Tech Insurrection

Tech Insurrection

Smart cities, says Anthony Townsend, will be forged by geeks, activists and civic hackers through bottom-up technological innovation.

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Sprawl’s Hidden Subsidies

Sprawl's Hidden Subsidies

The answer to sprawl isn't more regulation, says Pamela Blais, it's fixing the endemic biases embedded in taxes, utility fees, municipal services and mortgages.

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Reinventing the Formal Garden

Reinventing the Formal Garden

Lewis Ginter Botanical Garden is branching out to stream reclamation and indigenous plants.

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A Distracting Doctrine

A Distracting Doctrine

Instead of fixating on the United Nation’s Agenda 21 as a threat to American liberties, conservatives should articulate fiscally responsible, market-driven policies to address the very real challenges facing local governments in the United States.

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The Zimmerman Telegram

The Zimmerman Telegram

Chris Zimmerman's message upon leaving the Arlington County Board for Smart Growth America: Smart Growth is good for economic development, and other localities can benefit by Arlington's example.

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How North Carolina Halted a Bridge Boondoggle

mid-currituck_bridge

Map credit: Lochner MMM

by James A. Bacon

Many Virginians know the agony of driving to vacation in the Outer Banks at the peak of the summer season. Heading south between Chesapeake and Kitty Hawk, you follow four-lane roads jammed with as many as 50,000 cars on Saturdays. Then, if you’re staying in Duck, Whalehead or Corolla, you have to head back north through more congestion. It sure would be nice to have a bridge across the Currituck Sound directly to Corolla.

As it happens, the state of North Carolina was planning to build a seven-mile span from Coinjock to Corolla. The Mid-Currituck Bridge, expected to cost $411 million in its most recent incarnation, could save an hour’s driving time. The project worked its way through the traditional North Carolina project-approval system and, at one point, construction was expected to begin in 2012 and to be open to traffic in 2013.

I’m sure there are a lot of vested interests in the Outer Banks that would love to see new transportation capacity that would make it easier for even more visitors to come rent cottages, rent kayaks and go surfing. But North Carolina has instituted a system that we’re still working on here in Virginia: a methodology for ranking proposed highway projects according to cost, saved travel time, congestion relief, safety and economic benefits. According to the Virginian-Pilot, the Tarheels have scored some 1,284 projects and plans to release results for another 500 in May.

The result for the proposed Currituck Bridge: a score of 23.4 points out of a possible 100, giving it a rank of 178th in importance to North Carolina. It doesn’t look like the bridge will get state funding any time soon.

I have a problem with over-development of the ecologically fragile spit of land that originates in Virginia and extends almost unbroken all the way to Hatteras. The Outer Banks are a national treasure. Federal flood insurance subsidies are already encouraging excessive building on sand that could literally wash away with the next hurricane. The state of North Carolina doesn’t need to be subsidizing over-building as well.

That concern aside, I have a suggestion for the county officials of Currituck County who have been lobbying for the bridge. Don’t ask the citizens of North Carolina to pay for your bridge. Figure out how to pay for it yourself.

Issuing 30-year, tax-free bonds to cover the cost of $411 million bridge would require roughly $30 million a year in revenue. Could the bridge generate enough value for the tourism industry in the Northern Outer Banks to pay $30 million in financing costs and have local businesses come out ahead? If so, enact the needed legislation and get the deal done. If not, then the bridge, which is needed to accommodate peak traffic that occurs 13 or 14 Saturdays out of the year, would destroy economic value, not create it, and should never be built.

There are at least three potential financing mechanisms: tolls, value capture and excise taxes.

Tolls: A harried dad with antsy kids in the back seat would gladly fork over $10 or more to shave an hour off his drive to Corolla or points south. A toll could generate millions of dollars in revenue each summer to pay off the bonds issued to build the bridge. Indeed, before the project was put on hold, the Mid-Currituck Bridge project would have charged tolls. However, the North Carolina legislature envisioned the need to spend $28 million a year in gap funding, according to the News & Observer.

Value capture. Major beneficiaries of a bridge would be the owners of hotels and rental property. A bridge that cut driving time and made Currituck destinations the closest to Northern markets would allow owners to raise rents and generate more revenue. Set up a special district to impose a property tax surcharge to capture some of that added value and use it to pay off the bonds.

Resort meals tax. Other beneficiaries include owners of restaurants, shops and other beach amenities. Create a special resort tax district that collects an extra penny per dollar on retail sales. Apply that to pay off the bonds. Continue reading

Why Five Ex-Attorneys General Are So Wrong

mcdonnells arraignedBy Peter Galuszka

The practice of law in Virginia is supposed to be an honorable profession.

The state, which produced such orators as Patrick Henry and Thomas Jefferson, loves its lawyers perhaps much more than individuals who actually create or do something of value. It could be why the state has so many of them.

This makes a filing in the McDonnell corruption case by five former attorneys general all the more despicable. The bunch includes both parties and is made up of Andrew P. Miller, J. Marshall Coleman, Mary Sue Terry, Stephen D. Rosenthal and Mark L. Earley.

They want corruption charges thrown out against former Gov. Robert F. McDonnell, who, with his wife, has been indicted on 14 federal corruption charges. Their trial, expected in July, will explore charges they misused their position to help a dietary supplement maker who showered them with more than $165,000 in personal gifts and loans.

The five attorneys general claim that there is no clear evidence the McDonnells did anything wrong. Odd, but I thought lawyers knew enough not to try and bias a case that has been through the indictment and arraignment phase and is due for trial but then I didn’t go to law school.

Their other reason is actually more upsetting. Their filing claims that future governors might be reluctant to invite state business leaders on foreign trade missions or to host campaign donors at the governors mansion, according to The Washington Post.

Huh? I don’t see the connection. Of course, governor’s can host trade missions. They can invite people to the Executive Mansion. It’s just that, in the process, the governors can’t reasonably be OK with accepting a $6,500 Rolex from the head of Kia Motors or a special loan for his failing beach houses from the local rep of Rolls Royce North America.

It is stunning that the five attorneys general are caught up in “the Virginia Way” of having hardly any controls on gift giving and spending that everything is OK. They also can’t seem to move beyond the conceit that  anyone who occupies the governor’s chair must naturally be an honest gentleman or gentlewoman.

This kind of thinking helps explain nothing substantive has been done to reform the state’s ethics laws. I can give you five reasons why.

Sprawl’s Hidden Subsidies

perverse_citiesby James A. Bacon

If planning and regulation were the answer to sprawl, then the Toronto metropolitan region ought to be a smart growth paradise. Toronto has a sophisticated, multi-tiered planning process, starting with an regional plan, plans for 30 upper-tier municipalities, and plans for 241 lower-tier municipalities (towns and townships, mostly). Yet outside the city of Toronto itself, which is undergoing a condo boom, there isn’t much to show for it.

The various municipal plans, which are comparable to Virginia’s comprehensive plans, define urban boundaries, control densities and show where growth should take place. The goal is for 40% of all new residential units to be built in already-urbanized areas. “That’s not happening,” says Pamela Blais, a city planner and principle of Toronto-based Metropole Consultants. “All the plans said all the right things. … [But] the regulatory approach isn’t sufficient to bring about the change.”

The failure of regulation to halt sprawling, auto-centric development was the basis for Blais’ 2010 book, “Perverse Cities: Hidden Subsidies, Wonky Policy and Urban Sprawl.” She had researched and written the volume to figure out how the planners’ plans had gone awry. If smart growth made so much sense, and if planners had the power to bring it about, why weren’t developers and home builders doing what they were supposed to do? Something else had to be going on, she reasoned, something that was not commonly recognized.

pamela_blais

Pamela Blais

As she delved into the subject, Blais found that real estate development is guided by massive hidden subsidies that shift costs from inefficient, land-intensive development to efficient, compact development. These invisible subsidies work at cross purposes to the regulations. As it turns out, developers follow the dollar.

Blais describes herself as a pragmatist. “It’s not an ideological argument I’m making,” she told Bacon’s Rebellion. “I’m interested in getting better cities. I’m happy to talk to everybody on the whole spectrum.” But her approach to urban development is one that fiscal and free-market conservatives can appreciate. The system for pricing public goods such as roads, water, sewer, electricity and public services bears little relationship to the cost of providing those services, she argues, with the result that a tangled skein of hidden subsidies incentivizes low-density development.

“Everybody thinks [sprawl] is the the invisible hand of the market. It’s a highly distorted market,” she says. “I’ve been arguing, let’s remove the distortions and take it from there. Remove the distortions and you’ll get a different development pattern. That should be the starting point.”

That is very much the argument that I have made in Bacon’s Rebellion, based largely on the work of EM Risse in his work, “The Shape of the Future” and essays published on this blog several years ago. Risse argued that charges do not reflect their “location-variable costs,” a succinct phrase that captures the spirit of Blais’ argument. In my reporting, I have focused mainly on one set of costs — transportation — but Blais carries the analysis to charges for utilities, municipal services, housing, parking and development charges as well. In “Perverse Cities,” she exhumed an impressive body of research to document her thesis across the board.

When you subsidize sprawl, you get more of it. When you penalize smart growth, you get less of it. To achieve smart growth objectives, Blais argues, what the United States and Canada need is not more regulation, which can create distortions of their own, but prices that reflect the underlying costs of development. 

Blais doesn’t oppose all subsidies. But she thinks they should be transparent and a subject of public discussion. “Right now, we’re not even having those discussions. People aren’t aware those cross subsidies are happening.” Here is a sampling from her book of how hidden biases are built into the system:

Water-sewer. Water-sewer charges typically are applied uniformly across a service area, regardless of how much it costs to provide the service. Sometimes charges vary by the volume of water; sometimes they do not. But charges rarely vary by the capital cost of extending water-sewer pipe longer distances to serve scattered, low-density housing, nor the operating cost of pumping water those greater distances. As a consequence, homeowners living in compact urban areas where the service is inexpensively supplied wind up subsidizing homeowners living in low-density areas where it is more expensive. Those subsidies could be avoided by breaking water charges into two components: a charge based on the volume of water consumed and a location-based charge that reflects the cost of building and maintaining the pipes. Continue reading

Measuring Sprawl

sprawl_index

by James A. Bacon

The Charlottesville region is the least afflicted by “sprawl” of any metropolitan statistical area in Virginia over 200,000 in population, according to data in a new report, “Measuring Sprawl 2014,” published by Smart Growth America and the Metropolitan Research Center at the University of Utah. Charlottesville’s composite score ranked it the 43rd least sprawling MSA among the 221 regions surveyed.

The Washington-Arlington region scored 91st in the ranking, followed by Hampton Roads, Roanoke, Richmond, Lynchburg and Bristol-Kingsport, in that order.

The researchers compiled the scores based on 28 variables falling into four main categories: density, land use mix, activity centering and street accessibility. Regions that were judged to be more compact and higher density, to have a better balance of jobs to population on a census-tract level, to have strong downtowns and other definable centers of activity, and to have superior walkability scored higher and were deemed to have the least sprawl.

While the Washington region has the 6th most compact, walkable urban center in the country, the region as a whole fared relatively poorly because the commuting shed that defines the MSA extends across many low-density counties as far away as West Virginia.

The authors said that a region’s position on the spectrum of sprawl between New York City, the nation’s most dense MSA, and Hickory-Lenoir, N.C., the most sprawl-prone large region in the county, is correlated with health, prosperity, quality of life and fiscal health. They hope the report will inspire local political and civic leaders to take a closer look at regional land use patterns.

A breakdown of Virginia counties provides insight into the wide variability within MSAs. In the Washington MSA, compare Arlington with a sprawl score of 163.28 to Stafford County with a composite score of 85.09. In the Richmond MSA, compare the City of Richmond with a score of 158.90 with Goochland County with a score 68.17.

The top composite scores in Virginia were:

City of Norfolk (179.57)
City of Charlottesville (175.93)
City of Alexandria (169.56)
Arlington County (163.28)
City of Richmond (158.90)
City of Harrisonburg (145.19)
City of Falls Church (144.69)
City of Winchester (142.10)
City of Williamsburg (138.61)
City of Fredericksburg (137.06)
City of Roanoke (136.69)

Complete scores are as follows: Continue reading

A Second Opinion on the Columbia Pike Streetcar

by James A. Bacon

This is exactly what we need in the debate over Arlington’s proposed $284 million streetcar system for Columbia Pike: close scrutiny from local citizens.

Arlingtonians for Sensible Transit (AST) has issued a paper listing 15 reasons why the streetcar would be a waste of taxpayers’ money. ”The consultant has collected its $100,000 fee by doing a shameless whitewash of the County Board’s desired outcome,” the paper concludes. “The losers are the County’s taxpayers who have not only paid for another worthless study, but may have to pay $310 million for a slow, uncomfortable, disruptive, hazardous, unattractive and inflexible system.”

The paper is a rejoinder to a report issued by HR&A Advisors last week that concluded a $284 million investment (in 2014 dollars, $310 million in future dollars) in a Columbia Pike streetcar system would generate significantly higher economic benefit than a far less expensive investment in an upgraded bus system. My quick-and-dirty analysis found the main conclusions to be supportable, although I suggested that if the benefits were as great as HR&A says they are, perhaps the city should finance the project by means of setting up a tax district to pay off the bonds. For property owners, the increase in leases and rents would more than offset the higher taxes.

Arlingtonians for Sensible Transit raises a number of issues that I had not considered. Some are unpersuasive but several of them give me pause. They bear a closer look.

  • The reason the proposed streetcar system could carry more riders than the proposed enhanced-bus alternatives is that the streetcars would have fewer seats and more people would be forced to stand: 28 sitting and 126 standing versus 60 sitting and 34 standing. “This is pure sophistry: Take essentially the same-sized vehicles, make the vast majority stand in one, and then claim that only that vehicle can meet capacity needs.”
  • While the HR&A study says the streetcars would run almost as fast as buses, AST cites a study to suggest that buses average speeds twice that of streetcars.
  • HR&A argues that streetcars are needed because an upgraded bus system would be over capacity by the year 2035. “Beyond the irrationality of spending hundreds of millions now based on speculation more than 20 years in the future, the consultant completely ignores the simple solution of increasing the number of [Bus Rapid Transit] buses.”

AST also assails HR&A’s impact on leases, rents and property values in the streetcar corridor. While I am not convinced — I think property values could rise — there is no denying the uncertainty associated with any such forecasts. Even the consultants conceded in an earlier report that streetcar impacts on property values can vary widely, depending upon a number of contextual factors.

It’s difficult for open-minded citizens who don’t have  time to pore through endless studies and documents to appraise the conflicting assertions and counter-arguments. And I would argue that we shouldn’t have to. There is a simple acid test: Structure the financing so that the chief beneficiaries of the improvements — property owners along the streetcar line — pay for those improvements through a special tax levy. If the property owners are willing to go along, it’s probably a good idea. If they balk, it’s probably not.

If streetcar service makes properties so much more valuable that tenants are willing to pay 10% more in leases and rents (say, $5,000 annually for a property), then a surcharge increasing the property tax (by, say, $2,500 annually) should be easy to bear. In that case, why wouldn’t the County Board want the prime beneficiaries to pay for the improvement rather than dunning taxpayers generally? If the deal cannot be structured to yield such a win-win outcome, or if property owners are reluctant to assume the risk associated with trading higher taxes (a certainty) for higher rents (speculative), that should be a warning that the risk-adjusted economic value created does not justify the investment. Continue reading

An Ex-Coal Baron’s Strange Movie

Blankenship

Blankenship

By Peter Galuszka

Almost four years after 29 miners employed by then Richmond-based Massey Energy were killed in a West Virginia mine explosion, its former chief executive under federal investigation for widespread safety violations has come forward with an apparently self-funded “documentary” proclaiming his innocence.

Donald Blankenship released the film “Upper Big Branch, Never Again” this week which reiterates his claims that he and the firm were innocent of wrongdoing and that an unexpected flood of natural gas and meddling by federal regulators caused the blast.

Three investigations have cited Blankenship and Massey for a culture of cost-cutting  and ignoring safety problems. So far, four former Massey employees have been imprisoned for related convictions.

The strange, 51-minute film brought immediate demands for its retraction by U.S. Sen. Joe Manchin of West Virginia who claims he did not know of Blankenship’s involvement when was interviewed for the film  being played on YouTube. Manchin is shown making what seem to be supportive statements of coal in general and, presumably, Blankenship.

The film also features interviews with E. Morgan Massey, a retired Massey executive who lives in Richmond. Another is University of Utah mining professor named Tom Hethmon who has told National Public Radio that he was also misled about the film and wants nothing to do with it.

The movie was made by a Chesapeake –based firm called Adroit Films whose officials have refused to tell reporters who funded the production.

In the film, Blankenship, Massey and Stanley Suboleski, a former Massey director who lives in Chesterfield County, repeat earlier claims that the explosion at the Upper Big Branch mine in Montcoal, W.Va. on April 5, 2010 was caused by an unexpected flood of natural gas. The explosion was affected by what Blankenship claims were wrong-headed demands by the federal Mine Safety and Health Administration to change the ventilation system which stretches for more than seven miles underground.

An MSHA probe along with one ordered by Manchin when he was state governor claim that the blast was caused when badly-maintained mining equipment hit a pocket of gas that touched off a huge coal dust explosion. The company was required but failed to keep highly combustible coal dust at bay by spraying mine shafts with powdered limestone, investigators say.

After he was forced out as Massey’s CEO in 2010 and the company was sold in 2011 for $7 billion to Alpha Natural Resources of Bristol, Blankenship kept a low profile.  He stirred to life about a year ago when he launched a website offering his views that coal is overregulated and that global warming is a hoax.He is also well-known for his staunchly anti-labor views and his support for mountaintop removal mining methods that are highly destructive of watersheds, wildlife and landscapes.

The film also shows footage of President Barack Obama as if to suggest a connection between him and the mine blast. At the time, Obama had been in office for a little more than a year. In other words, if he mangled the coal industry, he did so in a remarkably short period of time. The film also revives “War on Coal” footage shot during the 2012 presidential campaign. It tends to suggest that the coal mined at Upper Big Branch was used to generate electricity for America’s benefit when, in fact, all of it was of a metallurgical variety bound for export to foreign steel mills.

Another odd aspect of the film is why Manchin would agree to an interview with filmmakers he did not know. When I was researching my 2012 book “Thunder on the Mountain: Death at Massey and the Dirty Secrets Behind Big Coal” (St. Martin’s Press), I could only talk to Manchin and other elected officials at public events, although Massey, Suboleski and other former company officials spoke with me at length. Blankenship declined to be interviewed.

Federal prosecutors in West Virginia say that their ongoing probe may extend to top officers and directors of the defunct firm. It is unclear why Blankenship made the movie now.

Full Disclosure: I have been interviewed and have acted as an unpaid consultant for an upcoming documentary  titled “Blood on the Mountain” produced by Evening Star Productions.

The Long, Sad, Inevitable Demise of Small Town America

population_loss

Map credit: Brookings Institution

by James A. Bacon

In theory the past decade should have been very good for America’s small towns and rural areas: The fracking revolution has created an energy boom in places as far flung as western Pennsylvania and North Dakota. High prices for agricultural commodities have propped up incomes across the grain belt. Yet, despite the strength of the natural resource economy, non-metropolitan populations are shrinking.

Summing up Bureau of Census data through 2013, the Brookings Institution concluded that, outside of energy boom towns and retirement magnets, the future does not look good for small town America. Communities outside of metropolitan statistical areas showed the third straight year of population loss in 2013. Small cities and towns dependent upon manufacturing have been particularly hard hit.

In this blog, I have frequently cited the work of urban geographers who explain that a knowledge-based economy favors large metropolitan regions with large labor markets of skilled and educated employees. Knowledge-intensive companies gravitate to regions where they can hire workers with the skills they need, and workers gravitate to regions where they can find employment. While this trend does not trump all other considerations — Detroit is a case in point — it is powerful. Only in unique circumstances — a university town, an energy boom town, a town blessed with extraordinary climate or beauty — can small towns fight the tide. Small towns dependent upon light manufacturing especially appear doomed to long-term decline.

In his recently published book, “The Economic Viability of Micropolitan America,” Gerald L. Gordon asks the question, can micropolitan areas (urban centers with populations between 10,000 and 50,000) survive? Gordon is best known in Virginia as CEO of the Fairfax County Economic Development Authority, one of the most respected and successful economic development enterprises in the country. But he also has an academic bent and when he’s not closing big deals like the relocation of Volkwagen USA and Intelsat to Fairfax County, he’s teaching economic development as an adjunct faculty member and doing his own research.

The latest book is one in a series aimed at extracting economic development lessons from communities large and small around the U.S. For this book, Gordon interviewed the mayors of 70 micropolitan communities, including two in Virginia: Danville and Martinsville. While small-town mayors maintain an up-beat outlook as their communities’ chief salesmen, the outlook Gordon describes is grim.

One rampant problem is the brain drain, the loss of residents with skills and education, to larger metropolitan areas that offer superior career prospects. The small towns’ problem is the inverse that of the major metros. Lacking a skilled and educated workforce makes it difficult to attract higher-quality employers; the lack of higher-quality employers makes it difficult to recruit or retain educated workers. Writes Gordon:

The loss of a primary employer means more than the loss of jobs and taxes. It can also mean the loss of the best of the workforce in the city as well as private support for organizations and causes throughout the community. This brain drain is an extremely serious for micropolitan cities.

That problem feeds another one: The erosion of the business tax base and the loss of higher-income individuals reduces the resources available to small towns and cities to make the investments in education and infrastructure they need to grow. “The ‘Catch-22′ is that the community then becomes less attractive to potential new residents and employers.

If there is a magic formula for success, Gordon didn’t find it. Indeed, his summary chapters are remarkably pessimistic — not for any apocalyptic language, which he studiously avoids, but for the simple paucity of plausible economic-development strategies beyond the well-worn ideas of diversifying the economy and revitalizing downtown.

That’s not to say that the future of micropolitan America is hopeless. There is a niche for people who prefer a slower-paced life in a tightly knit community where everyone knows and supports one another. For the most part, those people are retirees. I confess, I did not read all 70 of the community profiles, but I saw little discussion of what it takes to become a successful retirement community — something any region with access to beaches or mountains can reasonably aspire to. Continue reading

Map of the Day: Impact of Conservation Easements

2006 population distribution, Beltway to Winchester.

2006 population distribution, Beltway to Winchester.

Luke Juday is using his mapping tools over at the Weldon Cooper Center for Public Policy to project what Virginia’s population distribution could look like 25 years from now and 50 years from now. You can see those maps here. We’ve re-published many of his maps here at Bacon’s Rebellion, so you may find them familiar. But Juday is always tweaking, and always looking for more geographic databases to play with, and he has done something really new: He shows how conservation easements in Loudoun and Fauquier counties could shape Northern Virginia’s growth trajectory over the next half century.

Beltway to Winchester 50 years from now -- conservation easements in blue.

Beltway to Winchester 50 years from now — conservation easements in blue.

As Juday writes, “Conservation easements matter”… at least when they achieve critical mass, as they have done in the Middleburg-Upperville hunt country area. The easements could play a major role in blocking the western advance of the Washington metropolitan region, forcing development south toward Fredericksburg.

Please note that Juday does not describe these maps as a “forecast” or “projection.” Rather, they are a visualization of how population would be distributed if (a) Weldon Cooper’s planning district-level population projects prove accurate, (b) no “game-changer” roads are built such as the Prince William Bi-County Parkway and (c) regions develop at their current level of density. The visualizations ignore zoning, which is too complex to include in his mapping routine, and it does not reflect the very real possibility that Americans (and Virginians) are driving less, with the implication that trend would have for greater urban density and infill. Finally, I would add, the map doesn’t consider the likelihood that northern Piedmont landowners will continue to place land in conservation easements, meaning that the swaths of blue will get even thicker and more formidable.

Even with all those caveats, the visualization shows how, over a long period of time, conservation easements could become as important as rivers, bays and Interstate highways in shaping Northern Virginia’s future.

– JAB

Trickle-Down Economics Revealed

Who's laughing now?

Who’s laughing now?

by James A. Bacon

A generation ago, liberals mocked the so-called “trickle-down economics” of the Reagan administration, the idea that creating wealth for the rich would trickle down to the less affluent by way of expanded economic activity. While Reagan himself never used that term, his economic philosophy of tax cuts, tax-code reform and restrained federal spending did work as advertised. The 1980s were a period of great prosperity in which all income groups and ethnicities shared. The irony is that the trickle-down economics is a label more aptly applied to the policies of President Barack Obama. During O’s five years in office, the rich have gotten richer while the poor have fed on scraps. But you’ll never hear the term “trickle down” applied to Obama’s monetary policies.

There are many winners from the low interest rate policy implemented by the Federal Reserve Board with the full support of the Obama administration — most of them wealthy. One group is the “millionaires and billionaires” who benefit from rising stock and bond prices. Another is the owners of mortgages who have refinanced their debt at lower interest rates, in many cases saving hundreds of dollars a month. Needless to say, those with the highest incomes who can afford the most expensive houses benefit the most. The biggest beneficiary, of course, is the federal government, the world’s largest debtor, which saves on the order of $200 billion to $300 billion a year in interest payments on its $17 trillion debt. Finally, there is a modest trickle-down effect in the form of job creation in interest rate-sensitive industries like construction.

Of course, there are many losers, too — a mega-narrative that has gone largely unreported by the mainstream media. One group of losers is small business, which finds it more difficult to gain access to capital (it’s easier for banks to lend to the government). Another group consists of state and local governments whose retirement funds no longer generate the returns they were several years ago and now face chronic fiscal stress as they struggle to make up the difference. Fifteen years ago, for example, the Virginia pension system was fully funded. Today, even after major structural reforms, Virginia and its local governments still owe billions.

Then there are the little guys, especially the Baby Boomers who accumulated modest nest eggs to help support them in retirement. I have fulminated on this topic on and off since writing “Boomergeddon,” frustrated that the issue has drawn so little attention. But a Bloomberg News article published today in the Times-Dispatch (sorry, can’t find the link) shows the full dimension of the problem. Some key points:

A 65-year-old who wanted to pay for retirement with annuities tied to bonds needed 24% more wealth in 2013 than in 2005. National Bureau of economic Research President James Potera calculated in a research paper released in February. …

U.S. Treasury yields are at least 2 percentage points less than what they would be otherwise because of the Fed’s low-rate policies and stimulus programs, said William Ford, former Atlanta Fed president who wrote a 2011 paper estimating the impact on savers of monetary easing. That reduces their income by at least $280 billion annually, his analysis shows.

“The cost of low interest rates are being ignored,” Ford said. “It is killing savers, elderly savers who are living on life savings that have been conservatively invested.”

The Fed is engineering one of the greatest wealth transfers in American history — from the working-class and middle-class to the rich. The stock market has never been higher. Wall Street is doing better than ever. Bankers are still getting their big bonuses. And the little guys with meager savings are watching their pathetic little nest eggs lose value as inflation exceeds the income they can generate.

The extraordinary thing is that Obama then turns around and castigates the economic system for inequalities in wealth — the very same inequalities that he and former Fed Chairman Ben Bernanke (it’s too early to pin any blame on Janet Yellen yet) did to aggravate. Rather than undo the harm he has inflicted, Obama ask Americans to entrust him with even more power to “help” the poor and downtrodden. What I find mind-boggling is that this is not the delusion of a single man — it’s that liberals and leftists have so uniformly and gullibly bought into the delusion. They have become apologists for the very evil, income inequality, that they decry.

I suppose that’s inevitable. The political class always gravitates to “solutions” that entail the accumulation of more power for the political class. In Virginia, liberals’ idea is to expand the Medicaid entitlement, paid for the federal government with borrowed money. Why not? It’s “free” money. But it’s really not. Every billion dollars borrowed by the federal government requires more financial repression and more wealth transfer from savers to favored classes of borrowers, the foremost of which is the U.S. government. The favored classes do not include the poor and middle-class who rack up credit card debt, typically charges around 13% to 15%.

Liberals prattle about “social justice” and lobby for distractions like a higher minimum wage (which raises pay for some and destroys jobs for others) while aiding and abetting the trickle-down economics that leaves America’s less well-off with crumbs. The hypocrisy is almost too much to bear.

Ukraine Secret Ops: A Virginia Spy Story

The CIA's Rositzke

The CIA’s Rositzke

By Peter Galuszka

About 32 years ago, I was driving my dark green Audi Fox through Virginia’s lush horse country near Middleburg in search of a 350-acre farm owned by Harry Rositzke, author, educator and linguist. He also was one of the highest ranking spies in the Central Intelligence Agency which ran secret operations against Ukraine and other Soviet republics from 1949 to 1954.

Rositzke, who died in 2002, seemed an odd prospect for gentleman farmer. He had been born in Brooklyn and sounded like it. He had an extreme sense of street smarts, as I found when I was working on a newspaper story on spying in Virginia.

From what I remember of my interview — I lost my notes years ago — I had no real idea just how active the CIA had been in actually recruiting local language speakers, often displaced persons or recent emigres, giving them a smattering of training and then kicking them out the side door of a dark-colored C-47 at night onto the potato fields of Ukraine, the Baltic States and also Russia.

Mind you, these black drops were just a few years after the Soviet Union and the U.S. were suspicious allies who had helped defeat Germany, Japan and Italy. Things turned nasty very quickly and, as history moves forward, we seem back where we were 60 plus years ago.

Today, Vladimir Putin is massing Russian troops on the Ukraine border after annexing Crimea. He claims that America has a history of meddling in Ukraine, an independent nation since the 1991 split up of the U.S.S.R. The ironies are delicious. Putin, a former KGB spy in East Germany, is right.

The spy acronym for the early Cold War infiltration efforts was REDSOX, according to espionage historian Matthew Aim. The specific ones against Ukraine were labelled AERODYNAMIC with others being AEROOT (Estonia), AEQUOR (Byelorussia), AECOB (Latvia), AEGEAN (Lithuania) and AESAURUS (inside Russia itself).

The operations were run out of a CIA base in Munich and were headed in 1951 to 1954 by Rositzke.  “We were sending people into the Ukraine, people forget that there was an active resistance movement there… We’d fly them in and parachute them from C-47s. We never lost a plane. We were pleased to see how inefficient the anti-aircraft sources were,” he told The Washington Post.

Aim believes that up to 85 agents were air dropped in denied areas of Eastern and Central Europe from 1949 to 1954. The British MI6 intelligence group likewise sent agents there.

It isn’t clear what their missions were, but reconnaissance, establishing covert networks and sabotage are possibilities. The strange part is that anywhere from 75 to 100 percent of the air drop covert missions were failures, according to Aim and others.

One problem is that the American spymasters probably didn’t know what they were getting into. It wasn’t the same as setting up French underground groups during World War II; émigré groups fought each other and many if not all of the missions had been thoroughly compromised by Soviet counter-intelligence before they ever got off the ground.

According to Aim, one British agent named Myron Matviyenko had been in command of three teams of MI6 infiltrators who had jumped into Western Ukraine and Poland but turned them all in to the Soviets. Another theory is that Soviet super spy H.A. R. “Kim” Philby had learned of many of the missions while a British Embassy official in Washington and quickly passed the information along. Many of the agents simply vanished.

Rositzke at one point is quoted as saying that the missions were so rushed that the CIA hadn’t had time to vet the agents. In any event, he bought his farm near Middleburg in 1955 as a place to retire and eventually did. Little did I know as I was driving away from Rositzke’s estate with the big oak trees that I would be working in the Soviet Union myself as a news correspondent four years later. I ended up doing two tours of three years there.

In 1996, as I was preparing to leave Moscow for the last time, I went to a new museum opened by the KGB at their famous Lybyanka Headquarters. The guide was an elderly, grey haired man with ice cold blue eyes, sort of Putin-like. He was a retired KGB officer and I was mesmerized that their exhibit had photos and relics from compromised American and British covert ops in Ukraine and the Baltics.

One dead giveaway was that the CIA was dumb enough to use stainless steel staples in the fake passports it made, the guide said. Everyone knows that true Soviet passport staples are old-style iron and they always smudge the paper with rust. This could be easily spotted by checking a passport. No smudge? Instant spy!

I asked if the CIA still made the same mistake after all these years. He stared at me coldly for more than a minute before responding: “No, they make others.”