mind you, this is Coal Country, the supposedly rich area upon which Barack Obama is waging war and harming local people by not going along with coal executives’ demands on environmental disasters such as mountaintop removal, keeping deep mine safety standards light and avoiding carbon dioxide rules.

The big question, of course,  is why if the land is so rich in fossil fuel, are the people so poor and in need of free medical care? It’s been this way for 150 years. And now, coal’s demise got underway in Southwest Virginia in 1991 when employment peaked at about 11,000. It is now at 4,000 or less. It’s getting worse, not better.

In June 2011, by coincidence, I happened along a RAM free clinic in Pikesville, Ky., not that far from Wise when I was researching my book, “Thunder on the Mountain: Death at Massey and the Dirty Secrets Behind Big Coal.” My photographer Scott Elmquist and I spotted the clinic at a high school. There must have been hundreds of people there –  some of whom told me they had been waiting since 1:30 a.m. It was about 8:30 a.m.

Attending them were 120 medical and dental personnel from the U.S. Public Health Service. They were dressed in U.S. Navy black, grey and blue colored fatigues. The University of Louisville had sent in about 80 dental chairs.

Poverty in Pike County had been running about 27 percent, despite the much-touted riches of coal. Pike is Kentucky’s biggest coal producer.

One man I spoke with said he had a job as a security guard, but he doesn’t qualify for regular Medicaid and can’t afford a commercial plan. In other words, had I interviewed him more recently and had he been a Virginian, he would have been lost through the cracks of Medicaid expansion. Alas, he’s in luck. In 2013, Kentucky opted for a “marketplace” expansion system where federal funds would be used to help lower income buy health plans through private carriers.

Lucky the man isn’t from here. The marketplace plan is exactly the kind that McAuliffe has proposed and exactly the one that stubborn Republicans such as Bill Howell in the General Assembly are throttling. The feds would pick up the bill for expanding Medicaid to 400,000 needy Virginians, at least initially.

Yet another irony. Expanded medical benefits are available just across an invisible border in two states whose coalfield residents somehow never got the great benefits of King Coal.

More Defense Cuts Plague Virginia

Special deliveryBy Peter Galuszka

Virginia continues to see painful military spending cuts in the aftermath of the years’- long U.S. intervention in Iraq and Afghanistan.

Among the latest news is that the Army may cut 3,600 jobs at Ft. Lee, ironically the site of a recent and large expansion, by 2020. That could result in a decline of 9,000 residents near Petersburg which is close to  the base.

Plus, the Air Force plans on cutting 742 positions at its Air Combat Command headquarters at Langley Air Force Base in Hampton although some of the positions are already vacant and won’t be filled.

These are just some of the changes that are affecting Virginia, which is the No. 2 defense industry state after California. Many of the cuts involve active duty personnel whose vacancies are not being filled or are being asked to take early retirement.

Defense industry jobs are likewise taking cuts. A report by the National Association of Manufacturers states that in 2014, California will lose the most military-related jobs (148,400) followed by Virginia (114,900) and then Texas (109,000). Maryland will lose 40,200 jobs, the report says.

Many of the jobs are in heavy manufacturing, such as aerospace and ship building, and search and navigational services, but general business and other services will also be affected.

The news is especially hard on Petersburg and nearby Ft. Lee which just a few years ago enjoyed a major boost after a Base and Realignment and Closure round consolidated many multi-service logistics and supply functions. The influx of thousands of soldiers, contractors and their families boosted the city and surrounding areas.

Hampton, the location of Langley Air Force Base, doesn’t seem to be in store for such heavy impacts since the cuts involve some jobs already being lost to attrition. Other bases and areas hurt by the Air Force cuts include Washington, D.C.; San Antonio; Texas; Dayton, Ohio; and Belleville, Illinois.

Newport News Shipbuilding, now owned by Huntington Ingalls Industries, could lose a deal to build one submarine and might delay another to build as Ford class nuclear attack carrier, if automatic defense budget cuts return in 2016. Another potential hit: refueling the nuclear-powered carrier George Washington but may mothball the ship if the budget cuts kick in. About 24,000 people work at Newport News Shipbuilding, making it the largest private employer in the state.

Besides the Washington area, Hampton Roads is greatly dependent upon defense spending. Some 47 percent of the regional economy depends on it. Anticipating more defense cuts, former Gov. Robert F. McDonnell formed a commission to come up with ideas before he left office this year. One of them is to be pro-active and recommend cuts of its liking before the federal government acts.

One of its recommendations cuts both ways on environmental issues. It recommends against offshore oil and gas drilling in watery areas where the military trains, thus making them available over the long term. It likewise recommends against wind turbines in the same areas.

These are interesting, but very difficult choices.

McAuliffe Hits Private IT Outsourcing

mcauliffeBy Peter Galuszka

Just a decade ago, privatizing and out-sourcing traditionally government work was all the rage.

Virginia’s Democrats and Republicans alike saw a philosophical advantage in fending off Information Technology, road maintenance and other work to for-profit, private companies who supposedly – if you believed the hype then  –could always do things better, faster and more efficiently than state workers.

The concept of “government” workers always seemed to be negative. Not only would taxpayers have to pay their health and retirement benefits, they might try to join unions and make labor negotiations even more difficult. It didn’t wash with Virginia’s conceit of being an anti-labor, “right-to-work” state that promised to keep workers docile as the state tried to recruit outside firms.

Now, Gov. Terry McAuliffe is turning this concept on its head. He is ordering a review of state contracts, especially on out-sourced IT service work that he says may be inefficient and expensive. “I am concerned that state government is inappropriately dependent on expensive contract labor when traditionally appointed state employees can perform at a higher level at a lower cost.”

Now that’s a major turn-around, even for a Democrat. After all, it was fellow Democrat and former Gov. and now U.S. Senator Mark Warner, currently running for re-election, that worked the get the state to accept a $2.3 billion contract for defense contractor Northrop Grumman to take over and upgrade the state’s antiquated IT system in 2005.

That deal proved disastrous as the contractor’s performance issues brought on bouts of oversight and renegotiation. The state ended up extending its contract with Northrop Grumman by three years.

An underlying problem is that while the contract lasts until 2019, the state must make some decisions if it wants to continue with the outsourcing route or start relying on its own state workers.

Another problem is whether the state identifies independent contractors as such or employees of state organizations. About 1 percent of the state’s workers were misidentified as independents. Apparently, state workers have their Social Security and taxes withheld from paychecks. But are they really independents? Or is it just window dressing to play homage to some fad thought up by fiscal conservatives?

McAuliffe is right to start thinking in these terms. What he’s going to have to face, however, is the conventional wisdom in Virginia that “public” is always bad and “private, for-profit” is always good. For evidence of this hidebound view, just read this blog regularly.

In Praise of an Unsung Hero

John D. Bassett III

John D. Bassett III

by James A. Bacon

Nearly 40 years ago I moved from the big city to a place had I barely heard of, Martinsville, Va., to embark upon my journalism career as a cub reporter for the Martinsville Bulletin. Compared to Washington, D.C., where I had spent most of my time growing up, it seemed a hard-scrabble place. Little did I know, those were the glory days.

Martinsville was reputed to have more millionaires per capita than anywhere else in Virginia. (Those were the days before the rise of Northern Virginia’s high-tech industry sector.) There was poverty, to be sure, but the region had pride. As the headquarters town for three major textile and apparel companies, Martinsville claimed to be the Sweatshirt Capital of the World. In the days before off-shoring, the town dominated the global knitted fabrics sector. Martinsville and nearby communities of Bassett and Stanleytown also comprised one of the largest concentrations of furniture manufacturing in the country. There was a large DuPont plant there as well, and even a high-tech company started by immigrant Julius Hermes, Martin Processing, that manufactured advanced film coatings.

Other than DuPont, all the businesses were locally owned and operated. Martinsville was no branch-plant economy. The town had a strong middle class of middle managers and professionals. And even the poor weren’t destitute. Many workers lived on plots of land in the country, supplementing their factory wages with garden crops and, often, small plots of tobacco. To my recollection, the population was affluent enough to support four country clubs. The local delegate to the General Assembly, A.L. Philpott, was speaker of the House. Martinsville was small but it punched above its weight.

In just a few short decades, however, it all came tumbling down. America embraced globalization and open trade. It was something the nation had to do, and there has been a huge payoff to companies and their employees who could provide the higher value-added services where American was globally competitive. But free trade came at a cost — and the people of Martinsville were among those who paid it. First the DuPont nylon plant closed, for reasons that may or may not have been connected to free trade (I can’t remember). The textile-apparel sector was the next to go. Within a couple of decades after I had left, the entire sector had shut down, shuttering the huge knitting mills, as production moved to Asia. Then the furniture industry met its demise. That process was more protracted, and some of the companies survived. Although most production moved overseas, local companies like Bassett, Stanleytown and Hooker survived as furniture designers, marketers and distributors of Chinese-manufactured goods.

That’s all prelude to the purpose of this post, which is to highlight a new book, “Factory Man,” by Roanoke Times reporter Beth Macy, which received a rave book review in the New York Times. Macy tells the story of John Bassett III, president of Vaughn-Bassett Furniture, who fought the fight to preserve furniture manufacturing in Virginia and North Carolina longer and harder than anyone. As the NY Times recapitulates the story:

[Macy] went looking for mountain families who had spent generations working for the region’s furniture giants, until the whole industry was walloped by cheaper furniture imported from China. She found all that and more in the battling Bassetts, a feudal family of factory owners who controlled a string of these companies and the bank, hospital, school, clinic and housing their workers used.

Questions of how the business can survive weigh heavily on manufacturers’ minds.

The ’80s answer brings JBIII’s attitude into stark contrast with those of his fellow owners. Companies merge; Wall Street takes over; laying off workers and closing plants is seen as smart rather than damaging. And nobody much cares what happens to those workers except for JBIII, who can’t bear thinking of them “in unemployment lines instead of assembly lines.”

After leaving the Martinsville Bulletin, I worked for the Roanoke Times from 1979 to 1984. That was before Macy joined the newspaper. I did not know her, but my hat’s off to her for finding the color and the drama in Bassett’s largely Quixotic quest and for telling a story that truly deserves to be told. John Bassett will never be remembered as one of America’s great innovators, like Steve Jobs, or one of its captains of industry, like Jack Welch. Unlike them, he failed. He could not revitalize American furniture manufacturing; China’s economic advantage of cheap labor was overwhelmingly decisive. But he deserves America’s admiration as a businessman who cared about the people who depended upon him, who chose to follow the hard path rather than the easy one, and who gave it his all.

(Hat tip: Patrick Zilliacus)

Two UMW Daughters of the ’60s

Birmingham By Peter Galuszka

Just a few days ago, Elena Siddall, a Mathews County Republican activist and Tea Party Patriot, posted her account on the Rebellion of being a social worker in New York in the 1960s and the wrong-headedness of Saul Alinsky, a leftist organizer who had had a lot of influence back in the day, among others. I won’t comment on Ms. Siddall’s lively account and conservative point of view. But I do notice one thing: she is a 1963 graduate of what is now the University of Mary Washington, which then was considered the female side of the University of Virginia (campuses being segregated by sex back then).

I have a tie as well to Mary Wash, which is now coed. My daughter graduated from there last year and my cousin-in-law, now living in Tennessee, went there was well before moving on the U.Va. nursing. Our family experience at Mary Wash has been a big positive and I support the school. So, it is with considerable interest that I noticed that the Spring 2014 issue of the University of Mary Washington Magazine had a cover story of a different kind of graduate than Ms. Siddall with some very different views.

So, in the interest of providing some equal time among women who came of age during those years of intense ethical and political awareness, I thought I’d toss in the magazine story to further the debate and show that not every Eagle from Mary Wash thinks like Ms. Siddall (no disrespect intended).

The story has to do with Nan Grogan Orrock, class of ’65, the daughter of an Abingdon forest ranger, who got the civil rights fever when it wasn’t always easy for a young, white woman in Virginia to be an activist. But activist she was, from exhorting her classmates to join protests, to spending summers and other time in the Deep South demonstrating with African-Americans in SNCC, to staring down the real possibility of being beaten or killed and to even today, when she’s been active in the Georgia legislature shaking things up, such as trying to get the Confederate flag off public buildings.

The article, written by Mary Carter Bishop, class of ’67, is intriguing. The writer is a career journalist who was part of a team that won a Pulitzer in 1980 for the Philadelphia Inquirer when that paper was one of the liveliest and best in the nation.

As Bishop writes:Nan Grogan Orrock ’65 is among the South’s most veteran and well-respected advocates of social change. She is one of the longest-serving and most progressive members of the Georgia legislature and has left her mark on every sector of social justice: civil rights, women’s rights, worker rights, gay rights, environmental rights.

“She’s chased after cross-burning Ku Klux Klansmen, cut sugar cane in Cuba, started an alternative newspaper, organized unions, led strikes, been arrested a bunch of times, and still stands on picket lines. At 70, she’s far from done. I had to finally get to know her. The week before Christmas, I flew to Atlanta and sat down with her at the State Capitol.”

Please read both accounts – Ms. Siddall’s and Ms. Bishop’s article – and see ideas through opposite prisms of the 1960s involving two obviously very bright women.

Sure Looks Like a Brain Drain

Exerpt from map published in CityLab. Purple = net in-migration. Gray = net out-migration.

Exerpt from map published in CityLab. Purple = net in-migration. Gray = net out-migration.

by James A. Bacon

Richard Florida’s latest demographic research project presents an interesting twist on the old “domestic migration” data we’ve all seen (well, we’ve all seen it if we’re regular readers of Bacon’s Rebellion!) The U.S. Census tracks “domestic migration” — the movement of American citizens from one locale to another — and commentators have made much of the fact that some metros are consistent population losers while others are consistent gainers.

While the migration data is useful, there is much it doesn’t tell you. It’s one thing if your region is seeing an influx of college grads and Ph.Ds and quite another if you’re getting flooded with high school drop-outs. Florida broke down the migration data by education level to determine which metros were enriching their human capital, which metros were diluting their human capital and which were simply exporting their human capital. You can see his presentation at CityLab.

In some ways, the data presents the same picture. Big Northeastern and Midwestern cities like New York, Chicago, Philadelphia and Detroit lost population across all education categories between 2011 and 2012. But other cities showed more complex patterns. The Washington and San Francisco metros saw a net in-migration of people with college degrees and advanced degrees and a net out-migration of the less-than-college educated. Not a bad trade — you gain the people who contribute the most to the economy and tax base and you shed people the most likely to wind up on food stamps and unemployment insurance!

Here are the details for Virginia MSAs. Take the numbers for Charlottesville, Blacksburg and Harrisonburg with a grain of salt. Their massive outflow of college grads and Ph.D.s undoubtedly reflects the outsize demographic impact of local universities — hundreds of students come in with high school degrees and leave with sheepskins.

domestic_migration2
Richmond saw the greatest net in-migration of any Virginia metro during this period, although the newcomers were a mixed bag educationally. The region saw a bigger influx of people with less-than-high-school education levels than college and post-graduate combined. Roanoke experienced what can only be called a brain drain — no, make that a brain hemorrhage — losing large numbers of educated residents while receiving equally large numbers of ill-educated citizens.

This data is fundamental to economic development. Political and civic leaders need to know not only how many people are coming and leaving but what their net education level is — whether the region is building human capital or seeing it shrink. Each region needs to track this data over time. And, if it wants to have any kind of future in the entrepreneurial knowledge economy, it needs to attract citizens with the highest level of education who are likely to contribute the most to the economy.

The prognosis from this one year’s worth of data is not good for downstate Virginia. Throwing out the figures for Bristol-Kingsport (which is mostly Tennessee) and the three college towns, I conflated results for Hampton Road, Richmond, Roanoke, Lynchburg, Danville and Winchester. Here is the composite tally:

composite

That’s just one year but it looks like a major brain drain to me. We should be terrified. But we’re not. We should feel a sense of urgency. But we don’t.

Denying Truth on the Outer Banks

Sun Realty

Sun Realty

By Peter Galuszka

North Carolina’s Outer Banks have always been a touchstone for me – in as much as anyone can associate permanence with sandy islands being perpetually tossed  around by tremendous wind and water forces.

The Banks and I go back to 1954 and Hurricane Hazel when I was an infant. They mark many parts of my life. So, I read with great interest The Washington Post story by Lori Montgomery about how real estate officials in Dare County and other coastal parts of North Carolina are trying to alter clear-cut scientific projections about how deeply the islands will be under water by 2100.

State officials say that the ocean should rise 39 inches by the end of the century. This would mean that 8,500 structures worth $1.4 billion would be useless. Naturally, this has upset the real estate industry which is pushing for a new projection of an 8-inch rise 30 years from now. Think of it like a photo in a rental brochure. You don’t choose shots of dark and stormy days. The skies must be blue.

Ditto science. The insanity is that so many still don’t believe what is going on with climate change and carbon dioxide pollution. Over the past several years, Virginians, many of whom vacation on the Outer Banks, endured and paid for former Atty. Gen. Kenneth Cuccinelli’s legal attacks against a former University of Virginia climatologist who linked global warming to human activity. The assaults went nowhere.

Instead of addressing such profoundly transitory events, too many in the region say it isn’t so or pick away at what is really happening as we speak. And as Mother Jones magazine points out, it isn’t because weather change deniers, usually conservatives, don’t understand science.

The Outer Banks are an extreme example because of their incredible fragility. Anyone with even a cursory understanding of the islands knows that they are completely under the thumb because they are where two major ocean currents meet.

The only reason Hatteras has developed at all is the Bonner Bridge, an ill-conceived, 51-year-old span over Oregon Inlet so decrepit that it is often closed for repairs. Replacing it has been constantly delayed by the lack of funding and the threat of lawsuits. The federal government has been complicit for decades by spending at least hundreds of millions on sand replenishment programs or offering flood insurance coverage.

About 15 miles south of the bridge is Rodanthe, a flyspeck village just south of Pea Island National Wildlife Refuse. It is at the point of the Banks that sticks out farthest into the Atlantic and is under the strongest attack by ocean currents and storms. Route 12, the only way to evacuate by car when a hurricane comes, is on a narrow spit of constantly shifting sand trapped between the ocean and Pamlico Sound.

I’ve been going to Rodanthe for years. Starting in the 1980s, friends and I would pool our money and  rent one of the big beach houses. We have been constantly amazed how the distance between the structures and the surf is disappearing. One favorite spot was “Serendipity,” a skinny, tall beach house that we rented perhaps twice and featured fantastic views from the top-floor bar.

It was dressed up as a bed and breakfast in the movie ”Nights At Rodanthe,” a 2008 weeper starring Richard Gere and Diane Lane. The film was panned and the house was equally threatened. In fact, the next year, the owner had the whole thing placed on a truck and moved nearly a mile down the coast where there’s a little more sand.

More hurricanes followed, cutting a new inlet a few miles into Pea Island and its watery bird impoundments. The oceanfront houses we used to rent are in trouble. The ones across Route 12 now have dramatic new views.  A small, new bridge spans the inlet.

One can argue that building on the Banks is madness, global warming or not. There’s a lot of truth to this. But rising ocean water is truly going to accelerate the changes no matter how hard politicians or North Carolina’s real estate industry say it isn’t so.

When the Bubble Pops

Image credit: Commonwealth Institute

Image credit: Commonwealth Institute

by James A. Bacon

Northern Virginia is so much more prosperous than the Rest of Virginia that it’s difficult for we RoVians to appreciate what is happening north of the Rappahannock. But the picture isn’t pretty. Gripped by the realities of sequestration and budget cuts, the Washington region has one of the worst-performing economies in the country at the moment. And when Northern Virginia sneezes, as the saying goes, Virginia catches cold. Virginia’s current budget travails can be traced directly to NoVa’s economic ailment.

Two new reports drive home the message that Northern Virginia, the state’s economic locomotive for the past three or four decades, has experienced an unfortunate confrontation with reality.

First, CityLabs has published a list, drawn from Bureau of Labor Statistics data, listing the 10 jurisdictions that gained the most jobs in 2013 and the 10 that lost the most. Three of the 10 biggest losers — Arlington County (-1.1%, Fairfax County, -1.2% and the City of Alexandria (-1.4%) — were located in Virginia. Interestingly enough, neither Washington, D.C., nor any Maryland jurisdiction was included in the list of Top 10 biggest losers, which I would attribute to the facts that sequestration has clamped down hardest on military spending and that Northern Virginia’s economy is more military-dependent than D.C.’s or Maryland’s.

Second, the Commonwealth Institute (working in collaboration with two other regional think tanks) has published a new report, “Bursting the Bubble,” on the challenges of living in the national capital region.  The broad conclusion:

Income inequality is growing. Employment levels for people without a college education are far lower than before the recession. Unemployment rates for several groups of workers, including those without a college degree, remain high. Black workers and young workers were particularly hard hit by the recession, even when compared to other areas residents with similar education levels. The high cost of living in the region is pushing many families to spend more than they can afford on housing, while others trade more affordable housing for long and expensive commutes.

The region has many successes worth celebrating. But broadly shared prosperity is not one of them.

College-educated workers are earning more than before the recession; everyone else is earning less. States the report: “While wages are rising at the top and declining at the bottom nationwide, the divergence is more extreme in the national capital region.”

“Bursting the Bubble” looks at a longer time-frame than the CityLabs article — the period from 2007 to 2012. Over those five years, which includes the Obama administration’s economic stimulus phase and ends before the CityLabs data picks up, public administration jobs (which disproportionately hires college grads) increased by 40,000 jobs while the construction sector (with mostly less-than-college grads) lost a comparable amount.

income_breakdownThe wage growth that did occur was overwhelmingly concentrated in Washington, D.C. Every other jurisdiction (but Stafford County) saw median incomes decline.

These employment and income trends make life especially hard for the poor. Between the high cost of housing, the high cost of child care and the long commutes, families need higher incomes to stay out of poverty. Adjusted for living costs, the region’s poverty rate is 13.4%, only a little lower the nation’ adjusted poverty rate of 15.3%.

The highest-cost housing (ranked by median home sales prices in 2012) was located in the metropolitan core — Arlington County the highest, followed by Alexandria, Washington, D.C., and Fairfax County. (It would be interesting to see a ranking based on the cost of housing per square foot.) Many homeowners are still struggling, especially in heavily African-American jurisdictions in Maryland’s Prince George County. Three percent of mortgages in the metro’s Maryland jurisdictions are in foreclosure compared to o.5% in Virginia.

Bacon’s bottom line: There’s only so much that state and local government officials can do to counteract the inevitable squeeze of federal government spending. Uncle Sam’s long-term budget crisis is far from over. The federal government will continue to be a drag on the regional economy for a long, long time. While there is a reasonable prospect that all the super-smart people who moved to the region will manage to reinvent the economy along more entrepreneurial, private-sector lines, that adjustment will take years to occur. Continue reading

McAuliffe: Time for Some Real Ethics Reform

mcauliffePeter Galuszka

One can hardly blame Gov. Terry McAuliffe for ditching the General Assembly’s absurdly weak ethics panel along with deep-sixing the line items in the budget that restrict him from expanding Medicaid.

Obviously, the nice-guy, bipartisan approach he had advocated simply isn’t possible with the likes of Tommy Norment and Bill Howell in the legislature. So, it’s hard ball time.

After a year-long trauma of the tawdry gift accepting of former Gov. and Mrs. Robert F. McDonnell and their upcoming corruption trial, it is high time the state got serious about ethics reform. But true to form and the traditional senses of entitlement and privilege, the General Assembly has created a ridiculously weak entity called the Virginia Conflicts of Interest and Ethics Advisory Council.

This wrist-slapper would collect and review financial filings of donations to legislators and help “educate” those poor dears about those mistakes they might surely make even though they obviously didn’t intend to.

As for real teeth, it has gums. It doesn’t cover “intangibles” like trips to the Masters, deep-sea fishing, African boar-hunting, feasts at high-end steak houses and so on. Dominion, Altria and anyone else can shower on such goodies. Jonnie R. Williams could still fly Bob and Maureen anywhere in his private jet. Subpoena power? Forget it!

Well, McAuliffe has defunded this effort and wants real ethics legislation by next assembly.

Meanwhile, Virginia’s cozy politicians are “shocked, shocked, mind you” that the feds are taking a harder look at them. Many can’t get over the fact that McDonnell was actually indicted. They can’t believe he really faces trial in six weeks. Five former Attorneys General harrumphed their way to federal court saying that this is certainly not corruption. A federal judge effectively showed them the door.

Now we have a new federal case. Veteran State Sen. Philip Puckett, a key Democrat, decided to take a powder just before the General Assembly vote on the $96 billion, two-year budget and the Medicaid expansion matter. His bizarre departure just before the vote tilted matters the way of conservative, anti-expansion Republicans.

It was said at the time that Puckett might be considered for a six-figure job at the Virginia Tobacco Indemnification and Community Revitalization Commission, which would be a step up from the $18,000 he makes as a senator. In the mix, his daughter could get appointed as a state judge.

The outcry was so strong that Puckett withdrew from the tobacco commission job possibility. But there’s a federal probe in Abingdon and Puckett has hired Thomas J. Bondurant Jr., a former federal prosecutor. Likewise lawyering up is tobacco commission head Terry G. Kilgore, who will be represented by Thomas Cullen, another former federal prosecutor. This sounds just like GiftGate.

Now the tobacco commission has always been a fun place since it doles out hundreds of millions from the state’s settlement with Big Tobacco back in the 1990s. Many of the 46 states who got the money used it to prevent smoking but Virginia also created a gigantic slush fund supposedly to advance products in the Southside and Southwest tobacco belts that grow bright leaf and burley.

Their first act was to hand out checks worth thousands to anyone who held a tobacco quota in a now-defunct tobacco program. You could use this to invest in your community, buy new golf clubs or vacation in the Maldives. Your choice. (We Virginians like free choice, it’s the Jefferson thing).

A few problems set in. Turns out that former director of the commission, John W. Forbes II, was dipping in the well to the tune of $4 million and also set up a suspect “literacy fund” worth $5 million. He is serving a 10-year prison sentence after his trial in 2010.

Since then, there’s been more suspect stuff going on. Last fall, for instance, the commission gave a $240,000 grant to Virginia Intermont College, a tiny and troubled liberal arts school in Bristol. The college has received lots of money form the commission over the years.

Well, the grant was supposed to help Intermont turn the corner financially as it tried to merge with another institution. The latest is that the merger failed and Intermont is kaput and the city wants it to pay its bills. And where did that $240,000 go?

Not to worry, folks. We’re dealing with Virginia gentlemen here and we are all honorable. Or maybe not. As State Sen. Creigh Deeds says: “We ought to be troubled. We ought to all tremble. I’ve read some pretty nasty speculation. We ought to fear people talking like that. … When you’re elected to office, your public actions ought to be beyond reproach.”