Tag Archives: Les Schreiber

Virginia Retirement System — Trouble Ahead

Last week as I was watching the business channel, I was very interested in the comments of AIG’s head of investments about the effects of low interest rates on his firm. For those involved in life insurance and other long-term products, today’s historically low interest rates pose a significant problem. With negative rates on investment-grade bonds, insurers have no choice but to raise prices to the consumer or leave markets where bond yields are not high enough to support interest-sensitive products.

This morning’s Richmond Times Dispatch brought the issue a little closer to home. House Speaker William J. Howell wants to shift from the current structure to a self-managed system. In other words, employees would manage their own retirements and, as is the case with 403b plans or IRAs, would take their accounts with them when they shift jobs. (As a retired teacher, I receive a small pension from the Virginia Retirement System.)

It is unclear from the article how, under Howell’s proposal, the employee would fund this. Would employees receive a stipend equal to the amount that school districts currently contribute on their behalf to VRS? Or would they be totally on their own? If the latter, the state would be shifting not only market risk but the actual cost to teachers and its other employees.

Teaching has always been a relatively low wage profession. One of the unspoken deals always was, “You work for a low wage now and we will help you out in your later years.” The article leads me to conclude that Howell wants to destroy that bargain. Sure, we all want to be on our own, but attracting skilled folks to the teaching profession, which has seen a decline in real wages since the Great Recession, will be even more difficult. Funding their own retirement is a risk that few will be able to afford.

— Les Schreiber

The System Is Rigged… and Trump Ought to Know

The system is rigged!

Building a big, beautiful tax break

Back in the day, Virginia was one of the most reliable Republican states in presidential elections.  That changed in 2008, with the election of President Obama.  Current polling indicates that the deeply flawed Democratic candidate, Hillary Clinton has a double-digit lead over Donald Trump.  The core of this support seems to be amongst college-educated whites in the Washington, D.C., suburbs.

Now there is more trouble ahead for “The Donald”!! The lead story in today’s New York Times details how, after filing for bankruptcy, Trump’s New Jersey casinos owed the state of New Jersey $30 million in back taxes.  The article discusses how, after Chris Christie ascended to the governorship, the state settled for 17 cents on the dollar, or slightly less than $5 million.

And Governor Bob was indicted for, amongst other matters, riding around in a Ferrari?

— Les Schreiber

Why “The Donald”

trumpLast summer as the Dow Jones average hovered near its all-time high of 18,000+, one of the commentators on the CNBC business channel commented that Lloyd Blankenfein had just joined the billionaire’s club. I was a bit taken aback. While Goldman is the premiere investment bank on Wall Street, during the 2008-2009 financial crisis, the largest percentage of the $85 billion spent to bail out A.I.G. was funneled to Goldman Sachs in order to settle credit default swaps issued by AIGFP to Goldman as a counter-party. Who knew that a person could be a billionaire and a welfare queen at the same time?

Recently, the charity OXFAM AMERICA issued a report stating that for every dollar spent by corporations in America on lobbying activities, they receive $130 in tax breaks, and approximately $4,000 in federal loans. Since 1952, the share of corporate taxation as part of federal revenue has declined from 32% to 11%.

From studying the results of recent primaries, there is a significant backlash against the economic policies of Republican and Democratic administrations.

In addition to the financial crisis and tax policies, foreign trade agreements are perceived as benefiting a few while middle class jobs disappear. A recent article in the New York Times outlined the decline of the steel industry in Birmingham Alabama. It was not pretty.

Somehow, Trump, whose companies have gone bankrupt more than once, has been able to feed on this feeling that the system is structurally unjust, to win the nomination of a major American political party. This is not pretty. And while Donald the person may be dismissed, the reasons for his success should not be.

— Les Schreiber

A Book Review for an Election Year

Along with income inequality, one of the most-discussed issues in the Presidential election year is the role of money in political campaigns.  Following the Roberts Court’s ruling in the Citizens United Case, which basically equated money with free speech, large numbers of Political Action Committees masquerading as charities, such as the Americans for Progress, were supported by wealthy donors to funnel money to selected candidates.  These so-called super-PACs could raise unlimited amounts as long as they were not “coordinated” with the candidate’s campaign.  This process and it after-math are the heart of Jane Mayer’s new book, “Dark Money.”

According to the book, Ed Gillespie, currently the front-runner for the Republican nomination for Governor of Virginia, was one of the first political operatives to realize the potential surrounding the Supreme Court’s decision, and began to organize attacks on regulation having to do with environmental protection and tax policy.

The perception that business is under attack and a response must be begun dates back to the early 1970’s.  Lewis Powell, a Richmond lawyer who served as a distinguished member of the Supreme Court, outlined a type of response that included an organized to roll back regulations and other government policies that, he perceived, were undermining the American private Enterprise System. (see reclaim democracy.org). Powell served on many corporate boards including tobacco giant Phillip Morris.  His ideas were taken up by several individuals of significant wealth.

The book indicates that those who found the dark side of American politics are mindful in operations that have significant impact on the environment.

The Olin Corporation is an example.  Olin was a significant polluter.  It was the largest manufacturer of DDT, which was eventual banned by the government in 1972.  In the town of Saltville, Va., Olin’s Chlorine production spilled significant amount of mercury into the Holston River.  The company ceased operations shortly after it was reported from Japan that large exposure to mercury in water caused birth defects.  Members of the Olin family are significant contributors to conservative think tanks such as the Heritage Foundation and the American Enterprise Institute

The most significant of the “dirty money” fraternity are the Koch brothers (No relation to former mayor of NY Ed Koch).  Their oil refining and pipeline business if one of the largest privately-held pipeline companies in the United States.  The family has a very interesting history. Earlier generations did business with both Nazi Germany and Stalinist Russia. Family members were members of the John Birch Society. This is the same group that believed that President Eisenhower was a Communist.

In her research, Jane Mayer discusses many legal problems that Koch industries has had under the current leadership of Davis and Charles Koch, some involving outright theft of oil from Native Americans’ reservations, significant instances of pollution. One particularly disturbing case involved the death of an employee named Donald Carson who died of Leukemia in 1997.  Doctors believe that his cancer was the result of exposure to benzene, a chemical involved in refining crude oil. The Kochs refused to pay him Workmen’s Compensation even though a company-sponsored blood test indicated five years before his death that his blood was poisoned. The employee was subsequently terminated from the company.  Charles Koch believes that government regulations are “socialistic.” Employees within the company that brought up potential health issues to OSHA were fired. In one case, involving a pipeline explosion, resulting in the death of an employee, a jury found that the Koch’s not only negligent but malicious, ordering them to pay a settlement three times the hundred million Dollars that was originally requested.

Ms. Mayer does acknowledge that the Koch Brothers have given significantly to “real charities” such as Lincoln Center in New York and several medical research institutes. According to the author, these contributions served to soften their image and make their political activities seem less threatening and less self-serving.

Following the plan, laid out many years ago by Lewis Powell, American Universities are the fountainhead of anti-business attitudes in the United States. The theories of the Austrian school of economics was believed to provide an intellectual basis for the type of free-for-all capitalism advocated by the Koch brothers.  In 1981, the Mercatus Center was established at the George Mason University in George Mason University.  The Center claimed that it “bridged the gap between academic ideas and real world problems.”  Records obtained by Jane Myer indicate that the brothers have contributed $30 million to the Institute. One historian on the faculty describes the institute as a “lobbying group for corporate interests.”

Whether you agree with the author,  Jane Mayer, the current rise of “outsider politicians” in both parties shows that much of the public perceives that the system is rigged in favor of the ultra wealthy.

— D. Leslie Schreiber

Welcome to the Fan, Randy

randy_forbes

Watch out, Mr. Forbes, you have a new constituent, and his name is Les Schreiber.

In recent years Virginia’s politics has appeared disjointed. In the past two presidential elections, the Democratic nominee has prevailed here. The current governor as well as both U.S. Senators, John Warner and Tim Kaine, are Democrats. Yet representation in the House of Representatives favor the House G.O.P. by a ratio of 8-to-3.  It is small wonder that some observers believe that Congressional Districts were drawn to protect the Republicans.  An article and a map in today’s RTD indicates that a federal court states that in order to achieve more balanced representation, the City of Richmond will shift from the congressional district of Bobby Scott, a Democrat, that of Randy Forbes, a Republican.

A quick glance at Forbes’ website indicates that he supports the usual G.O.P. platitudes on domestic policy.  Forbes, as one would expect, would repeal the Affordable Care Act.  The question for Forbes is: “How would a 62-year-old making $45,000 per year with a pre-existing condition be able to buy almost any health insurance?

Rep. Forbes also wants a balanced budget amendment to the Constitution. Quick, Randy-name five federal programs you would slash, and how much would be saved by each cut.

If Randy can not respond to these questions with specifics, he joins Rep. David Bratt sharing the coveted title of Fauxconomist.

Like so many of Dave’s followers, he espouses programs that he can not possible implement.

— D. Leslie Schreiber

Thanks For the Memories

I have not written much over that past several months because I have been dealing with some family problems. I thought a brief article on the Dave Brat interview might be worth a comment. Boy,was I wrong.

I was upset at one of the responses to my Brat article and have decided that continuing to prepare and write an occasional article for this blog is not worth the time. I have never been accused of being a liar. It seems that some simply don’t understand the give and take, is not an excuse to call into question the basic values of one with whom they do not agree.

— Les Schreiber

Dave Brat, What to Make of this Guy?

As I flipped though the New York Times Sunday Magazine, I was shocked to find a full-page interview with Rep. David Brat.  The Times usually does not pay much attention to House freshmen, but Brat has created a high profile for himself by becoming an outspoken member of the “Freedom Caucus” of ultra-right wing Republicans that recently promoted the resignation of Speaker John Boehner of Ohio.

The interview was amazingly short on policy as Brat seemed to want to dwell on his knowledge of philosophy rather than on governing.  The brief outline that he did give of policy consisted of not raising the debt limit, lowering taxes, and bulking up the military. Brat refused to say how he would accomplish these goals, which taken into totality seem to defy simple math. How is he able to lower taxes and hike defense spending, without significant cuts in the rest of the budget? One doesn’t need a PhD in econometrics, to see that the numbers don’t add up: witness the presidency of George W. Bush and the deficit fiasco that followed.

Brat seemed to be critical of popular culture.  In the interview, he bemoaned what he perceived as a paucity of movies “capturing the highlight of Western tradition.” It seems that the congressman has forgotten that the purpose of free speech is to put all ideas in the public sphere.  Spoken by a federal legislator, this type of media criticism is nothing if not disturbing.

Brat, as most economists, is a fan of Adam Smith who in 1776, published Wealth of Nations, which described the fundamental workings of market-based economies, but Brat transforms the questions about the application of Smith’s principals to today’s complex problems into a criticism of European economies. Perhaps Dr. Brat is unfamiliar with the classic article written by Robert Mondell, the theory of optimal currency unions, and compares this work with the European Union’s plan to implement the Euro. Brat, this “scholar–his word”, should compare the present Euro zone that demonstrates the results of the type of austerity that Brat seems to advocate, with low inflation, but near-zero growth and very high rates of unemployment.

This guy should represent Disneyland!

— D. Leslie Schreiber

Nous sommes touts Parisien